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EXHIBIT 10.3
AFFILIATION AND DISTRIBUTION AGREEMENT,
DATED AS OF ___________ ___, 2001,
BY AND BETWEEN
ICN PHARMACEUTICALS, INC.
AND
RIBAPHARM INC.
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AFFILIATION AND DISTRIBUTION AGREEMENT
This AFFILIATION AND DISTRIBUTION AGREEMENT (the "Agreement") is made and
entered into as of _________ ___, 2001, by and between ICN Pharmaceuticals,
Inc., a Delaware corporation ("ICN"), and Ribapharm Inc., a Delaware corporation
and a wholly owned subsidiary of ICN ("Ribapharm"). Certain capitalized terms
used herein are defined in Section 1 of this Agreement.
RECITALS
WHEREAS, the Board of Directors of ICN has determined that it would be
in the best interests of ICN and its stockholders to separate certain assets and
businesses from ICN;
WHEREAS, ICN has caused Ribapharm to be incorporated in order to effect
such separation;
WHEREAS, ICN has, pursuant to resolutions of its Board of Directors
adopted on August 7, 2000 (the "ICN Contribution Resolutions"), contributed to
Ribapharm, certain assets (the "Contributed Assets"), including its nucleoside
analog library, subject to certain consents, the Exclusive License and Supply
Agreement between ICN and Schering-Plough Ltd. Dated July 28, 1995, as amended,
and ICN's corporate headquarters in Costa Mesa, California;
WHEREAS, Ribapharm has previously filed the IPO Registration Statement
(as herein defined) with the Securities and Exchange Commission but it has not
yet become effective;
WHEREAS, immediately following the consummation of the Initial Public
Offering (as herein defined), ICN will own all of the Class B Common Stock, par
value $.01 per share, of Ribapharm (the "Ribapharm Class B Common Stock");
WHEREAS, ICN currently intends to divest itself, following the Initial
Public Offering, of its entire ownership of Ribapharm by distributing in the
Distribution (as herein defined) all of its shares of Ribapharm Common Stock to
holders of ICN Common Stock;
WHEREAS, ICN and Ribapharm intend that the Distribution will be
tax-free to ICN and its stockholders under Section 355 of the Code;
WHEREAS, in the Tax Sharing Agreement to be made and entered into by
ICN and Ribapharm concurrent with this Agreement, ICN and Ribapharm have
provided for and agreed upon the allocation between the parties of liabilities
for Taxes arising prior to, as a result of, and subsequent to the Distribution,
and have provided for and agreed upon other matters relating to Taxes; and
WHEREAS, the parties hereto have determined that in order to accomplish
the objectives of the Initial Public Offering and the Distribution and to
facilitate the consummation thereof, it is necessary and desirable to
restructure certain intercompany relationships, provide working capital
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financing to Ribapharm, allocate certain liabilities and provide for certain
indemnification, all as set forth herein;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. DEFINITIONS.
"Abandonment Notice" has the meaning set forth in Section 3.4.
"Affiliate" means a Ribapharm Affiliate or an ICN Affiliate, as the
case may be.
"Annual Financial Statements" has the meaning set forth in Section
5.1(a)(v).
"Bankruptcy Code" shall mean the United States Bankruptcy Code, as
amended, 11 U.S.C. Section 101, et seq., as amended from time to time and any
successor act thereto.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions located in the State of California or London,
England are authorized or obligated by law or executive order to close.
"Claim" has the meaning set forth in Section 6.5.
"Class B Director" means the director which the holders of Ribapharm
Class B Common Stock have the sole power to elect pursuant to Ribapharm's
Certificate of Incorporation.
"Commitment" means the obligation of ICN to make loans to Ribapharm
from time to time in an aggregate principal amount not to exceed $25,000,000
(Twenty-Five Million dollars) at any time outstanding.
"Contribution" means the transfer of certain assets by ICN to Ribapharm
pursuant to the ICN Contribution Resolutions.
"Contributed Assets" has the meaning set forth in the recitals.
"Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Controlled" has the meaning correlative to the definition of
"Control."
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"Dispute Notice" means written notice of any dispute between ICN and
Ribapharm arising out of or relating to this Agreement, which shall set forth,
in reasonable detail, the nature of the dispute.
"Disputes" has the meaning set forth in Section 7.1.
"Distribution" means the distribution of Ribapharm Common Stock by ICN
in one or more transactions occurring after the Initial Public Offering that
collectively have the effect that all shares of Ribapharm Common Stock held by
ICN are distributed to ICN stockholders, pro rata, whenever such transaction(s)
shall occur.
"Distribution Date" means any date or dates, as the case may be,
determined by ICN, in its sole and absolute discretion, to be a date on which
shares of Ribapharm Common Stock held by ICN are distributed in connection with
the Distribution.
"Event of Default" has the meaning set forth in Section 2.6(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Expiration Date" means the first day of the month immediately
following the month during which the first royalty payment under the
Schering-Plough License is required to be made after the consummation of the
Initial Public Offering.
"GAAP" means generally accepted accounting principles, consistently
applied.
"ICN Affiliate" means a Person that, directly or indirectly through one
or more intermediaries, is Controlled by ICN (other than Ribapharm and any
Subsidiary of Ribapharm).
"ICN Annual Statements" has the meaning set forth in Section 5.1(a)(v).
"ICN Business" means the business or operations of ICN or any ICN
Affiliate, including, in all cases, any predecessor entities, but excluding the
Ribapharm Business.
"ICN Public Filings" has the meaning set forth in Section 5.1(b)(ii).
"ICN Transfer Agent" means the American Stock Transfer and Trust
Company or any other person that acts as transfer agent and registrar for the
ICN Common Stock.
"ICN's Auditors" has the meaning set forth in Section 5.1(a)(v).
"Indemnifying Party" means a Person that is obligated to provide
indemnification under this Agreement.
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"Indemnitee" means a Person that is entitled to seek indemnification
under this Agreement.
"Indemnity Payment" means an amount that an Indemnifying Party is
required to pay to an Indemnitee under this Agreement.
"Initial Public Offering" means the initial public offering by ICN of
shares of Ribapharm Class A Common Stock as contemplated by the IPO Registration
Statement.
"Insurance Proceeds" means the payment received by an insured from an
insurance carrier or paid by an insurance carrier on behalf of the insured, net
of any applicable premium adjustment and tax effect.
"IPO Registration Statement" means the Registration Statement on Form
S-1, Registration No. 333-39350, of Ribapharm, as supplemented and amended from
time to time.
"IRS Private Letter Ruling" has the meaning set forth in the Tax
Sharing Agreement.
"LIBOR Rate" means, for any day, the rate for six-month U.S. Dollar
deposits which appears on Telerate Page 3750 (as defined in the International
Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange
Definitions), or such page as may replace Telerate Page 3750, as of 11:00 a.m.
(London time) on such date, or, such day is nor a Business Day, then the
immediately preceeding Business Day (or if not so reported then from another
recognized source or interbank quotation).
"Loans" has the meaning set forth in Section 2.1.
"Losses" means all losses, liabilities, claims, obligations, demands,
judgments, damages, dues, penalties, assessments, fines (civil or criminal),
costs, liens, expenses, forfeitures, settlements, or fees, reasonable attorneys'
fees and expenses and court costs, of any nature or kind, whether or not the
same would properly be reflected on a balance sheet, and "Loss" means any of
these.
"Notice" means any notice, request, claim, demand, or other
communication under this Agreement.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization of a governmental entity or any
department, agency or political subdivision thereof.
"Pre-Distribution Period" means the period of time from the date hereof
until completion of the Distribution.
"PwC" has the meaning set forth in Section 5.1(a)(iii).
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"Quarterly Financial Statements" has the meaning set forth in Section
5.1(a)(iv).
"Registration Rights Agreement" means that certain Registration Rights
Agreement dated as of _____________ ____, 2001 by and between Ribapharm and ICN.
"Regulation S-K" means Regulation S-K of the General Rules and
Regulations promulgated by the SEC (as in effect from time to time) and any
successor thereto.
"Regulation S-X" means Regulation S-X of the General Rules and
Regulations promulgated by the SEC (as in effect from time to time) and any
successor thereto.
"Request" has the meaning set forth in Section 6.5.
"Ribapharm Affiliate" means a Person that, directly or indirectly
through one or more intermediaries, is Controlled by Ribapharm.
"Ribapharm's Auditors" has the meaning set forth in Section
5.1(a)(iii).
"Ribapharm Business" means any business or operations of Ribapharm or
any Ribapharm Affiliates, including, in all cases, any predecessor entities.
"Ribapharm Capital Stock" means all classes or series of capital stock
of Ribapharm authorized by Ribapharm's Certificate of Incorporation.
"Ribapharm's Certificate of Incorporation" means Ribapharm's Amended
and Restated Certificate of Incorporation, as in effect upon the closing of the
Initial Public Offering.
"Ribapharm Class A Common Stock" means the Class A Common Stock, par
value $.01 per share, of Ribapharm.
"Ribapharm Class B Common Stock" has the meaning set forth in the
Recitals hereto.
"Ribapharm Combined Common Stock" means the Ribapharm Class A Common
Stock and the Ribapharm Class B Common Stock.
"Ribapharm Public Filings" has the meaning set forth in Section
5.1(a)(vii).
"Ribapharm Subsidiary" means all direct or indirect subsidiaries of
Ribapharm.
"Ribapharm Transfer Agent" means the American Stock Transfer and Trust
Company or any other person that acts as the transfer agent and registrar for
the Ribapharm Common Stock.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
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"Section 355(e) Event" has the meaning set forth in the Tax Sharing
Agreement.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, together with the rules and regulations promulgated thereunder, and any
successor thereto.
"Separate Counsel" has the meaning set forth in Section 6.4(b).
"Service Agent" means (i) for ICN, The Corporation Trust Company, with
offices on the date hereof at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and (ii) for Ribapharm, The Corporation Trust Company,
with offices on the date hereof at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Subsidiary" means with respect to any specified Person, any
corporation or other legal entity of which such Person or any of its
Subsidiaries Controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote with respect to the election of
members to the board of directors or similar governing body; provided, however,
that for the purposes of this Agreement, neither Ribapharm nor any of the
Subsidiaries of Ribapharm shall be deemed to be Subsidiaries of ICN or of any of
the Subsidiaries of ICN.
"Tainting Event" has the meaning set forth in the Tax Sharing
Agreement.
"Tax" or "Taxes" has the meaning set forth in the Tax Sharing
Agreement.
"Tax Opinion" means an opinion of counsel selected by ICN, in its sole
discretion, confirming in form and substance reasonably satisfactory to ICN,
that no income, gain or loss for U.S. federal income tax purposes will be
recognized by ICN, the stockholders or former stockholders of ICN, or any ICN
Affiliate with respect to the Distribution.
"Tax-Related Losses" means (i) all federal, state and local Taxes
(including interest and penalties thereon) imposed pursuant to any settlement,
final determination, judgment or otherwise; (ii) all accounting, legal and other
professional fees, and court costs incurred in connection with such taxes; and
(iii) all costs and expenses that may result from adverse tax consequences to
ICN payable by ICN or ICN Affiliates.
"Tax Sharing Agreement" means the Tax Sharing Agreement between ICN and
Ribapharm dated as of the date hereof.
"Third-Party Claim" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person other than ICN or any ICN Affiliate or Ribapharm or any
Ribapharm Affiliate which gives rise to a right of indemnification hereunder.
"Underwriting Agreement" means the Underwriting Agreement, dated
_____________ ____, 2001, among Ribapharm, ICN and the underwriters relating to
the Initial Public Offering.
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"Voting Stock" means with respect to any Person, all classes and series
of the capital stock of such Person entitled to vote generally in the election
of directors.
2. WORKING CAPITAL FACILITY
2.1. REVOLVING CREDIT.
(a) Subject to the terms and conditions of this Section 2, and provided
that no Event of Default has occurred and is continuing, ICN agrees to make
loans (the "Loans") to Ribapharm from time to time prior to the Expiration Date
in an aggregate principal amount not to exceed at any time the Commitment. The
Loans shall be evidenced by a note in the form of Exhibit 1 to be executed and
delivered by Ribapharm upon the making of the initial Loan. Subject to the terms
and conditions of this Section 2, Ribapharm may borrow under this Section 2.1,
prepay Loans as contemplated by Section 2.3(b) and reborrow under this Section
2.1.
(b) Ribapharm may borrow hereunder from ICN at any time prior to the
Expiration Date upon giving to ICN advance notice of the date of borrowing and
the amount to be borrowed.
2.2. INTEREST.
(a) Ribapharm shall pay interest on the aggregate amount of the Loans
outstanding, calculated in accordance with the provisions of Section 2.2(b),
payable monthly in arrears on the last day of each calendar month.
(b) The rate of interest payable on the aggregate amount of the Loans
with respect to each day the Loans are outstanding shall be the LIBOR Rate plus
200 basis points. Interest shall be computed upon the actual number of days
elapsed.
2.3. REPAYMENT OF THE LOAN AND CANCELLATION.
(a) Ribapharm undertakes to repay in full the amount of the Loans
outstanding hereunder, together with all interest accrued and outstanding
thereon, on -----------, 2002.
(b) Ribapharm, without premium or penalty and on two (2) days prior
notice to ICN of its intention to do so, may, at any time and from time to time,
prepay to ICN part or all of the aggregate amount of the Loans outstanding,
together with all interest accrued and outstanding thereon, to the date of such
repayment. Except as contemplated by clause (c) of this Section 2.3, the
prepayment of the Loans shall not reduce the amount of the Commitment.
(c) Ribapharm shall have the right at any time or from time to time to
terminate in whole or in part that part of the Commitment not drawn down by it
by giving prior notice thereof to ICN specifying the amount of the Commitment to
be terminated and the effective date thereof.
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2.4. PAYMENT PROVISIONS.
(a) If any payment due to be made by Ribapharm in accordance with this
Section 2 is to be made on a day which is not a Business Day, such payment shall
be made to ICN on the next succeeding Business Day, the sums to be paid being in
all instances calculated by reference to the actual date of payment.
(b) Ribapharm shall not be entitled to deduct or set off any amounts
which may be owed or claimed to be owed to it by ICN from any amounts payable by
Ribapharm to ICN under this Section 2.
(c) All payments by Ribapharm shall be made directly to ICN or as ICN
shall otherwise notify Ribapharm in writing.
2.5. NOTIFICATION. Ribapharm hereby covenants with ICN that from and after the
date hereof and for so long as any amount remains unpaid in respect of principal
of, or interest on, the outstanding borrowings or otherwise pursuant to this
Section 2, it will give ICN prompt notice in writing of the occurrence of any
Event of Default.
2.6. DEFAULT.
(a) An "Event of Default" shall mean any of the following:
(i) Ribapharm fails to pay when due any principal of, or
interest on, the Loans, or any other amounts payable under this Section 2, and
shall fail to make such payments within fifteen (15) Business Days of written
notification thereof by ICN; or
(ii) an order is made or an effective resolution is passed for
winding up Ribapharm other than for the sole purpose of a merger or
consolidation; or
(iii) Ribapharm shall default in the payment when due of any
principal of or interest on any of its other indebtedness having an aggregate
principal amount of at least $3 million or any event specified in any note,
agreement, indenture or other document evidencing or relating to any such
indebtedness shall occur if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder or
holders of such indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause, such indebtedness having an aggregate principal amount of at
least $3 million to become due, or to be prepaid in full (whether by redemption,
purchase or otherwise), prior to its stated maturity; or
(iv) Ribapharm shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(v) Ribapharm shall (a) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property, (b)
make a general assignment for the benefit of its creditors, (c) commence a
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voluntary case under the Bankruptcy Code, (d) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, (e) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code, or (f) take any
corporate action for the purpose of effecting any of the foregoing; or
(vi) A proceeding or case shall be commenced, without the
application or consent of Ribapharm, in any court of competent jurisdiction,
seeking (a) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (b) the appointment of a trustee,
receiver, custodian, liquidator or the like of Ribapharm or of all or any
substantial part of its assets, or (c) similar relief in respect of Ribapharm
under any law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of
60 or more days; or an order for relief against Ribapharm shall be entered in an
involuntary case under the Bankruptcy Code.
(b) Upon the occurrence of an Event of Default specified in Section
2.6(a)(v) or Section 2.6(a)(iv), or upon delivery of notice thereof in writing
by ICN after the occurrence of any other Event of Default, the Commitment shall
terminate (if then in existence) and the aggregate amount of the Loans at the
time outstanding shall be declared immediately due and payable with interest
thereon to the date of actual payment. Any such termination and declaration
shall be effective and binding on Ribapharm.
2.7 FACILITY COSTS. Ribapharm agrees to reimburse ICN for the actual costs and
expenses (including reasonable legal fees) reasonably incurred by ICN in
connection with the enforcement or attempted enforcement of, or the preservation
or attempted preservation of, any of its rights under this Section 2. These
costs and expenses shall become due as soon as notice thereof has been served on
Ribapharm and shall be paid by Ribapharm within fifteen (15) Business Days
thereof.
3. THE DISTRIBUTION.
3.1. THE DISTRIBUTION. ICN currently intends, following the consummation of the
Initial Public Offering, to complete the Distribution as promptly as practicable
after receipt of an IRS Private Letter Ruling. Notwithstanding the foregoing,
ICN may, in its sole discretion, complete the Distribution following receipt of
a satisfactory Tax Opinion. ICN intends to complete the Distribution through
means of a spin-off. ICN shall, in its sole and absolute discretion, determine
whether to proceed with all or part of the Distribution and all terms of the
Distribution, including, without limitation, the form, structure and terms of
any transaction(s) and/or offering(s) to effect the Distribution and the timing
of and conditions to the consummation of the Distribution. In addition, ICN may
at any time and from time to time until the completion of the Distribution
modify or change the terms of the Distribution, including, without limitation,
by accelerating or delaying the timing of the consummation of all or part of the
Distribution. Ribapharm shall cooperate with ICN in all respects to accomplish
the Distribution and shall, at
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ICN's direction, promptly take any and all actions necessary or desirable to
effect the Distribution, including, without limitation, the registration under
the Securities Act and the Exchange Act, as required under applicable law, of
Ribapharm Common Stock on an appropriate registration form or forms to be
designated by ICN. ICN shall select, in its sole discretion, in connection with
the Distribution, such investment banker(s), manager(s), financial printer,
solicitation and/or exchange agent and outside counsel to effect the
Distribution as it deems necessary or desirable; provided that nothing herein
shall prohibit Ribapharm from engaging (at its own expense) its own financial,
legal, accounting and other advisors in connection with the Distribution.
3.2. CERTAIN STOCKHOLDER MATTERS. From and after the distribution of Ribapharm
Common Stock in connection with any transaction(s) included as part of the
Distribution and until such Ribapharm Common Stock is duly transferred in
accordance with applicable law, Ribapharm shall regard the Persons receiving
Ribapharm Common Stock in such transaction(s) as record holders of Ribapharm
Common Stock in accordance with the terms of such transaction(s) without
requiring any action on the part of such Persons. Ribapharm agrees that, subject
to any transfers of such stock, (a) each such holder shall be entitled to
receive all dividends payable on, and exercise voting rights and all other
rights and privileges with respect to, the shares of Ribapharm Common Stock then
held by such holder and (b) each such holder shall be entitled, without any
action on the part of such holder, to receive one or more certificates
representing, or other evidence of ownership of, the shares of Ribapharm Common
Stock then held by such holder. ICN shall cooperate, and shall instruct the ICN
Transfer Agent to cooperate, with Ribapharm and the Ribapharm Transfer Agent,
and Ribapharm shall cooperate, and shall instruct the Ribapharm Transfer Agent
to cooperate, with ICN and the ICN Transfer Agent, in connection with all
aspects of the Distribution and all other matters relating to the issuance and
delivery of certificates representing, or other evidence of ownership of, the
shares of Ribapharm Common Stock distributed to the holders of ICN Common Stock
in connection with any transaction(s) included as part of the Distribution.
Following the Distribution, ICN shall instruct the ICN Transfer Agent to deliver
to the Ribapharm Transfer Agent true, correct and complete copies of the stock
and transfer records reflecting the holders of ICN Common Stock receiving shares
of Ribapharm Common Stock in connection with any transaction(s) included as part
of the Distribution.
3.3. FURTHER ASSURANCES REGARDING THE DISTRIBUTION. In addition to the actions
specifically provided for elsewhere in this Agreement, Ribapharm shall, at ICN's
direction, use all commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things commercially
reasonably necessary, proper or expeditious under applicable laws, regulations
and agreements in order to consummate and make effective the Distribution as
promptly as reasonably practicable. Without limiting the generality of the
foregoing, Ribapharm shall, at ICN's direction, cooperate with ICN, and execute
and deliver, or use all commercially reasonable efforts to cause to have
executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any domestic or foreign governmental
or regulatory authority requested by ICN in order to consummate and make
effective the Distribution.
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3.4. ABANDONMENT OF THE DISTRIBUTION. The parties expressly acknowledge and
agree that ICN is not obligated in any respect to proceed with or complete the
Distribution and that ICN may, in its sole and absolute discretion, at any time
abandon its plans to proceed with or complete the Distribution. In the event
that ICN so determines that it no longer intends to proceed with or complete the
Distribution, ICN shall provide to Ribapharm a written notification of such
determination (an "Abandonment Notice"). Effective as of the date of the
Abandonment Notice, (a) provided that no Distribution Date has yet occurred,
Section 3.3, 5.2 and 5.3 of this Agreement shall terminate, become null and void
and have no further force and effect (it being expressly understood and agreed
by the parties that such sections shall remain in full force and effect in the
event that a Distribution Date has occurred on or prior to the date of the
Abandonment Notice) and (b) ICN's rights, and Ribapharm's obligations, set forth
in the Registration Rights Agreement shall immediately become effective.
4. EXPENSES AND PRIOR RELATIONSHIP.
4.1. EXPENSES GENERALLY. Except as otherwise provided in this Agreement, all
costs and expenses of either party hereto in connection with this Agreement
shall be paid by the party that incurs such costs and expenses.
4.2. CERTAIN EXPENSES RELATING TO THE INITIAL PUBLIC OFFERING. ICN shall be
liable for all costs, fees and expenses relating to the Initial Public Offering,
including the costs and expenses of financial, legal, accounting and other
advisers.
4.3. CERTAIN EXPENSES RELATING TO THE DISTRIBUTION. ICN shall liable for all
costs, fees and expenses relating to the Distribution; provided that Ribapharm
shall be responsible for the payment of (a) the costs, fees and expenses of all
of Ribapharm's financial, legal, accounting and other advisors incurred in
connection with the Distribution if such financial, legal, accounting and other
advisors are not concurrently engaged by ICN and (b) any internal fees, costs
and expenses incurred by Ribapharm or any Ribapharm Affiliate in connection with
the Distribution.
4.4 PRIOR RELATIONSHIP. Ribapharm, with respect to Ribapharm and all of the
Ribapharm Affiliates, and ICN, with respect to ICN and all of the ICN
Affiliates, agree to take all commercially reasonable action to discontinue
their respective uses as promptly as is commercially reasonable of any printed
material that indicates an ownership or other relationship between or among ICN
and Ribapharm or any of their respective Affiliates that has changed as a result
of the Initial Public Offering, the Distribution or any other transactions
contemplated hereby; provided that this Section 4.4 shall not prohibit the use
of printed material containing appropriate and accurate references to such
relationship.
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5. ADDITIONAL COVENANTS.
5.1. FINANCIAL STATEMENTS COVENANTS. For so long as ICN is required to
include in its consolidated financial statements Ribapharm's results of
operations (determined in accordance with GAAP):
(i) Ribapharm shall, and shall cause each Ribapharm Affiliate
to, maintain a fiscal year which commences on January 1 and ends on December 31
of each calendar year.
(ii) Ribapharm shall deliver to ICN all schedules consistent
with ICN's corporate closing requirements and in a time consistent with ICN's
corporate closing schedule.
(iii) Except to the extent required by law (including SEC
rules and regulations), Ribapharm shall cause PricewaterhouseCoopers, LLP
("PwC") to be retained as the independent certified public accountants to audit
its consolidated financial statements ("Ribapharm's Auditors") unless (x)
Ribapharm receives the prior written consent of ICN (which consent will not be
unreasonably withheld if Ribapharm has demonstrated to ICN that it is justified
in not retaining PwC by reason of any action or inaction of PwC), (y) ICN no
longer uses PwC to audit its consolidated financial statements or (z) PwC
resigns as Ribapharm's Auditors. If PwC ceases to be Ribapharm's Auditors, then
Ribapharm shall retain independent certified public accountants of nationally
recognized standing as Ribapharm's Auditors.
(iv) As soon as practicable, and in any event within 35 days
after the end of each of the first three fiscal quarters in each fiscal year of
Ribapharm (but in no event later than five days before Ribapharm intends to file
its Quarterly Financial Statements (as defined below) with the SEC), Ribapharm
shall deliver to ICN drafts of (A) the consolidated financial statements of
Ribapharm (and notes thereto) for such periods and for the period from the
beginning of the current fiscal year to the end of such quarter, setting forth
in each case in comparative form for each such fiscal quarter of Ribapharm the
consolidated figures (and notes thereto) for the corresponding quarter and
periods of the previous fiscal year and all in reasonable detail and prepared in
accordance with Regulation S-X, and (B) a discussion and analysis by management
of Ribapharm's consolidated financial condition and results of operations for
such fiscal period, including, without limitation, an explanation of any
material adverse change from the immediately preceding fiscal quarter, all in
reasonable detail and prepared in accordance with Item 303(b) of Regulation S-K.
The information set forth in (A) and (B) above is herein referred to as the
"Quarterly Financial Statements." No later than the earlier of (x) two Business
Days prior to the date Ribapharm files its Quarterly Report on Form 10-Q with
the SEC or otherwise makes its Quarterly Financial Statements publicly available
or (y) two Business Days prior to the date on which ICN has notified Ribapharm
that it intends to file its Quarterly Report on Form 10-Q with the SEC (but in
no event earlier than the 5th day before ICN's Quarterly Report on Form 10-Q is
required to be filed with the SEC), Ribapharm shall deliver to ICN the final
form of the Quarterly Financial Statements certified by the chief financial
officer of Ribapharm as presenting fairly, in all material respects, the
consolidated financial condition and results of operations of Ribapharm;
provided that ICN and Ribapharm financial representatives shall actively consult
with each other regarding any changes (whether or not substantive) which
Ribapharm may
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consider making to its Quarterly Financial Statements and related disclosures
prior to the actual filing of its Quarterly Report on Form 10-Q with the SEC.
(v) Ribapharm shall use its reasonable best efforts to enable
Ribapharm's Auditors to complete their audit such that they will date their
opinion on Ribapharm's audited annual financial statements on the same date that
ICN's independent certified public accountants ("ICN's Auditors") date their
opinion on ICN's audited annual financial statements (the "ICN Annual
Statements"), and to enable ICN to meet its timetable for the printing, filing
and public dissemination of the ICN Annual Statements. To this end, Ribapharm
shall deliver to ICN as soon as practicable, and in any event within 75 days
after the end of each fiscal year of Ribapharm (but in no event later than ten
days before Ribapharm intends to file its Annual Financial Statements (as
defined below) with the SEC), (A) drafts of the consolidated financial
statements of Ribapharm (and notes thereto) for such year, setting forth in each
case in comparative form the consolidated figures (and notes thereto) for the
previous fiscal year and all in reasonable detail and prepared in accordance
with Regulation S-X and (B) a discussion and analysis by management of
Ribapharm's consolidated financial condition and results of operations for such
year, including, without limitation, an explanation of any material adverse
change from the immediately preceding fiscal year, all in reasonable detail and
prepared in accordance with Item 303(a) of Regulation S-K. The information set
forth in (A) and (B) above is herein referred to as the "Annual Financial
Statements." Ribapharm shall deliver to ICN all revisions to such drafts as soon
as any such revisions are prepared or made. No later than the earlier of (1)
five Business Days prior to the date Ribapharm files its Annual Report on Form
10-K with the SEC or otherwise makes its Annual Financial Statements publicly
available or (2) five Business Days prior to the date on which ICN has notified
Ribapharm that it intends to file its Annual Report on Form 10-K with the SEC
(but in no event earlier than the 5th day before ICN's Annual Report on Form
10-K is required to be filed with the SEC), Ribapharm shall deliver to ICN the
final form of the Annual Financial Statements certified by the chief financial
officer of Ribapharm as presenting fairly, in all material respects, the
financial condition and results of operations of Ribapharm and its Subsidiaries;
provided that ICN and Ribapharm financial representatives shall actively consult
with each other regarding any changes (whether or not substantive) which
Ribapharm may consider making to its Annual Financial Statements and related
disclosures prior to the actual filing of its Annual Report on Form 10-K with
the SEC. The Annual Financial Statements shall also be accompanied by an opinion
thereon by Ribapharm's independent certified public accountants.
(vi) Ribapharm shall deliver to ICN all Quarterly and Annual
Financial Statements of each Ribapharm Affiliate (which (a) Ribapharm
consolidates for financial accounting purposes and (b) is itself required to
file financial statements with the SEC or otherwise make such financial
statements publicly available) with such financial statements to be provided in
the same manner and detail and on the same time schedule as those financial
statements of Ribapharm required to be delivered to ICN pursuant to this Section
5.1.
(vii) Ribapharm shall, and shall cause each Ribapharm
Affiliate which files information with the SEC, to deliver to ICN: (A) as soon
as the same are prepared, substantially final drafts of: (x) all reports,
notices and proxy and information statements to be sent or made
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available by Ribapharm or any Ribapharm Affiliate to their security holders, (y)
all regular, periodic and other reports to be filed under Sections 13, 14 and 15
of the Exchange Act (including Reports on Forms 10-K, 10-Q and 8-K and Annual
Reports to Shareholders), and (z) all registration statements and prospectuses
to be filed by Ribapharm or any Ribapharm Affiliate with the SEC or any
securities exchange pursuant to the listed company manual (or similar
requirements) of such exchange (collectively, the documents identified in
clauses (x), (y) and (z) are referred to herein as "Ribapharm Public Filings"),
and (B) as soon as practicable, but in no event later than one Business Day
prior to the date the same are printed, sent or filed, whichever is earliest,
final copies of all such Ribapharm Public Filings; provided that Ribapharm may
continue to revise such Ribapharm Public Filings prior to the filing thereof in
order to make corrections and changes which corrections and changes shall be
delivered by Ribapharm to ICN as soon as practicable; and, provided, further,
that ICN and Ribapharm financial representatives shall actively consult with
each other regarding any changes (whether or not substantive) which Ribapharm
may consider making to any of its Ribapharm Public Filings and related
disclosures prior to any anticipated filing with the SEC.
(viii) With reasonable promptness, Ribapharm shall deliver to
ICN such additional financial and other information and data with respect to
Ribapharm and its Subsidiaries and their business, properties, financial
positions, results of operations and prospects as from time to time may be
reasonably requested by ICN.
(ix) ICN agrees to provide to Ribapharm all information
relating to ICN or any ICN Affiliate that Ribapharm reasonably requests in
connection with any Ribapharm Public Filings or that, in the judgment of
Ribapharm's legal staff, is required to be disclosed or incorporated by
reference therein under any law, rule or regulation. ICN agrees that such
information shall be provided by ICN in a timely manner on the dates reasonably
requested by Ribapharm (which may be earlier than the dates on which ICN
otherwise would be required hereunder to have such information available) to
enable Ribapharm to prepare, print and release all Ribapharm Public Filings on
such dates as Ribapharm shall determine. If and to the extent reasonably
requested by Ribapharm, ICN agrees that it shall diligently and promptly review
all drafts of such Ribapharm Public Filings and prepare in a diligent and timely
fashion any portion of such Ribapharm Public Filing pertaining to ICN or any ICN
Affiliate.
(x) Ribapharm shall authorize Ribapharm's Auditors to make
available to ICN's Auditors both the personnel who performed or are performing
the annual audit of Ribapharm and work papers related to the annual audit of
Ribapharm, in all cases within a reasonable time prior to the date of
Ribapharm's Auditors' opinion on Ribapharm's audited financial statements, so
that ICN's Auditors are able to perform the procedures they consider necessary
to take responsibility for the work of Ribapharm's Auditors as it relates to
ICN's Auditors' report on ICN's statements, all within sufficient time to enable
ICN to meet its timetable for the printing, filing and public dissemination of
the ICN Annual Statements.
(xi) Ribapharm shall provide ICN's internal auditors access to
Ribapharm's and its Subsidiaries, books and records so that ICN may conduct
reasonable audits relating to the
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financial statements provided by Ribapharm pursuant hereto as well as to the
internal accounting controls and operations of Ribapharm and its Subsidiaries.
(xii) Ribapharm shall give ICN as much prior notice as
reasonably practical of any proposed determination of, or any significant
changes in, its accounting estimates or accounting principles from those in
effect on the date hereof. Ribapharm will consult with ICN and, if requested by
ICN, Ribapharm will consult with ICN's independent public accountants with
respect thereto.
(xiii) Ribapharm shall, and shall cause each Ribapharm
Affiliate to, maintain a system of internal accounting controls that will
provide reasonable assurance that (A) Ribapharm's and such Ribapharm Affiliate's
books, records and accounts fairly reflect all transactions and dispositions of
assets and (B) the specific objectives of accounting control are achieved.
(xiv) Ribapharm shall cooperate fully, and cause its
accountants to cooperate, with ICN to the extent reasonably requested by ICN in
the preparation of ICN's public earnings releases, Quarterly Reports on Form
10-Q, Annual Reports to Shareholders, Annual Reports on Form 10-K, any Current
Reports on Form 8-K and any other proxy, information and registration
statements, reports, notices, prospectuses and any other filings made by ICN
with the SEC, any national securities exchange or otherwise made publicly
available (collectively, "ICN Public Filings"). Ribapharm agrees to provide to
ICN all information relating to Ribapharm or any Ribapharm Affiliate that ICN
reasonably requests in connection with any ICN Public Filings or that, in the
judgment of ICN's legal staff, is required to be disclosed or incorporated by
reference therein under any law, rule or regulation. Such information shall be
provided by Ribapharm in a timely manner on the dates reasonably requested by
ICN (which may be earlier than the dates on which Ribapharm otherwise would be
required hereunder to have such information available) to enable ICN to prepare,
print and release all ICN Public Filings on such dates as ICN shall determine.
Ribapharm shall cause its accountants to consent to any reference to them as
experts in any ICN Public Filings required under any law, rule or regulation. If
and to the extent reasonably requested by ICN, Ribapharm shall diligently and
promptly review all drafts of such ICN Public Filings and prepare in a diligent
and timely fashion any portion of such ICN Public Filing pertaining to Ribapharm
or any Ribapharm Affiliate. Prior to any printing or public release of any ICN
Public Filing, an appropriate executive officer of Ribapharm shall, if requested
by ICN, certify that the information relating to Ribapharm, any Ribapharm
Affiliate or the Ribapharm Business in such ICN Public Filing is accurate, true
and correct in all material respects. Unless required by law, rule or
regulation, Ribapharm shall not publicly release any financial or other
information which conflicts with the information with respect to Ribapharm, any
Ribapharm Affiliate or the Ribapharm Business that is included in any ICN Public
Filing without ICN's prior written consent. Prior to the release or filing
thereof, ICN shall provide Ribapharm with a draft of any portion of a ICN Public
Filing containing information relating to Ribapharm, any Ribapharm Affiliate or
the Ribapharm Business and shall give Ribapharm an opportunity to review such
information and comment thereon; provided that ICN shall determine in its sole
discretion the final form and content of all ICN Public Filings.
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(xv) ICN agrees that it shall cooperate fully, and cause its
accountants to cooperate fully, with Ribapharm to the extent reasonably
requested by Ribapharm in the preparation of any Ribapharm Public Filings.
(xvi) Prior to the release or filing thereof, Ribapharm shall
provide ICN with a draft of any portion of a Ribapharm Public Filing containing
information relating to ICN or any ICN Affiliate and shall give ICN an
opportunity to review such information and comment thereon; provided that
Ribapharm shall determine in its sole discretion the final form and content of
all Ribapharm Public Filings.
Nothing in this Section 5.1 shall require Ribapharm to violate any agreement
with any of its customers regarding the confidentiality of commercially
sensitive information relating to that customer or its business; provided that
in the event that Ribapharm would otherwise be required under this Section 5.1,
but for such agreement, to disclose any such information, Ribapharm shall use
all commercially reasonable efforts to seek to obtain such customer's consent to
the disclosure of such information.
5.2. OTHER COVENANTS. Ribapharm hereby covenants and agrees that, for
so long as ICN beneficially owns at least 10% of the outstanding shares of
Ribapharm Common Stock, Ribapharm shall not, without the prior written consent
of ICN (which it may withhold in its sole and absolute discretion), take, or
cause to be taken, directly or indirectly, any action, including making or
failing to make any election under the law of any state, which has the effect,
directly or indirectly, of restricting or limiting the ability of ICN to freely
sell, transfer, assign, pledge or otherwise dispose of shares of Ribapharm
Common Stock or would restrict or limit the rights of any transferee of ICN as a
holder of Ribapharm Common Stock. Without limiting the generality of the
foregoing, Ribapharm shall not, without the prior written consent of ICN (which
it may withhold in its sole and absolute discretion), take any action, or take
any action to recommend to its stockholders any action, which would among other
things, limit the legal rights of, or deny any benefit to, ICN as a Ribapharm
stockholder in a manner not applicable to Ribapharm stockholders generally.
5.3 TAX-FREE SPIN-OFF. Ribapharm hereby covenants and agrees that for
six years from the date of this Agreement, Ribapharm shall not, without the
prior written consent of ICN (which it may withhold in its sole and absolute
discretion), (A) issue any shares of Ribapharm Capital Stock or any rights,
warrants or options to acquire Ribapharm Capital Stock (including, without
limitation, securities convertible or exchangeable for Ribapharm Capital Stock),
if after giving effect to such issuances and considering all of the shares of
Ribapharm Capital Stock acquirable pursuant to such rights, warrants and options
to be outstanding on the date of such issuance (whether or not then
exercisable), ICN would cease to beneficially own at least 80% of the voting
power of the outstanding shares of Ribapharm Capital Stock and at least 80% of
the number of shares of each class of non-Voting Ribapharm Capital Stock or (B)
take or cause to be taken, any action, or do, or cause to be done, anything
which will cause the Distribution to fail to qualify as a tax-free event under
Section 355(a) of the Internal Revenue Code. ICN and Ribapharm agree that ICN
may apply to any court of law or equity of competent jurisdiction (without
posting any bond or deposit) for specific performance and/or other
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injunctive relief to prevent any breach of this Section 5.3. This Section 5.3
shall terminate, become null and void and make no further effect if ICN takes
any action that has the effect that ICN cease to beneficially own at least 80%
of the voting power of the outstanding shares of Ribapharm Capital Stock and at
least 80% of the number of shares of each class of non-voting Ribapharm Capital
Stock
5.4 ALLOCATION OF BENEFITS COVENANT. ICN and Ribapharm hereby agree to
enter into an agreement, prior to the completion of the Distribution, to
equitably allocate existing employee and director options to acquire shares of
ICN Common Stock between new options to acquire ICN Common Stock and options to
acquire Ribapharm Class A Common Stock, substantially as described in the IPO
Registration Statement.
5.5. TAX SHARING AGREEMENT COVENANT. ICN and Ribapharm hereby covenant
and agree to enter into a Tax Sharing Agreement, concurrent with this Agreement,
to provide for and agree upon the allocation between the parties of liabilities
for Taxes arising prior to, as a result of, and subsequent to the Distribution,
and to provide for and agree upon other matters relating to Taxes.
5.6. COVENANT REGARDING RIGHTS TO TIAZOLE AND ADENAZOLE. ICN hereby
Covenants and agrees to take all required actions to cause ICN Yugoslavia to
transfer or license all right, title and interest in Tiazole and Adenazole to
Ribapharm, or if all right, title, and interest in Tiazole and Adenazole to
Ribapharm, or if all right, title and interest in Tiazole and Adenazole is
deemed to have reverted to ICN, to transfer all right, title and interest in
Tiazole and Adenazole to ICN.
ICN shall retain the sole right and obligation to pursue
claims regarding ownership of right, title and interest in Tiazole and Adenazole
(the "Yugoslavia Claim"); provided, however, that ICN's rights and obligation to
pursue the Yugoslavia Claim under this provision may be assigned to ICN
International Ltd. in the event of an initial public offering of ICN
International Ltd.
6. INDEMNIFICATION.
6.1. INDEMNIFICATION BY RIBAPHARM. Subject to Section 6.3, Ribapharm
shall indemnify, defend and hold harmless ICN, all ICN Affiliates and each of
their respective directors, officers and employees (in their capacities as
such), from and against:
(a) all Losses relating to, arising out of, or due to, directly or
indirectly, any breach by Ribapharm or any Ribapharm Affiliate of any of the
provisions of this Agreement;
(b) all Losses relating to, arising out of, or due to, directly or
indirectly, any incorrect, inaccurate or incomplete financial and other
information provided by Ribapharm or any Ribapharm Affiliate to ICN pursuant to
Section 5.1 of this Agreement; and
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(c) all Losses that result from any Third-Party Claim arising out of
the business or operation of the Ribapharm Business.
6.2. INDEMNIFICATION BY ICN. Subject to Section 6.3, ICN shall
indemnify, defend, and hold harmless Ribapharm, all Ribapharm Affiliates, and
each of their respective directors, officers and employees (in their capacities
as such), from and against:
(a) all Losses relating to, arising out of, or due to, directly or
indirectly, any breach by ICN or any ICN Affiliate of any of the provisions of
this Agreement;
(b) all Losses relating to, arising out of, or due to, directly or
indirectly, any incorrect, inaccurate or incomplete financial and other
information provided by ICN or any ICN Affiliate to Ribapharm pursuant to
Section 5.1 of this Agreement;
(c) all Losses relating to, arising out of, or due to, directly or
indirectly, any expenses, monetary judgment or settlement incurred in connection
with the pending civil lawsuit by the SEC against ICN and related parties in the
United States District Court for the Central District of California, the current
criminal investigation of ICN and related parties by a Grand Jury (in
conjunction with the U.S. Attorney's Office) in the United States District Court
for the Central District of California or the litigation involving the Republic
of Serbia, the Federal Republic of Yugoslavia and the State Health Fund of
Serbia relating to ICN's interest in ICN Yugoslavia; and
(d) all Losses that result from any Third-Party Claim arising out of
the business or operation of the ICN Business.
6.3. OTHER LIABILITIES.
(a) Except as provided in Section 6.4, this Section 6 shall not be
applicable to any Tax-Related Losses, which shall be governed by the Tax Sharing
Agreement.
(b) This Section 6 shall not be applicable to any Losses relating to,
arising out of, or due to any breach of the provisions of any other contract,
agreement or understanding between ICN or any ICN Affiliate, on the one hand,
and Ribapharm or any Ribapharm Affiliate, on the other hand, which Losses shall
be governed by the terms of such contract, agreement or understanding.
6.4. PROCEDURE FOR INDEMNIFICATION INVOLVING THIRD-PARTY CLAIMS.
(a) Notice of Claim. If any Indemnitee receives notice of the assertion
of any Third-Party Claim with respect to which an Indemnifying Party is
obligated under this Agreement to provide indemnification, such Indemnitee shall
give such Indemnifying Party notice thereof (together with a copy of such
Third-Party Claim, process or other legal pleading) promptly after becoming
aware of such Third-Party Claim; provided, however, that the failure of any
Indemnitee to give notice as provided in this Section shall not relieve any
Indemnifying Party of its obligations under this Section 6, except to the extent
that such Indemnifying Party is actually prejudiced by
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such failure to give notice. Such notice shall describe such Third-Party Claim
in reasonable detail.
(b) Obligation of Indemnifying Party. An Indemnifying Party, at such
Indemnifying Party's own expense and through counsel chosen by such Indemnifying
Party (which counsel shall be reasonably acceptable to the Indemnitee), may
elect to defend any Third-Party Claim. If an Indemnifying Party elects to defend
a Third-Party Claim, then, within ten Business Days after receiving notice of
such Third-Party Claim (or sooner, if the nature of such Third-Party Claim so
requires), such Indemnifying Party shall notify the Indemnitee of its intent to
do so, and such Indemnitee shall cooperate in the defense of such Third-Party
Claim. Such Indemnifying Party shall pay such Indemnitee's reasonable
out-of-pocket expenses incurred in connection with such cooperation. Such
Indemnifying Party shall keep the Indemnitee reasonably informed as to the
status of the defense of such Third-Party Claim. After notice from an
Indemnifying Party to an Indemnitee of its election to assume the defense of a
Third-Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Section 6 for any legal or other expenses subsequently
incurred by such Indemnitee in connection with the defense thereof other than
those expenses referred to in the preceding sentence; provided, however, that
such Indemnitee shall have the right to employ one law firm as counsel, together
with a separate local law firm in each applicable jurisdiction ("Separate
Counsel"), to represent such Indemnitee in any action or group of related
actions (which firm or firms shall be reasonably acceptable to the Indemnifying
Party) if, in such Indemnitee's reasonable judgment at any time, either a
conflict of interest between such Indemnitee and such Indemnifying Party exists
in respect of such claim, or there may be defenses available to such Indemnitee
which are different from or in addition to those available to such Indemnifying
Party and the representation of both parties by the same counsel would be
inappropriate, and in that event the reasonable fees and expenses of such
Separate Counsel shall be paid by such Indemnifying Party (it being understood,
however, that the Indemnifying Party shall not be liable for the expenses of
more than one Separate Counsel (excluding local counsel) with respect to any
Third-Party Claim (even if against multiple Indemnitees)). If an Indemnifying
Party elects not to defend against a Third-Party Claim, or fails to notify an
Indemnitee of its election as provided in this Section 6.4 within the period of
ten Business Days described above, the Indemnitee may defend, compromise, and
settle such Third-Party Claim and shall be entitled to indemnification hereunder
(to the extent permitted hereunder) on an as incurred basis; provided, however,
that no such Indemnitee may compromise or settle any such Third-Party Claim
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing, the
Indemnifying Party shall not, without the prior written consent of the
Indemnitee, (i) settle or compromise any Third-Party Claim or consent to the
entry of any judgment which does not include as an unconditional term thereof
the delivery by the claimant or plaintiff to the Indemnitee of a written release
from all liability in respect of such Third-Party Claim or (ii) settle or
compromise any Third-Party Claim in any manner that would be reasonably likely
to have a material adverse effect on the Indemnitee.
(c) Joint Defense of Certain Claims. Notwithstanding the provisions of
Section 6.4(b), ICN and Ribapharm shall jointly control the defense of, and
cooperate with each other with respect to defending, any Third-Party Claim with
respect to which each party is claiming that it is
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entitled to indemnification under Section 6.1 or 6.2. If either ICN or Ribapharm
fails to defend jointly any such Third-Party Claim, the other party shall solely
defend such Third-Party Claim and the party failing to defend jointly shall use
all commercially reasonable efforts to cooperate with the other party in its
defense of such Third-Party Claim; provided, however, that neither party may
compromise or settle any such Third-Party Claim without the prior written
consent of the other party, which consent shall not be unreasonably withheld or
delayed. All costs and expenses of either party in connection with, and during
the course of, the joint control of the defense of any such Third-Party Claim
shall be initially paid by the party that incurs such costs and expenses. Such
costs and expenses shall be reallocated and reimbursed in accordance with the
respective indemnification obligations of the parties on a periodic basis (but
in no event later than the conclusion of the defense of such Third-Party Claim).
6.5. PROCEDURE FOR INDEMNIFICATION NOT INVOLVING THIRD-PARTY CLAIMS. If
any Indemnitee desires to assert against an Indemnifying Party any claim for
indemnification under this Section 6 other than a Third-Party Claim (a "Claim"),
the Indemnitee shall deliver to the Indemnifying Party notice of its demand for
satisfaction of such Claim (a "Request"), specifying in reasonable detail the
amount of such Claim and the basis for asserting such Claim. Within 30 days
after the Indemnifying Party has been given a Request, the Indemnifying Party
shall either (i) satisfy the Claim requested to be satisfied in such Request by
delivering to the Indemnitee payment by wire transfer or a certified or bank
cashier's check payable to the Indemnified Party in immediately available funds
in an amount equal to the amount of such Claim, or (ii) notify the Indemnitee
that the Indemnifying Party contests such Claim by delivering to the Indemnitee
a Dispute Notice, stating that the Indemnifying Party objects to such Claim and
specifying in reasonable detail the basis for contesting such Claim. Any dispute
described in clause (ii) of this Section 6.5 shall be subject to the provisions
of Section 7.1.
6.6. EXCLUSIVE REMEDIES. Except for the right to pursue equitable
remedies, the remedies provided in this Section 6 shall be deemed the sole and
exclusive remedies of the parties with respect to the subject matters of the
indemnification provisions of this Section 6.
7. MISCELLANEOUS.
7.1. DISPUTE RESOLUTION. Resolution of any and all disputes arising
from or in connection with this Agreement other than the provisions of Section
5.3, whether based on contract, tort, or otherwise (collectively, "Disputes"),
shall be exclusively governed by and settled in accordance with the provisions
of this Section 7.1. The parties hereto shall use all commercially reasonable
efforts to settle all Disputes without resorting to mediation, arbitration,
litigation or other third party dispute resolution mechanisms. If any Dispute
remains unsettled, the parties hereby agree to mediate such Dispute using a
mediator reasonably acceptable to all parties involved in such Dispute. If the
parties are unable to resolve such dispute through mediation, each Party will be
free to commence litigation proceedings for the resolution thereof. No Party
shall be entitled to consequential, special, exemplary or punitive damages.
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7.2. AUTHORITY. Each of the parties hereto represents and warrants to
the other that (a) it has the corporate power and authority to execute, deliver
and perform this Agreement, (b) the execution, delivery and performance of this
Agreement by it has been duly authorized by all necessary corporate action, (c)
it has duly and validly executed and delivered this Agreement, and (d) this
Agreement is a legal, valid and binding obligation, enforceable against it in
accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general equity principles. The representations and warranties
contained in this Section 7.2 shall survive the execution and delivery hereof
until the expiration of all applicable statutes of limitations.
7.3. COMPLETE AGREEMENT. Except as otherwise set forth in this
Agreement, this Agreement and the exhibits hereto shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all prior agreements and understandings, whether written or
oral, between the parties with respect to such subject matter.
7.4. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California (without giving effect to
the conflict of laws principles thereof) as to all matters, including matters of
validity, construction, effect, performance and remedies.
7.5. NOTICES. All Notices and other communications hereunder shall be
in writing and shall be delivered in person, by telecopy, by express or
overnight mail delivered by a nationally recognized air courier (delivery
charges prepaid), or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties as follows:
(a) If to ICN, to:
ICN Pharmaceuticals, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
(b) If to Ribapharm, to:
Ribapharm Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery or when delivery is refused. Any notice or communication sent by
telecopy or by air courier shall be deemed effective on the first Business Day
at the place at which such notice or communication is received following the day
on which such notice or communication was sent.
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7.6. AMENDMENT AND MODIFICATION. This Agreement may not be amended or
modified in any respect except by a written agreement signed by both of the
parties hereto.
7.7. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon the parties hereto and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Except with respect to a merger of either party with another Person,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either party hereto without the prior written consent of
the other party.
7.8. THIRD PARTY BENEFICIARIES. The Indemnitees and their respective
successors shall be third party beneficiaries of the indemnification provisions
of Section 6, as applicable, and shall be entitled to enforce those provisions
and in connection with such enforcement shall be subject to Section 7.1, in each
such case as fully and to the same extent as if they were parties to this
Agreement. Except as provided in the previous sentence, nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
any legal or equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, and no Person (other than as provided in the
previous sentence) shall be deemed a third party beneficiary under or by reason
of this Agreement.
7.9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The Agreement may be
executed by facsimile signature.
7.10. WAIVER. The observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in writing signed by the party against which such
waiver is to be asserted. Unless otherwise expressly provided in this Agreement,
no delay or omission on the part of any party in exercising any right or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any right or privilege under this Agreement
operate as a waiver of any other right or privilege under this Agreement nor
shall any single or partial exercise of any right or privilege preclude any
other or further exercise thereof or the exercise of any other right or
privilege under this Agreement. No failure by either party to take any action or
assert any right or privilege hereunder shall be deemed to be a waiver of such
right or privilege in the event of the continuation or repetition of the
circumstances giving rise to such right unless expressly waived in writing by
the party against whom the existence of such waiver is asserted.
7.11. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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7.12. REMEDIES. Each of ICN and Ribapharm shall be entitled to enforce
its rights under this Agreement specifically, to recover damages and costs
(including reasonable attorneys' fees) caused by any breach of any provision of
this Agreement (including, without limitation Section 5.3) and to exercise all
other rights existing in its favor. Each of ICN and Ribapharm acknowledges and
agrees that under certain circumstances the breach by ICN or any of its
Affiliates or Ribapharm or any of its Affiliates of a term or provision of this
Agreement will materially and irreparably harm the other party, that money
damages will accordingly not be an adequate remedy for such breach and that the
non-defaulting party, in its sole discretion and in addition to its rights under
this Agreement and any other remedies it may have at law or in equity, may apply
to any court of law or equity of competent jurisdiction (without posting any
bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any breach of the provisions of this Agreement.
7.13. PERFORMANCE. Each of the parties hereto shall use all
commercially reasonable efforts to cause to be performed all actions, agreements
and obligations set forth herein to be performed by any Affiliate of such party.
7.14. REFERENCES; CONSTRUCTION. The section and other headings and
subheadings contained in this Agreement and the exhibits hereto are solely for
the purpose of reference, are not part of the agreement of the parties hereto,
and shall not in any way affect the meaning or interpretation of this Agreement
or any exhibit hereto. All references to days or months shall be deemed
references to calendar days or months. Unless the context otherwise requires,
any reference to a "Section" "Exhibit" shall be deemed to refer to a section of
this Agreement. The words "hereof," "herein" and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Whenever the words
"include," or "including" are used in this Agreement, unless otherwise
specifically provided, they shall be deemed to be followed by the words "without
limitation."
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first written above.
RIBAPHARM INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
ICN PHARMACEUTICALS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
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EXHIBIT I
[FORM OF NOTE]
REVOLVING CREDIT NOTE
Costa Mesa, California
$___________ _________, 2001
FOR VALUE RECEIVED, the undersigned, Ribapharm Inc., a Delaware
corporation ("Ribapharm"), hereby unconditionally promises to pay to the order
of ICN Pharmaceuticals, Inc., a Delaware corporation ("ICN"), in lawful money of
the United States of America and in immediately available funds, the principal
amount of ___________ DOLLARS ($__________), or such lesser amount as shall
equal the aggregate unpaid principal amount of all loans made by ICN to
Ribapharm pursuant to Section 2 of the Affiliation Agreement (as hereinafter
defined), on the dates and in the amounts specified in the Affiliation
Agreement. Ribapharm further agrees to pay interest in like money at ICN's
principal executive office on the unpaid principal amount hereof from time to
time outstanding at the rates and on the dates specified in the Affiliation
Agreement.
The holder of this note is authorized to endorse on the schedule
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date and amount of each loan of
ICN to Ribapharm pursuant to Section 2 of the Affiliation Agreement and the date
and amount of each payment or prepayment of principal thereof. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement (or any error
therein) shall not affect the obligations of Ribapharm in respect of any Loan
under the Affiliation Agreement.
This note (a) is one of the notes referred to in the Affiliation and
Distribution Agreement dated as of ____________, ____ (as amended, restated,
supplemented or otherwise modified from time to time, the "Affiliation
Agreement"), by and between Ribapharm and ICN, (b) is subject to the provisions
of the Affiliation Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Affiliation Agreement.
Upon the occurrence of any one or more Events of Default, all amounts
then remaining unpaid on this note shall become, or may be declared to be,
immediately due and payable, all as provided in the Affiliation Agreement.
All parties now and hereafter liable with respect to this note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest, notice of acceleration and intent to accelerate,
and all other notices of any kind.
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Unless otherwise defined herein, terms defined in the Affiliation
Agreement and used herein shall have the meanings given to them in the
Affiliation Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF CALIFORNIA (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF) AS TO ALL MATTERS, INCLUDING MATTERS OF VALIDITY,
CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.
RIBAPHARM INC.
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
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Schedule to Note
Date Loan Principal Amount of Unpaid Notation
Made Amount Principal Paid Principal Made By
or Paid of Loan Balance
of Note
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