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UNITED STATES :Expires: November 30, 1999
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WASHINGTON, D.C. 20549 :hours per response . 14.90:
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1 )*
Duramed Pharmaceuticals, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
266354 10 9
-------------------------------------------------------
(CUSIP Number)
Jeffrey D. Linton
Vice President, Law, Government and
Public Affairs
Solvay Pharmaceuticals, Inc.
901 Sawyer Road
Marietta, Georgia 30062
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 19, 1999
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [_].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1746(12-91)
<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP NO. 266354 10 9 Page 2 of 13 Pages
- --------------------- ------------------
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
Solvay Pharmaceuticals, Inc.
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [_]
(SEE INSTRUCTIONS) (B) [_]
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
OO
- -------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[_]
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Georgia
- -------------------------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 1,666,666
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH -0-
REPORTING --------------------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 1,666,666
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,666,666
- -------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) [X]
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.1%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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<PAGE>
SCHEDULE 13D
- --------------------- ------------------
CUSIP NO. 266354 10 9 Page 3 of 13 Pages
- --------------------- ------------------
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
Solvay America, Inc.
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [_]
(SEE INSTRUCTIONS) (B) [_]
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
- -------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
|_|
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 1,666,666
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH -0-
REPORTING --------------------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 1,666,666
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,666,666
- -------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) [X]
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.1%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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<PAGE>
SCHEDULE 13D
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CUSIP NO. 266354 10 9 Page 4 of 13 Pages
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- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
Solvay S.A.
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [_]
(SEE INSTRUCTIONS) (B) [_]
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
- -------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[_]
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Belgium
- -------------------------------------------------------------------------------
NUMBER OF 7. SOLE VOTING POWER
SHARES 1,666,666
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH -0-
REPORTING --------------------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER
WITH 1,666,666
--------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,666,666
- -------------------------------------------------------------------------------
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) [X]
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.1%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, OO
- -------------------------------------------------------------------------------
<PAGE>
CUSIP Number: 266354 10 9 Page 5 of 13
Solvay Pharmaceuticals, Inc., a Georgia corporation ("Solvay
Pharmaceuticals"), Solvay America, Inc., a Delaware corporation ("Solvay
America") and Solvay S.A., a Belgian societe anonyme ("Solvay S.A." and together
with Solvay Pharmaceuticals and Solvay America, the "Reporting Persons") hereby
amend the Report of Beneficial Ownership on Schedule 13D (the "Original Schedule
13D") filed by the Reporting Persons on October 18, 1999 with respect to shares
of Common Stock, par value $.01 per share (the "Shares"), of Duramed
Pharmaceuticals, Inc., a Delaware corporation ("Duramed") beneficially owned by
them. Capitalized terms used but not defined herein shall have the meaning
attributed to such terms in the Original Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 of the Original Schedule 13D is amended as follows:
On October 19, 1999 and as contemplated by the Option Agreement,
Duramed and Solvay Pharmaceuticals entered into:
o a Private Securities Subscription Agreement (the "Initial Subscription
Agreement") attached hereto as Exhibit C and incorporated herein by
reference, for the purchase of 1,666,666 Shares of Duramed; and
o a Private Securities Subscription Agreement (the "Subsequent
Subscription Agreement" and together with the Initial Subscription
Agreement, the "Subscription Agreements") attached hereto as Exhibit D
and incorporated herein by reference, for the purchase of an
additional 1,333,334 Shares of Duramed.
Pursuant to the terms of the Subscription Agreements, Solvay
Pharmaceuticals will purchase an aggregate of 3,000,000 Shares of Duramed at a
price of $9.00 per Share. Solvay Pharmaceuticals expects that the purchase of
the initial 1,666,666 Shares pursuant to the Initial Subscription Agreement will
occur on Friday, October 22, 1999 (the "Initial Closing Date") and the purchase
of the remaining 1,333,334 Shares pursuant to the Subsequent Subscription
Agreement will occur as
<PAGE>
CUSIP Number: 266354 10 9 Page 6 of 13
soon as certain conditions precedent occur, including the filing of a Premerger
Notification and Report Form with the Federal Trade Commission and the
Department of Justice pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act") and receipt of either early termination
or the expiration of the waiting period imposed by the HSR Act (the "Subsequent
Closing Date"). The Reporting Persons are also prohibited from taking certain
actions following each purchase. See Item 6.
Moreover, under the Subscription Agreements, if, prior to October 1,
2001, Duramed completes any sale of equity or equity-linked securities for cash
to third parties (other than Duramed employees and directors under Duramed's
stock option programs and other similar arrangements in the ordinary course of
business), Solvay Pharmaceuticals has the right to purchase such securities at
identical terms at the time of such sale, such that Solvay Pharmaceuticals'
percentage ownership of Duramed, calculated on a fully-diluted basis, prior to
such sale is equal to its percentage ownership, calculated on a fully-diluted
basis, after such sale.
As a condition to the purchase of Shares under the Initial Subscription
Agreement, on the Initial Closing Date Duramed and Solvay Pharmaceuticals will
enter into a Registration Rights Agreement (the "Initial Registration Rights
Agreement") in the form attached hereto as Exhibit E and incorporated herein by
reference. Similarly, as a condition to the purchase of Shares under the
Subsequent Subscription Agreement, on the Subsequent Closing Date Duramed and
Solvay Pharmaceuticals will enter into a similar Registration Rights Agreement
(the "Subsequent Registration Rights Agreement" and together with the Initial
Registration Rights Agreement, the "Registration Rights Agreements") in the form
attached hereto as Exhibit F and incorporated herein by reference. Pursuant to
the Registration Rights Agreements, Duramed will file a registration statement
covering the purchased Shares with the Securities and Exchange Commission (the
"SEC") within thirty days of each closing and keep the registration statement
effective at all times until such date as is two years after the date such
registration statement is first ordered effective by the SEC. See Item 6.
<PAGE>
CUSIP Number: 266354 10 9 Page 7 of 13
The foregoing discussion is qualified in its entirety by reference to
the Subscription Agreements, the Registration Rights Agreements and the Option
Agreement, which are incorporated by reference in their entirety into this Item
4.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER
Item 6 of the Original Schedule 13D is amended as follows:
On October 19, 1999 and as contemplated by the Option Agreement,
Duramed and Solvay Pharmaceuticals entered into the Initial Subscription
Agreement for the purchase of 1,666,666 Shares of Duramed and the Subsequent
Subscription Agreement for the purchase of an additional 1,333,334 Shares of
Duramed.
Pursuant to the terms of the Subscription Agreements, Solvay
Pharmaceuticals will purchase an aggregate of 3,000,000 Shares of Duramed at a
price of $9.00 per Share. Solvay Pharmaceuticals expects that the purchase of
the initial 1,666,666 Shares pursuant to the Initial Subscription Agreement will
occur on the Initial Closing Date and the purchase of the remaining 1,333,334
Shares pursuant to the Subsequent Subscription Agreement will occur on the
Subsequent Closing Date.
Each Subscription Agreement also restricts Solvay Pharmaceuticals from
taking certain actions prior to October 1, 2001.
Prior to October 1, 2001, neither Solvay Pharmaceuticals, nor any of
its affiliates or associates can, singly or as part of a group, directly or
indirectly:
o acquire, offer, make a proposal or agree to acquire any material
assets or equity securities of Duramed or its subsidiaries (except
pursuant a stock split, stock dividend, recapitalization,
reclassification or similar transaction);
o make, propose or participate in any solicitation of proxies or
consents or otherwise advise, influence or communicate
<PAGE>
CUSIP Number: 266354 10 9 Page 8 of 13
with other persons to vote in opposition to any matter that has been
recommended by the Duramed Board of Directors or to act in favor of
any matter that has not been approved by the Board of Directors;
o be a member of, form, join or encourage the formation of a group with
respect to any voting securities of Duramed or the acquisition of any
assets of Duramed or its subsidiaries;
o deposit any of the voting securities of Duramed into a voting trust or
subject such voting securities to any arrangement or agreement with
respect to voting;
o seek election to or representation on the Duramed Board of Directors
(except as permitted under the Subsequent Subscription Agreement);
o solicit, seek to effect, negotiate with or provide any information to
any party with respect to, or make any statement or proposal to the
Duramed Board of Directors or otherwise make any public announcement
or proposal whatsoever with respect to a merger or acquisition of
Duramed, the sale of all or a substantial portion of Duramed, or a
liquidation, recapitalization or similar business transaction with
respect to Duramed.
Solvay Pharmaceuticals has agreed that until October 1, 2001, it will
not sell, pledge, hypothecate, assign or otherwise transfer any voting
securities of Duramed to a third party, if as a result of such transfer, the
third party would hold in excess of 5% of the outstanding voting securities of
Duramed unless such third party becomes a party to, and agrees to be bound by,
the standstill provisions contained in Section 6 of each of the Subscription
Agreements.
Until October 1, 2001, in the event that Duramed notifies Solvay
Pharmaceuticals that Duramed is in the process of carrying out a private or
public sale of equity or equity-linked securities, Solvay Pharmaceuticals will
not offer, sell, contract to sell, grant any option to sell, or otherwise
dispose of, directly or indirectly, any Shares until such date as is ninety
<PAGE>
CUSIP Number: 266354 10 9 Page 9 of 13
days after completion or termination without completion of such sale of
securities by Duramed. In the event such a sale involves an underwritten public
offering of such securities, Solvay Pharmaceuticals will, at the request of the
underwriter, enter into a standard form of "lock-up" letter with such
underwriter to extend for a period of time not to exceed ninety days.
The foregoing restrictions, however, are all immediately suspended upon
the occurrence of any of the following events:
o Following the commencement of a tender or exchange offer by a third
party for 50% or more of the outstanding voting securities of Duramed,
Duramed has not, within a specified time, publicly recommended that
such offer be rejected and all of the material conditions to such
offer relating to the elimination or satisfaction of the material
defensive provisions of Duramed's rights plan have been satisfied or
waived;
o Duramed fails to reject an acquisition proposal from a third party
within 15 days of its receipt;
o Duramed experiences a change of control;
o Duramed publicly announces that it is "for sale" or that its Board of
Directors is seeking to, or has engaged investment advisors to assist
it in, maximizing stockholder value or in evaluating strategic
alternatives;
o execution of a definitive agreement which, if consummated, would
result in the change in control of Duramed;
o a public announcement by a third party or group of the commencement of
a bona fide proxy or consent solicitation to elect or remove a
majority of Duramed's Board of Directors which is not publicly opposed
by Duramed's Board of Directors and which would, if successful, change
the composition of a majority of the Duramed Board of Directors; or
<PAGE>
CUSIP Number: 266354 10 9 Page 10 of 13
o the adoption by the Duramed Board of Directors of a plan of
liquidation or dissolution.
Moreover, under the Subscription Agreements, if, prior to October 1,
2001, Duramed completes any sale of equity or equity-linked securities for cash
to third parties (other than Duramed employees and directors under Duramed's
stock option programs and other similar arrangements in the ordinary course of
business), Solvay Pharmaceuticals has the right to purchase such securities at
identical terms at the time of such sale, such that Solvay Pharmaceuticals's
percentage ownership of Duramed, calculated on a fully-diluted basis, prior to
such sale is equal to its percentage ownership, calculated on a fully-diluted
basis, after such sale.
Solvay Pharmaceuticals' purchase under each Subscription is subject to
the satisfaction or waiver of certain conditions precedent, including the
receipt by Solvay Pharmaceuticals of an opinion of Duramed's counsel as to
certain matters, the settlement by Duramed of certain pending litigation, and
the entering of a separate registration rights agreement for the Shares to be
acquired under each Subscription Agreement. Moreover, Solvay Pharmaceutical's
purchase under the Subsequent Subscription Agreement is subject to the
satisfaction or waiver of certain additional conditions precedent, including the
receipt of all regulatory approvals--including expiration or early termination
of the waiting period under the HSR Act, the approval of the boards of directors
of Solvay Pharmaceuticals and Solvay America, the successful closing of the
purchase of 1,666,666 Shares pursuant to the Initial Subscription Agreement and
the absence of any material adverse change in the financial condition,
properties, business, prospects or results of operations of Duramed prior to the
Subsequent Closing Date.
Either Duramed or Solvay Pharmaceuticals can terminate a Subscription
Agreement if the closing pursuant to such Subscription Agreement has not
occurred before December 31, 1999. In addition, either party may terminate the
Subsequent Subscription Agreement if it has not been approved by the boards of
directors of Solvay Pharmaceuticals and Solvay America on or before October 21,
1999.
<PAGE>
CUSIP Number: 266354 10 9 Page 11 of 13
Pursuant to the Subsequent Subscription Agreement, upon the earlier of
(a) the time that Solvay Pharmaceuticals and Duramed enter into a definitive
agreement providing for a certain broad-based hormone alliance, or (b) Duramed's
2000 annual meeting of stockholders, Duramed will increase the size of its Board
of Directors by one person and grant Solvay Pharmaceuticals the right to
nominate its representative to fill such vacancy. Duramed's Board of Directors
will, within the limits of Delaware law, cause the Solvay Pharmaceuticals'
director to continue so long as Solvay Pharmaceuticals holds at least (i) 7.5%
of the outstanding Shares of Duramed and a certain broad-based hormone alliance
between the parties is still in effect, or (ii) 10% or more of the outstanding
Shares of Duramed and a certain broad-based hormone alliance between the parties
is not in effect.
As a condition to the purchase of Shares under the Initial Subscription
Agreement, on the Initial Closing Date Duramed and Solvay Pharmaceuticals will
enter into the Initial Registration Rights Agreement. Similarly, as a condition
to the purchase of Shares under the Subsequent Subscription Agreement, on the
Subsequent Closing Date Duramed and Solvay Pharmaceuticals will enter into the
Subsequent Registration Rights Agreement. Pursuant to the Registration Rights
Agreements, Duramed will file a registration statement covering the purchased
Shares with the SEC within thirty days of each closing and keep the registration
statement effective at all times until such date as is two years after the date
such registration statement is first ordered effective by the SEC.
Upon the transfer by Solvay Pharmaceuticals of any of the Shares, the
registration rights with respect to those Shares granted under the applicable
Registration Rights Agreement become automatically assigned to the transferees
or assignees, but only if, among other things, the transferee or assignee agrees
in writing with Duramed to be bound by all of the provisions contained in the
applicable Registration Rights Agreement.
The foregoing discussion is qualified in its entirety by reference to
the Subscription Agreements, the Registration Rights Agreements and the Option
Agreement, each of which is incorporated herein by reference.
<PAGE>
CUSIP Number: 266354 10 9 Page 12 of 13
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 is amended and restated as follows:
Exhibit No. Exhibit Description
- ----------- -------------------
A Letter Agreement, dated October 6, 1999, between
Duramed and Solvay Pharmaceuticals (incorporated
herein by reference to Exhibit 99.1 of the Original
Schedule 13D, filed with the SEC on October 18,
1999).
B Joint Filing Statement (incorporated herein by
reference to Exhibit 99.2 of the Original Schedule
13D, filed with the SEC on October 18, 1999).
C Private Securities Subscription Agreement, dated
October 19, 1999, between Duramed and Solvay
Pharmaceuticals (regarding the initial purchase by
Solvay Pharmaceuticals of 1,666,666 Shares of
Duramed).
D Private Securities Subscription Agreement, dated
October 19, 1999, between Duramed and Solvay
Pharmaceuticals (regarding the subsequent purchase
by Solvay Pharmaceuticals of 1,333,334 Shares of
Duramed).
E Form of Registration Rights Agreement between Duramed
and Solvay Pharmaceuticals (regarding the
registration rights attached to Solvay
Pharmaceuticals' initial purchase of 1,666,666 Shares
of Duramed).
F Form of Registration Rights Agreement between Duramed
and Solvay Pharmaceuticals (regarding the
registration rights attached to Solvay
Pharmaceuticals' subsequent purchase of 1,333,334
Shares of Duramed).
<PAGE>
CUSIP Number: 266354 10 9 Page 13 of 13
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.
Dated: October 20, 1999
SOLVAY PHARMACEUTICALS, INC.
By: /s/ Jeffrey D. Linton
---------------------------------
Name: Jeffrey D. Linton
Title: Vice President, Law,
Government and Public
Affairs
SOLVAY AMERICA, INC.
By: /s/ E.J. Buckingham, III
---------------------------------
Name: E.J. Buckingham, III
Title: Vice President, General
Counsel and Secretary
SOLVAY S.A.
By: /s/ Rene H. Degreve
---------------------------------
Name: Rene H. Degreve
Title: General Manager, Finance
and Corporate Planning
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
99.1 Letter Agreement, dated October 6, 1999, between
Duramed and Solvay Pharmaceuticals (incorporated
herein by reference to Exhibit 99.1 of the Original
Schedule 13D, filed with the SEC on October 18,
1999).
99.2 Joint Filing Statement (incorporated herein by
reference to Exhibit 99.2 of the Original Schedule
13D, filed with the SEC on October 18, 1999).
99.3 Private Securities Subscription Agreement, dated
October 19, 1999, between Duramed and Solvay
Pharmaceuticals (regarding the initial purchase by
Solvay Pharmaceuticals of 1,666,666 Shares of
Duramed).
99.4 Private Securities Subscription Agreement, dated
October 19, 1999, between Duramed and Solvay
Pharmaceuticals (regarding the subsequent purchase
by Solvay Pharmaceuticals of 1,333,334 Shares of
Duramed).
99.5 Form of Registration Rights Agreement between
Duramed and Solvay Pharmaceuticals (regarding the
registration rights attached to Solvay
Pharmaceuticals' initial purchase of 1,666,666
Shares of Duramed).
99.6 Form of Registration Rights Agreement between
Duramed and Solvay Pharmaceuticals (regarding the
registration rights attached to Solvay
Pharmaceuticals' subsequent purchase of 1,333,334
Shares of Duramed).
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
Duramed Pharmaceuticals, Inc./
Solvay Pharmaceuticals, Inc.
October 19, 1999
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the "Agreement") has
been executed by the undersigned in connection with the sale pursuant to Section
4(2) of the Securities Act of 1933, as amended (the "Securities Act"), of
certain shares of Common Stock (hereinafter the "Shares") of Duramed
Pharmaceuticals, Inc., 5040 Lester Road, Cincinnati, Ohio 45213, a corporation
organized under the laws of Delaware (hereinafter "Seller") to Solvay
Pharmaceuticals, Inc., a corporation organized under the laws of Georgia
(hereinafter "Buyer"). Seller and Buyer (hereinafter collectively the "parties")
each hereby represents, warrants and agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
(i) Seller and Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Section 4(2) of the Securities Act.
(ii) Buyer hereby irrevocably subscribes for 1,666,666 Shares
at a purchase price of Nine Dollars ($9.00) per share, for an aggregate purchase
price of Fourteen Million Nine Hundred Ninety Nine Thousand, Nine Hundred and
Ninety Four Dollars ($14,999,994) U.S. payable in United States Dollars at
Closing as defined in Section 6 hereof.
(iii) Subject to the terms of the Registration Rights
Agreement to be dated the date of Closing, Seller will file a "shelf"
registration statement (the "Registration Statement") with the U.S. Securities
and Exchange Commission ("SEC") to register the resale of the Common Shares by
Buyer and shall use its best efforts to cause the Registration Statement to
become effective as soon as practicable after the Closing.
(iv) Seller and Buyer shall each use their best efforts to
complete the transactions contemplated by this Agreement and shall take all
steps practicable to satisfy the conditions to Closing, as set forth in this
Agreement.
2. BUYER'S REPRESENTATIONS AND AGREEMENTS
Buyer represents, warrants and agrees as follows:
(i) Buyer has been duly organized and is validly existing and
in good standing under the laws of its jurisdiction of incorporation. This
Agreement has been duly authorized,
<PAGE>
validly executed, and delivered on behalf of Buyer and is a valid and binding
agreement enforceable in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the enforcement
of creditors' rights generally;
(ii) Buyer understands that the Shares have not been
registered under the Securities Act, or any other applicable securities law,
and, accordingly, none of the Shares may be offered, sold, transferred, pledged,
hypothecated or otherwise disposed of unless registered pursuant to, or in a
transaction exempt from registration under, the Securities Act and any other
applicable securities law;
(iii) Buyer is acquiring the Shares for its own account. Buyer
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Shares. Buyer
has had a reasonable opportunity to ask questions of and receive answers from
Seller concerning Seller and the offering of the Shares. Neither such inquiries
or other due diligence investigations by or on behalf of Buyer shall affect
Buyer's right to rely on Seller's representations and warranties contained
herein. Buyer is not subscribing for the Shares as a result of or pursuant to
any advertisement, article, notice, or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio.
Buyer is aware that it may be required to bear the economic risk of an
investment in the Shares for an indefinite period, and it is able to bear such
risk for an indefinite period;
(iv) Buyer is acquiring the Shares for its own account for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution thereof within the meaning of the Securities Act. Buyer
agrees, prior to registration of the Common Shares pursuant to the Registration
Statement, to offer, sell or otherwise transfer any Shares only in conformity
with the Securities Act and any other applicable securities law and with the
restrictions on transfer set forth on the certificate(s) evidencing the Shares.
Buyer acknowledges that each certificate evidencing the Shares shall bear a
legend substantially to the effect of the foregoing Section 2(ii) and this
Section 2(iv). Such legend shall be in substantially the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED OR
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT
- 2 -
<PAGE>
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM SUCH REGISTRATION. TRANSFER OF THIS
CERTIFICATE IS RESTRICTED BY CERTAIN PROVISIONS SET FORTH IN A PRIVATE
SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND THE HOLDER
DATED OCTOBER 19, 1999. A COPY OF THE PORTION OF THE AFORESAID
SUBSCRIPTION AGREEMENT EVIDENCING SUCH RESTRICTIONS MAY BE OBTAINED
FROM THE COMPANY'S EXECUTIVE OFFICES."
Following registration, Buyer agrees not to sell any Shares except either (a) in
accordance with an effective Registration Statement, in which case Buyer agrees
to comply with the requirement of delivering a current prospectus, or (b) in
accordance with Rule 144 under the Securities Act, in which case Buyer agrees to
comply with such rule, or (c) pursuant to an applicable exemption from
registration under the Securities Act;
(v) Buyer acknowledges that Seller or any transfer agent of
Seller shall register the transfer or exchange of any of the Shares only upon
receipt of the certificate(s) evidencing such Shares with the transfer notice
set forth thereon appropriately completed and, in the event of a transfer or
exchange prior to registration, upon receipt in writing from the transferor and
the transferee or the recipient of such Shares in such transfer or exchange (as
the case may be) of a certificate setting forth the representations in Section 2
hereof;
(vi) Buyer understands that the Shares are being offered and
sold to it in reliance on specific provisions of federal and state securities
laws and that Seller is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements and understandings of
Buyer set forth herein in order to determine the applicability of such
provisions.
(vii) Buyer has received all information it has considered
necessary to make an informed business decision with respect to an investment in
the Shares, including but not limited to Seller's Public Documents as described
in Section 3(vii) herein.
3. SELLER'S REPRESENTATIONS AND AGREEMENTS
Seller represents, warrants and agrees as follows:
(i) Seller is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation; Seller
has registered its common shares
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pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); and Seller is in full compliance with all
reporting requirements of either Section 13(a) or 15(d) of the Exchange Act.
Seller is duly qualified as a foreign corporation and is in good standing in
each jurisdiction where the nature of its business make such qualification
necessary;
(ii) Seller has not conducted any general solicitation or
general advertising with respect to any of the securities offered hereby;
(iii) The Shares when issued and delivered will be duly and
validly authorized and issued, fully-paid and nonassessable, free and clear of
any liens, encumbrances, charges, or adverse claims of any nature whatsoever,
and will not subject the holders thereof to personal liability by reason of
being such holders. There are no preemptive rights of any shareholder of Seller
with respect to the Shares;
(iv) This Agreement, and the Registration Rights Agreement,
have been duly authorized, validly executed and delivered on behalf of Seller
and are valid and binding obligations, enforceable in accordance with their
terms, subject to general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally;
(v) The execution and delivery of this Agreement and the
Registration Rights Agreement and the consummation of the issuance of the Shares
and the transactions contemplated by this Agreement and the Registration Rights
Agreement do not and will not conflict with or result in a breach by Seller of
any of the terms or provisions of, or constitute a default under, and Seller is
not in material breach of or in material default under, the certificate of
incorporation or bylaws of Seller, or any indenture, mortgage, deed of trust or
other material agreement or instrument to which Seller is a party or by which it
or any of its properties or assets are bound, or any existing applicable decree,
judgement or order of any court, federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over Seller
or any of its properties or assets;
(vi) No authorization, approval or consent of or filing with
any federal, state or local governmental body of the United States or other
person is legally or otherwise required for the issuance and sale of the Shares
as contemplated by this Agreement and any necessary state blue sky filings;
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(vii) Seller has furnished Buyer with copies of Seller's most
recent Annual Report on Form 10-K filed with the Securities and Exchange
Commission and all Forms 10-Q and 8-K filed thereafter (the "Public Documents").
The Public Documents do not include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. Since the date of Seller's most recently filed Form 10-K, there has
been no material adverse development in the business, properties, operations,
financial condition or results of operations of Seller, except as disclosed in
the documents referred to in the other Public Documents;
(viii) At the Closing, Seller will issue one or more
certificates representing the Shares in the name of Buyer in such denominations
to be specified by Buyer prior to Closing. The certificates will bear the
restrictive legend specified in Section 2(iv) of this Agreement. Seller further
warrants that no instructions other than these instructions and stop transfer
instructions to give effect to Section 2(ii) hereof will be given to the
transfer agent and also warrants that the Shares shall otherwise be transferable
on the books and records of Seller as and to the extent provided in this
Agreement, subject to compliance with federal and state securities laws. Nothing
in this Section shall affect in any way Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of the Shares; and
(ix) As of their respective dates, the financial statements of
Seller included in the Public Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with U.S. generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of Seller as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(x) Except as disclosed in the Public Documents, there is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board or body, government agency or self-regulatory organization pending
or, to the knowledge of the
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Seller or any of its subsidiaries, threatened against or affecting the Seller or
any of its subsidiaries, wherein an unfavorable decision, ruling or finding
would have a material adverse effect on the financial condition, properties,
prospects or operations of Seller or which would adversely affect the validity
or enforceability of, or the authority or ability of the Seller to perform its
obligations under, this Agreement or the Registration Rights Agreement.
(xi) Seller shall notify the SEC and Nasdaq (hereinafter
called the "Principal Market") and any other applicable market in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of all of the Shares to Buyer and the listing thereof on such Principal
Market, and Seller shall maintain such listing.
(xii) The Seller's representations and warranties in this
Agreement do not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained herein, as of the date
on which they were made, in light of the circumstances under which they were
made, not misleading. None of the statements, documents, certificates or other
items prepared or supplied by the Seller with respect to the transactions
contemplated hereby contained, as of its date, an untrue statement of a material
fact or omitted a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. There is no fact relating to the Seller or its operation which the
Seller has not disclosed to Buyer and of which the Seller is aware which
materially and adversely affects or is reasonably likely to materially and
adversely affect the business, financial condition, or property of the Seller.
4. CLOSING
Share certificates shall be delivered to Buyer and the funds therefor
shall be delivered to Seller on October 22, 1999 (the "Closing") or at such time
to be mutually agreed.
5. CONDITIONS TO CLOSING
(i) Buyer's and Seller's respective obligations to close the
transactions contemplated by this Agreement are also subject to the other's
representations and warranties being true, in all material respects, at the time
of Closing.
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(ii) Buyer understands that Seller's obligations to sell the
Shares is conditioned upon delivery by Buyer to Seller or otherwise as agreed
between the parties of the amount set forth in Section 1 hereof.
(iii) Seller understands that Buyer's obligation to purchase
the Shares is conditioned upon delivery of certificate(s) representing Shares as
described in Section 1(ii) hereof and provision of an opinion of counsel, in
customary form, confirming the matters set forth in the first two clauses of
Section 3(i), and confirming the matters set forth in the third clause of
Section 3(i) to the best of counsel's knowledge; and also confirming the matters
set out in Section 3(iii), (iv), (v), (vi), and (xii) above.
(iv) Seller understands that Buyer's obligation to purchase
the Shares is conditioned upon Seller and Buyer entering into the Registration
Rights Agreement; and
(v) Seller understands that Buyer's obligation to purchase the
Shares is conditioned upon settlement of the currently pending litigation
between Seller and Schein Pharmaceutical, Inc. ("Schein") as described in the
Public Documents. Such settlement shall be effected through execution and
delivery of an agreement in writing between Seller and Schein and such other
actions as may be appropriate. Buyer need not close the purchase of the Shares
unless it believes reasonably that the means of settlement is effective to
resolve finally such litigation.
6. STANDSTILL AGREEMENT
6.1 Definitions
(a) "ACQUISITION PROPOSAL" shall mean a bona
fide, written proposal, which proposal includes all material terms of a proposed
transaction, received by the Board of Directors of Seller from any Person or
Group proposing to enter into a transaction which, if effected, would constitute
a Change of Control of Seller.
(b) "AFFILIATE" shall have the meaning given it
in Rule 12b-2 under the Exchange Act.
(c) "ASSOCIATE" shall have the meaning given it
in Rule 12b-2 under the Exchange Act.
(d) "BENEFICIAL OWNER" shall have the meaning
given it in Rule 13(d)(3) under the Exchange Act; and
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"Beneficially Own" and "Beneficial Ownership" shall apply to securities held by
a Beneficial Owner.
(e) "CHANGE OF CONTROL" shall mean (1) the
acquisition by a Third Party of more than 50% of Seller's then-outstanding
Voting Stock, excluding however, a purchase agreement with an underwriter or
group of underwriters in a registered public offering to the public; (2) the
consummation of a merger, acquisition, consolidation or reorganization or series
of such related transactions involving Seller, unless both (x) immediately after
such transaction or transactions, the stockholders of Seller immediately prior
to such transaction shall Beneficially Own at least 50% of the outstanding
Voting Stock of Seller (or, if Seller shall not be the surviving company in such
merger, consolidation or reorganization, the Voting Stock of the surviving
corporation issued in such transaction in respect of Voting Stock of Seller
shall represent at least 50% of the Voting Stock of such surviving company), and
(y) Seller is not subject to an agreement that provides that individuals who are
directors of Seller immediately prior to such transaction (or individuals
designated by Seller at or before the closing of such transaction) shall
constitute less than a majority of the directors of Seller (or such surviving
company, as the case may be) after the closing of such transaction; (3) a change
or changes in the membership of Seller's Board of Directors which represents a
change of a majority or more of such membership during any twelve month period
(unless such change or changes in membership are caused by the actions of the
then-existing Board of Directors); (4) an Insolvency Proceeding (as defined
below); or (5) the consummation of a sale of all or substantially all of
Seller's assets unless immediately after such transaction, the stockholders of
Seller immediately prior to such transaction shall beneficially own at least 50%
of the Voting Stock of the acquiring company.
(f) "EXCHANGE ACT" shall mean the Securities
Exchange Act of 1934, as amended.
(g) "GROUP" shall have the meaning provided in
Section 13(d)(3) of the Exchange Act.
(h) "INSOLVENCY PROCEEDING" shall mean (1) an
assignment for the benefit of creditors, (2) the filing by Seller of a petition
to have Seller adjudged insolvent, bankrupt or seeking a reorganization or
liquidation under any law relating to bankruptcy, insolvency or receivership,
(3) an appointment of a receiver or trustee for all or substantially all of the
assets of Seller unless appointed without Seller's consent, in which case if
after 60 days such appointment has not been vacated or stayed,
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<PAGE>
(4) a public admission in writing of Seller's inability to pay its debts as they
come due, or (5) the adoption of a plan of liquidation or dissolution by the
Board of Directors of Seller.
(i) "PERSON" means an individual, corporation,
partnership, association, trust, unincorporated organization or
other entity.
(j) "THIRD PARTY" shall mean any Person (other
than Seller or Buyer and their respective Affiliates and Associates) or Group
(other than any Group that includes Seller or Buyer or their respective
Affiliates or Associates).
(k) "TOTAL VOTING POWER" at any date, with
respect to any person, shall mean the total combined Voting Power of all the
Voting Stock of such Person then outstanding and entitled to vote.
(l) "VOTING POWER" with respect to any Voting
Securities of any Person on any date shall mean the voting power in the general
election of directors of the relevant Person to which such Voting Securities
would be entitled on such date.
(m) "VOTING STOCK" of any Person shall mean any
securities entitled to vote generally in the election of directors of such
Person, or any direct or indirect rights or options or warrants to acquire any
such securities or any securities (including, without limitation, the Preferred
Stock) convertible or exercisable into or exchangeable for such securities,
whether or not such securities are so convertible, exercisable or exchangeable
at the time of determination.
6.2 Restrictions on Certain Actions. Buyer agrees that, until
October 1, 2001, neither it nor any Affiliate or Associate of Buyer will, singly
or as part of a Group, directly or indirectly:
(a) except as provided for in the Private
Securities Subscription Agreement of even date herewith for the Subscription of
an additional 1,333,334 Shares of Seller by Buyer, acquire or offer, make a
proposal or agree to acquire (whether publicly or otherwise), in any manner, any
material assets of Seller or its subsidiaries or any equity securities of Seller
or its subsidiaries (or Beneficial Ownership thereof), except (1) pursuant to a
stock split, stock dividend, recapitalization, reclassification or similar
transaction not effected pursuant to a violation of this Section 6.2;
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<PAGE>
(b) make or in any way propose or participate in
any "solicitation" of "proxies" to vote (as such terms are defined in Rule 14a-1
under the Exchange Act), solicit any consent or communicate with or seek to
advise or influence any Person, other than Seller, with respect to the
solicitation or voting of any Voting Securities of Seller in opposition to any
matter that has been recommended by the Board or in favor of any matter that has
not been approved by the Board, or become a "participant" in any "election
contest" (as such terms are defined or used in Rule 14a-11 under the Exchange
Act)with respect to Company except pursuant to the Stockholders Agreement;
(c) form, be a member of, join or encourage the
formation of, any Group with respect to any Voting Securities of
Seller or the acquisition of any assets of Seller;
(d) deposit any Voting Stock of Seller into a
voting trust or subject any such Voting Stock to any arrangement
or agreement with respect to the voting thereof;
(e) except as provided for in the Private
Securities Subscription Agreement of even date herewith for the Subscription of
an additional 1,333,334 Shares of Seller by Buyer, seek election to or seek to
place a representative on the Board of Directors of Seller or seek the removal
of any member of the Board of Directors of Seller; or
(f) solicit, seek to effect, negotiate with or
provide any information to any other party with respect to, or make any
statement or proposal, whether written or oral, to the Board of Directors of
Seller or otherwise make any public announcement or proposal whatsoever with
respect to a merger or acquisition of Seller, the sale of all or a substantial
portion of the assets of Seller and its subsidiaries, liquidation of Seller,
recapitalization of Seller or similar business transactions with respect to
Seller or take any action which might require either party to make a public
announcement with respect to any such matters (the foregoing shall not limit
Buyer from discussing any Third Party Acquisition Proposal with the Company).
Notwithstanding the restrictions contained in this Section
6.2, Buyer shall not be prevented from complying with the requirements of
Sections 13(d) and 16(a) of the Exchange Act and the rules and regulations
thereunder, in each case, as from time to time in effect, or any successor
provisions or rules with respect thereto, or any other applicable law or rule or
regulations of any governmental body.
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<PAGE>
6.3 Suspension of Restrictions. The limitations provided in
Sections 6.2 and 6.4 shall immediately be suspended upon the occurrence of any
of the following events:
(a) any Third Party commences a tender or
exchange offer seeking to acquire Beneficial Ownership of 50% or more of the
outstanding shares of Voting Stock, but only if (i) Seller has not within 10
days after commencement of such offer (or such longer period as may then be
permitted under applicable law for Seller's initial recommendation with respect
to such offer), publicly recommended that such offer not be accepted, or (ii)
all of the material conditions to such offer relating to the elimination or
satisfaction of the material defensive provisions established by Seller,
including any rights plan or similar defensive provision of Seller have been
satisfied or waived);
(b) Seller's receipt of an Acquisition Proposal
from any Third Party but only if Seller has not, within 15 days after such
receipt, rejected such Acquisition Proposal;
(c) the occurrence of a Change in Control of
Seller;
(d) the public announcement by Seller that it is
"for sale" or that the Board of Directors is seeking to, or has engaged
investment advisors to assist it in, maximizing Shareholder Value or in
evaluating strategic alternatives;
(e) the execution of a definitive agreement
which, if consummated, would result in a Change of Control of
Seller;
(f) the public announcement by or on behalf of
any Person or Group (other than Buyer and its Affiliates) of the commencement of
a bona fide proxy or consent solicitation subject to Section 14 of the Exchange
Act (or any successor provision) to elect or remove a majority of the directors
of Seller which is not, within 10 days after the announcement of such proxy or
consent solicitation (or such longer period as may then be permitted under
applicable law for Seller's initial recommendation with respect to such contest
if such a period is specified) publicly opposed by Seller's Board of Directors
and which would, if successful, result in a change in the composition of a
majority of the Board of Directors of Seller; or
(g) the adoption by the Board of Directors of a
plan of liquidation or dissolution.
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Seller shall provide Buyer with prompt written notice of the
occurrence of any of the events set forth in this Section 6.3 or of the receipt
by Seller of an Acquisition Proposal from any Third Party (such notice to be
provided within ten days after receipt thereof, but without disclosing the terms
thereof or the identity of such Third Party). Upon any (i) withdrawal or lapsing
of any such tender or exchange offer referred to in Section 6.3(a) in which such
Third Party does not acquire more than 15% of the outstanding Voting Stock of
Seller, (ii) withdrawal, rejection or termination of an Acquisition Proposal
referred to in Section 6.3(e) without consummation thereof, (v) the withdrawal
or termination or failure of the solicitation referred to in Section 6.3(f) or
(vi) the termination of the plan of liquidation referenced in Section 6.3(g), as
the case may be, the limitations provided in Sections 6.2 and 6.4 (except to the
extent then suspended as a result of any other event specified in Section 6.3)
shall again be applicable for so long as and only to the extent provided therein
without any extension of the term thereof).
6.4 Other Restrictions. Until October 1, 2001, Buyer shall not
sell, pledge, hypothecate, assign or otherwise transfer (each a "Transfer") any
Voting Securities of Seller to any Third Party, if as a result of such Transfer,
the Third Party would hold in excess of 5% of the outstanding Voting Securities
of Seller unless such Third Party becomes a party to, and agrees to be bound by,
Section 6 of this Agreement.
Until October 1, 2001, in the event that Seller notifies Buyer
that Seller is in the process of carrying out a private or public sale of equity
or equity-linked securities (i.e., any security which is convertible into or
exchangeable for, or which entitles the holder to purchase, equity securities of
Seller or the value of which is linked to the equity securities of Seller),
Buyer will not offer, sell, contract to sell, grant any option to sell, or
otherwise dispose of, directly or indirectly, any Shares until such date as is
ninety days after completion or termination without completion of such sale of
securities by Seller. In the event such a sale involves an underwritten public
offering of such securities, Buyer will at the request of the underwriter(s)
enter into a standard form of "lock-up" letter with such underwriter(s) to
extend for a period of time not to exceed ninety days.
Until October 1, 2001, neither Buyer nor any Affiliate of
Buyer will solicit, endeavor to entice away, or otherwise directly or indirectly
interfere with the relationship of Seller with, any of Seller's employees,
except to the extent that the
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employee has voluntarily approached Buyer or has responded to a
general advertisement of employment.
7. ANTI-DILUTION. Until October 1, 2001, in the event that Seller
completes any sale of equity or equity-linked securities for cash to Third
Parties (other than Seller's employees and directors under Seller's stock option
programs and other similar arrangements in the ordinary course of business),
Buyer shall have the right to purchase identical securities at identical terms
such that Buyer's percentage ownership of Seller (calculated on a fully diluted
basis) after such purchase is equal to its percentage ownership (calculated on a
fully diluted basis) prior to such sale to a Third Party. For purposes of this
section, a material sale shall be defined as one involving more than 1% of the
number of shares of Common Stock of Seller outstanding prior to such
transaction. Buyer acknowledges that its decision whether or not to exercise its
rights under this Section 7 may be of material interest to a prospective
purchaser of Seller's securities and will have to be disclosed to such
purchaser. Seller shall notify Buyer in advance of any proposed sale. The notice
will provide as much information as is reasonably available with respect to the
expected terms of the sale. In the case of a registered public offering of
securities, such notice shall be given at least twenty days in advance of the
filing of the registration statement under the Securities Act. In the case of a
non-registered sale, the notice shall be given at least twenty days before
mailing of offering materials. Within fifteen days of receipt of such notice,
Buyer shall inform Seller of the extent to which it wishes to exercise its
rights to purchase securities under this Section 7. The purchase price to be
paid by Buyer shall be the same as that at which the securities actually are
sold to Third Parties.
8. TERMINATION. This Agreement may be terminated by
either Buyer or Seller if the Closing has not occurred prior to
December 31, 1999.
9. MISCELLANEOUS
(i) Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be effective upon hand delivery
or delivery by facsimile at the address or facsimile number designated below (if
delivered on a business day during regular business hours where such notice is
to be received), or the first business day following such delivery (if delivered
other than on a business day during regular business hours where such notice is
to be received). The addresses and facsimile number for such communications
shall be:
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<PAGE>
to the Seller:
Duramed Pharmaceuticals, Inc.
5040 Lester Road
Cincinnati, Ohio 45213
Phone No.: (513) 458-6070
Fax No.: (513) 458-6095
Attn: President and CEO
with copies to:
Taft, Stettinius & Hollister LLP
1800 Walnut Street
425 Walnut Street
Cincinnati, Ohio 45202-3957
Phone No.: (513) 381-2838
Fax No.: (513) 381-0205
Attn: Timothy E. Hoberg, Esq.
to the Buyer:
Solvay Pharmaceuticals, Inc.
901 Sawyer Road
Marietta, Georgia 30062
Phone No.: (770) 578-5740
Fax No.: (770) 565-3325
Attn: President and CEO
with a copy to:
Solvay America, Inc.
3333 Richmond Avenue
Houston, TX 77098
Phone No.: (713) 525-6080
Fax No.: (713) 525-7818
Attn: General Counsel
Either party hereto may from time to time change its address or facsimile number
for notices under this Section by giving written notice of such change to the
other party hereto.
(ii) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction of
the courts of the State of Delaware and the Federal Courts of the United States
of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement, and in
respect of the transactions contemplated
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<PAGE>
hereby, and hereby waive, and agree not to assert, as a defense in any action,
suit or proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in said courts or that the venue
thereof may not be appropriate or that this Agreement may not be enforced in or
by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
9(i) or in such other manner as may be permitted by law shall be valid and
sufficient service thereof.
(iii) This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(iv) Facsimile signatures of this Agreement shall be binding
on all parties hereto.
IN WITNESS WHEREOF, this Agreement was duly executed on the
day first written above.
SOLVAY PHARMACEUTICALS, INC.
By: /s/ David A. Dodd
-------------------------------------------
David A. Dodd, President and
Chief Executive Officer
DURAMED PHARMACEUTICALS, INC.
By: /s/ E. Thomas Arington
-------------------------------------------
E. Thomas Arington, Chairman
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PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
Duramed Pharmaceuticals, Inc./
Solvay Pharmaceuticals, Inc.
October 19, 1999
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the "Agreement") has
been executed by the undersigned in connection with the sale pursuant to Section
4(2) of the Securities Act of 1933, as amended (the "Securities Act"), of
certain shares of Common Stock (hereinafter the "Shares") of Duramed
Pharmaceuticals, Inc., 5040 Lester Road, Cincinnati, Ohio 45213, a corporation
organized under the laws of Delaware (hereinafter "Seller") to Solvay
Pharmaceuticals, Inc., a corporation organized under the laws of Georgia
(hereinafter "Buyer"). Seller and Buyer (hereinafter collectively the "parties")
each hereby represents, warrants and agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
(i) Seller and Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Section 4(2) of the Securities Act.
(ii) Buyer hereby irrevocably subscribes for 1,333,334 Shares
at a purchase price of Nine Dollars ($9.00) per share, for an aggregate purchase
price of Twelve Million and Six Dollars ($12,000,006) U.S. payable in United
States Dollars at Closing as defined in Section 6 hereof.
(iii) Subject to the terms of the Registration Rights
Agreement to be dated the date of Closing, Seller will file a "shelf"
registration statement (the "Registration Statement") with the U.S. Securities
and Exchange Commission ("SEC") to register the resale of the Common Shares by
Buyer and shall use its best efforts to cause the Registration Statement to
become effective as soon as practicable after the Closing.
(iv) Seller and Buyer shall each use their best efforts to
complete the transactions contemplated by this Agreement and shall take all
steps practicable to satisfy the conditions to Closing, as set forth in this
Agreement.
2. BUYER'S REPRESENTATIONS AND AGREEMENTS
Buyer represents, warrants and agrees as follows:
(i) Buyer has been duly organized and is validly existing and
in good standing under the laws of its jurisdiction of incorporation. This
Agreement has been duly authorized, validly executed, and delivered on behalf of
Buyer and is a valid
<PAGE>
and binding agreement enforceable in accordance with its terms, subject to
general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(ii) Buyer understands that the Shares have not been
registered under the Securities Act, or any other applicable securities law,
and, accordingly, none of the Shares may be offered, sold, transferred, pledged,
hypothecated or otherwise disposed of unless registered pursuant to, or in a
transaction exempt from registration under, the Securities Act and any other
applicable securities law;
(iii) Buyer is acquiring the Shares for its own account. Buyer
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Shares. Buyer
has had a reasonable opportunity to ask questions of and receive answers from
Seller concerning Seller and the offering of the Shares. Neither such inquiries
or other due diligence investigations by or on behalf of Buyer shall affect
Buyer's right to rely on Seller's representations and warranties contained
herein. Buyer is not subscribing for the Shares as a result of or pursuant to
any advertisement, article, notice, or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio.
Buyer is aware that it may be required to bear the economic risk of an
investment in the Shares for an indefinite period, and it is able to bear such
risk for an indefinite period;
(iv) Buyer is acquiring the Shares for its own account for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution thereof within the meaning of the Securities Act. Buyer
agrees, prior to registration of the Common Shares pursuant to the Registration
Statement, to offer, sell or otherwise transfer any Shares only in conformity
with the Securities Act and any other applicable securities law and with the
restrictions on transfer set forth on the certificate(s) evidencing the Shares.
Buyer acknowledges that each certificate evidencing the Shares shall bear a
legend substantially to the effect of the foregoing Section 2(ii) and this
Section 2(iv). Such legend shall be in substantially the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED OR
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
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PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION. TRANSFER OF THIS CERTIFICATE IS
RESTRICTED BY CERTAIN PROVISIONS SET FORTH IN A PRIVATE
SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY
AND THE HOLDER DATED OCTOBER 19, 1999. A COPY OF THE
PORTION OF THE AFORESAID SUBSCRIPTION AGREEMENT
EVIDENCING SUCH RESTRICTIONS MAY BE OBTAINED FROM THE
COMPANY'S EXECUTIVE OFFICES."
Following registration, Buyer agrees not to sell any Shares except either (a) in
accordance with an effective Registration Statement, in which case Buyer agrees
to comply with the requirement of delivering a current prospectus, or (b) in
accordance with Rule 144 under the Securities Act, in which case Buyer agrees to
comply with such rule, or (c) pursuant to an applicable exemption from
registration under the Securities Act;
(v) Buyer acknowledges that Seller or any transfer agent of
Seller shall register the transfer or exchange of any of the Shares only upon
receipt of the certificate(s) evidencing such Shares with the transfer notice
set forth thereon appropriately completed and, in the event of a transfer or
exchange prior to registration, upon receipt in writing from the transferor and
the transferee or the recipient of such Shares in such transfer or exchange (as
the case may be) of a certificate setting forth the representations in Section 2
hereof;
(vi) Buyer understands that the Shares are being offered and
sold to it in reliance on specific provisions of federal and state securities
laws and that Seller is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements and understandings of
Buyer set forth herein in order to determine the applicability of such
provisions.
(vii) Buyer has received all information it has considered
necessary to make an informed business decision with respect to an investment in
the Shares, including but not limited to Seller's Public Documents as described
in Section 3(vii) herein.
3. SELLER'S REPRESENTATIONS AND AGREEMENTS
Seller represents, warrants and agrees as follows:
(i) Seller is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation; Seller
has registered its common shares pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act
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of 1934, as amended (the "Exchange Act"); and Seller is in full compliance with
all reporting requirements of either Section 13(a) or 15(d) of the Exchange Act.
Seller is duly qualified as a foreign corporation and is in good standing in
each jurisdiction where the nature of its business make such qualification
necessary;
(ii) Seller has not conducted any general solicitation or
general advertising with respect to any of the securities offered hereby;
(iii) The Shares when issued and delivered will be duly and
validly authorized and issued, fully-paid and nonassessable, free and clear of
any liens, encumbrances, charges, or adverse claims of any nature whatsoever,
and will not subject the holders thereof to personal liability by reason of
being such holders. There are no preemptive rights of any shareholder of Seller
with respect to the Shares;
(iv) This Agreement, and the Registration Rights Agreement,
have been duly authorized, validly executed and delivered on behalf of Seller
and are valid and binding obligations, enforceable in accordance with their
terms, subject to general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally;
(v) The execution and delivery of this Agreement and the
Registration Rights Agreement and the consummation of the issuance of the Shares
and the transactions contemplated by this Agreement and the Registration Rights
Agreement do not and will not conflict with or result in a breach by Seller of
any of the terms or provisions of, or constitute a default under, and Seller is
not in material breach of or in material default under, the certificate of
incorporation or bylaws of Seller, or any indenture, mortgage, deed of trust or
other material agreement or instrument to which Seller is a party or by which it
or any of its properties or assets are bound, or any existing applicable decree,
judgement or order of any court, federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over Seller
or any of its properties or assets;
(vi) No authorization, approval or consent of or filing with
any federal, state or local governmental body of the United States or other
person is legally or otherwise required for the issuance and sale of the Shares
as contemplated by this Agreement and any necessary state blue sky filings;
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(vii) Seller has furnished Buyer with copies of Seller's most
recent Annual Report on Form 10-K filed with the Securities and Exchange
Commission and all Forms 10-Q and 8-K filed thereafter (the "Public Documents").
The Public Documents do not include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. Since the date of Seller's most recently filed Form 10-K, there has
been no material adverse development in the business, properties, operations,
financial condition or results of operations of Seller, except as disclosed in
the documents referred to in the other Public Documents;
(viii) At the Closing, Seller will issue one or more
certificates representing the Shares in the name of Buyer in such denominations
to be specified by Buyer prior to Closing. The certificates will bear the
restrictive legend specified in Section 2(iv) of this Agreement. Seller further
warrants that no instructions other than these instructions and stop transfer
instructions to give effect to Section 2(ii) hereof will be given to the
transfer agent and also warrants that the Shares shall otherwise be transferable
on the books and records of Seller as and to the extent provided in this
Agreement, subject to compliance with federal and state securities laws. Nothing
in this Section shall affect in any way Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of the Shares; and
(ix) As of their respective dates, the financial statements of
Seller included in the Public Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with U.S. generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of Seller as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(x) Except as disclosed in the Public Documents, there is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board or body, government agency or self-regulatory organization pending
or, to the knowledge of the
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Seller or any of its subsidiaries, threatened against or affecting the Seller or
any of its subsidiaries, wherein an unfavorable decision, ruling or finding
would have a material adverse effect on the financial condition, properties,
prospects or operations of Seller or which would adversely affect the validity
or enforceability of, or the authority or ability of the Seller to perform its
obligations under, this Agreement or the Registration Rights Agreement.
(xi) Seller shall notify the SEC and Nasdaq (hereinafter
called the "Principal Market") and any other applicable market in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of all of the Shares to Buyer and the listing thereof on such Principal
Market, and Seller shall maintain such listing.
(xii) The Seller's representations and warranties in this
Agreement do not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained herein, as of the date
on which they were made, in light of the circumstances under which they were
made, not misleading. None of the statements, documents, certificates or other
items prepared or supplied by the Seller with respect to the transactions
contemplated hereby contained, as of its date, an untrue statement of a material
fact or omitted a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. There is no fact relating to the Seller or its operation which the
Seller has not disclosed to Buyer and of which the Seller is aware which
materially and adversely affects or is reasonably likely to materially and
adversely affect the business, financial condition, or property of the Seller.
4. CLOSING
Share certificates shall be delivered to Buyer and the funds therefor
shall be delivered to Seller immediately after the conditions set forth in
Section 5 have been satisfied.
5. CONDITIONS TO CLOSING
(i) Buyer and Seller understand that their respective
obligations to close under this Agreement are subject to the receipt, prior to
the Closing, of all necessary governmental approvals and the expiration of all
necessary waiting periods,
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including specifically any waiting period prescribed by the Hart-Scott-Rodino
Antitrust Improvements Act.
(ii) Buyer's and Seller's respective obligations to close the
transactions contemplated by this Agreement are also subject to the other's
representations and warranties being true, in all material respects, at the time
of Closing.
(iii) Buyer understands that Seller's obligations to sell the
Shares is conditioned upon delivery by Buyer to Seller or otherwise as agreed
between the parties of the amount set forth in Section 1 hereof.
(iv) Seller understands that Buyer's obligation to purchase
the Shares is conditioned upon delivery of certificate(s) representing Shares as
described in Section 1(ii) hereof and provision of an opinion of counsel, in
customary form, confirming the matters set forth in the first two clauses of
Section 3(i), and confirming the matters set forth in the third clause of
Section 3(i) to the best of counsel's knowledge; and also confirming the matters
set out in Section 3(iii), (iv), (v), (vi) and (xii) above.
(v) Seller understands that Buyer's obligation to purchase the
Shares is conditioned upon Seller and Buyer entering into the Registration
Rights Agreement.
(vi) Seller understands that Buyer's obligation to purchase
the Shares is conditioned upon settlement of the currently pending litigation
between Seller and Schein Pharmaceutical, Inc. ("Schein") as described in the
Public Documents. Such settlement shall be effected through execution and
delivery of an agreement in writing between Seller and Schein and such other
actions as may be appropriate. Buyer need not close the purchase of the Shares
unless it believes reasonably that the means of settlement is effective to
resolve finally such litigation.
(vii) Seller understands that Buyer's obligation to purchase
the Shares is conditioned upon (a) approval of the Boards of Directors of Buyer,
and of Buyer's parent, Solvay America, Inc., (b) the successful closing of the
purchase of 1,666,666 shares of Common Stock of Buyer from Seller pursuant to
the terms of a separate Private Securities Subscription Agreement of even date
herewith, and (c) the absence of any material adverse change in the financial
condition, properties, business, prospects, or results of operations of Seller
from the date of this Agreement to the date of Closing.
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6. STANDSTILL AGREEMENT
6.1 Definitions
(a) "ACQUISITION PROPOSAL" shall mean a bona
fide, written proposal, which proposal includes all material terms of a proposed
transaction, received by the Board of Directors of Seller from any Person or
Group proposing to enter into a transaction which, if effected, would constitute
a Change of Control of Seller.
(b) "AFFILIATE" shall have the meaning given it
in Rule 12b-2 under the Exchange Act.
(c) "ASSOCIATE" shall have the meaning given it
in Rule 12b-2 under the Exchange Act.
(d) "BENEFICIAL OWNER" shall have the meaning
given it in Rule 13(d)(3) under the Exchange Act; and "Beneficially Own" and
"Beneficial Ownership" shall apply to securities held by a Beneficial Owner.
(e) "CHANGE OF CONTROL" shall mean (1) the
acquisition by a Third Party of more than 50% of Seller's then-outstanding
Voting Stock, excluding however, a purchase agreement with an underwriter or
group of underwriters in a registered public offering to the public; (2) the
consummation of a merger, acquisition, consolidation or reorganization or series
of such related transactions involving Seller, unless both (x) immediately after
such transaction or transactions, the stockholders of Seller immediately prior
to such transaction shall Beneficially Own at least 50% of the outstanding
Voting Stock of Seller (or, if Seller shall not be the surviving company in such
merger, consolidation or reorganization, the Voting Stock of the surviving
corporation issued in such transaction in respect of Voting Stock of Seller
shall represent at least 50% of the Voting Stock of such surviving company), and
(y) Seller is not subject to an agreement that provides that individuals who are
directors of Seller immediately prior to such transaction (or individuals
designated by Seller at or before the closing of such transaction) shall
constitute less than a majority of the directors of Seller (or such surviving
company, as the case may be) after the closing of such transaction; (3) a change
or changes in the membership of Seller's Board of Directors which represents a
change of a majority or more of such membership during any twelve month period
(unless such change or changes in membership are caused by the actions of the
then-existing Board of Directors); (4) an Insolvency Proceeding (as defined
below); or (5) the consummation of a sale of all or substantially all of
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<PAGE>
Seller's assets unless immediately after such transaction, the stockholders of
Seller immediately prior to such transaction shall beneficially own at least 50%
of the Voting Stock of the acquiring company.
(f) "EXCHANGE ACT" shall mean the Securities
Exchange Act of 1934, as amended.
(g) "GROUP" shall have the meaning provided in
Section 13(d)(3) of the Exchange Act.
(h) "INSOLVENCY PROCEEDING" shall mean (1) an
assignment for the benefit of creditors, (2) the filing by Seller of a petition
to have Seller adjudged insolvent, bankrupt or seeking a reorganization or
liquidation under any law relating to bankruptcy, insolvency or receivership,
(3) an appointment of a receiver or trustee for all or substantially all of the
assets of Seller unless appointed without Seller's consent, in which case if
after 60 days such appointment has not been vacated or stayed, (4) a public
admission in writing of Seller's inability to pay its debts as they come due, or
(5) the adoption of a plan of liquidation or dissolution by the Board of
Directors of Seller.
(i) "PERSON" means an individual, corporation,
partnership, association, trust, unincorporated organization or
other entity.
(j) "THIRD PARTY" shall mean any Person (other
than Seller or Buyer and their respective Affiliates and Associates) or Group
(other than any Group that includes Seller or Buyer or their respective
Affiliates or Associates).
(k) "TOTAL VOTING POWER" at any date, with
respect to any person, shall mean the total combined Voting Power of all the
Voting Stock of such Person then outstanding and entitled to vote.
(l) "VOTING POWER" with respect to any Voting
Securities of any Person on any date shall mean the voting power in the general
election of directors of the relevant Person to which such Voting Securities
would be entitled on such date.
(m) "VOTING STOCK" of any Person shall mean any
securities entitled to vote generally in the election of directors of such
Person, or any direct or indirect rights or options or warrants to acquire any
such securities or any securities (including, without limitation, the Preferred
Stock) convertible or exercisable into or exchangeable for such
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<PAGE>
securities, whether or not such securities are so convertible,
exercisable or exchangeable at the time of determination.
6.2 Restrictions on Certain Actions. Buyer agrees that, until
October 1, 2001, neither it nor any Affiliate or Associate of Buyer will, singly
or as part of a Group, directly or indirectly:
(a) except as provided in Section 7, acquire or
offer, make a proposal or agree to acquire (whether publicly or otherwise), in
any manner, any material assets of Seller or its subsidiaries or any equity
securities of Seller or its subsidiaries (or Beneficial Ownership thereof),
except (1) pursuant to a stock split, stock dividend, recapitalization,
reclassification or similar transaction not effected pursuant to a violation of
this Section 6.2;
(b) make or in any way propose or participate in
any "solicitation" of "proxies" to vote (as such terms are defined in Rule 14a-1
under the Exchange Act), solicit any consent or communicate with or seek to
advise or influence any Person, other than Seller, with respect to the
solicitation or voting of any Voting Securities of Seller in opposition to any
matter that has been recommended by the Board or in favor of any matter that has
not been approved by the Board, or become a "participant" in any "election
contest" (as such terms are defined or used in Rule 14a-11 under the Exchange
Act) with respect to Company except pursuant to the Stockholders Agreement;
(c) form, be a member of, join or encourage the
formation of, any Group with respect to any Voting Securities of
Seller or the acquisition of any assets of Seller;
(d) deposit any Voting Stock of Seller into a
voting trust or subject any such Voting Stock to any arrangement
or agreement with respect to the voting thereof;
(e) except as provided in Section 8, seek
election to or seek to place a representative on the Board of
Directors of Seller or seek the removal of any member of the
Board of Directors of Seller; or
(f) solicit, seek to effect, negotiate with or
provide any information to any other party with respect to, or make any
statement or proposal, whether written or oral, to the Board of Directors of
Seller or otherwise make any public announcement or proposal whatsoever with
respect to a merger or acquisition of Seller, the sale of all or a substantial
portion of the assets of Seller and its subsidiaries, liquidation of
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<PAGE>
Seller, recapitalization of Seller or similar business transactions with respect
to Seller or take any action which might require either party to make a public
announcement with respect to any such matters (the foregoing shall not limit
Buyer from discussing any Third Party Acquisition Proposal with the Company).
Notwithstanding the restrictions contained in this Section
6(2), Buyer shall not be prevented from complying with the requirements of
Sections 13(d) and 16(a) of the Exchange Act and the rules and regulations
thereunder, in each case, as from time to time in effect, or any successor
provisions or rules with respect thereto, or any other applicable law or rule or
regulations of any governmental body.
6.3 Suspension of Restrictions. The limitations provided in
Sections 6.2 and 6.4 shall immediately be suspended upon the occurrence of any
of the following events:
(a) any Third Party commences a tender or
exchange offer seeking to acquire Beneficial Ownership of 50% or more of the
outstanding shares of Voting Stock, but only if (i) Seller has not within 10
days after commencement of such offer (or such longer period as may then be
permitted under applicable law for Seller's initial recommendation with respect
to such offer), publicly recommended that such offer not be accepted, or (ii)
all of the material conditions to such offer relating to the elimination or
satisfaction of the material defensive provisions established by Seller,
including any rights plan or similar defensive provision of Seller have been
satisfied or waived);
(b) Seller's receipt of an Acquisition Proposal
from any Third Party but only if Seller has not, within 15 days after such
receipt, rejected such Acquisition Proposal;
(c) the occurrence of a Change in Control of
Seller;
(d) the public announcement by Seller that it is
"for sale" or that the Board of Directors is seeking to, or has engaged
investment advisors to assist it in, maximizing Shareholder Value or in
evaluating strategic alternatives;;
(e) the execution of a definitive agreement
which, if consummated, would result in a Change of Control of
Seller;
(f) the public announcement by or on behalf of
any Person or Group (other than Buyer and its Affiliates) of the
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commencement of a bona fide proxy or consent solicitation subject to Section 14
of the Exchange Act (or any successor provision) to elect or remove a majority
of the directors of Seller which is not, within 10 days after the announcement
of such proxy or consent solicitation (or such longer period as may then be
permitted under applicable law for Seller's initial recommendation with respect
to such contest if such a period is specified) publicly opposed by Seller's
Board of Directors and which would, if successful, result in a change in the
composition of a majority of the Board of Directors of Seller; or
(g) the adoption by the Board of Directors of a
plan of liquidation or dissolution.
Seller shall provide Buyer with prompt written notice of the
occurrence of any of the events set forth in this Section 6.3 or of the receipt
by Seller of an Acquisition Proposal from any Third Party (such notice to be
provided within ten days after receipt thereof, but without disclosing the terms
thereof or the identity of such Third Party). Upon any (i) withdrawal or lapsing
of any such tender or exchange offer referred to in Section 6.3(a) in which such
Third Party does not acquire more than 15% of the outstanding Voting Stock of
Seller, (ii) withdrawal, rejection or termination of an Acquisition Proposal
referred to in Section 6.3(e) without consummation thereof, (v) the withdrawal
or termination or failure of the solicitation referred to in Section 6.3(f) or
(vi) the termination of the plan of liquidation referenced in Section 6.3(g), as
the case may be, the limitations provided in Sections 6.2 and 6.4 (except to the
extent then suspended as a result of any other event specified in Section 6.3
shall again be applicable for so long as and only to the extent provided therein
without any extension of the term thereof).
6.4 Other Restrictions. Until October 1, 2001, Buyer shall not
sell, pledge, hypothecate, assign or otherwise transfer (each a "Transfer") any
Voting Securities of Seller to any Third Party, if as a result of such Transfer,
the Third Party would hold in excess of 5% of the outstanding Voting Securities
of Seller unless such Third Party becomes a party to, and agrees to be bound by,
Section 6 of this Agreement.
Until October 1, 2001, in the event that Seller notifies Buyer
that Seller is in the process of carrying out a private or public sale of equity
or equity-linked securities (i.e., any security which is convertible into or
exchangeable for, or which entitles the holder to purchase, equity securities of
Seller or the value of which is linked to the equity securities of Seller),
Buyer will not offer, sell, contract to
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<PAGE>
sell, grant any option to sell, or otherwise dispose of, directly or indirectly,
any Shares until such date as is ninety days after completion or termination
without completion of such sale of securities by Seller. In the event such a
sale involves an underwritten public offering of such securities, Buyer will at
the request of the underwriter(s) enter into a standard form of "lock-up" letter
with such underwriter(s) to extend for a period of time not to exceed ninety
days.
Until October 1, 2001, neither Buyer nor any Affiliate of
Buyer will solicit, endeavor to entice away, or otherwise directly or indirectly
interfere with the relationship of Seller with, any of Seller's employees,
except to the extent that the employee has voluntarily approached Buyer or has
responded to a general advertisement of employment.
7. ANTI-DILUTION. Until October 1, 2001, in the event that Seller
completes any sale of equity or equity-linked securities for cash to Third
Parties (other than Seller's employees and directors under Seller's stock option
programs and other similar arrangements in the ordinary course of business),
Buyer shall have the right to purchase identical securities at identical terms
such that Buyer's percentage ownership of Seller (calculated on a fully diluted
basis) after such purchase is equal to its percentage ownership (calculated on a
fully diluted basis) prior to such sale to a Third Party. For purposes of this
section, a material sale shall be defined as one involving more than 1% of the
number of shares of Common Stock of Seller outstanding prior to such
transaction. Buyer acknowledges that its decision whether or not to exercise its
right under this Section 7 may be of material interest to a prospective
purchaser of Seller's securities and will have to be disclosed to such
purchaser. Seller shall notify Buyer in advance of any proposed sale. The notice
will provide as much information as is reasonably available with respect to the
expected terms of the sale. In the case of a registered public offering of
securities, such notice shall be given at least twenty days in advance of the
filing of the registration statement under the Securities Act. In the case of a
non-registered sale, the notice shall be given at least twenty days before the
mailing of offering materials. Within fifteen days of receipt of such notice,
Buyer shall inform Seller of the extent to which it wishes to exercise its
rights to purchase securities under this Section 7. The purchase price to be
paid by Buyer shall be the same as that at which the securities actually are
sold to Third Parties.
8. BOARD OF DIRECTORS. Upon the earlier of (a) Seller and Buyer
entering into a definitive agreement providing for a broad based hormone
alliance of the nature described in Section 13.4 of
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the Exclusive Co-Promotion Agreements between Buyer and Seller dated October 5,
1999, or (b) Seller's 2000 Annual Meeting of Stockholders, Seller's Board of
Directors shall add an additional directorship and shall appoint a designee of
Buyer to Seller's Board. Such directorship shall, to the extent such action may
be determined by Seller's Board of Directors under Delaware law, continue to be
held by a designee of Buyer so long as Buyer holds at least 7.5% of the shares
of outstanding Common Stock of Seller, if the broad based hormone alliance is
then in effect, or 10.0% of the shares of outstanding Common Stock of Seller if
the alliance is not then in effect.
9. TERMINATION. This Agreement may be terminated by either Buyer or
Seller if the Closing has not occurred prior to December 31, 1999. Either party
may terminate this Agreement if it has not been approved by the Board of
Directors of Buyer and Buyer's parent, Solvay America, Inc., no later than
October 21, 1999.
10. MISCELLANEOUS
(i) Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be effective upon hand delivery
or delivery by facsimile at the address or facsimile number designated below (if
delivered on a business day during regular business hours where such notice is
to be received), or the first business day following such delivery (if delivered
other than on a business day during regular business hours where such notice is
to be received). The addresses and facsimile number for such communications
shall be:
to the Seller:
Duramed Pharmaceuticals, Inc.
5040 Lester Road
Cincinnati, Ohio 45213
Phone No.: (513) 458-6070
Fax No.: (513) 458-6095
Attn: President and CEO
with copies to:
Taft, Stettinius & Hollister LLP
1800 Walnut Street
425 Walnut Street
Cincinnati, Ohio 45202-3957
Phone No.: (513) 381-2838
Fax No.: (513) 381-0205
Attn: Timothy E. Hoberg, Esq.
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<PAGE>
to the Buyer:
Solvay Pharmaceuticals, Inc.
901 Sawyer Road
Marietta, Georgia 30062
Phone No.: (770) 578-5740
Fax No.: (770) 565-3325
Attn: President and CEO
with a copy to:
Solvay America, Inc.
3333 Richmond Avenue
Houston, TX 77098
Phone No.: (713) 525-6080
Fax No.: (713) 525-7818
Attn: General Counsel
Either party hereto may from time to time change its address or facsimile number
for notices under this Section by giving written notice of such change to the
other party hereto.
(ii) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction of
the courts of the State of Delaware and the Federal Courts of the United States
of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement, and in
respect of the transactions contemplated hereby, and hereby waive, and agree not
to assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement hereof or of any such document, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Delaware State or Federal court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9(i) or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
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(iii) This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(iv) Facsimile signatures of this Agreement shall be binding
on all parties hereto.
IN WITNESS WHEREOF, this Agreement was duly executed on the
day first written above.
SOLVAY PHARMACEUTICALS, INC.
By: /s/ David A. Dodd
----------------------------
David A. Dodd, President and
Chief Executive Officer
DURAMED PHARMACEUTICALS, INC.
By: /s/ E. Thomas Arington
----------------------------
E. Thomas Arington, Chairman
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of October [22], 1999 (this
"Agreement"), is made by and among Duramed Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and the person named on the signature page hereto
(the "Initial Investor").
WITNESSETH:
WHEREAS, in connection with the Private Securities Subscription
Agreement, dated as of October 19, 1999, between the Initial Investor and the
Company (the "Subscription Agreement"), the Company has agreed, upon the terms
and subject to the conditions of the Subscription Agreement, to issue and sell
to the Initial Investor 1,666,666 shares of Common Stock of the Company (the
"Common Shares"); and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Common Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investor and any transferee
or assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act on Form S-3, if available, or
such other
<PAGE>
appropriate registration form promulgated by the United States Securities and
Exchange Commission ("SEC") as shall be selected by the Company if Form S-3 is
unavailable, and, when requested by the Initial Investor or any Investor
pursuant to Section 2(c) hereof, shall (A) be reasonably acceptable to the
holders of a majority of the Registrable Securities to which such registration
relates, and (B) permit the disposition of Registrable Securities in accordance
with the intended method or methods specified in the Investor's request for such
registration, and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.
(iii) "Registrable Securities" means the Common
Shares.
(iv) "Registration Statement" means a registration statement
under the Securities Act registering securities of the Company for resale.
(b) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription Agreement.
2. Registration. The Company will file a Registration Statement with
the SEC registering the Common Shares within thirty (30) days after the Closing
of the purchase of the Shares (the "Closing Date"). The Company shall take all
reasonable steps to cause the Registration Statement to be declared effective by
the SEC as soon as practicable.
3. Obligations of the Company. In connection with the registration of
the Registrable Securities, the Company shall:
(a) File the Registration Statement pursuant to Rule 415, and keep the
Registration Statement effective pursuant to Rule 415 at all times until such
date as is two years after the date such Registration Statement is first ordered
effective by the SEC; provided, however, that during any period in which the
Registrable Securities shall constitute fewer than 3% of the Company's
outstanding Common Stock, the Company shall not be required to maintain the
registration of Registrable Securities pursuant to this Agreement. In any case,
the Registration Statement (including any amendments and supplements thereto and
prospectuses contained therein) filed by the Company shall not contain any
untrue statement of a material fact or omit to state a material
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fact required to be stated therein, or necessary to make the
statements therein not misleading;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until such
date as is two years after the date such Registration Statement is first ordered
effective by the SEC, and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement, and any such prospectus supplement or post-effective
amendment shall contain such information as the Investors shall agree should be
included therein relating to the sale and distribution of the Registrable
Securities;
(c) furnish to each Investor whose Registrable Securities are included
in the Registration Statement, such number of copies of a prospectus, including
a preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;
(d) use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
blue sky laws of such jurisdictions as the Investors who hold a majority in
interest of the Registrable Securities being offered reasonably request, (ii)
prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements, (iii) take such other actions as may
be necessary to maintain such registrations and qualifications in effect at all
times until such date as is the earlier of three years after the date such
Registration Statement is first ordered effective by the SEC or is three years
after the Initial Investor acquired the Common Shares and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (I) qualify to do
business in any jurisdiction where it would not otherwise be required to
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<PAGE>
qualify but for this Section 3(d), (II) subject itself to general taxation in
any such jurisdiction, (III) file a general consent to service of process in any
such jurisdiction, (IV) provide any undertakings that cause more than nominal
expense or burden to the Company or (V) make any change in its charter or
by-laws, which in each case the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its stockholders;
(e) in the event Investors who hold a majority in interest of the
Registrable Securities being offered in the offering select underwriters for the
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering;
(f) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver a number of copies of such supplement
or amendment to each Investor as such Investor may reasonably request;
(g) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other suspension
of effectiveness of the Registration Statement at the earliest possible time,
and exercise best efforts to cause such suspension or stop order to be
withdrawn;
(h) permit a single firm of counsel designated as selling stockholders'
counsel by the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the Registration
Statement and all amendments and supplements thereto a reasonable period of time
prior to their filing
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<PAGE>
with the SEC, and shall not file any document in a form to
which such counsel reasonably objects;
(i) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the Securities Act) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next following the date
of the Registration Statement;
(j) at the request of the Investors who hold a majority in interest of
the Registrable Securities being sold pursuant to such registration, furnish on
the date that Registrable Securities are delivered to an underwriter for sale in
connection with the Registration Statement (i) a letter, dated such date, from
the Company's independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering addressed to the underwriters; and (ii) an
opinion, dated such date, from counsel representing the Company for purposes of
such Registration Statement, in form and substance as is customarily given in an
underwritten public offering, addressed to the underwriters and Investors;
(k) make available for inspection by any Investor whose Registrable
Securities are being sold pursuant to such registration, any underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant or other agent retained by any such Investor or underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable each Inspector to
exercise its due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence; provided, however, that
each Inspector shall hold in confidence and shall not make any disclosure
(except to an Investor) of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court or
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<PAGE>
governmental body of competent jurisdiction or (iii) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3(k). Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the Records deemed confidential. The Company shall hold
in confidence and shall not make any disclosure of information concerning an
Investor provided to the Company pursuant to Section 4(e) hereof unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company agrees that
it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor and
allow such Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information;
(l) use its best efforts either to (i) cause all the Registrable
Securities covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on which
similar securities issued by the Company are then listed, if any, if the listing
of such Registrable Securities is then permitted under the rules of such
exchange or (ii) secure designation of all the Registrable Securities covered by
the Registration Statement as a National Association of Securities Dealers
Automated Quotations System ("Nasdaq") "national market system security" within
the meaning of Rule 11Aa2-1 of the SEC under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the quotation of
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<PAGE>
the Registrable Securities on the Nasdaq National Market System or, if, despite
the Company's best efforts to satisfy the preceding clause (i) or (ii), the
Company is unsuccessful in satisfying the preceding clause (i) or (ii), to
secure listing on a national securities exchange or Nasdaq authorization and
quotation for such Registrable Securities and, without limiting the generality
of the foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities;
(m) provide a CUSIP number, and a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement;
(n) cooperate with the Investors who hold Registrable Securities being
sold and the managing underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be sold pursuant to the
denominations or amounts as the case may be, and registered in such names as the
managing underwriter or underwriters, if any, or the Investors may reasonably
request; and, within five business days after a Registration Statement which
includes Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel selected by the Company to deliver,
to the transfer agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) instructions to the transfer agent to issue new stock certificates
without a legend and an opinion of such counsel that the Common Shares have been
registered; and
(o) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement;
4. Obligations of the Investors. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Agreement with respect to each Investor that
such Investor shall furnish to the Company such information
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<PAGE>
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(c) In the event Investors holding a majority in interest of the
Registrable Securities being registered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement;
(d) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice; and
(e) No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the
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<PAGE>
Investors entitled hereunder to approve such arrangements, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and other fees and expenses of investment
bankers and any manager or managers of such underwriting and legal expenses of
the underwriter applicable with respect to its Registrable Securities, in each
case to the extent not payable by the Company pursuant to the terms of this
Agreement.
5. Expenses of Registration. All expenses (other than underwriting
discounts and commissions and other fees and expenses of investment bankers and
other than brokerage commissions) incurred in connection with registrations,
filings or qualifications pursuant to Section 3, including, without limitation,
all registration, listing and qualifications fees, printers and accounting fees
and the fees and disbursements of counsel for the Company, shall be borne by the
Company; provided, however, that the Investors shall bear the fees and
out-of-pocket expenses of the legal counsel selected by the Investors pursuant
to Section 3(h) hereof.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities, the directors, if
any, of such Investor, the officers, if any, of such Investor, each person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act, any underwriter (as defined in the Securities Act) for the
Investors, the directors, if any, of such underwriter and the officers, if any,
of such underwriter, and each person, if any, who controls any such underwriter
within the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any losses, claims, damages, expenses or
liabilities (joint or several) (collectively "Claims") to which any of them
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations in the Registration Statement, or any post-effective
amendment
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<PAGE>
thereof, or any prospectus included therein: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any post-effective amendment thereof or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus if
used prior to the effective date of such Registration Statement, or contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state securities law or
any rule or regulation (the matters in the foregoing clauses (i) through (iii)
being collectively, "Violations"). Subject to the restrictions set forth in
Section 6(d) with respect to the number of legal counsel, the Company shall
reimburse the Investors and each such underwriter or controlling person,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a) shall not apply (I) to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
and (II) to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Persons and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to indemnify and hold harmless, to
the same extent and in the same manner set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who
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controls the Company within the meaning of the Securities Act or the Exchange
Act, any underwriter and any other stockholder selling securities pursuant to
the Registration Statement or any of its directors or officers or any person who
controls such stockholder or underwriter within the meaning of the Securities
Act or the Exchange Act (collectively and together with an Indemnified Person,
an "Indemnified Party"), against any Claim to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs (I) in reliance upon
and in conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement or
(II) due to the Investor's violation of Regulation M, Rules 100 - 105, under the
Exchange Act; and such Investor will promptly reimburse any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
such Investor, which consent shall not be unreasonably withheld; provided
further, however, that the Investor shall be liable under this Section 6(b) for
only that amount of a Claim as does not exceed the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and this indemnifying party shall
have the right to
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participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel reasonably satisfactory to the indemnifying
parties; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and other party represented by such
counsel in such proceeding. The Company shall pay for only one separate legal
counsel for the Investors; such legal counsel shall be selected by the Investors
holding a majority in interest of the Registrable Securities. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
7. Contribution. To the extent any indemnification provided for herein
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6, (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation and (c)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. Reports under Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 or any other similar rule or regulation of
the SEC that may at any
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time permit the Investors to sell securities of the Company to the public
without registration, until such time as the Investors have sold all the
Registrable Securities pursuant to a Registration Statement or Rule 144, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act,
and maintain its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. Assignment of the Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to transferees or assignees of all or
any portion of such securities only if: (a) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee and (ii) the securities with
respect to which such registration rights are being transferred or assigned, (b)
such transferee is an affiliate of the Company or immediately following such
transfer or assignment such securities will be restricted securities for
purposes of Rule 144 under the Securities Act and (c) at or before the time the
Company received the written notice contemplated by clause (a) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein.
10. Amendment of Registration Rights. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
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written consent of the Company and Investors who hold a majority in interest of
the Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
or when sent by registered mail, return receipt requested, addressed (i) if to
the Company, at Duramed Pharmaceuticals, Inc., 7155 East Kemper Road,
Cincinnati, Ohio, 45249, Attention: Timothy J. Holt, Senior Vice President and
Chief Financial Officer; (ii) if to the Initial Investor, at the address set
forth under its name in the Subscription Agreement; and (iii) if to any other
Investor, at such address as such Investor shall have provided in writing to the
Company, or at such other address as such party furnishes by notice given in
accordance with this Section 11(b), and shall be effective, when personally
delivered, upon receipt, and when so sent by certified mail, four business days
after deposit with the United States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts
of the State of Delaware and the Federal Courts of the United States of America
located in the State of Delaware solely in respect of the interpretation and
enforcement of the provisions of this Agreement, and in respect of the
transactions contemplated hereby, and hereby waive, and agree not to assert, as
a defense in any action,
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suit or proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in said courts or that the venue
thereof may not be appropriate or that this Agreement may not be enforced in or
by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
9(i) or in such other manner as may be permitted by law shall be valid and
sufficient service thereof.
(e) This Agreement and the Subscription Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in the Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
DURAMED PHARMACEUTICALS, INC.
By
-------------------------------
Timothy Holt
Chief Financial Officer
INITIAL INVESTOR
SOLVAY PHARMACEUTICALS, INC.
By
------------------------------
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of ___________, 1999 (this
"Agreement"), is made by and among Duramed Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and the person named on the signature page hereto
(the "Initial Investor").
WITNESSETH:
WHEREAS, in connection with the Private Securities Subscription
Agreement, dated as of October 19, 1999, between the Initial Investor and the
Company (the "Subscription Agreement"), the Company has agreed, upon the terms
and subject to the conditions of the Subscription Agreement, to issue and sell
to the Initial Investor 1,333,334 shares of Common Stock of the Company (the
"Common Shares"); and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Common Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investor and any transferee
or assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act on Form S-3, if available, or
such other
<PAGE>
appropriate registration form promulgated by the United States Securities and
Exchange Commission ("SEC") as shall be selected by the Company if Form S-3 is
unavailable, and, when requested by the Initial Investor or any Investor
pursuant to Section 2(c) hereof, shall (A) be reasonably acceptable to the
holders of a majority of the Registrable Securities to which such registration
relates, and (B) permit the disposition of Registrable Securities in
accordance with the intended method or methods specified in the Investor's
request for such registration, and the declaration or ordering of effectiveness
of such Registration Statement by the SEC.
(iii) "Registrable Securities" means the Common
Shares.
(iv) "Registration Statement" means a registration statement
under the Securities Act registering securities of the Company for resale.
(b) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription Agreement.
2. Registration. The Company will file a Registration Statement with
the SEC registering the Common Shares within thirty (30) days after the Closing
of the purchase of the Shares (the "Closing Date"). The Company shall take all
reasonable steps to cause the Registration Statement to be declared effective by
the SEC as soon as practicable.
3. Obligations of the Company. In connection with the registration of
the Registrable Securities, the Company shall:
(a) File the Registration Statement pursuant to Rule 415, and keep the
Registration Statement effective pursuant to Rule 415 at all times until such
date as is two years after the date such Registration Statement is first ordered
effective by the SEC; provided, however, that during any period in which the
Registrable Securities shall constitute fewer than 3% of the Company's
outstanding Common Stock, the Company shall not be required to maintain the
registration of Registrable Securities pursuant to this Agreement. In any case,
the Registration Statement (including any amendments and supplements thereto and
prospectuses contained therein) filed by the Company shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated
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<PAGE>
therein, or necessary to make the statements therein not
misleading;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until such
date as is two years after the date such Registration Statement is first ordered
effective by the SEC, and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement, and any such prospectus supplement or post-effective
amendment shall contain such information as the Investors shall agree should be
included therein relating to the sale and distribution of the Registrable
Securities;
(c) furnish to each Investor whose Registrable Securities are included
in the Registration Statement, such number of copies of a prospectus, including
a preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;
(d) use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
blue sky laws of such jurisdictions as the Investors who hold a majority in
interest of the Registrable Securities being offered reasonably request, (ii)
prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements, (iii) take such other actions as may
be necessary to maintain such registrations and qualifications in effect at all
times until such date as is the earlier of three years after the date such
Registration Statement is first ordered effective by the SEC or is three years
after the Initial Investor acquired the Common Shares and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (I) qualify to do
business in any jurisdiction where it would not otherwise be required to
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<PAGE>
qualify but for this Section 3(d), (II) subject itself to general taxation in
any such jurisdiction, (III) file a general consent to service of process in any
such jurisdiction, (IV) provide any undertakings that cause more than nominal
expense or burden to the Company or (V) make any change in its charter or
by-laws, which in each case the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its stockholders;
(e) in the event Investors who hold a majority in interest of the
Registrable Securities being offered in the offering select underwriters for the
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering;
(f) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver a number of copies of such supplement
or amendment to each Investor as such Investor may reasonably request;
(g) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other suspension
of effectiveness of the Registration Statement at the earliest possible time,
and exercise best efforts to cause such suspension or stop order to be
withdrawn;
(h) permit a single firm of counsel designated as selling stockholders'
counsel by the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the Registration
Statement and all amendments and supplements thereto a reasonable period of time
prior to their filing
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<PAGE>
with the SEC, and shall not file any document in a form to which such counsel
reasonably objects;
(i) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the Securities Act) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next following the date
of the Registration Statement;
(j) at the request of the Investors who hold a majority in interest of
the Registrable Securities being sold pursuant to such registration, furnish on
the date that Registrable Securities are delivered to an underwriter for sale in
connection with the Registration Statement (i) a letter, dated such date, from
the Company's independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering addressed to the underwriters; and (ii) an
opinion, dated such date, from counsel representing the Company for purposes of
such Registration Statement, in form and substance as is customarily given in an
underwritten public offering, addressed to the underwriters and Investors;
(k) make available for inspection by any Investor whose Registrable
Securities are being sold pursuant to such registration, any underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant or other agent retained by any such Investor or underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable each Inspector to
exercise its due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence; provided, however, that
each Inspector shall hold in confidence and shall not make any disclosure
(except to an Investor) of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court or
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<PAGE>
governmental body of competent jurisdiction or (iii) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3(k). Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the Records deemed confidential. The Company shall hold
in confidence and shall not make any disclosure of information concerning an
Investor provided to the Company pursuant to Section 4(e) hereof unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company agrees that
it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor and
allow such Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information;
(l) use its best efforts either to (i) cause all the Registrable
Securities covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on which
similar securities issued by the Company are then listed, if any, if the listing
of such Registrable Securities is then permitted under the rules of such
exchange or (ii) secure designation of all the Registrable Securities covered by
the Registration Statement as a National Association of Securities Dealers
Automated Quotations System ("Nasdaq") "national market system security" within
the meaning of Rule 11Aa2-1 of the SEC under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the quotation of
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<PAGE>
the Registrable Securities on the Nasdaq National Market System or, if, despite
the Company's best efforts to satisfy the preceding clause (i) or (ii), the
Company is unsuccessful in satisfying the preceding clause (i) or (ii), to
secure listing on a national securities exchange or Nasdaq authorization and
quotation for such Registrable Securities and, without limiting the generality
of the foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities;
(m) provide a CUSIP number, and a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement;
(n) cooperate with the Investors who hold Registrable Securities being
sold and the managing underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be sold pursuant to the
denominations or amounts as the case may be, and registered in such names as the
managing underwriter or underwriters, if any, or the Investors may reasonably
request; and, within five business days after a Registration Statement which
includes Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel selected by the Company to deliver,
to the transfer agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) instructions to the transfer agent to issue new stock certificates
without a legend and an opinion of such counsel that the Common Shares have been
registered; and
(o) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement;
4. Obligations of the Investors. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Agreement with respect to each Investor that
such Investor shall furnish to the Company such information
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<PAGE>
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(c) In the event Investors holding a majority in interest of the
Registrable Securities being registered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement;
(d) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice; and
(e) No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the
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<PAGE>
Investors entitled hereunder to approve such arrangements, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and other fees and expenses of investment
bankers and any manager or managers of such underwriting and legal expenses of
the underwriter applicable with respect to its Registrable Securities, in each
case to the extent not payable by the Company pursuant to the terms of this
Agreement.
5. Expenses of Registration. All expenses (other than underwriting
discounts and commissions and other fees and expenses of investment bankers and
other than brokerage commissions) incurred in connection with registrations,
filings or qualifications pursuant to Section 3, including, without limitation,
all registration, listing and qualifications fees, printers and accounting fees
and the fees and disbursements of counsel for the Company, shall be borne by the
Company; provided, however, that the Investors shall bear the fees and
out-of-pocket expenses of the legal counsel selected by the Investors pursuant
to Section 3(h) hereof.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities, the directors, if
any, of such Investor, the officers, if any, of such Investor, each person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act, any underwriter (as defined in the Securities Act) for the
Investors, the directors, if any, of such underwriter and the officers, if any,
of such underwriter, and each person, if any, who controls any such underwriter
within the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any losses, claims, damages, expenses or
liabilities (joint or several) (collectively "Claims") to which any of them
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations in the Registration Statement, or any post-effective
amendment
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<PAGE>
thereof, or any prospectus included therein: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any post-effective amendment thereof or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus if
used prior to the effective date of such Registration Statement, or contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state securities law or
any rule or regulation (the matters in the foregoing clauses (i) through (iii)
being collectively, "Violations"). Subject to the restrictions set forth in
Section 6(d) with respect to the number of legal counsel, the Company shall
reimburse the Investors and each such underwriter or controlling person,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a) shall not apply (I) to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
and (II) to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Persons and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to indemnify and hold harmless, to
the same extent and in the same manner set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who
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<PAGE>
controls the Company within the meaning of the Securities Act or the Exchange
Act, any underwriter and any other stockholder selling securities pursuant to
the Registration Statement or any of its directors or officers or any person who
controls such stockholder or underwriter within the meaning of the Securities
Act or the Exchange Act (collectively and together with an Indemnified Person,
an "Indemnified Party"), against any Claim to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs (I) in reliance upon
and in conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement or
(II) due to the Investor's violation of Regulation M, Rules 100 - 105, under the
Exchange Act; and such Investor will promptly reimburse any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
such Investor, which consent shall not be unreasonably withheld; provided
further, however, that the Investor shall be liable under this Section 6(b) for
only that amount of a Claim as does not exceed the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof and this indemnifying party shall have the right to
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<PAGE>
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel reasonably satisfactory to the indemnifying
parties; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and other party represented by such
counsel in such proceeding. The Company shall pay for only one separate legal
counsel for the Investors; such legal counsel shall be selected by the Investors
holding a majority in interest of the Registrable Securities. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
7. Contribution. To the extent any indemnification provided for herein
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6, (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation and (c)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. Reports under Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 or any other similar rule or regulation of
the SEC that may at any
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<PAGE>
time permit the Investors to sell securities of the Company to the public
without registration, until such time as the Investors have sold all the
Registrable Securities pursuant to a Registration Statement or Rule 144, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act,
and maintain its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. Assignment of the Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to transferees or assignees of all or
any portion of such securities only if: (a) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee and (ii) the securities with
respect to which such registration rights are being transferred or assigned, (b)
such transferee is an affiliate of the Company or immediately following such
transfer or assignment such securities will be restricted securities for
purposes of Rule 144 under the Securities Act, and (c) at or before the time the
Company received the written notice contemplated by clause (a) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein.
10. Amendment of Registration Rights. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
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<PAGE>
written consent of the Company and Investors who hold a majority in interest of
the Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
or when sent by registered mail, return receipt requested, addressed (i) if to
the Company, at Duramed Pharmaceuticals, Inc., 7155 East Kemper Road,
Cincinnati, Ohio, 45249, Attention: Timothy J. Holt, Senior Vice President and
Chief Financial Officer; (ii) if to the Initial Investor, at the address set
forth under its name in the Subscription Agreement; and (iii) if to any other
Investor, at such address as such Investor shall have provided in writing to the
Company, or at such other address as such party furnishes by notice given in
accordance with this Section 11(b), and shall be effective, when personally
delivered, upon receipt, and when so sent by certified mail, four business days
after deposit with the United States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts
of the State of Delaware and the Federal Courts of the United States of America
located in the State of Delaware solely in respect of the interpretation and
enforcement of the provisions of this Agreement, and in respect of the
transactions contemplated hereby, and hereby waive, and agree not to assert, as
a defense in any action,
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<PAGE>
suit or proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in said courts or that the venue
thereof may not be appropriate or that this Agreement may not be enforced in or
by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
9(i) or in such other manner as may be permitted by law shall be valid and
sufficient service thereof.
(e) This Agreement and the Subscription Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in the Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
DURAMED PHARMACEUTICALS, INC.
By
-------------------------------
Timothy Holt
Chief Financial Officer
INITIAL INVESTOR
SOLVAY PHARMACEUTICALS, INC.
By
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