<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 12, 1999
REGISTRATION STATEMENT NO. 333-70107
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
PHARMACIA & UPJOHN, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2834 98-0155411
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
-------------------------
<TABLE>
<S> <C>
95 CORPORATE DRIVE DON W. SCHMITZ, ESQ.
BRIDGEWATER, NEW JERSEY 08807 PHARMACIA & UPJOHN, INC.
(908) 306-4400 95 CORPORATE DRIVE
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, BRIDGEWATER, NEW JERSEY 08807
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL (908) 306-4400
EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
-------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
ANDREW D. SOUSSLOFF, ESQ. MARC M. ROSSELL, ESQ. EDWARD F. GREENE, ESQ.
SULLIVAN & CROMWELL SHEARMAN & STERLING CLEARY, GOTTLIEB, STEEN & HAMILTON
125 BROAD STREET 599 LEXINGTON AVENUE CITY PLACE HOUSE
NEW YORK, NEW YORK 10004 NEW YORK, NEW YORK 10022 55 BASINGHALL STREET
(212) 558-4000 (212) 848-4000 LONDON EC2V 5EH, ENGLAND
(011) (44171) 614-2200
</TABLE>
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the Securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than Securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY
THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION. DATED JANUARY 12, 1999.
31,101,116 SHARES
PHARMACIA &
UPJOHN
COMMON STOCK
LOGO
-------------------------
All of the shares of Common Stock in the offering are being sold by the selling
stockholder identified in this prospectus. The Company will not receive any of
the proceeds from the sale of the shares. The Company has agreed to repurchase
from the selling stockholder 1,769,912 shares of the 31,101,116 shares of Common
Stock offered hereby at a price per share described herein.
The Common Stock is listed on the New York Stock Exchange under the symbol
"PNU". The last reported sale price of the Common Stock on the New York Stock
Exchange on January 8, 1999 was $56.50 per share. Swedish Depositary Shares,
each representing one share of Common Stock, are traded on the Stockholm Stock
Exchange under the symbol "PHU".
See "Risk Factors" beginning on page 5 to read about certain factors you should
consider before buying shares of the Common Stock.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL(1)
--------- --------
<S> <C> <C>
Initial public offering price............................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to the selling stockholder....... $ $
</TABLE>
- ---------------
(1) The Company has agreed to purchase 1,769,912 shares of the 31,101,116 shares
being sold by the selling stockholder at a price per share equal to the
initial public offering price, less the underwriting discount. See "Share
Repurchase from the Selling Stockholder" and "Underwriting".
-------------------------
The underwriters may, under certain circumstances, purchase up to an additional
4,665,166 shares from the selling stockholder at the initial public offering
price less the underwriting discount.
-------------------------
The underwriters are severally underwriting the shares being offered. The
underwriters expect to deliver the shares against payment in New York, New York
on , 1999.
Joint Bookrunners and Joint Lead Managers
J.P. MORGAN & CO. GOLDMAN, SACHS & CO.
-------------------------
PROSPECTUS DATED , 1999
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE STOCKHOLM STOCK
EXCHANGE, IN THE OVER-THE-COUNTER MARKETS OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the U.S. Securities and Exchange Commission
(the "Commission") by the Company (File No. 1-11557) pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") are incorporated by reference in this
Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997 (the "1997 10-K");
2. The Company's Quarterly Reports on Form 10-Q for the periods ended March
31, 1998, June 30, 1998 and September 30, 1998;
3. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on October 24, 1995; and
4. The description of the Rights to purchase Participating Preferred Stock
of the Company contained in the Company's Registration Statement on Form
8-A filed on March 5, 1997.
All documents and reports filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the date of the termination of the offering shall be deemed to be incorporated
by reference in this Prospectus and thereby deemed to be part of this Prospectus
from the date of filing of such documents or reports. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified shall not
be deemed to constitute a part of the Prospectus except as so modified and any
statement so superseded shall not be deemed to constitute a part of this
Prospectus.
COPIES OF ANY DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS) MAY BE OBTAINED WITHOUT CHARGE BY ANY PERSON
(INCLUDING ANY BENEFICIAL OWNER) TO WHOM A PROSPECTUS IS DELIVERED BY CONTACTING
THE COMPANY AT 95 CORPORATE DRIVE, BRIDGEWATER, NEW JERSEY 08807, TELEPHONE:
(908) 306-4400, ATTENTION: INVESTOR RELATIONS.
-------------------------
FORWARD-LOOKING STATEMENTS
In addition to historical information, this Prospectus contains (or incorporates
by reference) certain "forward-looking statements", such as statements
concerning the Company's anticipated financial or product performance, its
ability to pay dividends, and other non-historical facts. Since these statements
are based on factors that involve risks and uncertainties, actual results may
differ materially from those expressed or implied by such forward-looking
statements. Such factors include, among others: sales and earnings projections;
the effectiveness of and expense estimates related to future projects including
restructuring plans, the Year 2000 date recognition problem and conversion to
the euro;
1
<PAGE> 4
management's ability to make further progress under the Company's global
turnaround program; the Company's ability to successfully market new and
existing products in new and existing domestic and international markets; the
success of the Company's research and development activities and the speed with
which regulatory authorizations and product rollouts may be achieved;
fluctuations in currency exchange rates; the effects of the Company's accounting
policies and general changes in generally accepted accounting practices; the
Company's exposure to product liability lawsuits and contingencies related to
actual or alleged environmental contamination; the Company's exposure to
antitrust lawsuits; social, legal and political developments, especially those
relating to health care reform and product liabilities; general economic and
business conditions; the Company's ability to attract and retain current
management and other employees of the Company; and other risks and factors
detailed in this Prospectus and the Company's other Exchange Act filings which
are incorporated by reference herein.
2
<PAGE> 5
THE COMPANY
Pharmacia & Upjohn, Inc. (the "Company") is a global pharmaceutical group that
researches, develops, manufactures, sells and markets a wide range of
prescription pharmaceutical products for humans. In addition, we manufacture and
sell non-prescription drugs, pharmaceutical chemicals and intermediate products
for use in our products and for sale to others. We also research, develop,
manufacture and market pharmaceutical products for animals, and we market
specialty products for hospital care and medical diagnostics. The Company was
formed in November 1995 through the combination (the "Combination") of Pharmacia
Aktiebolag ("Pharmacia") and The Upjohn Company ("Upjohn").
The Company's principal products include XALATAN(R), a novel therapy for
glaucoma; DETROL(R), an innovative therapy for overactive bladder;
GENOTROPIN(TM), a human growth hormone and the Company's leading product;
XANAX(R), a therapy for central nervous system disorders; CLEOCIN(R), an
antibiotic; MEDROL, a group of products to treat chronic inflammation disorders;
DEPO-PROVERA(TM), a contraceptive injection; NICORETTE(R), a line of nicotine
replacement products; CAMPTOSAR(R), a therapy for colorectal cancer; FRAGMIN(R),
a therapy for preventing blood clots; PHARMORUBICIN(R), a treatment for solid
tumors and leukemia; MIRAPEX/MIRAPEXIN(TM), a treatment for Parkinson's disease;
and ROGAINE(R), a non-prescription treatment for hair loss.
Through research and development and licensing agreements, the Company seeks to
develop innovative pharmaceuticals and other healthcare products that provide
high therapeutic benefits. The Company's research activities focus on four
medically important areas: infectious disease, metabolic disease, central
nervous system disorders and oncology. Our research is conducted primarily in
Kalamazoo, Michigan, Stockholm, Sweden and Milan, Italy.
CORPORATE STRATEGY
The Company is focused on the following strategic priorities:
Making the Merger Work. Since mid-1997, the Company has taken several steps to
enhance its operating performance, including making significant changes to its
senior management team and management structure, centralizing certain key
business functions at its new global headquarters in New Jersey, reducing
general and administrative expenses through the elimination of redundancies,
increasing organizational and operational efficiencies and fostering team spirit
throughout the organization.
Enhanced Top-Line Growth. The Company is developing its new and existing
product lines in order to improve revenue growth through increased sales force
support in key markets, including the United States, Germany and the United
Kingdom. In the third quarter of 1998, total consolidated sales, excluding
Biotech (which was contributed to a joint venture and is no longer
consolidated), grew 10%, principally as a result of a 14% volume increase. Sales
through September 30, 1998, excluding Biotech, grew 5%, principally as a result
of a 10% volume increase and a 28% growth in U.S. prescription pharmaceutical
sales. Since 1995, the percentage of sales from products introduced within the
last five years has increased from 4% to 21% of pharmaceutical sales, moving
closer to the Company's goal of 30% by the year 2000. The Company expects
limited revenue impact from patent expirations over the next five years.
Strengthened U.S. Presence. Because of the significance of the U.S. market to
the world-wide pharmaceutical industry, the Company is expanding its U.S.
prescription
3
<PAGE> 6
pharmaceutical sales force from 1,200 to 1,800 sales representatives, with a
greater percentage of the sales force calling on primary care physicians. The
Company expects its additional sales representatives to increase the market
awareness for recently launched products, such as DETROL(R) and XALATAN(R), as
well as products currently under development. Partly as a result of this
initiative, U.S. sales as a percentage of total consolidated sales, excluding
Biotech, increased to 37% for the first nine months of 1998, from 32% for the
same period in 1997.
Company-Wide Innovation. The Company relies upon innovation in discovery
research, product development, sales and marketing to enhance future
performance. Innovation in research and development is essential to the
introduction of successful new products. Examples of the Company's innovations
include the development of the oxazolidinones, the first new class of
antibiotics in over 30 years, and XALATAN(R), a breakthrough treatment for
glaucoma. To complement its internal product development pipeline, the Company
is actively seeking in-licensing opportunities and business partnerships. The
Company announced six new licensing agreements in 1998. Innovation in sales and
marketing has been particularly important for the success of products such as
DETROL(R), for which a staged roll-out through the sales force to physician
specialties was followed by direct-to-consumer advertising.
Focus on Essentials. The Company is increasing its focus on its key business
areas. To this end, the Company divested the majority of Biotech and its
nutrition business, allowing increased management attention to the faster
growing, higher margin pharmaceutical business. We installed new business
controls to more tightly manage the organization. We are emphasizing key growth
products in key markets when determining resource allocations. We continue to
adjust sales force productivity measures and incentives to align the activities
of field representatives with corporate goals. Finally, we are narrowing our
discovery research efforts to focus on infectious diseases, metabolic diseases,
central nervous system disorders and oncology.
SHARE REPURCHASE FROM THE SELLING STOCKHOLDER
The Company and the Selling Stockholder have entered into an agreement, dated as
of January 12, 1999 (the "Share Repurchase Agreement"), pursuant to which the
Company has agreed to purchase 1,769,912 shares of Common Stock from the Selling
Stockholder (the "Share Repurchase"), at a price per share equal to the initial
public offering price, less the underwriting discount. The Company will effect
the Share Repurchase by purchasing 1,769,912 shares of the 31,101,116 shares
being sold by the Selling Stockholder pursuant to this Prospectus. The Share
Repurchase is conditioned upon the completion of this offering. See
"Underwriting". The Share Repurchase is part of the Company's previously
announced plan to repurchase up to $1 billion of the outstanding shares of its
Common Stock.
4
<PAGE> 7
RISK FACTORS
Prior to making an investment decision, prospective investors should carefully
consider all of the information set forth in this Prospectus, including the
information incorporated by reference herein and the following risk factors.
COMPETITION
The pharmaceutical industry is highly competitive and rapidly changing. The
Company's principal competitors are major international corporations with
substantial resources for research and development, production and marketing.
Our products that are under patent protection face intense competition from
competitors' proprietary products. This competition may increase as new products
enter the market. We also face increasing competition from lower cost generic
products after patents on our products expire.
As new products enter the market, the Company's products may become obsolete or
our competitors' products may be more effective or more effectively marketed and
sold than our products.
A failure by the Company to maintain its competitive position could have a
material adverse effect on our business and results of operations.
PRICING
In addition to normal price competition in the marketplace, the prices of our
products are restricted by price controls imposed by governments and health care
providers in most countries where we sell products. Price controls operate
differently in different countries and can cause wide differences in prices
between markets. Currency fluctuations can aggravate these differences. The
existence of price controls can limit the revenues earned by the Company on its
products and may have an adverse effect on our business and results of
operations.
RESEARCH AND DEVELOPMENT
In order to remain competitive, the Company must commit substantial resources
each year to research and development. In the first nine months of 1998, the
Company spent approximately $838 million on research and development, and it
spent approximately $1,217 million on research and development in 1997.
The research and development process takes from 10 to 15 years from discovery to
commercial product launch. This process is conducted in various stages, and
during each stage there is a substantial risk that the Company will not achieve
its goals and have to abandon a product in which it has invested substantial
amounts. There can be no assurance that the Company will continue to succeed in
its research and development efforts. If the Company fails to continue
developing commercially successful products, or if competitors develop more
effective products or a greater number of successful new products, this could
have a material adverse effect on the Company's business and results of
operations.
PRODUCT REGULATION
The Company and its competitors are subject to strict government controls on the
development, manufacture, labeling, distribution and marketing of their
products. The Company must obtain and maintain regulatory approval for a
pharmaceutical product from a country's national regulatory agency before the
product may be sold in a particular country.
The submission of an application to a regulatory authority does not guarantee
that it will grant a license to market the product. Each authority may impose
its own requirements and delay or refuse to grant approval, even though a
product has been approved in another country.
5
<PAGE> 8
In the Company's principal markets, the approval process for a new product is
complex and lengthy. The time taken to obtain approval varies by country but
generally takes from six months to four years from the date of application. This
increases the cost to the Company of developing new products and increases the
risk that it will not succeed in selling them successfully.
PRODUCT LIABILITY
Product liability is a significant commercial risk for the Company. Substantial
damage awards have been made in certain jurisdictions against pharmaceutical
companies based upon claims for injuries allegedly caused by the use of their
products.
The Company is involved in a substantial number of product liability cases
claiming damages as a result of the use of the Company's products, including a
number of cases involving the drug HALCION(R). The Company believes that any
potentially unaccrued costs and liabilities associated with such matters will
not have a material adverse effect on the Company's consolidated financial
position, results of operations or liquidity. There can, however, be no
assurance that a future product liability claim or series of claims brought
against us would not have an adverse effect on our business or results of
operations.
ENVIRONMENTAL RISKS
We use hazardous materials, chemicals, viruses and compounds in our product
development programs and manufacturing processes. Although we believe that our
handling and disposing of these materials comply with applicable laws and
regulations, the risk of accidental contamination or injury still exists. If
such an accident occurred, we could be held liable for any damages or fines,
which could have an adverse effect on our business and results of operations.
The Company has made provision for various environmental liabilities, including
exposures related to several industrial and disposal sites and its closed
chemical plant in North Haven, Connecticut. The Company's estimates of the total
cost it will incur in connection with environmental situations could change
because of uncertainties at many sites regarding cleanup remedies, the estimated
cost of cleanup and the Company's share of the site's cleanup cost.
The Company may soon be required to submit a corrective measures study report to
the United States Environmental Protection Agency regarding the closed North
Haven chemical facility. As the corrective action process progresses, the
Company may need to reevaluate the amount of reserves designated for remediation
of the North Haven site as a result of changing circumstances. It is reasonably
possible that the Company will be required to make a material increase in
accrued liabilities for the North Haven site, but it is not possible to
determine what, if any, additional exposure exists at this time.
YEAR 2000
The Company has established a global Year 2000 program to review our systems and
to develop plans to correct Year 2000 date recognition problems. The program
consists of assessment and remediation of our information technology ("IT")
systems and embedded systems, assessment of high level business risks and the
development of contingency plans to address these risks. The Company expects to
complete compliance measures for its IT and embedded systems by mid-1999 and to
test these systems in the second half of 1999. We also are working with key
external parties whose systems may affect ours, in order to determine what
remediation and contingency actions may be necessary. As of September 30, 1998,
the Company had spent approximately $100 million of its total
6
<PAGE> 9
projected costs of $150 million for Year 2000-related compliance actions.
There can be no assurance that the Company's Year 2000 program will succeed.
Many factors outside our control could cause the Year 2000 problem to seriously
disrupt our operations. The more critical of these risks includes:
- Disruption in our supply of products due to internal Year 2000 failures,
and failures of raw material suppliers, third party manufacturers and
third party distributors;
- Infrastructure failures by utilities and communications providers;
- Internal failures in IT services and systems;
- Transportation industry failures that affect imports and exports;
- Interruption of the product regulatory filing process, such as a delay in
clinical trials or corruption of clinical trial data; and
- A major customer failure or interruption.
The Company expects to finalize its contingency plans to address these risks by
mid-1999. Management believes that our Year 2000 program will prevent the Year
2000 problem from having a material adverse effect on our business, financial
position, results of operations and liquidity. There can, however, be no
assurance that the Year 2000 problem will not have such an impact on the
Company.
CONVERSION TO THE EURO
On January 1, 1999, several European countries will begin operating with a new
common currency, the euro. The euro will completely replace these countries'
national currencies by January 1, 2002. The conversion to the euro will require
the Company to modify some of its systems and certain commercial arrangements.
The cost of this is not expected to be material. The conversion to the euro may
have competitive implications on pricing and marketing strategies, but any such
impact is not known at this time. The Company expects the conversion to have a
limited impact on its outstanding derivatives and other financial instruments,
and a limited impact on currency risk.
Management believes that the euro conversion will not have a significant impact
on the Company; however, it is uncertain what effects the new euro currency will
have on the marketplace. There can be no assurance that all problems will be
foreseen and corrected, or that there will not be a material disruption of our
business.
FOREIGN EXCHANGE FLUCTUATIONS
The Company records its transactions and prepares its financial statements in
U.S. dollars, but a significant portion of its earnings and expenditures are in
other currencies. Changes in exchange rates between the U.S. dollar and such
currencies can result in increases or decreases in the Company's costs and
earnings. Fluctuations in exchange rates between the U.S. dollar and other
currencies may also affect the book value of our assets outside the United
States and the amount of shareholders' equity. We seek to minimize our currency
exposure by engaging in hedging transactions, where we deem it appropriate.
7
<PAGE> 10
SUMMARY CONSOLIDATED FINANCIAL DATA
The summary consolidated financial data set forth below as of December 31, 1997,
1996 and 1995 and for each of the years in the three-year period ended December
31, 1997 have been derived from, and are qualified by reference to, the audited
consolidated financial statements of the Company for such periods, which are
incorporated by reference in this Prospectus from the Company's 1997 10-K (the
"Audited Consolidated Financial Statements"). The Audited Consolidated Financial
Statements have been audited by PricewaterhouseCoopers LLP, independent public
accountants. The summary consolidated financial data set forth below as of and
for the nine-month periods ended September 30, 1998 and September 30, 1997 have
been derived from, and are qualified by reference to, the unaudited interim
consolidated financial statements of the Company for such periods, including
information as of and for the nine-month period ended September 30, 1998 which
has been incorporated by reference in this Prospectus from the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 1998 (the
"Interim Consolidated Financial Statements"). In the opinion of management, the
Interim Consolidated Financial Statements reflect all adjustments of a normal
recurring nature necessary for a fair statement of the results for the interim
periods presented. The results of the nine-month period ended September 30, 1998
are not necessarily indicative of the results that ultimately may be achieved
for the full year. The following data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", the financial statements, the notes thereto and the other financial
information incorporated by reference in this Prospectus.
8
<PAGE> 11
<TABLE>
<CAPTION>
NINE MONTHS
ENDED AND AT
SEPTEMBER 30, YEAR ENDED AND AT DECEMBER 31,
----------------- --------------------------------
1998 1997 1997 1996 1995
------- ------ -------- -------- --------
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net sales......................... $ 4,909 $4,889 $ 6,586 $ 7,176 $ 6,949
Other revenue..................... 101 98 124 110 146
------- ------ ------- ------- -------
Total operating revenue......... 5,010 4,987 6,710 7,286 7,095
------- ------ ------- ------- -------
Cost of products sold............. 1,493 1,529 2,049 2,116 1,967
Research and development.......... 838 832 1,217 1,266 1,254
Marketing, administrative and
other........................... 1,952 1,839 2,665 2,642 2,617
Biotech(1)........................ (33) 31 73 -- --
Restructuring charges............. -- 125 316 518 104
Merger costs...................... -- -- -- 67 138
------- ------ ------- ------- -------
Total operating costs and
expenses..................... 4,250 4,356 6,320 6,609 6,080
------- ------ ------- ------- -------
Operating income.................. 760 631 390 677 1,015
Net financial income(2)........... 55 53 78 161 121
------- ------ ------- ------- -------
Earnings before income taxes...... 815 684 468 838 1,136
------- ------ ------- ------- -------
Net earnings...................... 554 451 323 562 739
Net earnings per common share:
Basic........................... $ 1.07 $ 0.87 $ 0.61 $ 1.08 $ 1.44
Diluted......................... 1.05 0.86 0.61 1.07 1.41
BALANCE SHEET DATA:
Cash and cash equivalents......... $ 1,005 $ 926 $ 775 $ 641 $ 841
Short-term investments............ 182 381 539 696 974
Total assets...................... 10,267 10,487 10,380 11,173 11,461
Short-term debt(3)................ 437 267 401 235 524
Long-term debt and ESOP debt(4)... 558 794 634 823 870
Total shareholders' equity........ 5,651 5,943 5,538 6,241 6,387
Total liabilities and
shareholders' equity............ 10,267 10,487 10,380 11,173 11,461
</TABLE>
- -------------------------
(1) In August 1997, the Company merged its biotechnology supply business,
Pharmacia Biotech, with Amersham Life Science, a division of Amersham,
International plc, in a noncash transaction that did not result in the
recognition of a gain or loss. The merger created a new company, Amersham
Pharmacia Biotech Ltd. The Company owns 45% of the new company which is
accounted for using the equity method. Biotech represents the Company's
share of Amersham Pharmacia Biotech Ltd.'s pretax earnings and, in 1997,
includes the costs associated with the merger.
(2) Net financial income includes interest income, interest expense, currency
exchange gains (losses) and all other, net.
(3) Including current maturities of long-term debt.
(4) See Note 11 to the Audited Consolidated Financial Statements incorporated by
reference herein.
9
<PAGE> 12
CAPITALIZATION
The following table summarizes the consolidated capital structure of the Company
at September 30, 1998.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------
(UNAUDITED)
(DOLLARS IN
MILLIONS)
<S> <C>
Long-term debt(1):
Medium-Term Notes......................................... $ 35
5.875% Notes due 2000..................................... 200
Other long-term debt(2)................................... 323
-------
Total long-term debt.............................. 558
-------
Shareholders' equity:
Preferred stock, one cent par value; at stated value;
authorized 100,000,000 shares; issued 6,889 shares..... 278
Common stock, one cent par value; authorized 1,500,000,000
shares; issued 508,648,707 shares...................... 5
Capital in excess of par value............................ 1,385
Retained earnings......................................... 5,497
ESOP-related accounts..................................... (246)
Treasury stock (421,346 shares)........................... (17)
Accumulated other comprehensive income.................... (1,251)
-------
Total shareholders' equity........................ 5,651
-------
Total capitalization........................................ $ 6,209
=======
</TABLE>
- -------------------------
(1) Excludes current maturities of long-term debt.
(2) Includes guarantee of ESOP debt of approximately $218 million.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the shares.
10
<PAGE> 13
MARKET PRICE INFORMATION
As of December 31, 1998, there were 507,908,744 shares of Common Stock issued
and outstanding. The Common Stock is traded on the New York Stock Exchange (the
"NYSE"), and Swedish Depositary Shares, each representing one share of Common
Stock, are traded on the Stockholm Stock Exchange (the "SSE"). The table below
sets forth, for the calendar quarters indicated, the high and low sale prices of
the Common Stock as reported on the NYSE Composite Tape and the Swedish
Depositary Shares as reported on the SSE.
<TABLE>
<CAPTION>
NYSE SSE
------------------ --------------------
HIGH LOW HIGH LOW
------- ------- -------- --------
(SEK PER SWEDISH
($ PER SHARE) DEPOSITARY SHARE)(1)
<S> <C> <C> <C> <C>
1996
First Quarter........................... $44.375 $35.875 305.0 234.0
Second Quarter.......................... $44.375 $36.625 292.0 249.0
Third Quarter........................... $44.625 $38.625 302.0 260.0
Fourth Quarter.......................... $42.750 $34.125 281.0 225.0
1997
First Quarter........................... $41.125 $35.750 307.0 262.5
Second Quarter.......................... $36.875 $27.500 284.0 214.5
Third Quarter........................... $38.625 $33.938 310.0 264.0
Fourth Quarter.......................... $37.500 $28.875 294.0 215.0
1998
First Quarter........................... $45.875 $33.750 356.0 270.0
Second Quarter.......................... $46.688 $38.250 369.0 297.0
Third Quarter........................... $51.688 $40.438 405.0 323.0
Fourth Quarter (through December 31,
1998)................................. $57.250 $44.875 460.0 340.0
</TABLE>
- ---------------
(1) On December 31, 1998, the noon buying rate in New York City for cable
transfers in Swedish kroner as certified for customers purposes by the
Federal Reserve Bank of New York was US$1.00 = SEK8.1.
11
<PAGE> 14
DIVIDENDS
The Company declared a quarterly dividend of $0.27 per share of Common Stock for
each quarter during the years ended December 31, 1996 and 1997, and for each
quarter of the nine-month period ended September 30, 1998.
It is the long-term objective of the Company's Board of Directors that the
aggregate dividends declared on the shares of Common Stock in each year will
range between 40% and 50% of the consolidated net income of the Company in such
year. However, the declaration and payment of future dividends will be dependent
on the Company's income, financial condition and capital and cash requirements,
restrictions on dividends under applicable laws governing the Company, as well
as other factors affecting the Company. Accordingly, there can be no assurance
that dividends will be paid in the future nor any assurance as to the amount
thereof.
SELLING STOCKHOLDER
Forvaltningsaktiebolaget Stattum (the "Selling Stockholder") is a limited
liability company organized under the laws of the Kingdom of Sweden. The Selling
Stockholder is wholly owned by the Kingdom of Sweden.
Prior to the offering, the Selling Stockholder owned 35,766,282 shares, or
approximately 7.0% of the Common Stock then outstanding. The Selling Stockholder
intends to sell all of its shares in connection with the offering. Following the
offering, the Selling Stockholder will own no shares of the Common Stock if the
underwriters exercise their option to purchase additional shares, and 4,665,166
shares if the underwriters do not exercise any part of this option. See
"Underwriting".
In connection with the Combination, the Selling Stockholder, the Company, Upjohn
and Pharmacia entered into a Registration Rights Agreement (the "Registration
Rights Agreement"), pursuant to which the Selling Stockholder has the right,
among other things, to require the Company to register for resale under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), all or any part of
the shares of Common Stock acquired by the Selling Stockholder as a result of
the Combination. The Registration Rights Agreement provides that the Company
will pay certain costs and expenses incurred in connection with any such
registration, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses and fees and disbursements of counsel
and accountants for the Company. In accordance with the Registration Rights
Agreement, the Selling Stockholder has agreed to pay certain expenses in
connection with the offering. See "Underwriting".
Pursuant to the Registration Rights Agreement, the Company filed the
Registration Statement (as defined below) of which this Prospectus forms a part
and has undertaken certain obligations in connection with such Registration
Statement, including the obligation to use its reasonable best efforts to keep
such Registration Statement effective for at least 180 days and to indemnify the
Selling Stockholder and the Underwriters against certain liabilities, including
liabilities under the Securities Act. In accordance with the Registration Rights
Agreement, the Selling Stockholder has agreed to indemnify the Company for
certain liabilities, including liabilities under the Securities Act.
12
<PAGE> 15
UNDERWRITING
The Selling Stockholder, the Company and the underwriters for the offering (the
"Underwriters") named below have entered into an underwriting agreement with
respect to the shares being offered. Subject to certain conditions, each
Underwriter has severally agreed to purchase the number of shares indicated on
the following table.
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- ------------ ----------------
<S> <C>
J.P. Morgan Securities Inc. ................................
Goldman, Sachs & Co. .......................................
----------
Total............................................. 31,101,116(1)
==========
</TABLE>
- ---------------
(1) Pursuant to the Share Repurchase Agreement, the Company will purchase
1,769,912 of the shares purchased by the Underwriters from the Selling
Stockholder at the same price per share at which the Underwriters will
purchase the shares from the Selling Stockholder. See "Share Repurchase from
the Selling Stockholder".
-------------------------
If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional
4,665,166 shares from the Selling Stockholder to cover such sales. They may
exercise that option for 30 days. If any shares are purchased pursuant to this
option, the Underwriters will severally purchase shares in approximately the
same proportion as set forth in the table above.
The following table shows the per share and total underwriting discounts and
commissions to be paid to the Underwriters by the Selling Stockholder. Such
amounts are shown assuming both no exercise and full exercise of the
Underwriters' option to purchase 4,665,166 additional shares.
<TABLE>
<CAPTION>
PAID BY THE SELLING
STOCKHOLDER
--------------------
NO FULL
EXERCISE EXERCISE
-------- --------
<S> <C> <C>
Per Share............ $ $
Total(1)............. $ $
</TABLE>
- ---------------
(1) The total underwriting discounts and commissions to be paid to the
Underwriters by the Selling Stockholder do not include any discounts or
commissions in respect of the 1,769,912 shares to be purchased by the
Company in the Share Repurchase. The Company will purchase such shares from
the Underwriters at the same price per share at which the Underwriters will
purchase the shares from the Selling Stockholder.
Shares sold by the Underwriters to the public will initially be offered at the
initial public offering price set forth on the cover of this Prospectus. The
Underwriters may sell shares outside the United States through their
international selling agents. Any shares sold by the Underwriters to securities
dealers may be sold at a discount of up to $ per share from the initial
public offering price. Any such securities dealers may resell any shares
purchased from the Underwriters to certain other brokers or dealers at a
discount of up to $ per share from the initial public offering price. If all
the shares are not sold at the initial offering price, the Underwriters may
change the offering price and the other selling terms.
In connection with the offering, certain purchasers outside the United States
may elect to take delivery of shares in the form of Swedish Depositary Shares.
13
<PAGE> 16
In the event that the Underwriters' overallotment option is not exercised in
full, the Selling Stockholder has agreed not to offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock or other securities of the
Company that are substantially similar to the shares of Common Stock, including
but not limited to any securities that are convertible into or exchangeable for,
or that represent the right to receive, shares of Common Stock or any such
substantially similar securities, for a period of 90 days after the date of this
Prospectus without the prior written consent of the Underwriters.
The Company has agreed not to issue, offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock or other securities of the Company that
are substantially similar to the shares of Common Stock, including but not
limited to any securities that are convertible into or exchangeable for, or that
represent the right to receive, shares of Common Stock or any such substantially
similar securities, for a period of 90 days after the date of this Prospectus
without the prior written consent of the Underwriters; provided, that this
restriction will not apply to issuances or sales of shares in connection with
(i) employee stock option, savings or compensation plans or dividend
reinvestment plans or the conversion of convertible securities outstanding on
the date of this Prospectus or (ii) a merger or other combination with, or
exchange offer for shares of, another entity.
Each Underwriter has also agreed that (a) it has not offered or sold and prior
to the date six months after the date of this Prospectus will not offer or sell
any shares of Common Stock to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995, (b) it has complied, and will
comply, with all applicable provisions of the Financial Services Act of 1986 of
Great Britain with respect to anything done by it in relation to the shares of
Common Stock in, from or otherwise involving the United Kingdom, and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issuance of the shares of
Common Stock to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1988 (Investment Advertisements) (Exemptions) Order 1996
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.
Buyers of shares of Common Stock offered hereby may be required to pay stamp
taxes and other charges in accordance with the laws and practices of the country
of purchase in addition to the initial public offering price.
In connection with the offering, the Underwriters may purchase and sell shares
of Common Stock in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater number of
shares than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the Common Stock while
the offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a particular
Underwriter repays to the Underwriters a portion of the underwriting discount
received by it because the Underwriters have repurchased shares sold by or for
the account of such Underwriter in stabilizing or short covering transactions.
14
<PAGE> 17
These activities by the Underwriters may stabilize, maintain or otherwise affect
the market price of the Common Stock. As a result, the price of the Common Stock
may be higher than the price that otherwise might exist in the open market. If
these activities are commenced, they may be discontinued by the Underwriters at
any time. These transactions may be effected on the NYSE, the SSE, in the
over-the-counter market or otherwise.
The Selling Stockholder has agreed in the Registration Rights Agreement to bear
the underwriting discount and certain other expenses in connection with the
offering of the shares of Common Stock. Certain costs and expenses incident to
the sale of the Common Stock offered, including registration and filing fees,
printing expenses, and fees and disbursements of counsel and accountants for the
Company, but excluding the fees and disbursements of counsel to the Selling
Stockholder, will be borne by the Company.
The Company and the Selling Stockholder have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act.
VALIDITY
The validity of the shares of Common Stock offered by this Prospectus will be
passed upon for the Company by Sullivan & Cromwell, New York, New York, and for
the Underwriters by Shearman & Sterling, New York, New York.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets of the Company as of December 31, 1997 and 1996,
and the consolidated statements of earnings, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1997, which have
been incorporated by reference in this Prospectus, have been included and
incorporated by reference herein in reliance on the report of
PricewaterhouseCoopers LLP, independent public accountants, given on the
authority of that firm as experts in auditing and accounting. With respect to
the unaudited interim financial information for the three-month periods ended
March 31, 1998 and 1997, the six-month periods ended June 30, 1998 and 1997 and
the nine-month periods ended September 30, 1998 and 1997, incorporated by
reference in this prospectus, the independent public accountants have reported
that they have applied limited procedures in accordance with professional
standards for a review of such information. However, their separate review
reports included in the Company's quarterly reports on Form 10-Q for the
quarters ended March 31, 1998 and 1997, June 30, 1998 and 1997 and September 30,
1998 and 1997, and incorporated by reference herein, state that they did not
audit and they do not express opinions on that interim financial information.
Accordingly, the degree of reliance on their review reports on such information
should be restricted in light of the limited nature of the review procedures
applied. The accountants are not subject to the liability provisions of Section
11 of the Securities Act of 1933 for their reports on the unaudited interim
financial information because those reports are not a "report" or a "part" of
the registration statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act.
AVAILABLE INFORMATION
The Company has filed with the Commission in Washington D.C. a registration
statement on Form S-3 (together with all amendments, exhibits and schedules
thereto, the "Registration Statement") under the Securities Act with respect to
the
15
<PAGE> 18
shares of Common Stock offered hereby. This Prospectus, which is part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the shares of Common Stock, reference is hereby made
to the Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein are not
necessarily complete and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each statement being qualified in all respects by such reference.
The Company is subject to the informational reporting requirements of the
Exchange Act and, in accordance therewith, files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information can be inspected and copies made at the public reference facilities
of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the Commission's regional offices at Suite 1400, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661 and Thirteenth Floor, Seven World Trade
Center, New York, New York 10048, and copies of such materials can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Information regarding the
Commission's public reference facilities may be obtained by calling the
Commission at 1-800-SEC-0330. The Commission also maintains an Internet site
that contains reports, proxy and information statements and other information
filed with the Commission by the Company at http://www.sec.gov.
The Common Stock is listed on the NYSE, and the periodic reports, proxy
statements and other information filed by the Company with the Commission are
available for inspection at the offices of the NYSE at 20 Broad Street, New
York, New York 10005.
16
<PAGE> 19
- ------------------------------------------------------
- ------------------------------------------------------
No dealer, salesperson or other person is authorized to give any information or
to represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is an offer to sell
only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
-------------------------
Table of Contents
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents
by Reference...................... 1
Forward-Looking Statements.......... 1
The Company......................... 3
Corporate Strategy.................. 3
Share Repurchase from the Selling
Stockholder....................... 4
Risk Factors........................ 5
Summary Consolidated Financial
Data.............................. 8
Capitalization...................... 10
Use of Proceeds..................... 10
Market Price Information............ 11
Dividends........................... 12
Selling Stockholder................. 12
Underwriting........................ 13
Validity............................ 15
Independent Public Accountants...... 15
Available Information............... 15
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
31,101,116 SHARES
PHARMACIA &
UPJOHN
COMMON STOCK
-------------------------
LOGO
-------------------------
J.P. MORGAN & CO.
GOLDMAN, SACHS & CO.
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is an estimate of the fees and expenses payable by the Company
in connection with the Common Stock being registered hereby:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee........ $ 547,563
Legal fees and expenses.................................... 300,000
Accountants' fees and expenses............................. 100,000
Blue sky fees and expenses................................. 10,000
Printing................................................... 120,000
----------
$1,077,563
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to award,
or a corporation's board of directors to grant, indemnity to directors and
officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. The Registrant's Certificate
of Incorporation and By-laws provide for indemnification of its directors,
officers, employees and other agents to the maximum extent permitted by the
Delaware General Corporation Law. In addition, the Registrant has entered into
Indemnification Agreements with its executive officers and directors. The
Registrant has also purchased and maintained insurance for its officers,
directors, employees or agents against liabilities which an officer, a director,
an employee or an agent may incur in his capacity as such.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <C> <S>
1 -- Form of Underwriting Agreement.
4 -- Restated Certificate of Incorporation and Restated By-laws
of Pharmacia & Upjohn (incorporated by reference to Exhibits
4.1 and 4.2 to Pharmacia & Upjohn's Registration Statement
on Form S-8 filed May 3, 1996).
+5 -- Opinion of Sullivan & Cromwell.
+15 -- Awareness Letter from PricewaterhouseCoopers LLP, concerning
unaudited interim financial information.
+23(a) -- Consent of PricewaterhouseCoopers LLP.
+23(b) -- Consent of Sullivan & Cromwell (included in Exhibit 5).
+24 -- Powers of Attorney (included in signature page).
</TABLE>
- ------------------
+Previously filed.
II-1
<PAGE> 21
(b) Financial Statement Schedules.
Schedules are omitted because they are either not required, are not applicable
or because equivalent information has been included in the financial statements,
the notes thereto or elsewhere herein.
(c) Reports, Opinions and Appraisals.
Not applicable.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 22
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN BRIDGEWATER, NEW JERSEY, ON THIS 12TH DAY OF JANUARY, 1999.
PHARMACIA & UPJOHN, INC.
By /s/FRED HASSAN
------------------------------------
Fred Hassan
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS BELOW
CONSTITUTES AND APPOINTS FRED HASSAN, CHRISTOPHER COUGHLIN, AND RICHARD COLLIER,
AND EACH OF THEM INDIVIDUALLY, HIS TRUE AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS,
WITH FULL POWER AND IN ANY AND ALL CAPACITIES, TO SIGN THIS REGISTRATION
STATEMENT AND ANY AND ALL AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO
THIS REGISTRATION STATEMENT, AND TO FILE SUCH REGISTRATION STATEMENT AND ALL
SUCH AMENDMENTS OR SUPPLEMENTS, WITH ALL EXHIBITS THERETO, AND OTHER DOCUMENTS
IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING
UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, AND EACH OF THEM, FULL POWER AND
AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE OR NECESSARY
TO BE DONE IN AND ABOUT THE PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE
MIGHT OR COULD DO IN PERSON, THEREBY RATIFYING AND CONFIRMING ALL THAT SAID
ATTORNEYS-IN-FACT AND AGENTS OR ANY OF THEM, OR THEIR OR HIS SUBSTITUTES OR
SUBSTITUTE, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE THEREOF.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ FRED HASSAN President and Chief Executive January 12, 1999
- --------------------------------------------------- Officer and Director
Fred Hassan
/s/ CHRISTOPHER COUGHLIN Executive Vice President and January 12, 1999
- --------------------------------------------------- Chief Financial Officer
Christopher Coughlin (Principal Financial Officer)
/s/ ROBERT THOMPSON Senior Vice President January 12, 1999
- --------------------------------------------------- (Principal Accounting
Robert Thompson Officer)
/s/ RICHARD H. BROWN Director January 12, 1999
- ---------------------------------------------------
Richard H. Brown
</TABLE>
II-3
<PAGE> 23
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ FRANK C. CARLUCCI Director January 12, 1999
- ---------------------------------------------------
Frank C. Carlucci
Director
- ---------------------------------------------------
Gustaf A. S. Douglas
Director
- ---------------------------------------------------
M. Kathryn Eickhoff
Director
- ---------------------------------------------------
J. Soren Gyll
/s/ R. L. BERTHOLD LINDQViST Director January 12, 1999
- ---------------------------------------------------
R. L. Berthold Lindqvist
Director
- ---------------------------------------------------
Olof G. Lund
/s/ C. STEVEN MCMILLAN Director January 12, 1999
- ---------------------------------------------------
C. Steven McMillan
/s/ WILLIAM U. PARFET Director January 12, 1999
- ---------------------------------------------------
William U. Parfet
Director
- ---------------------------------------------------
Ulla B. Reinius
/s/ BENGT SAMUELSSON Director January 12, 1999
- ---------------------------------------------------
Bengt Samuelsson
</TABLE>
II-4
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
<C> <C> <S> <C>
1 -- Form of Underwriting Agreement.
4 -- Restated Certificate of Incorporation and Restated By-laws
of Pharmacia & Upjohn (incorporated by reference to Exhibits
4.1 and 4.2 to Pharmacia & Upjohn's Registration Statement
on Form S-8 filed May 3, 1996).
+5 -- Opinion of Sullivan & Cromwell.
+15 -- Awareness Letter from PricewaterhouseCoopers LLP, concerning
unaudited interim financial information.
+23(a) -- Consent of PricewaterhouseCoopers LLP.
+23(b) -- Consent of Sullivan & Cromwell (included in Exhibit 5).
+24 -- Powers of Attorney (included in signature page).
</TABLE>
- ------------------
+Previously filed.
<PAGE> 1
PHARMACIA & UPJOHN, INC.
COMMON STOCK, $.01 PAR VALUE
UNDERWRITING AGREEMENT
January , 1999
J. P. Morgan Securities Inc.
Goldman, Sachs & Co.,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o J. P. Morgan Securities Inc.
60 Wall Street,
New York, New York 10260.
Ladies and Gentlemen:
Forvaltningsaktiebolaget Stattum (the "Selling Stockholder"), a
stockholder of Pharmacia & Upjohn, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
31,101,116 shares (the "Firm Shares" of the Company's common stock, $.01 par
value (the "Stock"), a portion of which may be delivered in the form of shares
and a portion of which have been deposited by the Selling Stockholder pursuant
to the Custodian Agreement referred to below and may be delivered in the form of
Swedish Depository Shares ("SDSs") and, at the election of the Underwriters, up
to 4,665,166 additional shares (the "Optional Shares"), a portion of which have
been delivered in the form of shares and a portion of which have been deposited
by the Selling Stockholder pursuant to the Custodian Agreement and may be
delivered in the form of SDSs (the Firm Shares and the Optional Shares which the
Underwriters elect to purchase pursuant to Section 2 hereof are herein
collectively called the "Shares"). Except as the context may otherwise require,
references hereinafter to the "Shares" shall include SDSs which may be sold
pursuant to this Agreement.
The SDSs will be issued in accordance with the Custodian Agreement,
dated as of November 1, 1995 (the "Custodian Agreement"), between the Company
and Skandinaviska Enskilda Banken AB (publ), as Custodian (the "Depositary"),
and the general terms and
<PAGE> 2
2
conditions under which the SDSs are issued and governed (the "General Terms and
Conditions").
The parties hereto agree that 1,769,912 of the Shares to be
purchased by the Underwriters (the "Repurchased Shares") shall be sold by the
Underwriters to the Company as part of the distribution of the Shares by the
Underwriters and as contemplated by the agreement, dated as of January ___, 1999
(the "Share Repurchase Agreement"), between the Company and the Selling
Stockholder. The Repurchased Shares shall be sold by the Underwriters to the
Company at the same price per share as the Underwriters purchase the Shares from
the Selling Stockholder, all as set forth in Section 2(a) hereof. Subject to the
terms and conditions of the Share Repurchase Agreement, the delivery of the
Repurchased Shares to the Company, and the payment for such Repurchased Shares
by the Company, shall take place simultaneously with the First Time of Delivery
(as defined herein).
1. (a) The Company represents and warrants to, and agrees with,
each of the Underwriters and (in the case of clauses (i)-(v) only) the Selling
Stockholder that:
(i) A registration statement on Form S-3 (File No. 333-70107)
(the "Initial Registration Statement") in respect of the Shares has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
to you, and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein, to you
for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which became effective upon filing, no
other document with respect to the Initial Registration Statement or
document incorporated by reference therein has heretofore been filed
with the Commission; and no stop order suspending the effectiveness of
the Initial Registration Statement, any post-effective amendment
thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in
the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Act is hereinafter called a "Preliminary Prospectus"); the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including (i) the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof and deemed by virtue of Rule 430A
under the Act to be part of the Initial Registration Statement at the
time it was declared effective and (ii) the documents incorporated by
reference in the prospectus contained in the Initial Registration
Statement at the time such part of the Initial Registration Statement
became effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective,
are hereinafter collectively called the "Registration Statement"; such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Act, is hereinafter called the
<PAGE> 3
3
"Prospectus"; any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under
the Act, as of the date of such Preliminary Prospectus or Prospectus,
as the case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated
by reference in such Preliminary Prospectus or Prospectus, as the case
may be; and any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of
the Company filed pursuant to Section 13(a) or 15(d) of the Exchange
Act after the effective date of the Initial Registration Statement that
is incorporated by reference in the Registration Statement;
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder;
(iii) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and any further documents
so filed and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective
or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to (x)
any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter
through J.P. Morgan Securities Inc. or Goldman, Sachs & Co. expressly
for use therein or (y) Selling Stockholder Information; for purposes of
this Agreement, "Selling Stockholder Information" shall comprise the
statements in the Prospectus in the first two paragraphs under the
caption "Selling Stockholder";
(iv) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and the Registration Statement does not and will not, as of
the applicable effective date of the Registration Statement and any
amendment thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein
<PAGE> 4
4
not misleading; provided, however, that this representation and
warranty shall not apply to (x) any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through J.P. Morgan Securities Inc.
or Goldman, Sachs & Co. expressly for use therein or (y) Selling
Stockholder Information;
(v) The Preliminary Prospectus, at the date thereof, did not,
and the Prospectus at the date thereof, does not or did not, and any
further amendment or supplement thereto, as of the date of any such
amendment or supplement, will not, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that this
representation and warranty shall not apply to (x) any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through J.P.
Morgan Securities Inc. or Goldman, Sachs & Co. expressly for use
therein or (y) Selling Stockholder Information; references herein to
"Preliminary Prospectus" or "Prospectus" shall mean each and every
relevant prospectus, unless the context otherwise requires, and shall
be deemed to refer to and include the documents incorporated by
reference therein;
(vi) Neither the Company nor any of its Principal Subsidiaries
has sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business that is material to the Company and its
subsidiaries, taken as a whole, from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries, taken as a whole, or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus; as used in this Agreement, "Principal
Subsidiaries" means Pharmacia & Upjohn Company, Pharmacia & Upjohn AB,
Pharmacia S.p.A. and Pharmacia & Upjohn Caribe Inc.;
(vii) The Company and each of its subsidiaries have all
concessions, licenses, franchises, permits, authorizations, approvals
and orders of and from all governmental regulatory officials and bodies
that are necessary to own or lease their properties and conduct their
businesses as described in the Prospectus, except where the failure to
have any such concession, license, franchise, permit, authorization,
approval or order would not have a material adverse effect on the
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries taken as a whole;
(viii) The Company and its subsidiaries own or have had
licensed to them or otherwise have the benefit or use under the
authority of the owners thereof, of all
<PAGE> 5
5
patents, patent rights, inventions, trademarks, service marks, trade
names and copyrights (in each case, registered or not) which are
necessary for the conduct of the business of the Company and its
subsidiaries as described in the Prospectus and, except as set forth or
contemplated in the Prospectus, there are no unresolved assertions that
the Company or any of its subsidiaries has infringed the patents,
patent rights, inventions, trademark rights, service marks, trade names
or copyrights of others, other than assertions which are not reasonably
likely to have a material adverse effect on the consolidated financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole;
(ix) The Company and its subsidiaries (A) are in compliance
with all applicable federal, state, local and foreign laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (B) have all permits, licenses or
other approvals required of them under applicable Environmental Laws to
conduct their businesses as described in the Prospectus and (C) are in
compliance with all terms and conditions of any such permit, license or
approval, in each case except as described in the Prospectus or except
as would not, individually or in the aggregate, result in a material
adverse effect on the consolidated financial position, stockholders'
equity or results of operations of the Company and its subsidiaries,
taken as a whole;
(x) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and each Principal Subsidiary of the Company has been duly
organized and is validly existing as a corporation under the laws of
its jurisdiction of incorporation, and, in the case of Principal
Subsidiaries incorporated in the United States, is in good standing
under the laws of its jurisdiction of incorporation; and each of the
Company and each Principal Subsidiary of the Company has corporate
power and authority to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, except for any such failure to be so qualified in any
such jurisdiction which would not result in a material adverse effect
on the consolidated financial position, stockholder's equity or results
of operations of the Company and its subsidiaries, taken as a whole;
(xi) The Company has an authorized capitalization as set forth
in or incorporated by reference in the Prospectus, and all of the
issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and
conform to the description of the Stock contained in or incorporated by
reference in the Prospectus; shares of Stock are listed for trading on
the New York Stock Exchange and are quoted on the SEAQ International
system operated by the London Stock Exchange Limited, and SDSs are
traded on the Stockholm Stock Exchange; and all of the issued shares of
capital stock of each Principal Subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and
non-assessable and (except for directors' qualifying shares and except
as set forth in
<PAGE> 6
6
the Prospectus) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims;
(xii) The sale and delivery of the Shares and SDSs to be sold
by the Selling Stockholder hereunder and the compliance by the Company
with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or Bylaws of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties, except for such conflicts, breaches, violations and
defaults that would not have a material adverse effect on the financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries taken as a whole or that would otherwise
materially prejudice the consummation of the transactions contemplated
by this Agreement; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required to be obtained or made by the Company for
the sale and delivery of the Shares or SDSs by the Selling Stockholder
or the consummation by the Company of the transactions contemplated by
this Agreement, except for the registration under the Act of the Shares
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities or
Blue Sky laws in connection with the purchase and distribution of the
Shares and SDSs by the Underwriters;
(xiii) This Agreement has been duly authorized, executed and
delivered by the Company;
(xiv) The Custodian Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding agreement of the Company, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; upon the deposit of Shares evidencing SDSs to be delivered
at each Time of Delivery in respect thereof in accordance with the
provisions of the Custodian Agreement and the General Terms and
Conditions, the persons in whose names the SDSs are registered will be
entitled to the rights specified in the Custodian Agreement and in the
General Terms and Conditions;
(xv) The description of the Stock included or incorporated by
reference in the Prospectus, insofar as it purports to constitute a
summary of the terms of the Stock, and the statements set forth in the
Prospectus under the caption "Underwriting", insofar as they purport to
describe the provisions of the laws and documents referred to therein,
are accurate, complete and fair;
<PAGE> 7
7
(xvi) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, are reasonably
likely, individually or in the aggregate, to have a material adverse
effect on the current or future consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(xvii) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company",
as such term is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act");
(xviii) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes;
(xix) PricewaterhouseCoopers LLP, who have certified certain
financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder; and
(xx) To the best of its knowledge and belief, the Company does
not know of any information regarding the Year 2000 Problem and its
potential effect on the Company that would be required to be disclosed
in the Registration Statement and is not so disclosed. The "Year 2000
Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization
of data or in the operation of mechanical or electrical systems of any
kind will not, in the case of dates or time periods occurring after
December 31, 1999, function at least as effectively as in the case of
dates or time periods occurring prior to January 1, 2000.
(b) The Selling Stockholder represents and warrants to, and agrees
with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders
necessary for the execution and delivery by the Selling Stockholder of
this Agreement and for the sale and delivery of the Shares and SDSs to
be sold by the Selling Stockholder hereunder, have been obtained and
are in full force and effect; and the Selling Stockholder has full
right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver the Shares to be sold by the Selling
Stockholder hereunder;
(ii) The sale and delivery of the Shares and the SDSs to be
sold by the Selling Stockholder hereunder and the compliance by the
Selling Stockholder with all of the provisions of this Agreement and
the consummation of the transactions herein
<PAGE> 8
8
contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any statute, indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Selling Stockholder is a
party or by which the Selling Stockholder is bound, or to which any of
the property or assets of the Selling Stockholder is subject, nor will
such action result in any violation of the provisions of any statute or
any order, rule or regulation of any court or governmental agency or
body in Sweden binding on the Selling Stockholder or the property of
the Selling Stockholder;
(iii) The Selling Stockholder has good and valid title to the
Shares, free and clear of all liens, encumbrances, equities and claims
and, with respect to each Time of Delivery (as defined in Section 4
hereof) (A) immediately prior to such Time of Delivery, the Selling
Stockholder will have good and valid title to the Shares to be sold by
the Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or claims; (B) immediately prior to such Time of
Delivery, the Selling Stockholder will have good and valid title to the
Shares deposited by it pursuant to the Custodian Agreement against
issuance of the SDSs to be delivered by the Selling Stockholder at such
Time of Delivery, free and clear of all liens, encumbrances, equities
and claims (except such as arise under the terms of the Custodian
Agreement); (C) immediately prior to such Time of Delivery, the Selling
Stockholder will have good and valid title to the SDSs to be delivered
by the Selling Stockholder at such Time of Delivery, free and clear of
all liens, encumbrances, equities and claims; and (D) upon delivery of
the Shares and the SDSs to be delivered by the Selling Stockholder at
such Time of Delivery pursuant to this Agreement and payment therefor
pursuant hereto, good and valid title to such Shares and SDSs, free and
clear of all liens, encumbrances, equities or claims, will pass to the
several Underwriters;
(iv) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(v) The Selling Stockholder Information did not, at the date
of the Preliminary Prospectus and the Registration Statement, and will
not, at the date the Prospectus and any further amendments or
supplements to the Registration Statement or the Prospectus become
effective or are filed with the Commission, as the case may be, contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in the case of the Preliminary Prospectus or Prospectus, in
light of the circumstances under which they were made, not misleading;
(vi) This Agreement has been duly authorized, executed and
delivered by the Selling Stockholder;
(vii) No brokerage fee or any other fee is payable to the
securities brokerage companies or agencies in Sweden in connection with
the sale and delivery of the Shares and SDSs by the Selling Stockholder
to the Underwriters, the sale and delivery of the
<PAGE> 9
9
Shares and the SDSs by the Underwriters to each other, and the sale and
delivery of the Shares and SDSs by the Underwriters to the initial
purchasers thereof in the manner contemplated in this Agreement; and
(viii) To the best of the Selling Stockholder's knowledge, no
stamp or other issuance or transfer taxes or duties, and no capital
gains, income, withholding or other taxes are payable to the Kingdom of
Sweden, the Kingdom of Denmark, the Republic of Finland, the Kingdom of
Norway, the United Kingdom, the United States, France, Germany or Japan
(the "Relevant Jurisdictions") or any political subdivision or taxing
authority of any of the Relevant Jurisdictions by or on behalf of the
Underwriters in connection with (A) the sale and delivery by the
Selling Stockholder of the Shares and SDSs to or for the respective
accounts of the Underwriters in the manner contemplated herein or (B)
the sale and delivery by the Underwriters of the Shares and SDSs to the
initial purchasers thereof in the manner contemplated herein.
2. Subject to the terms and conditions herein set forth, (a) the
Selling Stockholder agrees to sell, to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Selling
Stockholder, at a purchase price per share of $..........., the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto and
(b) in the event and to the extent that the Underwriters shall exercise the
election to purchase Optional Shares as provided below, the Selling Stockholder
agrees to sell, to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Selling Stockholder, at
the purchase price per share set forth in clause (a) of this Section 2, that
portion of the number of Optional Shares as to which such election shall have
been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction the
numerator of which is the maximum number of Optional Shares which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Selling Stockholder hereby grants to the Underwriters the right to
purchase at their election up to 4,665,166 Optional Shares, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering over-allotments in the sale of the Firm Shares. Any such election to
purchase Optional Shares may be exercised from time to time on one or more
occasions only by written notice from you to the Selling Stockholder, given
within a period of 30 calendar days after the date of this Agreement and setting
forth the aggregate number of Optional Shares to be purchased and the date on
which such Optional Shares are to be delivered, as determined by you but in no
event earlier than the First Time of Delivery (as defined in Section 4 hereof)
or, unless you and the Selling Stockholder otherwise agree in writing, earlier
than two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
<PAGE> 10
10
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as J.P. Morgan Securities Inc. may request upon at least forty-eight
hours' prior notice to the Ministry shall be delivered by or on behalf of the
Selling Stockholder to J.P. Morgan Securities Inc. through the facilities of The
Depository Trust Company ("DTC"), for the account of such Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor in
U.S. dollars by wire transfer of Federal (same-day) funds to the account
specified by the Ministry to J.P. Morgan Securities Inc. at least forty-eight
hours in advance. The Selling Stockholder will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York City time, on ............., 1999 or
such other time and date as J.P. Morgan Securities Inc. and the Selling
Stockholder may agree upon in writing, and, with respect to the Optional Shares,
9:30 a.m., New York City time, on the date specified by J.P. Morgan Securities
Inc. in the written notice given by J.P. Morgan Securities Inc. of the
Underwriters' election to purchase such Optional Shares, or such other time and
date as J.P. Morgan Securities Inc. and the Selling Stockholder may agree upon
in writing. Such time and date for delivery of the Firm Shares is herein called
the "First Time of Delivery", such time and date for delivery of the Optional
Shares, if not the First Time of Delivery, is herein called the "Second Time of
Delivery", and each such time and date for delivery is herein called a "Time of
Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(l) hereof, will be delivered at the offices
of: Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022 (the
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at such Time of Delivery. A meeting will be held at the Closing Location at
.......p.m., New York City time, on the New York Business Day next preceding
such Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. A. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to submit to you for prior approval with reasonable
notice any proposed amendments or supplements to the Registration
Statement or Prospectus; to advise you, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish you
with a
<PAGE> 11
11
reasonable number of copies thereof; to file promptly all reports and
any definitive proxy or information statements required to be filed by
the Company with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Shares; to advise you, promptly after
it receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its reasonable best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may request and to use
its reasonable best efforts to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for
nine months after the time of issue of the Prospectus, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with a reasonable number of copies
of the Prospectus in New York City and, if the delivery of a prospectus
is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or
sale of the Shares and if at such time any events shall have occurred
as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Act or the
Exchange Act, to notify you and upon your request to file such document
and to prepare and furnish without charge to each Underwriter and to
any dealer in securities a reasonable number of copies as you may from
time to time request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
<PAGE> 12
12
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earning statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder, any securities of the Company that
are substantially similar to the Shares, including but not limited to
any securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities without your prior written consent; provided, that this
restriction will not apply to issuances or sales of shares in
connection with (i) employee stock option, savings or compensation
plans or dividend reinvestment plans or the conversion of convertible
securities outstanding on the date of the Prospectus or (ii) a merger
or other combination with, or exchange offer for shares of, another
entity;
(f) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the
time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act; and
(g) To comply in all material respects with the Custodian
Agreement so that the SDSs, if any, to be delivered to the Underwriters
at each Time of Delivery will be executed and, if applicable,
countersigned.
B. The Selling Stockholder agrees with each of the
Underwriters:
(i) To bear and pay any stamp, transfer, registration,
documentary or similar taxes or duties (including interest and
penalties if the payment was due to be made by the Selling Stockholder)
payable in the Relevant Jurisdictions or any political subdivision or
taxing authority of any such jurisdiction not recoverable within a
reasonable period of time in connection with (A) the sale and delivery
by the Selling Stockholder of the Shares and the SDSs to or for the
respective accounts of the Underwriters in the manner contemplated
herein, (B) any deposit with the Depositary of Shares against the
issuance of SDSs at each Time of Delivery, (C) the sale and delivery by
the Underwriters of the Shares or SDSs to the initial purchasers
thereof in the manner contemplated herein, (D) the execution and
delivery of this Agreement, and any value added tax payable in
connection with the commissions and other amounts payable by the
Selling Stockholder pursuant to this Agreement;
<PAGE> 13
13
(ii) In the event that and for so long as all of the Optional
Shares have not been purchased by the Underwriters, during the period
beginning from the date hereof and continuing to and including the date
90 days after the date of the Prospectus, not to offer, sell, contract
to sell or otherwise dispose of, except as provided hereunder, any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into
or exchangeable for, or that represent the right to receive, stock or
any such substantially similar securities without your prior written
consent;
(iii) Not to take, directly or indirectly, any action which is
designed to or which constitutes or which might reasonably be expected
to cause or result in stabilization or manipulation of the price of any
security of the Company in connection with the sale or resale of the
Shares; provided, however, that this provision shall not apply to
stabilization activities conducted by J.P. Morgan Securities Inc. on
behalf of the Underwriters, as described in the Prospectus; and
(iv) If necessary to effect delivery of SDSs, prior to each
Time of Delivery, to deposit Shares with the Depositary in accordance
with the provisions of the Custodian Agreement and the General Terms
and Conditions and otherwise to comply with the Custodian Agreement and
the General Terms and Conditions so that any SDSs to be delivered by
the Selling Stockholder at such Time of Delivery will be issued by the
Depositary against receipt of such shares and delivered at such Time of
Delivery.
6. (a) The Company covenants and agrees with the Selling
Stockholder and the several Underwriters that the Company will pay or cause to
be paid all expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation: (i) all Commission and any
National Association of Securities Dealers registration and filing fees and
expenses, (ii) all fees and expenses in connection with the qualification of the
Shares for offering and sale under state securities or "blue sky" laws,
including reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualifications, (iii) all expenses relating to the
preparation, printing, distribution and reproduction of the Registration
Statement, each Prospectus included therein or prepared for distribution
pursuant hereto, each amendment or supplement of the foregoing, the certificates
representing Shares and any charges of the transfer agent or registrar and all
other documents relating to the offering, purchase, sale and delivery of the
Shares and SDSs, (iv) internal expenses (including, without limitation, all
salaries and expenses of the Company's officers and employees performing legal
or accounting duties), and (v) fees, disbursements and expenses of the Company's
counsel and its advisors and experts and independent certified public
accountants (including the expenses of any opinions or "comfort" letters
required by or incident to the performance by the Company of its obligations
hereunder and compliance with such obligations). To the extent that any such
expenses are incurred, assumed or paid by the Selling Stockholder or the
Underwriters, the Company shall reimburse such person for the full amount so
incurred, assumed or paid promptly after receipt of a request therefor.
(b) The Selling Stockholder covenants and agrees with the
Company and the several Underwriters that it will pay or cause to be paid (i)
all underwriting discounts and
<PAGE> 14
14
commissions directly attributable to the sale of the Shares on behalf of the
Selling Stockholder, (ii) the fees, disbursements and expenses of its counsel
in connection with the offering and sale of the Shares and (iii) all costs and
expenses incident to the performance of or compliance with this Agreement by
the Selling Stockholder which are not otherwise specifically provided to be
paid by the Company pursuant to Section 6(a) or by the Underwriters pursuant to
Section 6(c). To the extent that any such expenses are incurred, assumed or
paid by the Company or the Underwriters, the Selling Stockholder shall
reimburse such person for the full amount so incurred, assumed or paid promptly
after receipt of a request therefor.
(c) It is understood, that, except as provided in this Section
6, and Sections 8 and 12 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel.
7. The obligations of the Underwriters hereunder, as to the Shares or
SDSs to be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company and of the Selling Stockholder herein are, at and as
of such Time of Delivery, true and correct, the condition that the Company and
the Selling Stockholder shall have performed all of their respective obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have
become effective by 10:00 P.M., Washington, D.C. time, on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Shearman & Sterling, counsel for the Underwriters, shall
have furnished to you such written opinion or opinions (a draft of each
such opinion is attached as Annex II(a) hereto), dated such Time of
Delivery, with respect to the matters covered in paragraphs (i), (ii),
(iii) and the two full paragraphs following paragraph (vi) of
subsection (c) below as well as such other related matters as you may
reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass
upon such matters;
(c) Sullivan & Cromwell, counsel for the Company, shall have
furnished to you and the Selling Stockholder their written opinion (a
draft of such opinion is attached as Annex II(b) hereto), dated such
Time of Delivery, in form and substance satisfactory to you, to the
effect that:
<PAGE> 15
15
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Delaware;
(ii) All outstanding shares of common stock of the
Company (including the Shares) have been duly authorized and
validly issued and are fully paid and non-assessable;
(iii) This Agreement has been duly authorized,
executed and delivered by the Company;
(iv) The sale and delivery of the Shares by the
Selling Stockholder to the Underwriters in the manner
contemplated in this Agreement and in the Prospectus and the
performance by the Company of its obligations under this
Agreement will not (A) violate the Company's Certificate of
Incorporation or By-Laws or (B) violate any federal law of the
United States or law of the State of New York applicable to
the Company; provided, however, that for the purposes of
paragraph (iv)(B), such counsel need express no opinion with
respect to federal or state securities laws, other antifraud
laws and fraudulent transfer laws; and provided further that
insofar as performance by the Company of its obligations under
this Agreement is concerned, such counsel need express no
opinion as to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating
to or affecting creditors' rights; and
(v) All regulatory consents, authorizations,
approvals and filings, required to be obtained or made by the
Company under the Federal laws of the United States or the
laws of the State of New York for the sale and delivery of the
Shares or SDSs by the Selling Stockholder to the Underwriters
hereunder have been obtained or made;
In rendering such opinion, such counsel may state that such
opinion is limited to the Federal laws of the United States, the laws
of the State of New York and the General Corporation Law of the State
of Delaware, and that they are expressing no opinion as to the effect
of the laws of any other jurisdiction.
In rendering such opinion, such counsel may also state that,
with your approval, they have relied as to certain matters on
information obtained from public officials, officers of the Company and
other sources believed by them to be responsible and that they assume
that the certificates for the outstanding shares of Stock of the
Company, including the Shares, conform to the specimen thereof examined
by them and have been countersigned by a transfer agent and that the
signatures on all documents examined by such counsel are genuine, which
assumptions they may state they have not independently verified.
Such counsel shall also state that they have reviewed the
Registration Statement and the Prospectus and participated in
discussions with representatives of the Company, representatives of the
Company's accountants, the Selling Stockholder and
<PAGE> 16
16
its U.S. counsel and representatives of the Underwriters and advised
the Company as to the requirements of the Act and the applicable rules
and regulations of the Commission thereunder, that between the
effectiveness of the Registration Statement and the time of the
delivery of their letter they also participated in further discussions
with representatives of the Company, representatives of the Company's
accountants, the Selling Stockholder and its U.S. counsel and
representatives of the Underwriters during which the contents of
certain portions of the Prospectus and certain related matters were
discussed, and reviewed the opinions referred to in this Section 7; on
the basis of the information that they gained in the course of the
performance of such services, considered in the light of their
understanding of the applicable law (including the requirements of Form
S-3 and the character of the prospectus contemplated thereby) and the
experience they have gained through their practice under the Act, such
counsel shall confirm to the Underwriters that, in their opinion, the
Registration Statement, as of its effective date, and the Prospectus,
as of its date, appeared on their face to be appropriately responsive
in all material respects to the requirements of the Act and the
applicable rules and regulations of the Commission thereunder; that
nothing that came to the attention of such counsel during the course of
such review has caused them to believe that the Registration Statement,
as of its effective date, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, or that the Prospectus, as of its date, contained any
untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements therein, in the light of
the circumstances in which they were made, not misleading; and on the
basis of the procedures described in the second subclause of this
paragraph, such counsel shall confirm to the Underwriters that such
counsel does not believe that the Prospectus, as amended at such Time
of Delivery, as of such Time of Delivery, contained any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances in which they were made, not misleading and that such
counsel do not know of any documents that are required to be filed as
exhibits to the Registration Statement and are not so filed or of any
documents that are required to be summarized in the Prospectus and are
not so summarized; (in rendering the opinion described in this
paragraph such counsel may state that the limitations inherent in the
independent verification of factual matters and the character of
determinations involved in the registration process are such that they
do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus except for the description of Stock in the Company's
Registration Statement on Form 8-A and incorporated in the Prospectus
by reference; that they do not express any opinion or belief as to the
financial statements or other financial data derived from accounting
records included therein; and that their opinion described in this
paragraph is furnished as counsel for the Company and is solely for the
benefit of the several Underwriters, the Selling Stockholder and the
directors of the Company to whom such opinion is addressed.
(d) Don W. Schmitz, counsel for the Company, shall have
furnished to you and the Selling Stockholder his written opinion (a
draft of such opinion is attached as
<PAGE> 17
17
Annex II(d) hereto), dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) Each Principal Subsidiary of the Company that is
incorporated in the United States (a "Principal U.S.
Subsidiary") has been duly organized and is validly existing
under the laws of its jurisdiction of incorporation; each of
the Company and each Principal U.S. Subsidiary of the Company
has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, or
is subject to no material liability or disability by reason of
failure to be so qualified in any such jurisdiction; and, to
the best of such counsel's knowledge and belief after
reasonable investigation, each Principal Subsidiary of the
Company that is incorporated outside of the United States has
been duly organized and is validly existing under the laws of
its jurisdiction of incorporation (such counsel being entitled
to rely in respect of the opinion in this clause upon opinions
of local counsel and in respect of matters of fact upon
certificates of officers of the Company, provided that such
counsel shall state that they believe that both you and they
are justified in relying upon such opinions and certificates);
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of each Principal U.S. Subsidiary of the Company
have been duly and validly authorized and issued, are fully
paid and non-assessable, and except as otherwise set forth in
the Prospectus, are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities
or claims (such counsel being entitled to rely in respect of
the opinion in this clause upon opinions of local counsel and
in respect of matters of fact upon certificates of officers of
the Company or its subsidiaries, provided that such counsel
shall state that they believe that both you and they are
justified in relying upon such opinions and certificates) and
the Shares conform to the description of the Stock included in
or incorporated by reference in the Prospectus;
(iii) The sale and delivery of the Shares and SDSs to
be sold by the Selling Stockholder hereunder and the
compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such
counsel to which the Company or any of its Principal
Subsidiaries is a party or by which the Company or any of its
Principal Subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries
is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws
of the Company or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of its
<PAGE> 18
18
Principal Subsidiaries or any of their properties, except for
such conflicts, breaches, violations and defaults that would
not have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company
and its subsidiaries taken as a whole or that would not
otherwise materially prejudice the consummation of the
transactions contemplated by this Agreement;
(iv) To the best of his knowledge, the Company and
each of its Principal Subsidiaries have all concessions,
licenses, franchises, permits, authorizations, approvals and
orders of and from all relevant governmental regulatory
officials and bodies that are necessary to own or lease their
properties and conduct their businesses as described in the
Prospectus, except where the failure to have any such
concession, license, franchise, permit, authorization,
approval or order would not have a material adverse effect on
the financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a
whole;
(v) To the best of his knowledge, the Company and its
Principal Subsidiaries own or have had licensed to them or
otherwise have the benefit or use under the authority of the
owners thereof of, all patents, patent rights, inventions,
trademarks, service marks, trade names and copyrights (in each
case, registered or not) which are necessary for the conduct
of the business of the Company and its subsidiaries as
described in the Prospectus, except for any such failure as
would not have a material adverse effect on the financial
position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole, and, to the
best of his knowledge and except for the matters described in
the Prospectus, there are no unresolved assertions that the
Company or any of its subsidiaries has infringed the patents,
patent rights, inventions, trademark rights, service marks,
trade names or copyrights of others, other than assertions
which, if determined adversely to the Company or any of its
subsidiaries, would not individually or in the aggregate with
respect to similar claims, have a material adverse effect on
the consolidated financial position, stockholders' equity or
results of operations of the Company and its subsidiaries,
taken as a whole;
(vi) To the best of such counsel's knowledge and
other than the matters described in the Prospectus, there are
no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any
of its subsidiaries, are reasonably likely, individually or in
the aggregate with respect to similar claims, to have a
material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a
whole; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
<PAGE> 19
19
(vii) The Custodian Agreement has been duly
authorized, executed and delivered by the Company; and
(viii) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made
by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to
which such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the
requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder;
and he has no reason to believe that any of such documents,
when such documents became effective or were so filed, as the
case may be, contained in the case of a registration statement
which became effective under the Act, an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or, in the case of other documents which were
filed under the Exchange Act, an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such documents
were so filed, not misleading (other than the financial
statements and other financial data as to which such counsel
need express no opinion).
In rendering such opinion, such counsel may rely upon opinions
of local counsel and in respect of matters of fact upon certificates of
officers of the Company, provided that such counsel shall state that he
believes both you and he are justified in relying upon such opinions
and certificates.
(e) Advokatfirman Vinge, Swedish counsel for the Selling
Stockholder, shall have furnished to you their written opinion (a draft
of each such opinion is attached as Annex II(d) hereto), dated such
Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) The deposit with the Depositary of the Shares to
be delivered in the form of SDSs, the sale and delivery of the
Shares and the SDSs, the compliance by the Selling Stockholder
with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not
conflict with or result in a breach or violation of (a) any
statute of Sweden or (b) any order, rule or regulation of
general application of any court or governmental agency or
body of Sweden having jurisdiction over the Selling
Stockholder or any of its respective properties;
(ii) No consent, approval, authorization or order of
any court or governmental agency or body in Sweden is required
for the consummation of the transactions contemplated by this
Agreement in connection with the Shares and SDSs to be sold by
the Selling Stockholder hereunder, except [NAME ANY SUCH
<PAGE> 20
20
CONSENT, APPROVAL, AUTHORIZATION OR ORDER] which [HAS] [HAVE]
been duly obtained and [IS] [ARE] in full force and effect;
(iii) (A) The Selling Stockholder has good and valid
title of the Shares being sold by it under this Agreement,
free and clear of all liens, encumbrances, equities and
claims; (B) immediately prior to delivery by or on behalf of
the Selling Stockholder of Shares to the Depositary or its
nominee as provided in this Agreement and the Custodian
Agreement, the Selling Stockholder had good and valid title to
the Shares so delivered, free and clear of all liens,
encumbrances, equities and claims; (C) upon deposit by or on
behalf of the Selling Stockholder of the Shares with the
Depositary pursuant to this Agreement and the Custodian
Agreement against issuance by the Depositary of SDSs and
delivery by the Depositary of the SDSs to the Selling
Stockholder and the Selling Stockholder's subsequent delivery
of such SDSs at such Time of Delivery, all right, title and
interest in the Shares so deposited have been transferred to
the Depositary or its nominee; and (D) upon delivery of the
Shares and the SDSs to the Underwriters by the Selling
Stockholder pursuant to this Agreement and payment therefor as
provided herein, good and valid title thereto, free and clear
of all liens, encumbrances, equities and claims and, unless
they have knowledge thereof, claims, will pass to the several
Underwriters;
(iv) No stamp or other issuance or transfer taxes or
duties, and no capital gains, income, withholding or other
taxes are payable to Sweden or any political subdivision or
taxing authority thereof or therein by or on behalf of the
Underwriters in connection with: (A) the deposit with the
Depositary of Shares to be delivered in the form of SDSs by
the Selling Stockholder, (B) the sale and delivery by the
Selling Stockholder of the Shares and the SDSs to or for the
respective accounts of the Underwriters in the manner
contemplated in this Agreement or (C) the sale and delivery by
the Underwriters of the Shares and SDSs to the initial
purchasers thereof in the manner contemplated in this
Agreement; and
(v) under the laws of Sweden, the agreement of the
Selling Stockholder that this Agreement shall be governed by
and construed in accordance with the laws of New York is valid
and legally binding and will be recognized by the Swedish
courts, subject to bankruptcy, insolvency, moratorium or
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
In rendering such opinion, such counsel may state (i) that they express
no opinion as to the laws of any jurisdiction outside Sweden and (ii) that they
are relying as to matters of United States Federal or New York law on the
opinion of Cleary, Gottlieb, Steen & Hamilton delivered pursuant to clause (f).
In rendering the opinion in paragraph (iv), such counsel may rely upon
certificates of the Selling Stockholder in respect of matters of fact as to
ownership of, and liens, encumbrances,
<PAGE> 21
21
equities or claims on, the Shares sold by the Selling Stockholder, provided that
such counsel shall state that they believe that both you and they are justified
in relying upon such certificate;
(f) Cleary, Gottlieb, Steen & Hamilton, United States counsel
for the Selling Stockholder, shall have furnished to you their written
opinion (a draft of such opinion is attached as Annex II(e) hereto),
dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) assuming due authorization, execution and
delivery by the Selling Stockholder under Swedish law, this
Agreement has been duly executed and delivered by the Selling
Stockholder under the law of the State of New York;
(ii) the sale and delivery of the Shares and the SDSs
and the compliance by the Selling Stockholder with all of the
provisions of this Agreement will not violate any statute,
rule or regulation of the United States or the State of New
York or any United States Federal or New York court or
administrative order or decree identified in Annex ___
thereto;
(iii) upon delivery to the Underwriters in the State
of New York of certificates evidencing the Shares and the SDSs
being delivered at such Time of Delivery endorsed to such
Underwriters or in blank and payment therefor by the
Underwriters pursuant to this Agreement, the Underwriters will
own the Shares and the SDSs free of any adverse claim (within
the meaning of the Uniform Commercial Code as in effect in the
State of New York (the "UCC"). In rendering the foregoing
opinion, such counsel may assume that each Underwriter takes
delivery of the SDSs without notice of any adverse claims
(within the meaning of the UCC); and
(iv) no consent, approval, authorization,
registration or qualification of or with any governmental
agency of the United States or the State of New York is
required for the sale and delivery of the Shares and the SDSs
to be delivered by the Selling Stockholder in connection with
the purchase and distribution of the Shares and SDSs by the
Underwriters, except such as has been obtained under the Act
or the Exchange Act (but such counsel need not express an
opinion as to any consent, approval, authorization,
registration or qualification that may be required under state
securities or "blue sky" laws).
In rendering such opinion, such counsel may (i) state that they express
no opinions as to the laws of any jurisdiction other than U.S. federal and New
York state law and (ii) rely, as to matters of Swedish law, on, and subject to
the same qualifications set forth, in the opinion of Advokatfirman Vinge
delivered pursuant to clause (e) above.
In rendering the opinion in paragraph (iii) above, such counsel may
also state that they are relying in respect of certain factual matters upon
certificates of the Selling Stockholder and
<PAGE> 22
22
the Company and their respective officers and employees and upon information
obtained from public officials and other sources believed by such counsel to be
responsible.
(g) Skandinaviska Enskilda Banken Legal Department, counsel
for the Depositary, shall have furnished to you and the Selling
Stockholder their written opinion (a draft of such opinion is attached
as Annex II(f) hereto), dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Custodian Agreement has been duly authorized,
executed and delivered by the Depositary and, assuming the
Custodian Agreement has been duly authorized, executed and
delivered by the Company, constitutes a valid and legally
binding obligation of the Depositary, enforceable in
accordance with its terms, subject as to enforcement to
applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
upon the deposit of Shares evidencing SDSs to be delivered at
such Time of Delivery in respect thereof in accordance with
the provisions of the Custodian Agreement and the General
Terms and Conditions, the persons in whose names the SDSs are
registered will be entitled to the rights specified in the
Custodian Agreement and in the General Terms and Conditions;
and
(ii) Shares represented by the SDSs to be delivered
by the Selling Stockholder at such Time of Delivery to or on
behalf of the Underwriters have been duly deposited with the
Depositary or The Bank of New York, as Sub-Custodian, under
and in accordance with all applicable laws and regulations.
(h) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, PricewaterhouseCoopers, LLP shall have furnished
to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto (the executed copy of the letter delivered
prior to the execution of this Agreement is attached as Annex I(a)
hereto and a draft of the form of letter to be delivered on the
effective date of any post-effective amendment to the Registration
Statement and as of each Time of Delivery is attached as Annex I(b)
hereto);
(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change,
<PAGE> 23
23
or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries taken as a
whole, otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in clause (i) or (ii),
is in the judgment of the Underwriters so material and adverse as to
make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(j) On or after the date hereof and prior to such Time of
Delivery there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on
the New York Stock Exchange, the Stockholm Stock Exchange or the London
Stock Exchange; (ii) a suspension or material limitation in trading in
the Company's securities on the New York Stock Exchange, the Stockholm
Stock Exchange or SEAQ International; (iii) a general moratorium on
commercial banking activities in New York, Sweden or London declared by
the relevant authorities; (iv) a change or development involving a
prospective change in United States taxation affecting the share
capital of the Company or the transfer thereof or the imposition of
exchange controls by the United States or Sweden; (v) the outbreak or
escalation of hostilities involving the United States or the European
Union ("EU") or the declaration by the United States or relevant EU
authorities of a national emergency or war if the effect of any such
event specified in clause (iv) or (v) in the judgment of the
Underwriters, makes it impracticable or inadvisable to proceed with the
public offering of the Shares or delivery of, or materially impairs the
ability of the Underwriters to subscribe, hold or sell, the Shares or
SDSs being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus; or (vi) a change in national or
international political, financial or economic conditions or taxation
regimes or currency exchange rates or controls if the effect of any
such event specified in this clause (vi) in the judgment of the
Underwriters is so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering of the Shares or
delivery of, or materially impairs the ability of the Underwriters to
subscribe, hold or sell, the Shares or SDSs being delivered at such
Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(k) The Company shall have complied with the provisions of
Section 5A(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
and
(l) The Company and the Selling Stockholder shall have
furnished or caused to be furnished to you at such Time of Delivery (i)
certificates of officers of the Company and of the Selling Stockholder,
respectively, reasonably satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Selling
Stockholder, respectively, herein at and as of such Time of Delivery,
as to the performance by the Company and the Selling Stockholder of all
of their respective obligations hereunder to be performed at or prior
to such Time of Delivery, and, in the case of the Company, as to the
matters set forth in subsections (a) and (k) of this
<PAGE> 24
24
Section, and as to such other matters as you may reasonably request;
and (ii) certificates of the corporate secretary or other comparable
officer of the Company and of the Selling Stockholder, respectively,
reasonably satisfactory to you as to the resolutions adopted by the
Company and the Selling Stockholder in connection with this Agreement,
incumbency and signatures of persons executing this Agreement and other
similar matters.
8. (a) The Company, will indemnify and hold harmless each Underwriter
and the Selling Stockholder against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter, or the Selling Stockholder, as the
case may be, may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or any
document incorporated by reference therein, or arise out of or are based upon
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 and
will reimburse each Underwriter and the Selling Stockholder for any legal or
other expenses reasonably incurred by such Underwriter or the Selling
Stockholder, as the case may be, in connection with investigating or defending
any such action or claim as such expenses are incurred; provided, however, that
the Company shall not be liable to any Underwriter or the Selling Stockholder,
as the case may be, in any such case, to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement thereto or document incorporated by reference therein (x) in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through J.P. Morgan Securities Inc. or Goldman, Sachs
& Co. expressly for use therein or (y) that comprised Selling Stockholder
Information; and provided, further, however, that the Company shall not be
liable to any such person in any such case if the Company shall sustain the
burden of proving that the Selling Stockholder or such Underwriter, as the case
may be, sold securities to the person alleging such loss, claim, damage or
liability without sending or giving, at or prior to the written confirmation of
such sale in any case where such delivery is required by the Act, a copy of the
Prospectus (excluding any documents incorporated by reference therein) or of the
Prospectus, as then amended or supplemented (excluding any documents
incorporated by reference therein) if the Company had previously furnished
copies thereof to the Selling Stockholder or such Underwriter, and the loss,
claim, damage or liability of such person results from an untrue statement or
omission of a material fact contained in the Preliminary Prospectus which was
corrected in the Prospectus or the Prospectus as amended or supplemented.
(b) The Selling Stockholder will indemnify and hold harmless each
Underwriter and the Company against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or the Company, as the case may be,
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or any document incorporated
by reference therein, or
<PAGE> 25
25
arise out of or are based upon 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, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement thereto or document
incorporated by reference therein comprised Selling Stockholder Information; and
will reimburse each Underwriter or the Company, as the case may be, for any
legal or other expenses reasonably incurred by such Underwriter or the Company,
as the case may be, in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) Each Underwriter will, severally and not jointly, indemnify and
hold harmless the Company and the Selling Stockholder against any losses,
claims, damages or liabilities to which it may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or any document incorporated by reference therein, or arise out of or
are based upon 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, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Prospectus, the Registration Statement or the Prospectus or
any such amendment or supplement thereto or document incorporated by reference
therein in reliance upon and in conformity with written information furnished to
the Company by such Underwriter through J.P. Morgan Securities Inc. or Goldman,
Sachs & Co. expressly for use therein; and will reimburse the Company and the
Selling Stockholder for any legal or other expenses reasonably incurred by the
Company or the Selling Stockholder in connection with investigating or defending
any such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action or proceeding
for which indemnification under subsection (a), (b) or (c) may be requested,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party,
<PAGE> 26
26
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholder on the one
hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholder on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations,
including relative fault. The relative benefits received by the Company and the
Selling Stockholder on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Shares purchased under this Agreement (before deducting expenses)
received by the Company and the Selling Stockholder bear to the total
underwriting discounts and commissions received by the Underwriters with respect
to the Shares purchased under this Agreement, in each case as set forth in the
table on the cover page of the Prospectus. As among the Company and the Selling
Stockholder, the relative benefit derived by the Company and the Selling
Stockholder shall be determined by reference to the fact that the Company
entered into the Registration Rights Agreement among the Company, the Selling
Stockholder, The Upjohn Company and Pharmacia Aktiebolag to induce and the
Selling Stockholder to engage in the transaction in which the Selling
Stockholder acquired the Shares. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Selling Stockholder on
the one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Selling Stockholder and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (e) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in
<PAGE> 27
27
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (e), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholder under
this Section 8 shall be in addition to any liability which the Company or the
Selling Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company or the Selling Stockholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Selling Stockholder shall be entitled to a further period
of thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Selling Stockholder
that you have so arranged for the purchase of such Shares, or the Selling
Stockholder notifies you that it has so arranged for the purchase of such
Shares, you or the Selling Stockholder shall have the right to postpone such
Time of Delivery for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which may thereby be made necessary. The term "Underwriter" as used
in this Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to this Agreement with
respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Selling
Stockholder as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the aggregate
number of all of the Shares to be purchased at such Time of Delivery, then the
Selling Stockholder shall have the right to require each non-defaulting
Underwriter to purchase the number of Shares which such Underwriter agreed to
purchase hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such
<PAGE> 28
28
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Selling
Stockholder as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-eleventh of the aggregate number of
all of the Shares to be purchased at such Time of Delivery, or if the Selling
Stockholder shall not exercise the right described in subsection (b) above to
require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Underwriters to purchase and of the
Selling Stockholder to sell the Optional Shares) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the Company
or the Selling Stockholder, except for the expenses to be borne by the Company
and the Selling Stockholder and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholder and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or the Selling Stockholder, or any officer or
director or controlling person of the Company, or any controlling person of the
Selling Stockholder, and shall survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholder shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if any Shares are not delivered by or on behalf of the Selling Stockholder as
provided herein by reason of a failure of the Company to perform its obligations
under Section 7 (for the avoidance of doubt, it shall not be deemed to be a
failure by the Company to perform its obligations under Section 7 if the
conditions set forth in clauses 7(b), (e), (f), (g), (i), (j) and (l) (to the
extent that it refers to obligations of the Selling Stockholder) have not been
satisfied), the Company will, or if for any other reason Shares are not
delivered by or on behalf of the Selling Stockholder as provided herein, the
Selling Stockholder will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so delivered,
but the Company, the Selling Stockholder shall then be under no further
liability to any Underwriter in respect of the Shares not so delivered except as
provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly as the representatives.
<PAGE> 29
29
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of J.P. Morgan
Securities Inc., 60 Wall Street, 2nd Floor, New York, New York 10260, Attention:
Syndication Desk; if to the Selling Stockholder shall be delivered or sent by
mail, telex or facsimile transmission to Fredsgaten 8 S-103 33, Stockholm,
Sweden, Attention: Dag Detter, facsimile no. (46-8) 215-799; and if to the
Company shall be delivered or sent by mail, telex or facsimile transmission to
the address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 8(d) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire or telex constituting such Questionnaire, which address will be
supplied to the Company or the Selling Stockholder by you on request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholder and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company, the Selling Stockholder or
any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
17. The Selling Stockholder hereby irrevocably (i) agrees that any
legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby may be instituted in any state or federal
court located in the Borough of Manhattan, The City of New York, New York (a
"New York Court"), (ii) waives, to the fullest extent it may effectively do so,
any objection which it may now or hereafter have to the laying of venue of any
such proceeding and (iii) submits to the jurisdiction of such courts in any such
suit, action or proceeding. The Selling Stockholder do hereby appoint -,
Attention: -, as its authorized agent (the "Authorized Agent") upon whom process
may be served in any such action arising out of or based on this Agreement or
the transactions contemplated hereby which may be instituted in any New York
Court by any Underwriter or by any person who controls any Underwriter or by the
Company, expressly consents to the jurisdiction of any such court in respect of
any such action, and waives any other requirements of or objections to personal
jurisdiction with respect
<PAGE> 30
30
thereto. The Selling Stockholder may appoint a successor agent to receive
service of process as described herein; provided, however, that the Selling
Stockholder shall at all times maintain an agent for service of process in New
York City. The Selling Stockholder represents and warrants that the Authorized
Agent has agreed to act as such agent for service of process and the Selling
Stockholder agrees to take any and all action, including the filing of any and
all documents and instruments, that may be necessary to continue such
appointment (or any appointment of a successor agent, as applicable) in full
force and effect as aforesaid. Service of process upon the Authorized Agent and
written notice of such service to the Selling Stockholder, as the case may be,
shall be deemed, in every respect, effective service of process upon the Selling
Stockholder.
<PAGE> 31
31
If the foregoing is in accordance with your understanding, please sign
and return to us eight counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, the
Company and the Selling Stockholder. It is understood that your acceptance of
this letter on behalf of each of the Underwriters is pursuant to the authority
set forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company and the Selling Stockholder for examination, upon
request, but without warranty on your part as to the authority of the signers
thereof.
Very truly yours,
PHARMACIA & UPJOHN, INC.
By:
Name:
Title:
FORVALTNINGSAKTIEBOLAGET STATTUM
By:
Name:
Title:
Accepted as of the date hereof:
J. P. MORGAN SECURITIES INC.
GOLDMAN, SACHS & CO.
By:
(J.P. Morgan Securities Inc.)
<PAGE> 32
SCHEDULE I
<TABLE>
<CAPTION>
Number of
Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
<S> <C> <C>
J.P. Morgan Securities Inc.
Goldman, Sachs & Co.
Total
</TABLE>
<PAGE> 33
ANNEX I
FORM OF ANNEX I DESCRIPTION OF COMFORT LETTER
FOR REGISTRATION STATEMENTS ON FORMS S-2 AND S-3
Pursuant to Section 7(j) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the Institute of Certified Public
Accountants of the consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts
and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to the representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards
established by the Institute of Certified Public Accountants of the
unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in
the Prospectus and/or included in the Company's quarterly report on
Form 10-Q incorporated by reference into the Prospectus as indicated in
their reports thereon copies of which have been separately furnished to
the Representatives; and on the basis of specified procedures including
inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited
condensed consolidated financial statements referred to in paragraph
(vi)(A)(i) below comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Exchange Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent
<PAGE> 34
fiscal year agrees with the corresponding amounts (after restatement
where applicable) in the audited consolidated financial statements for
such five fiscal years which were included or incorporated by reference
in the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302,
402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) (i) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus and/or included or incorporated by reference in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act as it applies to Form 10-Q and the related
published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the
Prospectus or included in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus, for
them to be conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in
the Company's Annual Report on Form 10-K for the most recent
fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data
<PAGE> 35
and balance sheet items included in the Prospectus and
referred to in Clause (B) were not determined on a basis
substantially consistent with the basis for the audited
financial statements included or incorporated by reference in
the Company's Annual Report on Form 10-K for the most recent
fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest balance sheet included
or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and
its subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with amounts
shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
and
(F) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (E)
there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with the
comparable period of the preceding year and with any other
period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information
specified by the Representatives which are derived from the general
accounting records of the Company and its subsidiaries, which appear in
the Prospectus (excluding documents incorporated by reference) or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Representatives or in documents incorporated by
reference in the Prospectus specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and
have found them to be in agreement.
<PAGE> 36
ANNEX II(a)
Form of Shearman & Sterling opinion
<PAGE> 37
ANNEX II(b)
Form of Sullivan & Cromwell opinion
<PAGE> 38
ANNEX II(c)
Form of Advokatfirman Vinge opinion
<PAGE> 39
ANNEX II(c)
Form of Counsel for the Company opinion
<PAGE> 40
ANNEX II(d)
Form of Swedish Counsel for the Selling Stockholder opinion
<PAGE> 41
ANNEX II(e)
Form of United states Counsel for the Selling Stockholder opinion
<PAGE> 42
ANNEX II(f)
Form of Counsel for the Depositary opinion
