EXECUTION COPY
5,000,000 Shares of Common Stock
Inspire Pharmaceuticals, Inc.
UNDERWRITING AGREEMENT
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Xxxxx 00, 0000
XXXXXXXX BANK SECURITIES INC.
U.S. BANCORP XXXXX XXXXXXX INC.
as Representatives of the several Underwriters
named in Schedule I attached hereto
c/o Deutsche Bank Securities Inc.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Inspire Pharmaceuticals, Inc., a corporation organized and existing
under the laws of Delaware (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") for whom you are acting as
representatives (the "Representatives") an aggregate of 5,000,000 shares (the
"Firm Shares") of its common stock, par value $0.001 per share (the "Common
Stock"), and, for the sole purpose of covering over-allotments in connection
with the sale of the Firm Shares, at the option of the Underwriters, up to an
additional 750,000 shares (the "Additional Shares") of Common Stock. The Firm
Shares and any Additional Shares purchased by the Underwriters are referred to
herein as the "Shares." The Shares are more fully described in the Prospectus
referred to below.
1. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, the Underwriters that:
(a) The Company's registration statement on Form S-3 (File
No. 333-102595), including the base prospectus relating to shares of Common
Stock to be offered from time to time by the Company: (i) was prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the Rules and Regulations (the "Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder; (ii) was filed
with the Commission on January 17, 2003, and amended by a pre-effective
amendment No. 1 filed on February 18, 2003 and a pre-effective amendment No. 2
filed on March 6, 2003; and (iii) was declared effective by the Commission on
March 7, 2003. The Company has at all times relevant to the offering of the
Shares contemplated hereby complied with the conditions for the use of Form S-3
and is eligible to use Form S-3. Such registration statement, which is herein
referred to as the "Registration Statement," is effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. The Company has filed with the Commission pursuant to
Rule 424(b) a preliminary prospectus supplement to the base prospectus included
in the Registration Statement and will hereafter file with the Commission
pursuant to
Rule 424(b) a final supplement to such base prospectus, in each case relating to
the Shares and the offering thereof in conformity with the requirements of the
Act and the Regulations. "Base Prospectus" means the prospectus included in the
Registration Statement at the time it became effective under the Act.
"Prospectus" means the Base Prospectus together with the final prospectus
supplement relating to the Shares first filed with the Commission pursuant to
Rule 424(b). Each preliminary prospectus supplement to the Base Prospectus which
describes the Shares and the offering thereof and is used prior to the filing of
the Prospectus with the Commission, together with the Base Prospectus, is herein
referred to as a "Preliminary Prospectus." Any reference herein to the
Registration Statement, the Base Prospectus, any Preliminary Prospectus or any
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Securities Exchange Act of 1934 (the "Exchange Act") on or before the effective
date of the Registration Statement or the date of such Base Prospectus, any
Preliminary Prospectus or Prospectus, as the case may be; and any reference
herein to the terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, the Base Prospectus, and Preliminary Prospectus or any
Prospectus shall be deemed to refer to and include any document (x) filed under
the Exchange Act after the effective date of the Registration Statement, or the
date of such Base Prospectus, any Preliminary Prospectus or any Prospectus, as
the case may be, and prior to the termination of the offering of the Shares by
you, and (y) deemed to be incorporated therein by reference. Neither the
Commission nor the Blue Sky or securities authority of any jurisdiction has
issued a stop order suspending the effectiveness of the Registration Statement,
preventing or suspending the use of any preliminary prospectus, the Prospectus,
the Registration Statement or any amendment or supplement thereto, refusing to
permit the effectiveness of the Registration Statement or suspending the
registration or qualification of the Shares, nor, to the Company's knowledge,
has any of such authorities instituted or threatened to institute any
proceedings with respect to a stop order.
(b) At the time of the effectiveness of the Registration Statement
or the effectiveness of any post-effective amendment to the Registration
Statement on or before the Closing Date or any Additional Closing Date hereunder
(as hereinafter respectively defined), when the Prospectus is first filed with
the Commission pursuant to Rule 424(b) of the Regulations, when any supplement
to or amendment of the Prospectus is filed with the Commission and at the
Closing Date and the Additional Closing Date, if any, the Registration Statement
and the Prospectus and any amendments thereof and supplements thereto (including
any prospectus wrapper) complied or will comply in all material respects with
the applicable provisions of the Act and the Regulations and do not or will not
contain an untrue statement of a material fact and do not or will not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein (i) in the case of the Registration Statement, not
misleading and (ii) in the case of the Prospectus, in light of the circumstances
under which they were made, not misleading. The documents incorporated by
reference in the Prospectus, at the time filed with the Commission complied, or,
as applicable, will comply in all material respects with the requirements of the
Exchange Act or the Act, as applicable, and the rules and regulations of the
Commission thereunder. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement or any amendment
thereto or pursuant to Rule 424(a) of the Regulations) and when any amendment
thereof or supplement thereto was first filed with the Commission, such
preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions
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of the Act and the Regulations and did not contain an untrue statement of a
material fact and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No representation and
warranty is made in this subsection (b), however, with respect to any
information contained in or omitted from the Registration Statement or the
Prospectus or any Preliminary Prospectus or any amendment thereof or supplement
thereto in reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of any Underwriter through you as herein stated
expressly for use in connection with the preparation thereof.
(c) PricewaterhouseCoopers LLP, who have certified the financial
statements and supporting schedules incorporated by reference in the
Registration Statement and the Prospectus, are independent public accountants as
required by the Act and the Regulations.
(d) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth in
the Registration Statement and the Prospectus: (i) there has been no material
adverse change in the business, prospects, properties, operations, condition
(financial or other) or results of operations of the Company (a "Material
Adverse Change"), whether or not arising from transactions in the ordinary
course of business, and since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the Prospectus; (ii)
the Company has not incurred or undertaken any liabilities or obligations,
direct or contingent, which are material to the Company, except for liabilities
or obligations which are reflected in the Registration Statement and the
Prospectus or the financial statements that are incorporated therein by
reference and business; and (iii) there has not been any material transaction
entered into or any material transaction that is probable of being entered into
by the Company, other than transactions in the ordinary course of business.
(e) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
transactions contemplated herein have been duly and validly authorized by the
Company, and this Agreement has been duly and validly executed and delivered by
the Company and is enforceable against the Company in accordance with its terms,
except as rights to indemnity may be limited by federal or state securities laws
relating thereto and except as enforcement: (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights and remedies generally; (ii) is subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or law); and (iii) is subject to the effect of public
policy considerations or court decisions which may limit rights to obtain
indemnification.
(f) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
pursuant to, any contract, agreement, instrument, franchise, license or permit
to which the Company is a party or by which it or any of its properties or
assets may be bound, except where such conflict, breach, default, lien, charge
or encumbrance would not be reasonably likely to
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have a material adverse effect (considered individually or when aggregated with
other such instances) on the business, prospects (as of the date of this
Agreement), properties, operations, condition (financial or other), or results
of operations of the Company (a "Material Adverse Effect") or (ii) violate or
conflict with any provision of the amended and restated certificate of
incorporation or the by-laws of the Company or any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or any of its
properties or assets. No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its properties or assets is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale and delivery of the Shares to
be issued, sold and delivered by the Company hereunder, except the registration
under the Act of the Shares and such consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses and permits as may be
required under state securities or Blue Sky laws or foreign equivalents of such
regulations or statutes, where applicable, in connection with the purchase and
distribution of the Shares by the Underwriters.
(g) Upon the sale of the Firm Shares on the Closing Date, the only
shares of capital stock of the Company issued and outstanding (other than the
Shares) will be 25,933,440 shares of Common Stock, assuming that between the
date hereof and the Closing Date no shares of Common Stock are issued upon the
exercise of outstanding options and warrants. All of the issued and outstanding
shares of capital stock of the Company are duly and validly authorized and
issued, fully paid and nonassessable, and none of such shares was issued in
violation of or is subject to any preemptive or similar rights. The Shares have
been duly and validly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when delivered by the Company in accordance with
this Agreement, will be duly and validly issued and outstanding, fully paid and
nonassessable and will not have been issued in violation of or be subject to any
preemptive or similar rights. The Company had, at December 31, 2002, an
authorized and outstanding capitalization as set forth in the Prospectus. The
authorized capital stock of the Company, including the Firm Shares and the
Additional Shares, conforms to the description thereof contained in the
Registration Statement and the Prospectus or incorporated therein by reference.
Except as disclosed in the Registration Statement and the Prospectus and except
with respect to the issuance of options under the Company's stock option plan,
there are no outstanding options, warrants or other rights calling for the
issuance of, and no commitments, obligations, plans or arrangements to issue,
any shares of capital stock of the Company or any security convertible into or
exchangeable for capital stock of the Company. The outstanding stock options and
warrants relating to the Common Stock have been duly authorized and validly
issued and conform to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(h) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation. The Company is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction in which the character
and location of its properties (owned, leased or licensed) or nature or conduct
of its business makes such qualification necessary, except where the failure to
so qualify would not have a Material Adverse Effect. The Company has all
requisite power and authority and, except where such failure would not have a
Material Adverse Effect, all necessary
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consents, approvals, authorizations, orders, registrations, qualifications,
licenses and permits (collectively, "Governmental Licenses") of and from all
public, regulatory or governmental agencies and bodies, to own, lease and
operate its properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus, and each such
Governmental License is valid and in full force and effect. No such Governmental
License contains a materially burdensome restriction not adequately disclosed in
the Registration Statement and the Prospectus, and the Company has not received
any notice of proceedings to the revocation of any such Governmental Licenses.
The Company is in compliance with all applicable laws, orders, rules,
regulations, ordinances and directives, except where the failure to be in
compliance could not have a Material Adverse Effect. The Company does not have
any subsidiaries as defined in Rule 405 of the Regulations. The Company does not
presently own or control, directly or indirectly, any interest in any other
corporation, association or other business entity.
(i) The Company is not in violation of any provision of its amended
and restated certificate of incorporation or of its by-laws or in breach of, or
in default under (nor has any event occurred that with notice, lapse of time, or
both, would constitute a breach of, or default under), except where such breach
or default would not have a Material Adverse Effect, any provision of any
agreement, instrument, franchise, lease, license or permit to which the Company
is a party or by which any of its properties or assets may be bound or affected
or any judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets.
(j) There is no litigation, arbitration, proceeding, investigation
or claim to which the Company is a party or to which any property or assets of
the Company are subject which is pending or, to the knowledge of the Company,
threatened or contemplated against the Company which might result in any
Material Adverse Effect or any development involving a Material Adverse Effect
or which is required to be disclosed in the Registration Statement and the
Prospectus.
(k) Neither the Company nor, to the knowledge of the Company, any of
its directors, officers or affiliates (as defined in the Regulations) has taken
or will take, directly or indirectly, any action designed to cause or result in,
or which constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares or a violation of Regulation M under
the Exchange Act. The Company acknowledges that the Underwriters may engage in
passive market making transactions in the Shares on The Nasdaq Stock Market in
accordance with Regulation M under the Exchange Act.
(l) The financial statements, including the notes thereto, and
supporting schedules incorporated by reference in the Prospectus present fairly
the financial position of the Company as of the dates indicated and the results
of its operations for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein; and the
selected financial data and the summary financial information included or
incorporated by
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reference in the Prospectus present fairly the information shown therein and
have been compiled on a basis consistent with that of the financial statements
incorporated by reference in the Prospectus.
(m) Except as described in the Registration Statement and the
Prospectus and except for rights that have been effectively waived in writing
(complete and accurate copies of which have been provided to the Underwriters
prior to the date of this Agreement), which waivers are in full force and
effect, (i) no holder of securities of the Company has any rights to cause the
Company to issue to it, or register pursuant to the Act, any securities of the
Company because of the filing of the Registration Statement or otherwise, in
connection with the sale of the Shares contemplated hereby or otherwise and (ii)
no holder of securities of the Company has preemptive rights or other rights to
purchase any of the Shares.
(n) The Company is not, and upon consummation of the transactions
contemplated hereby and the application of the proceeds therefrom as described
in the Prospectus will not be, an "investment company" or a person "controlled"
by an "investment company" under the Investment Company Act of 1940.
(o) The Common Stock of the Company, including the Shares, have been
approved for quotation on the National Association of Securities Dealers
Automated Quotation National Market System.
(p) The Company owns or possesses valid and enforceable licenses or
other rights to use all inventions, patents, patent applications, trademarks,
service marks, trade names, copyrights, technology, software, databases,
Internet domain names, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), proprietary techniques (including processes and substances) and
other intellectual property rights with respect to those product candidates in
clinical development as described in the Registration Statement and the
Prospectus (collectively, "Intellectual Property") free and clear of all liens,
claims and encumbrances, except where the failure to own or possess such rights
would not reasonably be expected to have a Material Adverse Effect; other than
as described in the Registration Statement and the Prospectus: (i) there are no
third parties who have any rights in the Intellectual Property that could
preclude the Company from conducting its business as currently conducted or as
presently contemplated to be conducted as described in the Registration
Statement and the Prospectus; (ii) there are no pending or threatened actions,
suits, proceedings, investigations or claims by others challenging the rights of
the Company or (if the Intellectual Property is licensed) the licensor thereof
in any Intellectual Property owned or licensed to the Company; (iii) neither the
Company nor (if the Intellectual Property is licensed) the licensor thereof has
infringed, or received any notice of infringement of or conflict with, any
rights of others with respect to the Intellectual Property; and (iv) there is no
dispute between it and any licensor with respect to any Intellectual Property.
The Company has taken all reasonable steps to protect, maintain and safeguard
the Intellectual Property for which improper or unauthorized disclosure would
impair its value or validity. True and correct copies of all licenses and other
agreements between the Company and any third party relating to the Intellectual
Property, and all amendments and supplements thereto, have been provided to the
Underwriters or to counsel for the Underwriters.
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(q) The Company has timely filed all federal, state, local and
foreign income and franchise tax returns and reports required to be filed and
has paid all taxes shown thereon and all assessments received by it to the
extent that such taxes have become due and are not being contested in good
faith, and there is no tax deficiency that has been or, to the Company's
knowledge, might be asserted or threatened against the Company that might have a
Material Adverse Effect; and all tax liabilities are adequately provided for on
the books of the Company.
(r) The Company maintains insurance with insurers of recognized
financial responsibility of the types and in the amounts (i) generally deemed
adequate for its business and consistent with insurance coverage maintained by
similar companies in similar businesses and (ii) required under any of the
Company's agreements, licenses or other contracts, all of which insurance is in
full force and effect; the Company has no reason to believe that it will not be
able to renew its existing insurance as and when such coverage expires or to
obtain similar insurance with similar insurers adequate and customary for its
business and sufficient to satisfy any requirements of its contracts at a cost
that would not have a Material Adverse Effect.
(s) Except where it would not have a Material Adverse Effect: (i)
the Company is in compliance with all applicable federal, state, local or
foreign laws, regulations, rules, ordinances, orders or directives relating to
pollution or (in connection therewith) protection of human health and safety,
the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"); (ii) to the Company's knowledge, no material expenditures
are or will be required to comply with the Environmental Laws, and the Company
holds all permits, licenses and approvals required to conduct its business
thereunder and is in compliance with all terms and conditions of any such
permit, license or approval; (iii) to the Company's knowledge, all properties
and assets leased or owned, including, without limitation, all structures,
contents, soil, subsoil and groundwater, do not contain Hazardous Materials; and
(iv) to the Company's knowledge, the Company has no liability or obligation,
whether to any governmental authority or to any other person or entity, for
damages, claims, penalties, forfeitures or otherwise, as a consequence of the
generation, transportation or disposal of any Hazardous Materials or otherwise
under the Environmental Laws.
(t) As of the date of this Agreement and except as necessary to
conduct the business or as described in the Registration Statement and the
Prospectus, the Company is not required to file or obtain any registration,
application, license, request for exemption, permit or other regulatory
authorization with the U.S. Food and Drug Administration (the "FDA") or any
other federal, state, local or foreign regulatory body in order to conduct its
business as described in the Registration Statement and Prospectus.
(u) The human clinical trials, animal studies and other preclinical
tests conducted by or on behalf of the Company that are described in the
Registration Statement and the Prospectus (the "Company Studies"), have been and
will continue to be conducted in accordance with experimental protocols,
procedures and controls generally used by qualified
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experts in preclinical or clinical trials; the descriptions of the results of
such Company Studies contained in the Registration Statement and Prospectus are
accurate and complete in all material respects; and the Company has no knowledge
of any other trials, studies or tests, the results of which reasonably call into
question the results described or referred to in the Registration Statement and
Prospectus or the documents incorporated therein by reference.
(v) The Company has good and marketable title to all properties
(real and personal) owned by the Company, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind except such as do not, singly or in the aggregate, materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company; and all properties held
under lease or license by the Company are held under valid, existing and
enforceable leases or licenses.
(w) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general and specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorizations, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(x) To the Company's knowledge, no labor dispute with the employees
of the Company is pending or is imminent; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, collaborative or strategic partners, manufacturers or
contractors that could result in any Material Adverse Effect.
(y) Each employee benefit plan, within the meaning of Section 3(3)
of the Employee Retirement Income Securities Act of 1974, as amended ("ERISA"),
that is maintained, administered or contributed to by the Company for employees
or former employees of the Company has been maintained in compliance with its
respective terms and the requirements of any applicable statutes, orders, rules
and regulations, including but not limited to ERISA and the Internal Revenue
Code of 1986, as amended (the "Code"). No prohibited transaction, within the
meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with
respect to any such plan that could result in liability to the Company,
excluding transactions effected pursuant to a statutory or administrative
exemption. For each such plan that is subject to the funding rules of Section
412 of the Code or Section 302 of ERISA, no "accumulated funding deficiency," as
defined in Section 412 of the Code, has been incurred, whether or not waived,
and the fair market value of the assets of each such plan (excluding for these
purposes accrued but unpaid contributions) exceeds the present value of all
benefits accrued under such plan determined using reasonable actuarial
assumptions.
(z) The statistical and market-related data included or incorporated
by reference in the Registration Statement and the Prospectus are derived from
sources which the Company reasonably and in good faith believes to be accurate,
reasonable and reliable, and such data agree with the sources from which they
were derived.
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(aa) There are no contracts, licenses, agreements or other documents
which are required to be described in the Registration Statement and the
Prospectus or filed as exhibits to the Registration Statement or the documents
incorporated therein by reference by the Act or by the Regulations which have
not been described in the Registration Statement and the Prospectus or filed as
exhibits to the Registration Statement or the documents incorporated therein by
reference.
(bb) No relationship, direct or indirect, exists between or among
the Company or, to the knowledge of the Company, any of its affiliates on the
one hand, and the directors, officers, stockholders, customers or suppliers of
the Company on the other hand, which is required to be described in the
Registration Statement and the Prospectus that is not so described.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price per share of $12.69, the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the offices of Xxxxxxx Xxxx & Xxxxxxxxx,
000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, or at such other place as shall be
agreed upon by you and the Company, at 10:00 A.M. on the third or fourth
business day (as permitted under Rule 15c6-1 under the Exchange Act) (unless
postponed in accordance with the provisions of Section 9 hereof) following the
date of the effectiveness of the Registration Statement (or, if the Company has
elected to rely upon Rule 430A of the Regulations, the third or fourth business
day (as permitted under Rule 15c6-1 under the Exchange Act) after the
determination of the initial public offering price of the Shares), or such other
time not later than ten business days after such date as shall be agreed upon by
you and the Company (such time and date of payment and delivery being herein
called the "Closing Date"). Payment shall be made to the Company by wire
transfer of immediately available funds, against delivery to the Representatives
for the respective accounts of the several Underwriters of certificates for the
Firm Shares to be purchased by them. Such payment and delivery are to be made
through the facilities of The Depositary Trust Company, New York, New York on
the Closing Date. As used herein, the term "business day" means any day other
than a day on which banks are permitted or required to be closed in New York
City.
(c) In addition, the Company hereby grants to the several
Underwriters the option to purchase up to 750,000 Additional Shares at the same
purchase price per share to be paid by the Underwriters to the Company for the
Firm Shares as set forth in this Section 2, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option may
be exercised at any time, in whole or in part, on or before the thirtieth day
following the date of the Prospectus, by written notice by you, as
Representatives, to the Company. Such notice shall set forth the aggregate
number of Additional Shares as to which the option is being exercised and the
date and time, as reasonably determined by you, as
9
Representatives, when the Additional Shares are to be delivered (such date and
time being herein sometimes referred to as the "Additional Closing Date");
provided, however, that the Additional Closing Date shall not be earlier than
the Closing Date or earlier than the second full business day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof).
(d) The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same ratio to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 9 hereof) bears to the total number of Firm
Shares being purchased from the Company, subject, however, to such adjustments
to eliminate any fractional shares as you in your sole discretion shall make.
(e) Payment of the purchase price for the Additional Shares shall be
made by wire transfer of immediately available funds at the offices of Xxxxxxx
Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, or such other place as
shall be agreed upon by you and the Company, upon delivery of the certificates
for the Additional Shares to you for the respective accounts of the
Underwriters. Such payment and delivery are to be made through the facilities of
The Depositary Trust Company, New York, New York on the Additional Closing Date.
3. Offering.
Upon your authorization of the release of the Firm Shares, the
Underwriters propose to offer the Shares for sale to the public upon the terms
set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with
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the Underwriters that:
(a) The Company will file the Prospectus (properly completed if Rule
430A has been used) pursuant to Rule 424(b) within the prescribed time period
and will provide evidence satisfactory to you of such timely filing.
On or before the Closing Date or any Additional Closing Date hereunder,
the Company will notify you as soon as reasonably practicable (and, if requested
by you, will confirm such notice in writing) (i) when any post-effective
amendment to the Registration Statement becomes effective, (ii) of any request
by the Commission for any amendment of or supplement to the Registration
Statement, the Prospectus or any documents incorporated by reference therein or
for any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor and (v) of the receipt of any comments from the
Commission relating to the Registration Statement. If the Commission shall
propose or enter a stop order at any time, the Company will make every
reasonable effort to prevent the issuance of any such stop order and, if issued,
to obtain the lifting of such order as soon as possible. On or before the
Closing Date or any Additional Closing Date hereunder, the Company will not file
any amendment to the
10
Registration Statement, make any filing under Rule 462(b) of the Regulations or
file any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b)) that differs from the prospectus
on file at the time of the effectiveness of the Registration Statement before or
after the effective date of the Registration Statement of which the
Representatives shall not previously have been advised and timely furnished with
a copy in advance of filing or to which you shall reasonably object in writing
after being timely furnished in advance a copy thereof or which is not in
compliance with the Regulations.
(b) The Company will comply with the Act and the Regulations so as
to permit the completion of the distribution of the Shares as contemplated in
this Agreement and the Prospectus. If at any time when a prospectus relating to
the Shares is required to be delivered under the Act any event shall have
occurred as a result of which the Prospectus as then amended or supplemented
would, in the judgment of the Underwriters or the Company, include an 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 light of the
circumstances under which they were made, not misleading, or if it shall be
necessary at any time to amend or supplement the Prospectus or Registration
Statement to comply with the Act or the Regulations, the Company will notify the
Representatives promptly and prepare and file with the Commission an appropriate
amendment or supplement (in form and substance reasonably satisfactory to you)
which will correct such statement or omission and will use its best efforts to
have any amendment to the Registration Statement declared effective as soon as
possible.
(c) The Company will maintain in the Company's files manually signed
copies of such documents for at least five years from the date of filing. The
Company will promptly deliver to each of the Underwriters such number of copies
of any preliminary prospectus, the Prospectus, the Registration Statement, and
all amendments of and supplements to such documents, if any, as you may
reasonably request, and the Company hereby consents to the use of such copies
for purposes permitted by the Act.
(d) The Company will endeavor in good faith, in cooperation with you
to qualify the Shares for offering and sale under the securities laws relating
to the offering or sale of the Shares of such jurisdictions as you may designate
and to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process. The Company will promptly advise you of the
receipt by the Company of any notification with respect to suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and will use every reasonable
effort to obtain the withdrawal of any order of suspension as soon as possible.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
11
(f) During the period commencing on the date of the Prospectus and
ending 90 days thereafter, the Company will not, without the prior written
consent of Deutsche Bank Securities Inc. on behalf of the Underwriters, directly
or indirectly, file a registration statement for shares of Common Stock or other
securities convertible into or exchangeable or exercisable for shares of Common
Stock or issue, sell, offer or agree to sell, grant any option, warrant or other
right to purchase or otherwise sell or dispose of (or announce any offer of
sale, contract of sale, sale, grant of any option, warrant or other right to
purchase or other sale or disposition of), pledge, make any short sale or
maintain any short position, establish or maintain a "put equivalent position"
(within the meaning of Rule 16-a-1(h) under the Exchange Act), enter into any
swap, derivative transaction or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock (whether any such transaction is to be settled by delivery of Common
Stock, other securities, cash or other consideration) or otherwise dispose of,
any Common Stock (or any securities convertible into, exercisable for or
exchangeable for Common Stock) or interest therein of the Company, except for
the grant by the Company of options for shares of Common Stock under, and the
issuance by the Company of shares of Common Stock pursuant to the exercise of
options outstanding under, the Amended and Restated 1995 Stock Plan, as amended,
as in effect on the date hereof (provided that the Company shall only so issue
shares during such 90 days to persons who are not, at the time of the closing of
the sale of the Firm Shares on the Closing Date, officers or directors of the
Company or stockholders having beneficial ownership of at least 1% of the
outstanding Common Stock of the Company), and except for the issuance of Common
Stock (or any securities convertible into, exercisable for or exchangeable for
Common Stock) issued in connection with strategic alliances or joint ventures
entered into by the Company after the date hereof, provided that, each holder of
any securities so issued delivers (or has delivered) to the Underwriters its
agreement not to engage in any of the aforesaid transactions on its own behalf
during such 90-day period. The Company will obtain the undertaking of each of
its officers and directors and the securityholders listed on Schedule II and
Schedule III to this Agreement, as of the time of the closing of the sale of the
Firm Shares hereunder on the Closing Date, not to engage in any of the
aforementioned transactions on their own behalf, other than the Company's sale
of Shares hereunder during the period commencing on the date of the Prospectus
and ending (i) 90 days thereafter with respect to each director, officer and
securityholder listed on Schedule II and (ii) 30 days thereafter with respect to
each securityholder listed on Schedule III.
(g) The Company will apply the proceeds from the sale of the Shares
as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will use its best efforts to cause the Shares to be
included in the National Association of Securities Dealers Automated Quotation
National Market System and to maintain such quotation so long as any of the
Shares are outstanding.
(i) The Company, during the period when the Prospectus is required
to be delivered under the Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations thereunder.
(j) The Company will use its best efforts to do and perform all
things required or necessary to be done and performed under this Agreement by
the Company prior to or after
12
the Closing Date or any Additional Closing Date, as the case may be, and to
satisfy all conditions precedent to the delivery of the Shares.
5. Payment of Expenses. Whether or not the transactions contemplated
-------------------
in this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any amendments
or supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents (including this
Agreement, the Master Agreement Among Underwriters and the Master Selected
Dealers Agreement) and all other documents related to the public offering of the
Shares (including those supplied to the Underwriters in quantities as
hereinabove stated), (ii) the issuance, transfer and delivery of the Shares to
the Underwriters, including any transfer or other taxes payable thereon, (iii)
the qualification of the Shares under state or foreign securities or Blue Sky
laws or regulations, including the costs of printing and mailing a preliminary
and final "Blue Sky Survey" and the fees of counsel for the Underwriters and
such counsel's disbursements in relation thereto, (iv) quotation of the Shares
on the National Association of Securities Dealers Automated Quotation National
Market System, (v) filing fees of the Commission and the National Association of
Securities Dealers, Inc., (vi) the cost of printing certificates representing
the Shares and (vii) the cost and charges of any transfer agent or registrar for
the Shares.
6. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Xxxxxxx Xxxx & Xxxxxxxxx
("Underwriters' Counsel") pursuant to this Section 6 of any misstatement or
omission, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement shall have become effective and all
necessary approvals of the National Association of Securities Dealers Automated
Quotation National Market System shall have been received, not later than, if
pricing pursuant to Rule 430A, 5:30 P.M., New York time, on the date of this
Agreement, if pricing pursuant to a pricing amendment, 12:00 Noon, New York
time, on the date an amendment to the Registration Statement containing the
public offering price has been filed with the Commission, or at such later time
and date as shall have been consented to in writing by you; if the Company shall
have elected to rely upon Rule 430A or Rule 434 of the Regulations, the
Prospectus shall have been filed with the Commission in a timely fashion in
accordance with Section 4(a) hereof; and, at or prior to the Closing Date, no
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof shall have been issued and no proceedings
therefor shall have been initiated or threatened by the Commission.
13
(b) At the Closing Date you shall have received the opinion of Xxxx
Xxxxx LLP, counsel for the Company, dated the date of such Closing Date
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. The Company is duly qualified and in
good standing as a foreign corporation in each jurisdiction in which
the character or location of its properties (owned, leased or
licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so
qualified or in good standing which will not in the aggregate have a
material adverse effect on the Company. The Company has all
requisite corporate authority to own, lease and license its
respective properties and conduct its business as now being
conducted and as described in the Registration Statement and the
Prospectus. The Company does not have any subsidiaries as defined in
Rule 405 of the Regulations.
(ii) The Company has authorized capital stock as set
forth in the Registration Statement and the Prospectus. All
outstanding shares of capital stock are duly and validly authorized
and issued, are fully paid and nonassessable and were not issued in
violation of or subject to any preemptive or similar rights. To such
counsel's knowledge, except as disclosed in the Registration
Statement and Prospectus and except with respect to the issuance of
options subsequent to December 31, 2002, there are no outstanding
options, warrants or other rights calling for the issuance of, and
no commitments, obligations, plans or arrangements to issue, any
shares of capital stock of the Company or any security convertible
into or exchangeable for capital stock of the Company. All
outstanding stock options and warrants relating to the Common Stock
have been duly authorized and validly issued.
The Shares to be delivered on the Closing Date have been
duly and validly authorized and, when delivered by the Company to
the Underwriters against payment therefor in accordance with this
Agreement, will be duly and validly issued, fully paid and
nonassessable and will not have been issued in violation of or
subject to any preemptive or similar rights. The Common Stock, the
Firm Shares and the Additional Shares conform to the description
thereof contained or incorporated by reference in the Registration
Statement and the Prospectus.
(iii) The Shares have been approved (upon issuance as
contemplated by the Underwriting Agreement) for quotation in the
National Association of Securities Dealers Automated Quotation
System National Market System.
(iv) This Agreement has been duly and validly authorized, executed
and delivered by the Company.
(v) Such counsel does not know of any litigation, arbitration,
proceeding, investigation or claim to which the Company is a party
or to which any property or assets of the Company are subject which
is pending or threatened against the Company which is of a character
required to be disclosed in the Registration Statement and the
Prospectus which has not been properly disclosed therein or of any
statute, regulation, contract,
14
license, agreement or other document that is required to be described
in the Registration Statement and the Prospectus or required to be
filed as an exhibit to the Registration Statement has not been
described or filed as required.
(vi) The Company has the corporate power and authority to enter
into the Underwriting Agreement and to issue, sell and deliver to the
Underwriters the Shares to be issued and sold by it thereunder. The
execution, delivery, and performance of the Underwriting Agreement
by the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not (A) conflict
with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of
time, or both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, any contract,
agreement, instrument, franchise, lease, license or permit known to
such counsel to which the Company is a party or by which it or its
properties or assets may be bound or (B) contravene any provision of
applicable law, violate or conflict with any provision of the
amended and restated certificate of incorporation or the by-laws of
the Company or, to the knowledge of such counsel, any judgment,
decree or order, or any statute, rule or regulation of any court or
any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of its properties or assets. No
consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental, or regulatory agency or body having jurisdiction over
the Company or any of its properties or assets is required for the
execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, including the
issuance, sale and delivery of the Shares to be issued, sold and
delivered by the Company hereby, except for (1) such as may be
required under state securities or Blue Sky laws or regulations (or
foreign securities laws or regulations, if applicable) in connection
with the purchase and distribution of the Shares by the Underwriters
(as to which such counsel need express no opinion) and (2) such as
have been made or obtained under the Act.
(vii) To such counsel's knowledge, there are no contracts,
agreements or other documents or instruments required to be
described or referred to in the Registration Statement and the
Prospectus or to be filed as exhibits to the Registration Statement
or the documents incorporated therein by reference other than those
described or referred to or filed as required.
(viii) The Registration Statement and the Prospectus and
the documents incorporated by reference therein and any amendments
thereof or supplements thereto (other than the financial statements
and notes and schedules thereto and other financial data derived
therefrom, as to which no opinion need be rendered) comply as to
form in all material respects with the requirements of the Act and
the Regulations.
(ix) The statements in the Registration Statement and
the Prospectus under the caption "Supplemental Risk Factors -- The
shares that we are selling in this offering may be resold
immediately in the public market which could adversely affect our
stock price" and the statements in the documents incorporated by
reference therein under the captions "Description of Capital Stock"
and "Government Regulation" insofar as such statements
15
constitute matters of law or legal conclusions, have been reviewed by
such counsel and fairly present such matters and conclusions, and the
form of certificate evidencing the Common Stock and filed as an exhibit
to the Registration Statement complies with the laws of the State of
Delaware and any applicable requirements of the Company's restated
certificate of incorporation and bylaws and the National Association of
Securities Dealers Automated Quotation System National Market System.
(x) The Company is not, and upon consummation of the
transactions contemplated hereby and the application of the proceeds
therefrom as described in the Prospectus will not be, an "investment
company" or a person "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(xi) The Registration Statement is effective under the
Act, and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement or any
post-effective amendment thereof has been issued and no proceedings
therefor have been initiated or threatened by the Commission. All
filings required by Rule 424(a) and Rule 424(b) of the Regulations
have been made.
In addition, such opinion shall also contain a statement that such
counsel has participated in conferences with certain officers and
representatives of the Company, the independent public accountants for the
Company, the Underwriters and the Underwriters' counsel at which the contents of
the Registration Statement and the Prospectus and related matters were discussed
and no facts have come to the attention of such counsel which would lead such
counsel to believe that either the Registration Statement at the time it became
effective (including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), if applicable),
or any amendment thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as of its date (or any
amendment thereof or supplement thereto made prior to the Closing Date as of the
date of such amendment or supplement) and as of the Closing Date contained or
contains an untrue statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements, including the notes and
schedules thereto and other financial data derived therefrom).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel. The opinion of such
16
counsel for the Company shall state that the opinion of any such other counsel
is in form satisfactory to such counsel and, in their opinion, you and they are
justified in relying thereon.
(c) At the Closing Date, you shall have received the opinion of
Howrey Xxxxx Xxxxxx & White, LLP, patent counsel for the Company, dated the
Closing Date addressed to the Underwriters and in the form previously agreed
with Underwriters' Counsel and set forth in Exhibit A hereto.
(d) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be satisfactory in
form and substance to you and to Underwriters' Counsel, and the Underwriters
shall have received from said Underwriters' Counsel a favorable opinion, dated
as of the Closing Date with respect to the issuance and sale of the Shares, the
Registration Statement and the Prospectus and such other related matters as you
may reasonably require, and the Company shall have furnished to Underwriters'
Counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(e) At the Closing Date you shall have received a certificate of the
Chief Executive Officer and President of the Company, dated the Closing Date, to
the effect that (i) the condition set forth in subsection (a) of this Section 6
has been satisfied, (ii) as of the date hereof and as of the Closing Date the
representations and warranties of the Company set forth in Section 1 hereof are
true and correct, (iii) as of the Closing Date the obligations of the Company to
be performed hereunder on or prior thereto have been duly performed and (iv)
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, the Company has not sustained any
loss or interference with its business or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and there has
not been any Material Adverse Change, or any development involving a Material
Adverse Effect, except in each case as described in or contemplated by the
Prospectus.
(f) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter from PricewaterhouseCoopers LLP, independent
public accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in form
and substance satisfactory to you, stating that: (i) they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the Regulations; (ii) in their opinion, the financial statements and
schedules of the Company incorporated by reference in the Prospectus and covered
by their opinion therein comply as to form in all material respects with the
applicable accounting requirements of the Act and the applicable published rules
and regulations of the Commission thereunder; (iii) on the basis of procedures
consisting of a reading of the latest available unaudited interim financial
statements of the Company and of the latest available unaudited monthly
financial statements of the Company (which, in the case of the letter delivered
on the Closing Date, shall be at least as of January 31, 2003), a reading of the
minutes of meetings and consents of the stockholders and board of directors of
the Company and the committees of such board subsequent to December 31, 2002,
inquiries of officers and other employees of the Company who have responsibility
for financial and accounting matters of the Company with respect to transactions
and events subsequent to December 31, 2002 and other specified procedures and
inquiries to a date not more
17
than five days prior to the date of such letter (provided that the letter
delivered on the Closing Date shall use a "cut-off" date not earlier than the
date hereof), nothing has come to their attention that would cause them to
believe that: (A) with respect to the period subsequent to December 31, 2002
there were, as of the date of the most recent available monthly financial
statements of the Company, if any, and as of a specified date not more than five
days prior to the date of such letter (provided that the letter delivered on the
Closing Date shall use a "cut-off" date not earlier than the date hereof), any
changes in the capital stock or long-term indebtedness of the Company or any
decrease in the net current assets or stockholders' equity of the Company, in
each case as compared with the amounts shown in the most recent balance sheet
presented in the Registration Statement and the Prospectus, except for changes
or decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in such letter; or (B) that during
the period from January 1, 2003 to the date of the most recent available monthly
financial statements of the Company, if any, and to a specified date not more
than five days prior to the date of such letter (provided that the letter
delivered on the Closing Date shall use a "cut-off" date not earlier than the
date hereof), there was any decrease, as compared with the corresponding period
in the prior fiscal year, in revenues, or increase in net loss, except for
decreases or increases, as the case may be, which the Registration Statement and
the Prospectus disclose have occurred or may occur or which are set forth in
such letter; and (iv) they have compared specific dollar amounts, numbers of
shares, percentages of revenues and earnings, and other financial information
pertaining to the Company incorporated by reference in the Prospectus, which
have been specified by you prior to the date of this Agreement, to the extent
that such amounts, numbers, percentages, and information may be derived from the
general accounting and financial records of the Company or from schedules
furnished by the Company, and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the application
of specified readings, inquiries, and other appropriate procedures specified by
you set forth in such letter, and found them to be in agreement.
(g) Prior to the Closing Date the Company shall have furnished to
you such further information, certificates and documents as you may reasonably
request.
(h) You shall have received from each person who is a director or
officer of the Company and the securityholders listed on Schedule II and
Schedule III to this Agreement, as of the time of the closing of the sale of the
Firm Shares hereunder at the Closing Date, an agreement to the effect that such
person will not, without the prior written consent of Deutsche Bank Securities
Inc. on behalf of the Underwriters, during the period commencing on the date of
the Prospectus and ending 90 days thereafter with respect to each director,
officer and securityholder listed on Schedule II and ending 30 days thereafter
with respect to each securityholder listed on Schedule III, directly or
indirectly, offer, sell, pledge, contract to sell, (including any short sale),
grant any option to purchase or otherwise dispose of any shares of Common Stock
(including, without limitation, shares of Common Stock which may be issued upon
exercise of a stock option or warrant and any other security convertible into or
exchangeable for Common Stock and including, without limitation, except with
respect to the directors of the Company, shares of Common Stock which may be
deemed to be beneficially owned in accordance with the rules and regulations of
the Commission) or enter into any Hedging Transaction (as defined below)
relating to the Common Stock (each of the foregoing referred to as a
"Disposition"). "Hedging Transaction" means any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put
18
or call option) with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from the Common Stock.
(i) At the Closing Date, the Shares shall have been quoted on the
National Association of Securities Dealers Automated Quotation National Market
System.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
cancelled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company in writing, or by
telephone, facsimile, telex or telegraph, confirmed in writing.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed, or any amendment thereof, or any
Preliminary Prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, or (ii) 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; provided, however, that the Company will not be liable
in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through you
expressly for use therein. This indemnity agreement will be in addition to any
liability which the Company may otherwise have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or
19
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Shares, as originally filed, or any filed amendment thereof, or any related
Preliminary Prospectus or the Prospectus, or any amendment thereof or supplement
thereto, 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 any such loss, liability, claim, damage or expense arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through you expressly for use therein; provided, however, that in no
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting discount and commission applicable to the Shares purchased by
such Underwriter hereunder. This indemnity will be in addition to any liability
which any Underwriter may otherwise have including under this Agreement. The
Company acknowledges that the statements set forth in the third, ninth and tenth
through fifteenth paragraphs and the list of Underwriters and the number of
shares listed opposite their respective names in the first paragraph under the
caption "Underwriting" in the Prospectus constitute the only information
furnished in writing by or on behalf of any Underwriter expressly for use in the
Registration Statement, as originally filed, or any filed amendment thereof, or
any Preliminary Prospectus or the Prospectus, or any amendment thereof or
supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7, except to the extent (but only
to the extent) such failure prejudices the rights of such indemnifying party).
In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel satisfactory to such indemnified party. Notwithstanding the foregoing,
the indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties.
Anything in this subsection to the contrary notwithstanding, an indemnifying
party shall not be liable for any
20
settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withheld.
8. Contribution. In order to provide for contribution in
------------
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received proper notice as provided in Section 7 hereof, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Company and the Underwriters in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and (y) the underwriting
discounts and commissions received by the Underwriters, respectively, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and of the Underwriters 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 or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 8 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.
Notwithstanding the provisions of this Section 8, (i) in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount and commission applicable to the Shares purchased by such
Underwriter hereunder, and (ii) 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. Notwithstanding the provisions of this Section 8 and the
preceding sentence, 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 that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. For purposes of this Section 8, each person, if any, who controls an
Underwriter within the meaning of Section
21
15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 8. Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another party
or parties, notify each party or parties from whom contribution may be sought,
but the omission to so notify such party or parties shall not relieve the party
or parties from whom contribution may be sought from any obligation it or they
may have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, the Firm Shares or Additional Shares to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
the respective proportions which the numbers of Firm Shares set forth opposite
their respective names in Schedule I hereto bear to the aggregate number of Firm
Shares set forth opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, you may in your discretion
arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within five calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Sections 5, 7(a) and 8 hereof) or the Underwriters, but nothing
in this Agreement shall relieve a defaulting Underwriter or Underwriters of its
or their liability, if any, to the other Underwriters and the Company for
damages occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Additional Closing Date, as
the case may be, for a period, not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the
22
Prospectus which, in the opinion of Underwriters' Counsel, may thereby be made
necessary or advisable. The term "Underwriter" as used in this Agreement shall
include any party substituted under this Section 9 with like effect as if it had
originally been a party to this Agreement with respect to such Firm Shares and
Additional Shares.
10. Survival of Representations and Agreements. All representations
------------------------------------------
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity, agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the execution of this
Agreement.
(b) This Agreement may be terminated by you by notice to the Company
at any time prior to the Closing Date or any Additional Closing Date (if
different from the Closing Date and then only as to Additional Shares) if any of
the following has occurred: (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
Material Adverse Change or any development involving a prospective Material
Adverse Change, taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make it
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, (iii) suspension of trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market or limitation on prices for securities on either such Exchange, (iv) the
enactment, publication, decree or other promulgation of any statute, regulation,
rule or order of any court or other governmental authority which in your opinion
has or may have a Material Adverse Effect, (v) the declaration of a banking
moratorium by United States or New York State authorities, (vi) the suspension
of trading of the Common Stock by the Nasdaq National Market, the Commission or
any other governmental authority or (vii) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs which
in your reasonable opinion has a material adverse effect on the securities
markets in the United States.
(c) Any notice of termination pursuant to this Section 11 shall be
by telephone, facsimile, telex, or telegraph, confirmed in writing by letter.
23
(d) If this Agreement shall be terminated pursuant to any of the provisions
hereof (otherwise than pursuant to Section 9(b) or 11(b) hereof), or if the sale
of the Shares provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth herein is not satisfied or because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, the Company will, subject
to demand by you, reimburse the Underwriters for all out-of-pocket expenses
(including the fees and expenses of their counsel) incurred by the Underwriters
in connection herewith.
12. Notices. All communications hereunder, except as may be
-------
otherwise specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, sent by facsimile, telex or telegraph
and confirmed in writing, to such Underwriter c/o Deutsche Bank Securities Inc.,
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity
Syndicate; facsimile number (000) 000-0000; if sent to the Company, shall be
mailed, delivered, sent by facsimile, telex or telegraph and confirmed in
writing to the Company, 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, XX
00000-0000, Attention: Xxxxxxx X. Xxxxxxx, Ph.D., Chief Executive Officer;
facsimile number (000) 000-0000.
13. Parties. This Agreement shall inure solely to the benefit of,
-------
and shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Sections 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares (from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
15. Counterparts. This Agreement may be signed in two or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
16. Headings. The headings of the sections of this Agreement have
--------
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
[Signature Page Follows]
24
If the foregoing correctly sets forth the understanding between you and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
INSPIRE PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: President
Accepted as of the date first above written
DEUTSCHE BANK SECURITIES INC.
U.S. BANCORP XXXXX XXXXXXX INC.
By: Deutsche Bank Securities Inc.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director, Head of Healthcare for the Americas
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
------------------- ----------------------
Deutsche Bank Securities Inc. 3,250,000
U.S. Bancorp Xxxxx Xxxxxxx Inc. 1,750,000
Total.............................................. 5,000,000
SCHEDULE II
None.
SCHEDULE III
Domain Partners III, L.P.
DP III Associates, L.P.
EXHIBIT A
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Opinion of Howrey Xxxxx Xxxxxx & White, LLP
