--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
XXXXXX DEVELOPMENT CORPORATION II, INC.
(a Delaware corporation)
DURA PHARMACEUTICALS, INC.
(a Delaware corporation)
4,400,000 Units
Each Unit Consisting of
One Share of Callable Common Stock of Xxxxxx Development Corporation II, Inc.
and One Warrant to Purchase
One-Fourth of One Share of Common Stock of Dura Pharmaceuticals, Inc.
U.S. PURCHASE AGREEMENT
Dated: December 16, 1997
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
SECTION 1. Representations and Warranties . . . . . . . . . . . . . . . . 5
(a) Representations and Warranties by the Companies . . . . . . . 5
(i) Compliance with Registration Requirements . . . . . . 5
(ii) Incorporated Documents. . . . . . . . . . . . . . . . 6
(iii) Independent Accountants . . . . . . . . . . . . . . . 6
(iv) Financial Statements. . . . . . . . . . . . . . . . . 6
(v) No Material Adverse Change in Business. . . . . . . . 7
(vi) Good Standing of the Companies. . . . . . . . . . . . 8
(vii) Good Standing of Subsidiaries . . . . . . . . . . . . 8
(viii) Capitalization. . . . . . . . . . . . . . . . . . . . 9
(ix) Authorization of Agreements . . . . . . . . . . . . . 9
(x) Authorization and Description of Units. . . . . . . . 10
(xi) Registration or Similar Rights Waived . . . . . . . . 11
(xii) Absence of Defaults and Conflicts . . . . . . . . . . 11
(xiii) Compliance with Laws. . . . . . . . . . . . . . . . . 13
(xiv) Absence of Labor Dispute. . . . . . . . . . . . . . . 13
(xv) Absence of Proceedings. . . . . . . . . . . . . . . . 13
(xvi) Accuracy of Exhibits. . . . . . . . . . . . . . . . . 13
(xvii) Possession of Intellectual Property . . . . . . . . . 14
(xviii) Absence of Further Requirements . . . . . . . . . . . 14
(xix) Possession of Licenses and Permits. . . . . . . . . . 15
(xx) Title to Property . . . . . . . . . . . . . . . . . . 15
(xxi) Compliance with Cuba Act. . . . . . . . . . . . . . . 15
(xxii) Investment Company Act. . . . . . . . . . . . . . . . 16
(xxiii) Environmental Laws. . . . . . . . . . . . . . . . . . 16
(xxiv) Taxes . . . . . . . . . . . . . . . . . . . . . . . . 16
(xxv) Insurance . . . . . . . . . . . . . . . . . . . . . . 16
(xxvi) Accounting Controls . . . . . . . . . . . . . . . . . 17
(xxvii) Lock-up Agreements . . . . . . . . . . . . . . . . . 17
(xxviii) Affiliate Transactions . . . . . . . . . . . . . . . 17
(xxix) Distribution of Prospectuses. . . . . . . . . . . . 17
(b) Officer's Certificates. . . . . . . . . . . . . . . . . . . . 17
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing. . . . . . . . 18
(a) Initial U.S. Units. . . . . . . . . . . . . . . . . . . . . . 18
(b) U.S. Option Units . . . . . . . . . . . . . . . . . . . . . . 18
(c) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Denominations; Registration . . . . . . . . . . . . . . . . . 19
SECTION 3. Covenants of the Companies . . . . . . . . . . . . . . . . . . 19
(a) Compliance with Securities Regulations and Commission
Requests. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Filing of Amendments. . . . . . . . . . . . . . . . . . . . . 20
i
(c) Delivery of Registration Statement. . . . . . . . . . . . . . 20
(d) Delivery of Prospectuses. . . . . . . . . . . . . . . . . . . 20
(e) Continued Compliance with Securities Laws . . . . . . . . . . 20
(f) Rule 158. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(g) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i) Restriction on Sale of Dura Common Stock. . . . . . . . . . . 21
(j) Reporting Requirements. . . . . . . . . . . . . . . . . . . . 22
(k) Compliance with NASD Rules. . . . . . . . . . . . . . . . . . 22
(l) Lock-up Agreements. . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4. Payment of Expenses. . . . . . . . . . . . . . . . . . . . . . 22
(a) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Termination of Agreement. . . . . . . . . . . . . . . . . . . 23
SECTION 5. Conditions of U.S. Underwriters' Obligations . . . . . . . . . 23
(a) Effectiveness of Registration Statement . . . . . . . . . . . 23
(b) Opinion of Counsel for the Companies. . . . . . . . . . . . . 23
(c) Opinion of Patent Counsel for the Companies . . . . . . . . . 24
(d) Opinion of Regulatory Counsel for the Companies . . . . . . . 24
(e) Opinion of Counsel for the U.S. Underwriters. . . . . . . . . 24
(f) Officers' Certificate . . . . . . . . . . . . . . . . . . . . 24
(g) Accountants' Comfort Letter . . . . . . . . . . . . . . . . . 25
(h) Bring-down Comfort Letter . . . . . . . . . . . . . . . . . . 25
(i) Approval of Listing . . . . . . . . . . . . . . . . . . . . . 25
(j) No Objection. . . . . . . . . . . . . . . . . . . . . . . . . 25
(k) Lock-up Agreements. . . . . . . . . . . . . . . . . . . . . . 25
(l) Purchase of Initial International Units . . . . . . . . . . . 25
(m) Conditions to Purchase of U.S. Option Units . . . . . . . . . 25
(i) Officers' Certificate. . . . . . . . . . . . . . . . . 26
(ii) Opinions of Counsel for the Companies. . . . . . . . . 26
(iii) Opinion of Counsel for the U.S. Underwriters . . . . . 26
(iv) Bring-down Comfort Letter. . . . . . . . . . . . . . . 26
(n) Additional Documents. . . . . . . . . . . . . . . . . . . . . 26
(o) Termination of Agreement. . . . . . . . . . . . . . . . . . . 26
SECTION 6. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Indemnification of U.S. Underwriters. . . . . . . . . . . . . 27
(b) Indemnification of the Companies, Directors and Officers. . . 28
(c) Actions against Parties; Notification . . . . . . . . . . . . 28
(d) Settlement without Consent if Failure to Reimburse. . . . . . 29
SECTION 7. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9. Termination of Agreement . . . . . . . . . . . . . . . . . . . 31
(a) Termination; General . . . . . . . . . . . . . . . . . 31
ii
(b) Liabilities. . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10. Default by One or More of the U.S. Underwriters. . . . . . . 31
SECTION 11. Default by the Companies . . . . . . . . . . . . . . . . . . 32
SECTION 12. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 13. Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 14. Governing Law and Time. . . . . . . . . . . . . . . . . . . 33
SECTION 15. Effect of Headings. . . . . . . . . . . . . . . . . . . . . 33
iii
XXXXXX DEVELOPMENT CORPORATION II, INC.
(a Delaware corporation)
DURA PHARMACEUTICALS, INC.
(a Delaware corporation)
4,400,000 Units
Each Unit Consisting of
One Share of Callable Common Stock of Xxxxxx Development Corporation II, Inc.
and One Warrant to Purchase
One-Fourth of One Share of Common Stock of Dura Pharmaceuticals, Inc.
U.S. PURCHASE AGREEMENT
December 16, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
as U.S. Representatives of the several U.S. Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Xxxxxx Development Corporation II, Inc., a Delaware corporation ("SDC II"),
and Dura Pharmaceuticals, Inc., a Delaware corporation ("Dura" and, together
with SDC II, the "Companies"), confirm their respective agreements with Xxxxxxx
Xxxxx & Co., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx ("Xxxxxxx Xxxxx") and each of the other U.S. Underwriters
named in Schedule A hereto (collectively, the "U.S. Underwriters", which term
shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Xxxxxxx Xxxxx and Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation are acting as representatives (in such capacity, the
"U.S. Representatives"), with respect to the issue and sale by the Companies,
and the purchase by the U.S. Underwriters, acting severally and not jointly, of
the respective number of units set forth in said Schedule A, each unit composed
of one share of callable common stock, par value $.001 per share, of SDC II
("SDC II Common Stock") and one warrant (each a "Warrant") that will entitle the
registered owner thereof to purchase one-fourth of one share of common stock,
par value $.001 per share, of Dura ("Dura Common Stock") at a per share exercise
price as set forth in Schedule B hereto, pursuant to and subject to certain
adjustments as set forth in the Warrant certificate to be issued as part of the
Unit Certificate (as hereinafter defined), and with respect to the grant by SDC
II and Dura to the U.S. Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of 660,000
additional units to cover over-allotments, if any. The SDC II Common Stock and
the Warrants will be paired for sale as units by SDC II and Dura and then sold
to the U.S. Underwriters. The aforesaid 4,400,000 units (the "Initial U.S.
Units") to be purchased by the U.S. Underwriters and all or any part of the
660,000 units subject to the option described in Section 2(b) (the "U.S. Option
Units") are hereinafter called, collectively, the "U.S. Units".
It is understood that the Companies concurrently are entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Companies of an aggregate of 1,100,000 units
composed of one share of SDC II Common Stock and one Warrant (the "Initial
International Units") through arrangements with certain underwriters outside the
United States and Canada (the "Managers") for whom Xxxxxxx Xxxxx International
is acting as lead manager (the "Lead Manager") and the grant by the Companies to
the Managers, acting severally and not jointly, of an option to purchase all or
any part of the Managers' pro rata portion of up to 165,000 additional units
composed of one share of SDC II Common Stock and one Warrant solely to cover
over-allotments, if any (the "International Option Units" and, together with the
U.S. Option Units, the "Option Units"). The Initial International Units and the
International Option Units are hereinafter called the "International Units". It
is understood that the Companies are not obligated to sell and the U.S.
Underwriters are not obligated to purchase, any Initial U.S. Units unless all of
the Initial International Units are contemporaneously purchased by the Managers.
The U.S. Underwriters and the Managers are hereinafter collectively called
the "Underwriters", the Initial U.S. Units and the Initial International Units
are hereinafter collectively called the "Initial Units", and the U.S. Units and
the International Units are hereinafter collectively called the "Units".
The Underwriters concurrently will enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions
2
among the Underwriters under the direction of Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (in such capacity, the "Global
Coordinator").
The Companies understand that the U.S. Underwriters propose to make a
public offering of the U.S. Units as soon as the U.S. Representatives deem
advisable after this Agreement has been executed and delivered.
Each Unit initially will be represented by a certificate representing one
or more Warrants and one or more shares of SDC II Common Stock (a "Unit
Certificate"). Each Unit will be transferable only as a whole and as described
in the Prospectuses (as hereinafter defined) through December 31, 1999 or such
earlier date on which the Purchase Option (as defined in the Prospectuses) is
exercised or expires unexercised, after which date the Warrants and the SDC II
Common Stock will trade separately; PROVIDED, HOWEVER, that such separation date
will be accelerated upon the occurrence of an Acceleration Event (as defined in
the Prospectuses) with respect to Dura. The SDC II Common Stock, the Warrants
and the U.S. Units are more fully described in the Registration Statement (as
hereinafter defined) and the Prospectuses.
The Companies and the U.S. Underwriters agree that up to 552,200 shares of
the Initial U.S. Units to be purchased by the U.S. Underwriters (the "Reserved
Units") shall be reserved for sale by the U.S. Underwriters to certain eligible
employees and persons having business relationships with the Companies, as part
of the distribution of the U.S. Units by the U.S. Underwriters, subject to the
terms of this Agreement, the applicable rules, regulations and interpretations
of the National Association of Securities Dealers, Inc. and all other applicable
laws, rules and regulations. To the extent that such Reserved Units are not
orally confirmed for purchase by such eligible employees and persons having
business relationships with the Companies by the end of the first business day
after the date of this Agreement, such Reserved Units may be offered to the
public as part of the public offering contemplated hereby.
The Companies have filed with the Securities and Exchange Commission (the
"Commission") a combined registration statement (Nos. 333-37673 and
333-37673-01) covering the registration of the U.S. Units under the Securities
Act of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, (a) with respect to SDC II, on Form S-1, relating to
the SDC II Common Stock comprising a portion of the U.S. Units, and (b) with
respect to Dura, on Form S-3, relating to the Warrants comprising a portion of
the U.S. Units, the Dura Common Stock underlying the Warrants and the Dura
Common Stock issuable upon exercise of the Purchase Option. Promptly after
execution and delivery of this Agreement, the Companies will either (i) prepare
and file a prospectus in accordance with the provisions of Rule 430A ("Rule
430A") of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the
1933 Act Regulations or (ii) if the Companies have elected to rely upon Rule 434
("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Units: one relating to the U.S. Units (the "Form of U.S.
3
Prospectus") and one relating to the International Units (the "Form of
International Prospectus"). The Form of International Prospectus is identical
to the Form of U.S. Prospectus, except for the front cover and back cover pages,
the information under the caption "Underwriting", the inclusion in the
"Prospectus Summary" section of the Form of International Prospectus of a
paragraph under the caption "United States Taxation of Non-U.S. Persons" and the
exclusion in the Form of International Prospectus of a section under the caption
"United States Federal Income Tax Consequences." The information included in
any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (A) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (B) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information". Each Form of U.S. Prospectus and Form of International
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus". Such registration statement, including the exhibits thereto,
schedules thereto, if any, and the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it became
effective and including the Rule 430A Information and the Rule 434 Information,
as applicable, is herein called the "Registration Statement". Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement", and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final Form of U.S. Prospectus and the final Form of
International Prospectus, including the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the forms first
furnished to the Underwriters for use in connection with the offering of the
Units (the "Unit Offering") are herein called the "U.S. Prospectus" and the
"International Prospectus", respectively, and, collectively, the "Prospectuses".
If Rule 434 is relied on, the term "U.S. Prospectus" and "International
Prospectus" shall refer to the preliminary U.S. Prospectus dated December 1,
1997 and the preliminary International Prospectus dated December 1, 1997,
respectively, each together with the applicable Term Sheet and all references in
this Agreement to the date of such Prospectuses shall mean the date of the
applicable Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the U.S. Prospectus, the
International Prospectus or any Term Sheet or any amendment or supplement to any
of the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("XXXXX").
Prior to the Closing Time (as defined), Dura intends to acquire all of the
outstanding capital stock of Xxxxxx Development Corporation ("SDC") for an
aggregate purchase price of approximately $45.7 million, payable in cash, shares
of Dura Common Stock, or any combination thereof (the "SDC Purchase").
4
All references in this Agreement to financial statements and schedules and
other information which is "contained", "included" or "stated" in the
Registration Statement, any preliminary prospectus (including the Form of U.S.
Prospectus and the Form of International Prospectus) or the Prospectuses (or
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus
(including the Form of U.S. Prospectus and the Form of International Prospectus)
or the Prospectuses, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectuses shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectuses, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANIES. The Companies
jointly and severally represent and warrant to each U.S. Underwriter as of the
date hereof, as of the Closing Time referred to in Section 2(c) hereof, and as
of each Date of Delivery (if any) referred to in Section 2(b) hereof, and agree
with each U.S. Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Dura meets the
requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Companies, are contemplated by the Commission, and any request on the part
of the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto become
effective and at the Closing Time (and, if any U.S. Option Units are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not 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. Neither of the Prospectuses nor any amendments or
supplements thereto, at the time the Prospectuses or any amendments or
supplements were issued and at the Closing Time (and, if any U.S. Option
Units are purchased, at the Date of Delivery), included or will include an
untrue statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If
Rule 434 is used, the Companies will
5
comply with the requirements of Rule 434. The representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or the U.S. Prospectus made in reliance
upon and in conformity with information furnished to the Companies in
writing by any U.S. Underwriter through Xxxxxxx Xxxxx expressly for use in
the Registration Statement or the U.S. Prospectus.
Each preliminary prospectus and the prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement and
the Prospectuses, when they became effective or at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations or the Securities Exchange Act of 1934 (the "1934 Act") and the
rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), as applicable, and, when read together with the other
information in the Prospectuses, at the time the Registration Statement
became effective, at the time the Prospectuses were issued and at the
Closing Time (and, if any U.S. Option Units are purchased, at the Date of
Delivery), did not 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, in light of the circumstances
under which they were made, not misleading.
(iii) INDEPENDENT ACCOUNTANTS. Deloitte & Touche LLP, which are
reporting upon the audited financial statements and supporting schedules
with respect to Dura, Spiros Development Corporation ("SDC") and SDC II
incorporated by reference or included in the Registration Statement, are
independent accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iv) FINANCIAL STATEMENTS. (A) The financial statements of Dura
incorporated by reference or included in the Registration Statement and the
Prospectuses, together with the related schedules and notes, present fairly
the financial position of Dura (and, for relevant periods consistent with
the Commission's rules and regulations, Dura's Subsidiaries (as defined in
clause (vii) below)) at the dates indicated and the statements of
operations, shareholders' equity and cash flows of Dura (and, for relevant
periods consistent with the Commission's rules and regulations, each of the
Subsidiaries) for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting
6
principles ("GAAP") applied on a consistent basis throughout the periods
involved. The supporting schedules, if any, included in the Registration
Statement present fairly in accordance with GAAP the information required
to be stated therein. The selected financial data and summary financial
information for Dura and the Subsidiaries included in the Prospectuses
present fairly in accordance with GAAP the information shown therein and
have been compiled on a basis consistent with that of the audited financial
statements of Dura and the Subsidiaries included in the Registration
Statement. Other than the financial statements and schedules referred to
in this paragraph (iv), no other financial statements or schedules are
required to be included in the Registration Statement or incorporated
therein by reference.
(B) The financial statements of SDC included in the Registration
Statement and the Prospectuses, together with the related schedules and
notes, present fairly the financial position of SDC at the dates indicated
and the statements of operations, shareholders' equity and cash flows of
SDC for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with GAAP applied on a consistent basis throughout the periods
involved.
(C) The financial statements of SDC II included in the Registration
Statement and the Prospectuses, together with the related schedules and
notes, present fairly the financial position of SDC II at the date
indicated; except as otherwise stated in the Registration Statement, said
financial statements have been prepared in conformity with GAAP.
(D) The pro forma financial statements and the related notes thereto
included in the Registration Statement and the Prospectuses or incorporated
therein by reference present fairly in accordance with GAAP the information
shown therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and have been
properly compiled on the bases described therein, and the assumptions used
in the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances
referred to therein.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
Dura and the Subsidiaries (as defined below), considered as one enterprise,
whether or not arising in the ordinary course of business (a "Dura Material
Adverse Effect"), (B) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of SDC, whether or not arising in the ordinary course
of business (an "SDC Material Adverse Effect"), (C) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings,
7
business affairs or business prospects of SDC II, whether or not arising
in the ordinary course of business (an "SDC II Material Adverse Effect"),
(D) there have been no transactions entered into by Dura or any Subsidiary,
SDC or SDC II, other than in the ordinary course of business, which are
material with respect to Dura and the Subsidiaries, considered as one
enterprise, SDC or SDC II, respectively, and (D) there has been no dividend
or distribution of any kind declared, paid or made by each of SDC, SDC II
or Dura, on any class of its respective capital stock. As used in this
Agreement on the date hereof, a "Material Adverse Effect" shall mean both a
Dura Material Adverse Effect and an SDC Material Adverse Effect.
(vi) GOOD STANDING OF THE COMPANIES. (A) Dura has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its obligations
under this Agreement; and Dura is duly qualified as a foreign corporation
to transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to
so qualify or to be in good standing would not result in a Dura Material
Adverse Effect.
(B) SDC II has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectuses and to enter
into and perform its obligations under this Agreement; and SDC II is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or to be in good standing
would not result in an SDC II Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. Dura Delivery Systems,
Inc., a Delaware corporation ("DDSI"), Health Script Pharmacy Services,
Inc., a Colorado corporation ("Health Script"), Healthco Solutions, Inc., a
Colorado corporation ("Healthco"), HS Wholesaler, Inc., a Colorado
corporation ("HS Wholesaler"), Scandi Acquisition Corp., a Delaware
corporation ("Scandi"), DCI, Ltd., a corporation organized under the laws
of the Cayman Islands ("DCI"), Dura (Bermuda) Trading Company Ltd., a
corporation organized under the laws of Bermuda ("Dura (Bermuda)"), Dura
(Barbados) Ltd., a corporation organized under the laws of Barbados ("Dura
(Barbados)"), Dura (Barbados) Holding Company Ltd., a corporation organized
under the laws of Barbados ("Dura (Barbados) Holding"), Dura USA Holdings,
Inc., a Delaware corporation ("Dura USA") and SDC Acquisition Corp., a
Delaware corproation ("SDC Acquiisition") are the only subsidiaries of Dura
(DDSI, Health Script, Healthco, HS Wholesaler, Scandi, DCI, Dura (Bermuda),
Dura (Barbados), Dura (Barbados) Holding, Dura USA, SDC Acquisition
8
and, unless otherwise indicated, SDC, are hereinafter referred to as the
"Subsidiaries"). Except for the Subsidiaries, neither Dura nor any
Subsidiary owns any shares of stock or any other equity securities of any
corporation or has any equity interests in any firm, partnership,
association or other entity other than 775,193 shares of Common Stock of
Trega Biosciences, Inc. and 754,799 shares of Common Stock of Cosmederm
Technologies, Inc., each held by Dura. Each Subsidiary has been duly
organized and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and conduct its business
as described in the Prospectuses and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; all of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and (other than with respect to SDC) is owned
solely by Dura or another Subsidiary free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of such
Subsidiary arising by operation of law, under the charter or by-laws of
such Subsidiary or under any agreement to which Dura or such Subsidiary is
a party.
(B) Upon the consummation of the SDC Purchase, all of the outstanding
shares of capital stock of SDC will be owned by Dura free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(viii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of each of Dura and SDC II is as set forth in the
Prospectuses under the column "Actual" under the captions "Dura
Capitalization" and "Xxxxxx Corp. II Capitalization", respectively (except,
in the case of Dura, for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectuses or incorporated by reference therein or pursuant to the
exercise of convertible securities, warrants or options referred to in the
Prospectuses or incorporated by reference therein). The shares of issued
and outstanding capital stock of each of Dura and SDC II have been duly
authorized and validly issued and are fully paid and non-assessable; none
of the outstanding shares of capital stock of Dura or SDC II was issued in
violation of the preemptive or other similar rights of any securityholder
of Dura or SDC II, respectively, arising by operation of law, under the
charter or by-laws of Dura or SDC II, as the case may be, or under any
agreement to which Dura or SDC II is a party. Except as disclosed in the
Prospectuses or incorporated by reference therein, there are no outstanding
options, warrants or other rights calling for the issuance of, and no
commitments, plans or arrangements to issue, any shares of capital stock of
Dura, SDC
9
II or any Subsidiary or any security convertible into or exchangeable for
capital stock of Dura, SDC II or any Subsidiary.
(ix) AUTHORIZATION OF AGREEMENTS. (A) This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by each of Dura and SDC II.
(B) The Warrant Agreement (as hereinafter defined) has been duly
authorized by Dura, and when executed and delivered by Dura and the Warrant
Agent thereunder, will constitute a valid and binding agreement of Dura,
enforceable against Dura in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(C) Each of the Development Agreement, the Technology Agreement, the
Albuterol and Product Option Agreement, the Manufacturing and Marketing
Agreement and the Services Agreement (each as defined in the Prospectuses,
and collectively referred to herein as the "Transaction Agreements") has
been duly authorized by Dura and SDC II and, in the case of the Technology
Agreement, Dura, SDC II, SDC and DDSI, and when executed and delivered by
Dura and SDC II, and, in the case of the Technology Agreement, Dura, SDC
II, SDC and DDSI, will constitute valid and binding agreements of each of
Dura, SDC II, SDC and DDSI, as the case may be, enforceable against Dura,
SDC II, SDC and DDSI in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(x) AUTHORIZATION AND DESCRIPTION OF UNITS. (A) The SDC II
Common Stock to be issued by SDC II as a component of the Units has been
duly authorized for issuance and sale to the U.S. Underwriters pursuant
to this Agreement and to the Managers pursuant to the International
Purchase Agreement, respectively, and, when issued and delivered by SDC
II against payment of the purchase price therefor as provided in this
Agreement and the International Purchase Agreement, respectively, will
be validly issued, fully paid and non-assessable; the SDC II Common
Stock conforms in all material respects to the statements relating
thereto contained in the Prospectuses and such description conforms to
the rights set forth in the instruments defining the same; no holder of
SDC II Common Stock will be subject to personal liability by reason of
being such a holder; and the issuance of the SDC II Common Stock is not
subject to the preemptive or other similar rights of any securityholder
of SDC II.
10
(B) The Warrants to be issued as a component of the Units have been
duly authorized by Dura for issuance and sale to the U.S. Underwriters
pursuant to this Agreement and to the Managers pursuant to the
International Purchase Agreement, respectively, and, when duly executed,
issued and delivered by Dura and duly countersigned by the Warrant Agent
(as hereinafter defined) in the manner provided for in the Warrant
Agreement (the "Warrant Agreement") to be entered into between Dura and
ChaseMellon Shareholder Services, as warrant agent (the "Warrant Agent"),
and, when issued and delivered by Dura against payment of the purchase
price therefor as provided in this Agreement and the International Purchase
Agreement, respectively, will constitute valid and binding obligations of
Dura, entitled to the benefits of the Warrant Agreement, and will be
enforceable in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law); such Warrants are not subject to the preemptive rights of any
stockholder of Dura.
(C) Dura shall have available such number of shares of Dura Common
Stock deliverable upon exercise of the Warrants as is sufficient to permit
the exercise in full of the Warrants. All shares of Dura Common Stock
issued upon exercise of the Warrants, when issued and paid for in
accordance with the terms of the Warrant Agreement, will be duly
authorized, validly issued, fully paid and nonassessable; shares of Dura
Common Stock are not subject to the preemptive rights of any stockholder of
Dura; and all corporate action required to be taken for such authorization,
issue and sale of the Dura Common Stock will have been validly and
sufficiently taken upon the issuance of the Warrants; such shares of Dura
Common Stock conform in all material respects to the descriptions thereof
contained or incorporated by reference in the Prospectuses and all
corporate action required to be taken for the authorization, issue and sale
of such shares of Dura Common Stock has been validly and sufficiently
taken.
(xi) REGISTRATION OR SIMILAR RIGHTS WAIVED. Except as set
forth in the Prospectus, there are no persons with registration or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Companies under
the 1933 Act who have not waived such rights.
(xii) ABSENCE OF DEFAULTS AND CONFLICTS. (A) Neither Dura nor
any Subsidiary is in violation of its charter or by-laws or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which Dura or any Subsidiary is a party or by which it or any of them may
be bound, or to which any of the property or assets of Dura or any
Subsidiary is subject (collectively, "Agreements and Instruments") except
for such defaults that would not
11
result in a Material Adverse Effect; and the execution, delivery and
performance of each of this Agreement, the International Purchase
Agreement, the Warrant Agreement and the Transaction Agreements by Dura,
SDC and DDSI, as the case may by, the issuance and delivery of the Warrants
and the issuance of shares of Dura Common Stock upon the exercise of the
Warrants and the consummation by Dura, SDC and DDSI, as the case may be, of
the transactions contemplated in this Agreement, the International Purchase
Agreement, the Warrant Agreement and the Transaction Agreements and in the
Registration Statement (including the issuance and sale of the Warrants as
part of the Units) and compliance by Dura, SDC and DDSI, as the case may
be, with their respective obligations under this Agreement, the
International Purchase Agreement, the Warrant Agreement and each of the
Transaction Agreements to which they are a party have been duly authorized
by all necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of Dura or any Subsidiary pursuant
to, the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or by-laws of Dura or any Subsidiary or any
applicable material law, statute, rule, regulation, judgment, order, writ
or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over Dura or any Subsidiary or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by Dura or any Subsidiary.
(B) SDC II is not in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which SDC II is a party or by which it may be bound, or to
which any of the property or assets of SDC II is subject (collectively,
"SDC II Agreements and Instruments") except for such defaults that would
not result in an SDC II Material Adverse Effect; and the execution,
delivery and performance of each of this Agreement, the International
Purchase Agreement and the Transaction Agreements by SDC II and the
consummation by SDC II of the transactions contemplated herein, therein and
in the Registration Statement (including the issuance and sale of the SDC
II Common Stock as part of the Units and the use of the proceeds from the
sale of the Units as described in the Prospectuses under the caption "Use
of Proceeds") and compliance by SDC II with its obligations under this
Agreement, the International Purchase Agreement and each of the Transaction
Agreements have been duly authorized by all necessary corporate action and
do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default
12
or SDC II Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of SDC II pursuant to, the SDC II Agreements and Instruments
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in an SDC II Material Adverse Effect),
nor will such action result in any violation of the provisions of the
charter or by-laws of SDC II or any applicable material law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over SDC
II or any of its assets, properties or operations. As used herein, an "SDC
II Repayment Event" means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by SDC II.
(xiii) COMPLIANCE WITH LAWS. Except as set forth in the
Prospectuses, Dura and the Subsidiaries and SDC II are in compliance in all
material respects with all applicable laws, statutes, ordinances, rules or
regulations, the enforcement of which, individually or in the aggregate,
would be reasonably expected to have a Material Adverse Effect or an SDC II
Material Adverse Effect, as the case may be.
(xiv) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of Dura or any Subsidiary exists or, to the knowledge of Dura, is
imminent, and Dura is not aware of any existing or imminent labor
disturbance by the employees of any of its or any Subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case,
may reasonably be expected to result in a Dura Material Adverse Effect or
an SDC II Material Adverse Effect.
(xv) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation (except applications for regulatory approval for
marketing of pharmaceutical products) before or brought by any court or
governmental agency or body, domestic or foreign, now pending or, to the
knowledge of either Dura or SDC II, threatened against or affecting Dura or
any Subsidiary or SDC II that is required to be disclosed in the
Registration Statement or that might reasonably be expected to have a
Material Adverse Effect, or an SDC II Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
properties or assets of either Dura and the Subsidiaries (other than SDC),
considered as one enterprise, or SDC II or SDC, as the case may be, or the
consummation of the transactions contemplated in this Agreement, the
International Purchase Agreement, the Warrant Agreement and the Transaction
Agreements or the performance by Dura or SDC II of its obligations
hereunder or thereunder; the aggregate of all pending legal or governmental
proceedings to which Dura or any Subsidiary or SDC II, as the case may be,
is a party or which affect any of their respective property or assets is
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to its business, could not
13
reasonably be expected to result in a Material Adverse Effect or an SDC II
Material Adverse Effect, as the case may be.
(xvi) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectuses or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been described and filed as
required.
(xvii) POSSESSION OF INTELLECTUAL PROPERTY. (A) Except as set
forth in the Prospectuses, each of Dura and the Subsidiaries owns or
possesses adequate licenses or other rights to use the patents, patent
rights, licenses, inventions, copyrights, know how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), which are necessary for the operation
of their businesses as presently conducted except where the failure to so
own or have the right to use would not have a Material Adverse Effect.
Except as disclosed in the Prospectuses, nothing has come to the attention
of Dura or the Subsidiaries to the effect that (1) any product, process,
method, substance, part or other material presently contemplated to be sold
by or employed by Dura or any of the Subsidiaries in connection with Dura's
or such Subsidiary's business may infringe any patent, trademark, service
xxxx, trade name, copyright, license or other right owned by others,
(2) there is pending or threatened any claim or litigation against or
affecting Dura and the Subsidiaries contesting their right to sell or use
any such product, process, method, substance, part or other material or
(3) there is, or there is pending, any patent, invention, device,
application or any applicable statute, law, rule, regulation, standard or
code, in the case of each of clause (1), (2) or (3) above, which could have
Material Adverse Effect.
(B) SDC II will, to the extent provided for in the Technology
Agreement, have the right to use all patents, patent rights, licenses,
inventions, copyrights, know how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) owned or controlled by Dura or the Subsidiaries,
which are necessary for the operation of its business as described in the
Prospectuses. SDC II has not received any notice of proceedings relating
to revocation or modification of any such licenses, permits, certificates,
consents, orders, approvals or authorizations which singularly or in the
aggregate, if the subject of an unfavorable ruling or finding, could have a
SDC II Material Adverse Effect.
(xviii) ABSENCE OF FURTHER REQUIREMENTS. (A) No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Companies of their
obligations under this Agreement, the International Purchase Agreement, the
Warrant Agreement and the Transaction Agreements, in connection with the
offering, issuance, sale and delivery of the shares of SDC II Common Stock,
the Warrants or the shares of Dura Common Stock deliverable upon exercise
of the Warrants
14
or the consummation of the transactions contemplated by this Agreement, the
International Purchase Agreement, the Warrant Agreement and the Transaction
Agreements, except such as have been already obtained or as may be required
under the 1933 Act or the 1933 Act Regulations and foreign or state
securities or blue sky laws.
(B) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the consummation by SDC
and DDSI of the transactions contemplated by this Agreement, except such as
have already been obtained.
(xix) POSSESSION OF LICENSES AND PERMITS. Dura and the
Subsidiaries and SDC II possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies material to the conduct of the business now operated by Dura, the
Subsidiaries and SDC II, respectively; Dura and the Subsidiaries and SDC II
are in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect or a SDC II Material Adverse
Effect, as the case may be; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect or a SDC II Material
Adverse Effect, as the case may be; and neither Dura nor any Subsidiary nor
SDC II has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect or an SDC II Material Adverse
Effect; provided, however, that no FDA approval has been received with
respect to products that Dura, the Subsidiaries or SDC II currently are not
permitted to market.
(xx) TITLE TO PROPERTY. Dura and the Subsidiaries have good and
marketable title to all material properties and assets owned by Dura and
the Subsidiaries, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any kind
except such as (a) are described or incorporated by reference in the
Prospectuses or (b) do not, singly or in the aggregate, materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by Dura or the affected Subsidiaries,
as the case may be; and all properties held under lease by Dura or any
Subsidiary are held under valid, subsisting and enforceable leases.
(B) SDC II has good and marketable title to all material properties
and assets described in the Prospectuses as owned by it, free and clear of
all mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Prospectuses or (b) do not, singly or in the aggregate, materially
15
affect the value of such property and do not interfere with the use made
and proposed to be made of such property by SDC II.
(xxi) COMPLIANCE WITH CUBA ACT. Dura has complied with, and is
and will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.
(xxii) INVESTMENT COMPANY ACT. Neither of the Companies is and,
upon the issuance and sale of the Units as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses,
will not be an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxiii) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Dura Material Adverse Effect, (A) neither Dura nor any Subsidiary is in
material violation of any federal, state, local or foreign law, rule,
regulation, ordinance or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) Dura and the
Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or, to the best knowledge of Dura,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against Dura
or any of the Subsidiaries and (iv) to the best knowledge of Dura, there
are no events or circumstances that could form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting Dura or any
Subsidiary relating to Hazardous Materials or any Environmental Laws.
(xxiv) TAXES. Dura and the Subsidiaries have filed all federal,
state, local and foreign tax returns that are required to be filed or have
duly requested extensions thereof and have paid all taxes required to be
paid by any of them and any related assessments, fines or penalties, except
for any such tax, assessment, fine or penalty that is being contested in
good faith and by appropriate proceedings; and adequate charges, accruals
and reserves have been provided for in the financial statements referred to
in Section
16
1(a)(iv)(A) above in respect of all federal, state, local and foreign taxes
for all periods as to which the tax liability of Dura or any Subsidiary has
not been finally determined or remains open to examination by applicable
taxing authorities.
(xxv) INSURANCE. Dura and the Subsidiaries carry or are entitled
to the benefits of insurance in such amounts and covering such risks as is
generally maintained by companies of established repute engaged in the same
or similar business and all such insurance is in full force and effect.
(xxvi) ACCOUNTING CONTROLS. Dura and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's general and specific authorizations; (B) transactions are
recorded as necessary to permit preparations of financial statements in
conformity with GAAP and to maintain accountability for assets; (C) access
to assets is permitted only in accordance with management's general or
specific authorizations; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxvii) LOCK-UP AGREEMENTS. The Companies have obtained and
delivered to the U.S. Underwriters the agreements, in the form of Exhibit D
hereto, of the persons and entities named in Schedule C annexed hereto to
the effect that each such person will not, for a period of 90 days from the
date of this Agreement and except as otherwise provided in their respective
agreement, without the prior written consent of Xxxxxxx Xxxxx, directly or
indirectly, offer to sell, grant any option for the sale of, or otherwise
dispose of any shares of Dura Common Stock or any securities convertible
into or exercisable for shares of Dura Common Stock owned by such person or
entity or with respect to which such person has the power of disposition.
(xxviii) AFFILIATE TRANSACTIONS. No relationship, direct or
indirect, exists between or among any of Dura or any affiliate of Dura, on
the one hand, and any director, officer, shareholder, customer or supplier
of any of them, on the other hand, which is required by the 1933 Act or by
the 1933 Act Regulations to be described in the Registration Statement or
the Prospectuses and which is not so described or is not described as
required or is not incorporated by reference therein.
(xxix) DISTRIBUTION OF PROSPECTUSES. The Companies have not
distributed and, prior to the later to occur of (A) Closing Time and (B)
completion of the distribution of the Units, will not distribute any
prospectus (as such term is defined in the 1933 Act and the 1933 Act
Regulations) in connection with the offering and sale of the Units other
than the Registration Statement, any preliminary prospectus, the
Prospectuses or other materials, if any, permitted by the 1933 Act or by
the 1933 Act Regulations and approved by the U.S. Representatives.
17
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of Dura
or any Subsidiary or SDC II, delivered to the Global Coordinator, the U.S.
Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by Dura or SDC II, as the case may be, to each U.S.
Underwriter as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING.
(a) INITIAL U.S. UNITS. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Companies, severally and not jointly, agree to sell to each U.S.
Underwriter, and each U.S. Underwriter, severally and not jointly, agrees to
purchase from the Companies, at the price per Unit set forth in Schedule B, the
number of Initial U.S. Units set forth in Schedule A opposite the name of such
U.S. Underwriter, plus any additional number of Initial U.S. Units that such
U.S. Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) U.S. OPTION UNITS. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Companies, acting severally and not jointly, hereby grant an
option to the U.S. Underwriters, severally and not jointly, to purchase up to an
additional 660,000 Units at the same price per Unit set forth in Schedule B for
the Initial U.S. Units. The option hereby granted will expire 30 days after the
date hereof and may be exercised in whole or in part from time to time only for
the purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial U.S. Units upon notice by the Global
Coordinator to the Companies setting forth the number of U.S. Option Units as to
which the several U.S. Underwriters are then exercising the option and the time
and date of payment and delivery for such U.S. Option Units. Any such time and
date of delivery (a "Date of Delivery") shall be determined by the Global
Coordinator, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
U.S. Option Units, each of the U.S. Underwriters, acting severally and not
jointly, will purchase that proportion of the total number of U.S. Option Units
then being purchased which the number of Initial U.S. Units set forth in
Schedule A opposite the name of such U.S. Underwriter bears to the total number
of Initial U.S. Units, subject in each case to such adjustments as the Global
Coordinator in its discretion shall make to eliminate any sales or purchases of
fractional Units.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial U.S. Units shall be made at the offices of
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 000 Xxxx X Xxxxxx, Xxxxx 0000, Xxx Xxxxx,
Xxxxxxxxxx 00000, or at such other place as shall be agreed upon by the Global
Coordinator and the Companies, at 7:00 A.M. (California time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Global
18
Coordinator and the Companies (such time and date of payment and delivery being
herein called "Closing Time").
In addition, in the event that any or all of the U.S. Option Units are
purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Units shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Companies, on each Date of Delivery as specified in
the notice from the Global Coordinator to the Companies.
Payment shall be made to the Companies by wire transfer of immediately
available funds to a bank account designated by the Companies against delivery
to the U.S. Representatives of certificates for the respective accounts of the
U.S. Underwriters of certificates for the U.S. Units to be purchased by them.
It is understood that each U.S. Underwriter has authorized the U.S.
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Initial U.S. Units and the U.S. Option
Units, if any, that it has agreed to purchase. Xxxxxxx Xxxxx, individually and
not as representative of the U.S. Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Initial U.S. Units or the U.S.
Option Units, if any, to be purchased by any U.S. Underwriter whose funds have
not been received by the Closing Time or the relevant Date of Delivery, as the
case may be, but such payment shall not relieve such U.S. Underwriter from its
obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial U.S. Units
and the U.S. Option Units, if any, shall be in such denominations and registered
in such names as the U.S. Representatives may request in writing at least one
full business day before the Closing Time or the relevant Date of Delivery, as
the case may be. The certificates for the Initial U.S. Units and the U.S.
Option Units, if any, will be made available for examination and packaging by
the U.S. Underwriters in The City of New York not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANIES. Each of the Companies covenants
with each U.S. Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Companies, subject to Section 3(b), will comply with the requirements
of Rule 430A or Rule 434, as applicable, and will notify the Global
Coordinator immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectuses or any amended
Prospectuses shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to
the Prospectuses or for additional information and (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the
19
qualification of the Units for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes.
The Companies will promptly effect the filings necessary pursuant to Rule
424(b) and will take such steps as they deem necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule
424(b) was received for filing by the Commission and, in the event that it
was not, will promptly file such prospectus. The Companies will make every
reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) FILING OF AMENDMENTS. The Companies will give the Global
Coordinator notice of their intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)), any
Term Sheet or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectuses, whether pursuant to the 1933 Act, the
1934 Act or otherwise, will furnish the Global Coordinator with copies of
any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such
document to which the Global Coordinator or counsel for the U.S.
Underwriters shall object.
(c) DELIVERY OF REGISTRATION STATEMENT. The Companies have furnished
or will deliver to the U.S. Representatives and counsel for the U.S.
Underwriters, without charge, signed copies of the Registration Statement
as originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated
or deemed to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the U.S.
Representatives, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without
exhibits) for each of the U.S. Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the U.S.
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Companies have delivered to each
U.S. Underwriter, without charge, as many copies of each preliminary
prospectus as such U.S. Underwriter reasonably requested, and the Companies
hereby consent to the use of such copies for purposes permitted by the 1933
Act. The Companies will furnish to each U.S. Underwriter, without charge,
during the period when the U.S. Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the U.S.
Prospectus (as amended or supplemented) as such U.S. Underwriter may
reasonably request. The U.S. Prospectus and any amendments or supplements
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
20
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Companies will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the distribution
of the Units as contemplated in this Agreement, the International Purchase
Agreement and in the Prospectuses. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Units, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the U.S. Underwriters or for
the Companies, to amend the Registration Statement or amend or supplement
any Prospectus in order that the Prospectuses will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time any such Prospectus is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at
any such time to amend the Registration Statement or amend or supplement
any Prospectus in order to comply with the requirements of the 1933 Act or
the 1933 Act Regulations, the Companies will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectuses comply with such requirements,
and the Companies will furnish to the U.S. Underwriters such number of
copies of such amendment or supplement as the U.S. Underwriters may
reasonably request.
(f) RULE 158. The Companies will timely file such reports pursuant
to the 1934 Act as are necessary in order to make generally available to
their securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(g) USE OF PROCEEDS. SDC II will use the net proceeds received by it
from the sale of the Units in the manner specified in the Prospectuses
under "Use of Proceeds".
(h) LISTING. The Companies will use their best efforts to effect and
maintain the quotation of the Units on the Nasdaq National Market and will
file with the Nasdaq National Market all documents and notices required by
the Nasdaq National Market of companies that have securities that are
traded in the over-the-counter market and quotations for which are reported
by the Nasdaq National Market.
(i) RESTRICTION ON SALE OF DURA COMMON STOCK. During a period of 90
days from the date of the Prospectuses, Dura will not, without the prior
written consent of the Global Coordinator, (i) directly or indirectly,
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of any shares of
Dura Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Dura Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or
(ii) enter into any swap or any other agreement or any
21
transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of Dura Common Stock whether any such
swap or transaction described in clause (i) or (ii) above is to be settled
by delivery of shares of Dura Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the Units
to be sold hereunder or under the International Purchase Agreement, (B) any
shares of Dura Common Stock issued by Dura upon the exercise of an option
or warrant or the conversion of a security outstanding on the date hereof
and referred to in, or incorporated by reference into, the Prospectuses,
(C) any shares of Dura Common Stock issued or options to purchase Dura
Common Stock granted pursuant to existing employee benefit plans of Dura
referred to in, or incorporated by reference into, the Prospectuses or (D)
any shares of Dura Common Stock issued to stockholders of SDC in connection
with the acquisition of all of the outstanding stock of SDC pursuant to a
registration statement on Form S-3 filed with the Commission on October 15,
1997, as amended (No. 333-37955).
(j) REPORTING REQUIREMENTS. The Companies, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.
(k) COMPLIANCE WITH NASD RULES. The Companies hereby agree to
cooperate with the U.S. Underwriters to ensure that the Reserved Units will
be restricted as required by the National Association of Securities
Dealers, Inc. (the "NASD") or the NASD rules from sale, transfer,
assignment, pledge or hypothecation for a period of three months following
the date of this Agreement. After such time as they have been notified in
writing by the U.S. Underwriters as to which persons will need to be so
restricted, the Companies will use their best efforts to direct the
transfer agent or such other applicable person to place a stop transfer
restriction upon such securities for such period of time. Should the
Companies release, or seek to release, from such restrictions any of the
Reserved Units, the Companies agree to reimburse the U.S. Underwriters for
any reasonable expenses (including, without limitation, legal expenses)
they incur in connection with such release.
(l) LOCK-UP AGREEMENTS. SDC II will cause each person that becomes a
director or officer within 90 days of the date hereof to deliver an
agreement substantially in the form of Exhibit D hereto.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. SDC II will pay or cause to be paid all expenses incident to
the performance of the Companies' obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters, the Warrant
Agreement
22
and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Units, (iii) the preparation,
issuance and delivery of the certificates for the Units to the Underwriters,
including any stock or other transfer taxes and any stamp or other duties
payable upon the sale, issuance or delivery of the Units to the Underwriters and
the transfer of the Units between the U.S. Underwriters and the Managers,
(iv) the fees and disbursements of the Companies' counsel, accountants and other
advisors, (v) the fees and disbursements of SDC's counsel, accountants and other
advisors, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectuses and any
amendments or supplements thereto, (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the Units,
(ix) all charges of the Warrant Agent, (x) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Units, (xi) the
fees and expenses incurred in connection with the listing of the Units, the
SDC II Common Stock and the Warrants on the Nasdaq National Market and (xii) all
costs and expenses of the U.S. Underwriters, including the fees and
disbursements of counsel for the U.S. Underwriters, in connection with matters
related to the Reserved Units that are designated by the Companies for sale to
employees and others having a business relationship with the Companies; PROVIDED
that the Underwriters will reimburse SDC II for up to $1,140,000 of expenses
incurred in connection with the Offerings.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the U.S.
Representatives in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11, the Companies shall reimburse the U.S. Representatives for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the U.S. Underwriters.
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Companies contained in
Section 1 hereof or in certificates of any officer of the Companies or any
Subsidiary delivered pursuant to the provisions hereof, to the performance by
the Companies of their covenants and other obligations hereunder, and to the
following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the U.S.
Underwriters. A prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of Rule 430A)
or, if the Companies have elected to rely upon Rule
23
434, a Term Sheet shall have been filed with the Commission in accordance
with Rule 424(b).
(b) OPINION OF COUNSEL FOR THE COMPANIES. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for Dura and SDC
II, in form and substance satisfactory to counsel for the U.S.
Underwriters, and, to the extent provided in Exhibit A hereto, Xxxxxxxx X.
Xxxxxxxx, General Counsel for Dura, together with signed or reproduced
copies of such letters for each of the other U.S. Underwriters, to the
effect set forth in Exhibit A hereto.
(c) OPINION OF PATENT COUNSEL FOR THE COMPANIES. At Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated
as of Closing Time, of Lyon & Lyon LLP (solely with respect to patents
concerning the Xxxxxx products), patent counsel for the Companies, in form
and substance satisfactory to counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other U.S.
Underwriters, to the effect set forth in Exhibit B hereto.
(d) OPINION OF REGULATORY COUNSEL FOR THE COMPANIES. At Closing
Time, the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time, of Kleinfeld, Xxxxxx and Xxxxxx, regulatory
counsel for the Companies, in form and substance satisfactory to counsel
for the U.S. Underwriters, together with signed or reproduced copies of
such letter for each of the other U.S. Underwriters, to the effect set
forth in Exhibit C hereto.
(e) OPINION OF COUNSEL FOR THE U.S. UNDERWRITERS. At Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated
as of Closing Time, of Shearman & Sterling, counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters, with respect to such matters as the
U.S. Underwriters may reasonably request. In giving such opinion, such
counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York and the federal law of the
United States upon the opinions of counsel satisfactory to the U.S.
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Companies and the Subsidiaries and
certificates of public officials.
(f) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any Dura Material Adverse Effect,
SDC Material Adverse Effect or SDC II Material Adverse Effect, whether or
not arising in the ordinary course of business, and the U.S.
Representatives shall have received a certificate of the President or a
Vice President of Dura and of the chief financial or chief accounting
officer of Dura, and the President or a Vice President of SDC II and of the
chief financial or chief accounting
24
officer of SDC II, dated as of the Closing Time, to the effect that
(i) there has been no such material adverse effect, (ii) the
representations and warranties of Dura and SDC II set forth in Section 1(a)
hereof are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, (iii) each of Dura and SDC II
shall have complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or are contemplated by the Commission.
(g) ACCOUNTANTS' COMFORT LETTER. At the time of the execution of
this Agreement, the U.S. Representatives shall have received from Deloitte
& Touche LLP a letter, dated such date, in form and substance satisfactory
to the U.S. Representatives, together with signed or reproduced copies of
such letter for each of the other U.S. Underwriters, containing statements
and information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectuses.
(h) BRING-DOWN COMFORT LETTER. At Closing Time, the U.S.
Representatives shall have received from Deloitte & Touche LLP a letter,
dated as of Closing Time, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (g) of this Section 5,
except that the specified date referred to shall be a date not more than
three business days prior to Closing Time.
(i) APPROVAL OF LISTING. At Closing Time, the Units shall have been
approved for inclusion in the Nasdaq National Market, subject only to
official notice of issuance.
(j) NO OBJECTION. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(k) LOCK-UP AGREEMENTS. At the date of this Agreement, the U.S.
Underwriters shall have received an agreement substantially in the form of
Exhibit D hereto signed by the persons listed on Schedule C hereto.
(l) PURCHASE OF INITIAL INTERNATIONAL UNITS. Contemporaneously with
the purchase by the U.S. Underwriters of the Initial U.S. Units under this
Agreement, the Managers shall have purchased the Initial International
Units under the International Purchase Agreement.
(m) CONDITIONS TO PURCHASE OF U.S. OPTION UNITS. In the event that
the U.S. Underwriters exercise their option provided in Section 2(b) hereof
to purchase all or any portion of the U.S. Option Units, the
representations and warranties of the Companies contained herein and the
statements in any certificates furnished by the Companies and
25
any Subsidiary hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the U.S. Representatives
shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date
of Delivery, of the President or a Vice President of each of the
Companies and of the chief financial or chief accounting officer of
each of the Companies confirming that the certificate delivered at the
Closing Time pursuant to Section 5(f) remains true and correct as of
such Date of Delivery.
(ii) OPINIONS OF COUNSEL FOR THE COMPANIES. The favorable
opinions of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the
Companies, Lyon & Lyon, patent counsel for the Companies, and
Kleinfeld, Xxxxxx and Xxxxxx, regulatory counsel for the Companies,
each in form and substance satisfactory to counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the U.S. Option
Units to be purchased on such Date of Delivery and otherwise to the
same effect as the opinions required by Sections 5(b), 5(c) and 5(d).
(iii) OPINION OF COUNSEL FOR THE U.S. UNDERWRITERS. The
favorable opinion of Shearman & Sterling, counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the U.S. Option
Units to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(e).
(iv) BRING-DOWN COMFORT LETTER. A letter from Deloitte &
Touche LLP, in form and substance satisfactory to the U.S.
Representatives and dated such Date of Delivery, substantially in the
same form and substance as the letter furnished to the U.S.
Representatives pursuant to Section 5(h), except that the "specified
date" in the letter furnished pursuant to this paragraph shall be a
date not more than five days prior to such Date of Delivery.
(n) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished with
such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Units as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Companies in connection
with the issuance and sale of the Units as herein contemplated shall be
reasonably satisfactory in form and substance to the U.S. Representatives
and counsel for the U.S. Underwriters.
(o) TERMINATION OF AGREEMENT. If any condition specified in this
Section 5 shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the purchase
of U.S. Option Units, on a Date of Delivery which is after the Closing
Time, the obligations of the U.S. Underwriters to purchase the relevant
U.S. Option Units, may be terminated by the U.S. Representatives by notice
to
26
the Companies at any time at or prior to Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section 4
and except that Sections 1, 6, 7 and 8 shall survive any such termination
and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF U.S. UNDERWRITERS. The Companies, jointly and
severally, agree to indemnify and hold harmless each U.S. Underwriter and each
person, if any, who controls any U.S. Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Companies; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Companies by
any U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
27
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto).
(b) INDEMNIFICATION OF THE COMPANIES, DIRECTORS AND OFFICERS. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Companies, their
directors, each of their officers who signed the Registration Statement, and
each person, if any, who controls either of the Companies within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section 6, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or any preliminary
U.S. prospectus or the U.S. Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information furnished to the
Companies by such U.S. Underwriter through the U.S. Representatives expressly
for use in the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the U.S. Prospectus (or any amendment or supplement
thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Companies. An indemnifying party
may participate at its own expense in the defense of any such action; PROVIDED,
HOWEVER, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
28
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) INDEMNIFICATION FOR RESERVED UNITS. In connection with the offer and
sale of the Reserved Units, the Companies agree, promptly upon a request in
writing, to indemnify and hold harmless the U.S. Underwriters from and against
any and all losses, liabilities, claims, damages and expenses incurred by them
as a result of the failure of eligible directors, officers, employees, business
associates and related persons of the Companies to pay for and accept delivery
of Reserved Units which, by the end of the first business day following the date
of this Agreement, were subject to a properly confirmed agreement to purchase.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Companies on the one hand and the U.S. Underwriters on the other hand from the
offering of the Units pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Companies on the one hand and of
the U.S. Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Companies on the one hand and the
U.S. Underwriters on the other hand in connection with the offering of the Units
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Units pursuant to
this Agreement (before deducting expenses) received by the Companies and the
total underwriting discount received by the U.S. Underwriters, in each case as
set forth on the cover of the U.S. Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Units as set forth on such cover.
The relative fault of the Companies on the one hand and the U.S.
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Companies or by the U.S. Underwriters and the
29
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Companies and the U.S. Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the U.S. 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 Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Units underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such U.S.
Underwriter has otherwise been required to pay by reason of any 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 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of each of the Companies, each officer of each of
the Companies who signed the Registration Statement, and each person, if any,
who controls the Companies within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Companies. The U.S. Underwriters' respective obligations to contribute pursuant
to this Section are several in proportion to the number of Initial U.S. Units
set forth opposite their respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Companies or any Subsidiary
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any U.S. Underwriter or
controlling person, or by or on behalf of the Companies, and shall survive
delivery of the Units to the U.S. Underwriters.
30
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The U.S. Representatives may terminate this
Agreement, by notice to the Companies, at any time at or prior to Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the U.S. Prospectus,
any Dura Material Adverse Effect or any SDC II Material Adverse Effect, whether
or not arising in the ordinary course of business, or (ii) if there has occurred
any material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the U.S. Representatives, impracticable to market the Units or to
enforce contracts for the sale of the Units, or (iii) if trading in any
securities of the Companies has been suspended or materially limited by the
Commission or the Nasdaq National Market, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the NASD
or any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York or California authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this Section
9, such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Units which it or they are obligated to purchase under this
Agreement (the "Defaulted Units"), the U.S. Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Units in such amounts as may be agreed
upon and upon the terms herein set forth; if, however, the U.S. Representatives
shall not have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Units does not exceed 10% of the
number of Units to be purchased on such date, the non-defaulting U.S.
Underwriters shall be obligated, each severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Units exceeds 10% of the number of
Units to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after Closing Time, the obligation of the
U.S. Underwriters to purchase
31
and of the Companies to sell the U.S. Option Units to be purchased and sold
on such Date of Delivery shall terminate without liability on the part of
any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section 10 shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after Closing
Time, which does not result in a termination of the obligation of the U.S.
Underwriters to purchase and the Companies to sell the relevant U.S. Option
Units, as the case may be, either the U.S. Representatives or the Companies
shall have the right to postpone Closing Time or the relevant Date of Delivery,
as the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectuses or in any other
documents or arrangements. As used herein, the term "U.S. Underwriter" includes
any person substituted for a U.S. Underwriter under this Section.
SECTION 11. DEFAULT BY THE COMPANIES. If the Companies shall fail at
Closing Time or at the Date of Delivery to sell the number of Units that they
are obligated to sell hereunder, then this Agreement shall terminate without any
liability on the part of any nondefaulting party; PROVIDED, HOWEVER, that the
provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect.
No action taken pursuant to this Section 11 shall relieve the Companies from
liability, if any, in respect of such default.
SECTION 12. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives at Xxxxx Xxxxx, Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention of Xxxx Xxxxxx; notices to
either of the Companies shall be directed to them at:
Dura Pharmaceuticals, Inc.
0000 Xxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxxx X. Xxxxxxxx
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxx "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
SECTION 13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the U.S. Underwriters and the Companies and their respective
successors. Nothing expressed
32
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the U.S. Underwriters and the Companies
and their respective successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the U.S. Underwriters and the Companies and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Units from any U.S. Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
33
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to each of Dura and SDC II a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the U.S. Underwriters, Dura and SDC II in accordance with its
terms.
Very truly yours,
DURA PHARMACEUTICALS, INC.
By: /s/ Cam X. Xxxxxx
----------------------------------
Title: Chairman, President & CEO
XXXXXX DEVELOPMENT CORPORATION II, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Title: Chairman, President & CEO
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: /s/ Xxxxx X. Xxxxxxx, Vice President
------------------------------------
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.
34
SCHEDULE A
Number of
Initial U.S.
Name of U.S. Underwriter Units
------------------------ -----
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated . . . . . . . . . . . . . . . . . . . . . 1,500,000
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation . . . . . 1,500,000
BT Alex. Xxxxx Incorporated . . . . . . . . . . . . . . . . . 200,000
BancAmerica Xxxxxxxxx Xxxxxxxx . . . . . . . . . . . . . . . 200,000
Xxxxxxx Xxxxx & Company . . . . . . . . . . . . . . . . . . . 200,000
CIBC Xxxxxxxxxxx Corp. . . . . . . . . . . . . . . . . . . . 200,000
Xxxxxxxxx & Xxxxx LLC . . . . . . . . . . . . . . . . . . . . 200,000
Nations Banc Xxxxxxxxxx Securities, Inc. . . . . . . . . . . 200,000
Xxxxx Xxxxxxx, Inc. . . . . . . . . . . . . . . . . . . . . . 200,000
----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,400,000
----------
----------
Sch A - 1
SCHEDULE B
XXXXXX DEVELOPMENT CORPORATION II, INC.
DURA PHARMACEUTICALS, INC.
4,400,000 Units
Each Unit Consisting of
One Share of Callable Common Stock of Xxxxxx Development Corporation II, Inc.
and One Warrant to Purchase
One-Fourth of One Share of Common Stock of Dura Pharmaceuticals, Inc.
1. The initial public offering price per U.S. Unit, determined as
provided in Section 2, shall be $16.00.
2. The purchase price per U.S. Unit to be paid by the U.S. Underwriters
shall be $14.88, being an amount equal to the initial public offering price set
forth above less $1.12 per U.S. Unit.
3. The exercise price of the Warrants shall be $54.84 per share of Dura
Common Stock.
Sch B - 1
SCHEDULE C
Xxxxx X. Xxxxx
Xxxxx Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxx, Xx.
Xxxxxxx Xxxxxxx
Cam X. Xxxxxx
Xxxxx X. Xxxx
Xxxxxxx Xxxx
Xxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxx X. Xxxx
Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Xxxxx Xxxxxxxx
Xxxxx Xxxxxx
Xxxxxxxx X. Xxxxxxxx
Sch C - 1
EXHIBIT A
FORM OF OPINION OF COUNSEL FOR DURA, SDC II and SDC
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
[For purposes of this opinion, to be delivered at the Closing Time, the
term "Subsidiaries" includes SDC.]
(i) Each of Dura and SDC II has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) Each of Dura and SDC II has full corporate power and authority to
own or lease its properties and conduct its business as described in the
Registration Statement and Prospectuses and, to enter into and perform its
obligations under the U.S. Purchase Agreement and the International Purchase
Agreement.
(iii) Each of Dura and SDC II is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Dura Material Adverse
Effect or a SDC II Material Adverse Effect, as the case may be (which opinion as
to Dura may be given by the General Counsel of Dura).
(iv) The authorized capital stock of Dura conforms as to legal matters
in all material respects to the description thereof contained in the
Registration Statement and Prospectuses. The authorized and outstanding shares
of capital stock of Dura are as set forth under the caption "Capitalization" and
have been duly and validly authorized and issued, are fully paid and
non-assessable, and are not subject to any preemptive rights (the opinion called
for by the last sentence of this paragraph (iv) may be given by the General
Counsel of Dura).
(v) The authorized, capital stock of SDC II conforms as to legal
matters in all material respects to the descriptions thereof contained in the
Registration Statement and Prospectuses under the caption "Xxxxxx Corp. II
Capital Stock".
(vi) The outstanding shares of Special Common Stock of SDC II are as
set forth under the caption "Capitalization" have been duly and validly
authorized and issued, are, to our knowledge, fully paid and nonassessable, and
are not subject to any preemptive rights.
(vii) The Warrant Agreement has been duly authorized, executed and
delivered by Dura and constitutes a legal, valid and binding obligation of Dura,
enforceable against Dura in accordance to its terms.
A-1
(viii) The issuance of the Warrants has been duly authorized by Dura
and, when duly executed, issued and delivered by Dura and countersigned by the
Warrant Agent and when payment of the purchase price for the Units has been
made, the Warrants will constitute valid and binding obligations of Dura
entitled to the benefits of the Warrant Agreement. The Warrants are not subject
to the preemptive rights of any stockholder of Dura. The Warrants conform as to
legal matters in all material respects to the description thereof contained in
the Registration Statement and the Prospectuses under the caption "Description
of the Warrants."
(ix) The shares of Dura Common Stock issuable upon exercise of the
Warrants have been duly and validly reserved for the issuance and, when and if
issued upon such exercise and upon payment of the exercise price, in accordance
with the terms of the Warrant Agreement, will be duly and validly authorized and
issued, will be fully paid and nonassessable, and will not be subject to any
preemptive or similar rights of any stockholder of Dura.
(x) The issuance of the SDC II Common Stock has been duly authorized
and, when issued and paid for as part of the Units as contemplated by the U.S.
Purchase Agreement and the International Purchase Agreement, will be validly
issued, fully paid and non-assessable. Such SDC II Common Stock is not subject
to the preemptive or similar rights of any stockholder of SDC II.
(xi) To our knowledge, the Subsidiaries, are Dura's sole subsidiaries.
Each Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own or lease its properties
and to conduct its business as described in the Registration Statement and
Prospectuses and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Dura Material Adverse Effect; all of the issued
and outstanding capital stock of each Subsidiary and SDC has been duly and
validly authorized and issued, are fully paid and non-assessable and, to the
best of our knowledge and information is owned by Dura free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; and
none of the outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive rights of any securityholder of such Subsidiary (the
opinion called for by the last sentence of this paragraph (xi) may be given by
the General Counsel of Dura).
(xii) Each of the U.S. Purchase Agreement and the International
Purchase Agreement has been duly authorized, executed and delivered by Dura and
SDC II.
(xiii) The Registration Statement, including any Rule 462(b)
Registration Statement, has become effective under the Act. Any required filing
of the Prospectuses pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b). To our knowledge, no stop order
proceedings suspending the effectiveness of the Registration Statement
A-2
or any Rule 462(b) Registration Statement have been instituted or threatened or
are pending under the Act.
(xiv) All descriptions in the Prospectuses of agreements and other
instruments to which Dura, SDC II or the Subsidiaries are a party are accurate
in all material respects. We know of no agreements required to be filed or
described in the Prospectuses or the Registration Statements which are not so
filed or described. To our knowledge, no breach or default exists under any
agreement or instrument to which Dura, SDC II or any Subsidiary is a party and
which is filed as an Exhibit to the Registration Statement or incorporated by
reference therein (the opinion called for by the last two sentences of this
paragraph (xiv) may be given by the General Counsel of Dura and SDC II).
(xv) The form of certificate used to evidence the Units complies in
all material respects with all applicable statutory requirements, and the
requirements of the Nasdaq National Market.
(xvi) To our knowledge, there is no legal or governmental proceeding
pending or threatened to which Dura, any Subsidiary or SDC II is a party or to
which any of the properties of Dura, any Subsidiary or SDC II is subject that is
required to be described in the Registration Statement or the Prospectuses and
is not so described, or of any statute or regulation, contract or other document
that is required to be described in the Registration Statement or the
Prospectuses or to be filed as an exhibit to the Registration Statement that is
not described or filed as required.
(xvii) The statements in the Registration Statement under Item 14, to
the extent that such statements constitute matters of law, summaries of
documents contained therein or summaries of legal matters have been prepared by
or reviewed by us and are correct in all material respects.
(xviii) The September 30, 1997 offer and sale of 1,000 shares of SDC II
Common Stock with an aggregate value of $1,000 by SDC II to Dura was exempt from
the registration requirements of Section 5 of the 1933 Act by virtue of Section
4(2) and/or Regulation D promulgated thereunder.
(xix) None of Dura, any Subsidiary or SDC II is in violation of its
charter or by-laws and no default by Dura or any subsidiary exists in the due
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectuses or filed or incorporated by reference
as an exhibit to the Registration Statement (which opinion as to Dura may be
given by the General Counsel of Dura).
(xx) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign,
A-3
(other than under the Act and the 1933 Act Regulations, which have been
obtained, or as may be required under the securities or blue sky laws of the
various states or any foreign jurisdiction , as to which no opinion is requested
or given) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreements or the offering, issuance,
sale or delivery of the Units, the SDC II Common Stock, the Warrants, or the
Dura Common Stock issuable upon exercise of the Warrants.
(xxi) The execution, delivery by Dura of, and the performance by Dura
of its obligations under the U.S. Purchase Agreement or the International
Purchase Agreement and the Warrant Agreement and the issuance and sale of the
Units contemplated thereby will not contravene any provision of applicable law
or the certificate of incorporation or bylaws of Dura or any Subsidiaries, or,
to our knowledge, any judgment, order or decree of any governmental body, agency
or court having jurisdiction over Dura or any of its property or any
Subsidiaries or any of their property, or, to our knowledge, constitute a breach
or default or a Dura Repayment Event (as defined in section 1(a)(xi) of the U.S.
Purchase Agreement) under any agreement or other instrument binding upon Dura or
any of the Subsidiaries, to which Dura or any of the Subsidiaries is a party and
filed as an exhibit to the Registration Statement or an Incorporated Document.
(xxii) The execution, delivery by SDC II of, and the performance by SDC
II of its obligations under the U.S. Purchase Agreement and the International
Purchase Agreement and the issuance and sale of the Units contemplated thereby
will not contravene any provision of applicable law or the certificate of
incorporation or bylaws of SDC II, or, to our knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction over SDC II
or any of its property, or, to our knowledge, constitute a breach or default or
a SDC II Repayment Event (as defined in section 1(a)(xii) of the U.S. Purchase
Agreement) under any agreement or other instrument binding upon SDC II, to which
SDC II is a party and filed as an exhibit to the Registration Statement or an
Incorporated Document.
(xxiii) Each of the Major Agreements has been duly authorized, executed
and delivered by Dura, SDC, DDSI and SDC II as applicable.
(xxiv) No holders of securities of Dura have rights against Dura which
have not been waived to the registration of shares of Dura Common Stock or other
securities, because of the filing of the Registration Statement by Dura or the
offering contemplated thereby (which opinion may be given by the General Counsel
of Dura).
(xxv) The Units have been duly authorized for quotation on the Nasdaq
National Market, upon notice of official issuance.
(xxvi) The statements in the Registration Statement and Prospectuses
under the caption "United States Federal Income Tax Consequences" and "United
States Taxation of Non-U.S. Persons" to the extent they constitute matters of
law or legal conclusions with respect thereto, have been prepared or reviewed by
us and are correct in all material respects.
A-4
(xxvii) Neither Dura nor SDC II is an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the 1940
Act.
In addition to the foregoing, (i) we believe that each of the
Incorporated Documents (except for financial statements and schedules and other
financial data included therein or omitted therefrom, as to which no opinion is
requested or given), when they became effective or were filed with the
Commission, as the case may be, complied as to form when filed with the
Commission in all material respects with the requirements of the Act and the
1934 Act, as applicable, and the rules and regulations of the Commission
thereunder; (ii) we believe that the Registration Statement, the Prospectuses
and each amendment or supplement to the Registration Statement and Prospectuses
(except for financial statements and schedules and other financial data included
or incorporated by reference therein or omitted therefrom, as to which no
opinion is requested or given), as of their respective effective or issue dates,
complied as to form in all material respects with the requirements of the Act
and the applicable rules and regulations of the Commission thereunder; (iii) we
confirm that nothing has come to our attention that has caused us to conclude
that (except for financial statements and schedules and other financial data
included or incorporated by reference therein or omitted therefrom, as to which
we need make no statement) the Registration Statement or any amendment thereto,
including the Rule 430A Information and Rule 434 Information (if applicable), at
the time such Registration Statement or any such amendment became effective,
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,
in the lights of the circumstances under which they were made, not misleading or
that (except for financial statements and schedules and other financial data
included or incorporated by reference therein or omitted therefrom, as to which
we need make no statement) the Prospectuses, on the date hereof, include an
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made not misleading.
In rendering such opinion, such counsel may rely (A) upon the opinions
of Lyon & Lyon and Kleinfeld, Xxxxxx & Xxxxxx and Xxxxxxxx X. Xxxxxxxx, Esq.
(which opinion may rely, to the extent appropriate, on the opinions of Xxxxxxx
Xxxx & Xxxxxxx, Bermuda counsel for Dura (Bermuda) Trading Company Ltd., and
Chancery Xxxxxxxx, Barbados counsel for Dura (Barbados) Holding Company Ltd. and
Dura (Barbados) Ltd.) with respect to the matters opined upon by each, and (B),
as to matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of Dura or SDC II and public
officials. Such opinion shall be subject to standard limitations, exclusions,
qualifications and assumptions. Such opinion shall not state that it is to be
governed or qualified by, or that it is otherwise subject to, any treatise,
written policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
A-5
EXHIBIT B
EXHIBIT B
FORM OF OPINION OF PATENT COUNSEL
FOR DURA AND SDC II DELIVERED PURSUANT TO SECTION 5(C)
(i) Dura owns U.S. patents and U.S. Foreign patent applications which
are directed to Xxxxxx and to certain uses of the Xxxxxx product necessary
to protect the business of Dura and Xxxxxx Corp. II as described in the
Prospectuses. With regard to the business presently and as proposed to be
conducted by Dura and Xxxxxx Corp. II relating to the Xxxxxx product as
described in the Registration Statement and the Prospectuses, and, except
as described therein, we have not received any notice of infringement of or
conflict with, and does not otherwise know of any basis for notice of any
such infringement of or conflict with, asserted rights of others with
respect to any patents, trademarks, service marks, trade names, copyrights,
technology or know-how relating to the Xxxxxx product.
(ii) To the extent that the statements relating to the Xxxxxx product
contained in the Registration Statement and Prospectuses under the
subheadings "Risk Factors--Business Risks Related to Xxxxxx Corp. II and
Dura--Uncertainty Regarding Patents and Proprietary Technology;
Unpredictability of Patent Protection - Xxxxxx Corp. II," "Risk Factors -
Business Risks Related to Xxxxxx Corp. II and Dura -- Uncertainty Regarding
Patents and Proprietary Technology; Unpredicability of Patent Protection -
Dura," and the first paragraph of "Business of Xxxxxx Corp. II -- Patents"
refer to opinions of counsel or matters of law, patents or patent
applications or purport to summarize the status of litigation or the
provisions of statutes, regulations, contracts, agreements or other
documents, such statements (A) have been prepared or reviewed by us and
accurately reflect the status of any such patent applications, litigation,
the provisions purported to be summarized and any of our opinions and (B)
do not contain any untrue statements of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
B-1
EXHIBIT C
FORM OF OPINION OF REGULATORY COUNSEL
FOR DURA AND SDC II
TO BE DELIVERED PURSUANT
TO SECTION 5(d)
(i) The descriptions in the Registration Statement of the statutes,
regulations and legal or governmental proceedings or procedures relating to
the FDA and the approval process relating to the products of Dura and SDC
II are accurate in all material respects and are a fair summary of those
statutes, regulations, proceedings or procedures.
(ii) Nothing has come to our attention that leads us to believe that
the descriptions of federal laws, regulations or rules relating to the
manufacture or sale of Dura's products and the approval process relating
thereto contained in the Registration Statement and the Prospectuses,
including, without limitation, the portions of the Registration Statement
and Prospectuses entitled "Risk Factors - Business Risks Related to Xxxxxx
Corp, II and Dura - Government Regulation; No Assurance of FDA Approval,"
and "Business of Dura - Government Regulation," 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 statement therein not misleading.
(iii) We have no reason to believe that Dura's current business is not
being conducted in material compliance with currently applicable
requirements under the Federal Food, Drug and Cosmetic Act or that the FDA
is currently considering taking action that would result in withdrawal from
marketing of any of Dura's currently marketed products.
X-0
XXXXXXX X
Xxxxxxx , 0000
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
as Representatives of the several
Underwriters to be named in the
within mentioned Purchase Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Proposed Public Offering by Dura Pharmaceuticals, Inc. and Xxxxxx
Development Corporation II
Ladies and Gentlemen:
The undersigned, a stockholder and/or officer and/or director of Dura
Pharmaceuticals, Inc. ("Dura") understands that Xxxxxxx Xxxxx & Co. ("Xxxxxxx
Xxxxx") and Xxxxxxxxx, Xxxxxx & Xxxxxxxx ("DLJ") propose to enter into a
Purchase Agreement (the "Purchase Agreement") with Dura and Xxxxxx Development
Corporation II ("SDC II") that will provide for the public offering of units
comprised of the common stock of SDC II and warrants to purchase Dura's common
stock (the "Securities"). In recognition of the benefit that such an offering
will confer upon the undersigned as a stockholder and/or officer and/or director
of Dura, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the Purchase Agreement that, during a period of
ninety (90) days from the date of the Purchase Agreement, the undersigned will
not, without the prior written consent of Xxxxxxx Xxxxx, directly or indirectly,
(i) sell, offer to sell, pledge, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer any shares of
Dura's common stock (the "Dura Common Stock"), or any securities convertible
into or exchangeable or exercisable for Dura Common Stock, whether now owned or
hereafter acquired by the undersigned, or with respect to which the undersigned
has or hereafter acquires the power of disposition, or file, participate in, or
request the filing of any registration statement under the Securities Act of
1933, as amended, with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part,
D-1
directly or indirectly, the economic consequence of ownership of Dura Common
Stock, whether any such swap or transaction is to be settled by delivery of Dura
Common Stock or other securities, in cash or otherwise.
Very truly yours,
Signature:
------------------------
Print Name:
-----------------------
D-2
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to each of Dura and SDC II a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the U.S. Underwriters, Dura and SDC II in accordance with its
terms.
Very truly yours,
DURA PHARMACEUTICALS, INC.
By:
----------------------------------
Title:
XXXXXX DEVELOPMENT CORPORATION II, INC.
By:
----------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By: /s/ Xxxxx X. Xxxxxxx, Vice President
------------------------------------
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.
