EXHIBIT 10.1
$115,000,000 Principal Amount
ENCYSIVE PHARMACEUTICALS INC.
2-1/2% Convertible Senior Notes
due 2012
PURCHASE AGREEMENT
March 11, 2005
PURCHASE AGREEMENT
March 11, 2005
X.X. XXXXXX SECURITIES INC.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
UBS SECURITIES LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XX XXXXX & CO., LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
as Initial Purchasers
Dear Sirs and Mesdames:
Encysive Pharmaceuticals Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the initial purchasers named in Schedule A hereto
(the "Initial Purchasers") $115,000,000 aggregate principal amount of its 2-1/2%
Convertible Senior Notes due 2012 (the "Firm Bonds"). In addition, the Company
proposes to grant to the Initial Purchasers the option to purchase from the
Company up to an additional $15,000,000 aggregate principal amount of the
Company's 2-1/2% Convertible Senior Notes due 2012 (the "Additional Bonds"). The
Firm Bonds and the Additional Bonds are hereinafter collectively sometimes
referred to as the "Bonds."
The Bonds are to be issued pursuant to an indenture (the "Indenture")
to be dated as of March 16, 2005, between the Company and The Bank of New York
Trust Company, N.A., as trustee (the "Trustee"). The Bonds will be convertible
in accordance with their terms and the terms of the Indenture into shares of the
common stock (the "Common Stock") of the Company, par value $.005 per share (the
"Shares").
The Bonds and the Shares will be offered without being registered
under the Securities Act of 1933, as amended (the "Securities Act"), to
"qualified institutional buyers" in compliance with the exemption from
registration provided by Rule 144A under the Securities Act ("Rule 144A").
The Initial Purchasers and their direct and indirect transferees will
be entitled to the benefits of a Registration Rights Agreement to be entered
into at or prior to the time of
purchase (as defined herein) between the Company and the Initial Purchasers (the
"Registration Rights Agreement").
In connection with the sale of the Bonds, the Company has prepared a
preliminary offering memorandum (the "Preliminary Memorandum") and will prepare
a final offering memorandum including or incorporating by reference a
description of the terms of the Bonds and the Common Stock, the terms of the
offering and a description of the Company (the "Final Memorandum" and, with the
Preliminary Memorandum, each a "Memorandum"). As used herein, the term
"Memorandum" shall include in each case the documents incorporated by reference
therein, if any. The terms "supplement," "amendment" and "amend" as used herein
with respect to a Memorandum shall include all documents deemed to be
incorporated by reference in such Memorandum, if any, that are filed subsequent
to the date of such Memorandum with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
The Company and the Initial Purchasers agree as follows:
1. Sale and Purchase: Upon the basis of the warranties and
representations and subject to the other terms and conditions herein set forth,
the Company agrees to sell to the Initial Purchasers, and each of the Initial
Purchasers, severally and not jointly, agrees to purchase from the Company, the
aggregate principal amount of Firm Bonds set forth opposite the name of such
Initial Purchaser in Schedule A hereto at a purchase price of 96.75% of the
principal amount thereof.
In addition, the Company hereby grants to the several Initial
Purchasers the option to purchase from time to time, and upon the basis of the
representations and warranties and subject to the other terms and conditions
herein set forth, each Initial Purchaser shall have the right to purchase from
time to time from the Company, at a purchase price of 96.75% of the principal
amount thereof, plus accrued interest, if any, from the time of purchase (as
hereinafter defined) to the additional time of purchase (as hereinafter
defined), Additional Bonds in an aggregate principal amount proportional to the
aggregate principal amount of Firm Bonds set forth opposite such Initial
Purchaser's name on Schedule A hereto. This option may be exercised by X.X.
Xxxxxx Securities Inc. and UBS Securities LLC, as representatives for the
Initial Purchasers (collectively, the "Representatives") at any time on or
before the thirtieth day following the date the Firm Bonds are issued, by
written notice to the Company. Such notice shall set forth the aggregate initial
principal amount of Additional Bonds as to which the option is being exercised,
and the date and time when the Additional Bonds are to be delivered (such date
and time being herein referred to as the "additional time of purchase");
provided, however, that the additional time of purchase shall not be earlier
than (i) the time of purchase or (ii) the second business day after the date on
which the option shall have been exercised nor later than the tenth business day
after the date on which the option shall have been exercised. As used herein,
"business day" shall mean a day on which the New York Stock Exchange, Inc. is
open for trading.
2. Payment and Delivery: Payment of the purchase price for the Firm
Bonds shall be made to the Company by Federal (same day) funds, against delivery
of the Firm Bonds
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to the Initial Purchasers, at the offices of Xxxxxx & Xxxxxx, L.L.P. in Houston,
Texas or at such other place as may be agreed upon by the parties hereto, for
the respective accounts of the Initial Purchasers. Such payment and delivery
shall be made at 10:00 A.M., New York City time, on March 16, 2005 (unless
another time shall be agreed to by you and the Company). The time at which such
payment and delivery are actually made is herein sometimes called the "time of
purchase."
Payment of the purchase price for the Additional Bonds shall be made
at the additional time of purchase in the same manner and at the same office and
time of day as the payment for the Firm Bonds.
One or more global securities representing the Bonds shall be
registered by the Trustee in the name of the nominee of The Depository Trust
Company ("DTC"), Cede & Co., credited to the accounts of such of its
participants as the Initial Purchasers shall request, upon notice to the Company
at least 48 hours prior to the time of purchase, with any transfer taxes payable
in connection with the transfer of the Bonds to the Initial Purchasers duly
paid, and deposited with the Trustee as custodian for DTC at the time of
purchase, against payment by or on behalf of the Initial Purchasers of the
aggregate purchase price therefore.
3. Representations and Warranties of the Company: The Company
represents and warrants to each of the Initial Purchasers that:
(a) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in any Memorandum complied
or will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder and
(ii) the Preliminary Memorandum, as of its date did not and as of the time
of execution of this Agreement does not, and the Final Memorandum, as
amended or supplemented, prior to the time of purchase will not, contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that any
representations and warranties set forth in this paragraph do not apply to
statements or omissions in any Memorandum based upon information relating
to any Initial Purchaser furnished to the Company in writing by or on
behalf of such Initial Purchaser expressly for use therein, which
information the parties hereto agree is limited to the Initial Purchasers'
Information (as defined in Section 11);
(b) As of the date of this Agreement, the Company's authorized
and outstanding capitalization is the same it as was as of December 31,
2004, as set forth under the column heading entitled "Actual" in the
section of the Final Memorandum entitled "Capitalization" and, as adjusted
to give effect to the offering of the Firm Bonds and the application of the
net proceeds therefrom as described in the "Use of Proceeds" section of the
Final Memorandum, the Company would, as of December 31, 2004 have had an
authorized and outstanding capitalization as set forth under the column
heading entitled "As Adjusted" in the section of the Final Memorandum
entitled "Capitalization"; all of the issued and outstanding shares of
capital stock, including the Common Stock, of
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the Company have been duly authorized and validly issued and are fully paid
and non-assessable, have been issued in compliance with all federal and
state securities laws and were not issued in violation of any statutory or
contractual preemptive rights, resale rights, rights of first refusal or
similar rights;
(c) The descriptions of the Company's stock option, stock bonus
and other stock plans or arrangements, and the options or other rights
granted thereunder, as described in the Memorandum accurately and fairly
present, in all material respects, the information required to be shown
with respect to such plans, arrangements, options and rights;
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Memorandum,
except where the failure to have such power and authority would not,
individually or in the aggregate, have a material adverse effect on the
business, properties, financial condition, results of operation or
prospects of the Company and the Subsidiaries (as hereinafter defined)
taken as a whole (a "Material Adverse Effect");
(e) The Company is duly qualified to do business as a foreign
corporation and is in good standing (or the foreign equivalent thereof, if
any) in each jurisdiction where the ownership or leasing of its properties
or the conduct of its business requires such qualification, except where
the failure to be so qualified and in good standing would not, individually
or in the aggregate, have a Material Adverse Effect and the Company is in
compliance in all respects with the laws, orders, rules, regulations and
directives issued or administered by such jurisdictions, except where the
failure to be in compliance would not have a Material Adverse Effect;
(f) The subsidiaries of the Company, other than (i)
ImmunoPharmaceutics, Inc., a California corporation and wholly owned
subsidiary of the Company, (ii) EP-ET, LLC, a Delaware limited liability
company and wholly owned subsidiary of the Company, (iii) Encysive, L.P., a
Delaware limited partnership, of which the Company is the sole limited
partner and EP-ET, LLC is the sole general partner, (iv) Revotar
Biopharmaceuticals, AG, a German corporation and majority-owned subsidiary
of the Company, and (v) Encysive (UK) Limited, a United Kingdom private
limited company and wholly owned subsidiary of the Company (collectively,
the "Subsidiaries"), would not, individually, or in the aggregate be a
"significant subsidiary" of the Company as defined by Rule 1-02 of
Regulation S-X; each Subsidiary has been duly organized and is validly
existing as a corporation or other legal entity in good standing (or the
foreign equivalent thereof, if any) under the laws of the jurisdiction of
its organization, with full power and authority to own, lease and operate
its properties and to conduct its business as described in the Memorandum
except where the failure to have such power and authority would not,
individually or in the aggregate, have a Material Adverse Effect; each
Subsidiary is duly qualified to do business as a foreign corporation or
other legal entity and is in good standing (or the foreign equivalent
thereof, if any) under the laws of each
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jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified and in good standing would not, individually or
in the aggregate, have a Material Adverse Effect; each of the Subsidiaries
are in compliance in all respects with the laws, orders, rules, regulations
and directives issued or administered by such jurisdictions, except where
the failure to be in compliance would not have a Material Adverse Effect;
all of the issued and outstanding shares of capital stock of the
Subsidiaries have been duly and validly authorized and issued, are fully
paid and non-assessable and, except to the extent set forth in the
Memorandum, are owned directly or indirectly by the Company, free and clear
of all liens, encumbrances, equities or claims;
(g) Neither the Company nor any of the Subsidiaries is in breach
or violation of, or in default under (nor has any event occurred which with
notice, lapse of time, or both would result in any breach or violation of,
constitute a default under or give the holder of any indebtedness (or
person acting on such holder's behalf), the right to require the
repurchase, redemption or repayment of all or part of such indebtedness
under) (i) its respective charter or by-laws (or analogous governing
instruments, as applicable), (ii) any indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or
their respective properties may be bound or affected, or (iii) under any
federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the Company or any of the Subsidiaries,
except, in the cases of clauses (ii) and (iii), any breaches, violations or
defaults, which, singularly or in the aggregate, would not have a Material
Adverse Effect; and, the execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Indenture and the Bonds
and consummation of the transactions contemplated hereby and thereby,
including the issuance of the Bonds and the issuance of the Shares upon
conversion of the Bonds, will not conflict with, result in any breach or
violation of, or constitute a default under (nor constitute any event which
with notice, lapse of time or both would result in any breach or violation
of or constitute a default under), the charter or by-laws (or analogous
governing instruments, as applicable) of the Company or any of the
Subsidiaries or any indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease,
contract or other agreement or instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected, or any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order applicable
to the Company or any of the Subsidiaries;
(h) The Indenture has been duly authorized by the Company and
when duly executed and delivered by the Company and duly authorized,
executed and delivered by the Trustee will be a legal, valid and binding
agreement of the Company, enforceable in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws affecting
creditors' rights generally and general principles of equity;
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(i) The Registration Rights Agreement has been duly authorized by
the Company and when executed and delivered by the Company and duly
authorized, executed and delivered by the Initial Purchasers will be a
legal, valid and binding agreement of the Company, enforceable in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws affecting creditors' rights generally and general
principles of equity;
(j) The Bonds have been duly authorized by all necessary
corporate action on the part of the Company and when executed and delivered
by the Company and duly authenticated by the Trustee in accordance with the
terms of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms hereof will constitute legal, valid
and binding obligations of the Company, enforceable in accordance with
their terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
similar laws affecting creditors' rights generally and general principles
of equity, and will be entitled to the benefits of the Indenture and the
Registration Rights Agreement; the Shares initially issuable upon
conversion of the Bonds have been duly authorized and validly reserved for
issuance upon conversion of the Bonds, and upon conversion of the Bonds in
accordance with their terms and the terms of the Indenture will be issued
free of statutory and contractual preemptive rights and are sufficient in
number to meet the current conversion requirements, and such Shares, when
so issued upon such conversion in accordance with the terms of the
Indenture, will be duly and validly issued and fully paid and
non-assessable;
(k) This Agreement has been duly authorized, executed and
delivered by the Company;
(l) The terms of the Bonds, the Registration Rights Agreement,
the Indenture and the capital stock of the Company, including the Shares,
conform in all material respects to the description thereof contained or
incorporated by reference in the Final Memorandum;
(m) No approval, authorization, consent or order of or filing
with any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency or Nasdaq National Market
("Nasdaq"), or approval of stockholders of the Company, is required in
connection with the issuance and sale by the Company of the Bonds or the
issuance of Shares upon conversion of the Bonds or the consummation of the
transactions as contemplated hereby and by the Indenture, the Registration
Rights Agreement and the Bonds other than (i) as may be required under the
securities or blue sky laws of the various jurisdictions in which the Bonds
and the Shares are being offered by the Initial Purchasers, (ii) as may be
required by federal and state securities laws with respect to the Company's
obligations under the Registration Rights Agreement and the listing of the
Shares on the Nasdaq in connection therewith, (iii) those required in
connection with the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended (the "1939 Act"), (iv) those required in
connection with arranging for the
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Bonds to be designated eligible for trading in PORTAL or for the Bonds to
be eligible for clearance and settlement through the DTC and (v) such as
have already been obtained;
(n) The Company has obtained for the benefit of the Initial
Purchasers the agreement (a "Lock-Up Agreement"), substantially in the form
set forth as Exhibit B hereto, of each of its executive officers and
directors named in Exhibit B-1 hereto;
(o) Except as described in the Memorandum, (i) no person has any
preemptive rights or similar rights to purchase any shares of Common Stock
or shares of any other capital stock or other equity interests of the
Company and (ii) no person has the right to act as an initial purchaser or
as a financial advisor to the Company in connection with the offer and sale
of the Bonds, in the case of each of the foregoing clauses (i) and (ii),
whether as a result of the sale of the Bonds as contemplated hereby or
otherwise; and except as described in the Memorandum, no person has the
right, contractual or otherwise, to cause the Company to include any shares
of Common Stock or shares of any other capital stock or other securities of
the Company in the registration statement to be filed with the Commission
pursuant to the Registration Rights Agreement, whether as a result of the
sale of the Bonds as contemplated hereby or otherwise;
(p) Neither the Company nor any of its Subsidiaries is a party to
any contract, agreement or understanding with any person that would give
rise to a valid claim against the Company or the Initial Purchasers for a
brokerage commission, finder's fee or like payment in connection with the
offering and sale of the Bonds;
(q) KPMG LLP, whose reports on the consolidated financial
statements of the Company and the Subsidiaries are incorporated by
reference in the Memorandum, are independent public accountants with
respect to the Company as required by the Securities Act, and the
applicable published rules and regulations thereunder;
(r) Each of the Company and the Subsidiaries has all licenses,
certificates, authorizations, permits, consents and approvals
(collectively, "Consents") and has made all necessary declarations and
filings required under any federal, state, local or foreign law, regulation
or rule and has obtained all Consents from other persons, which are
necessary or desirable for the ownership of their respective properties or
the conduct of their respective businesses as described in the Memorandum
including without limitation all such Consents required by the United
States Food and Drug Administration (the "FDA") or any other federal, state
or foreign agencies or bodies engaged in the regulation of pharmaceuticals
or biohazardous materials, except where any failures to possess or make the
same, singularly or in the aggregate, would not have a Material Adverse
Effect; all of such Consents are valid and in full force and effect, except
where the invalidity of such Consents or the failure of such Consents to be
in full force and effect would not, singularly or in the aggregate, have a
Material Adverse Effect; all such Consents are free and clear of any
restrictions or conditions that are in addition to, or materially different
from, those normally applicable to similar Consents; and neither the
Company nor any of the Subsidiaries is in violation of, or in default
under, nor has the
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Company nor any of the Subsidiaries received notification of any
proceedings relating to revocation or modification of any such Consent or
any federal, state, local or foreign law, regulation or rule or any decree,
order or judgment applicable to the Company or any of the Subsidiaries and
has no reason to believe that any such Consent will not be renewed, except
where such revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect;
(s) Except as described in the Memorandum, there are no actions,
suits, claims, investigations or proceedings pending, to the knowledge of
the Company, threatened or contemplated to which the Company or any of the
Subsidiaries is or would be a party or of which any of their respective
properties is or would be subject at law or in equity, or before or by any
federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency, except any such action suit, claim,
investigation or proceeding which would not result in a judgment, decree or
order either (A) having, individually or in the aggregate, a Material
Adverse Effect or (B) preventing the consummation of the transactions
contemplated hereby and by the Indenture, the Registration Rights Agreement
and the Bonds;
(t) All tax returns required to be filed by the Company and each
of the Subsidiaries have been filed, and all taxes and other assessments of
a similar nature (whether imposed directly or through withholding)
including any interest, additions to tax or penalties applicable thereto
due or claimed to be due from such entities have been paid, other than
those being contested in good faith and for which adequate reserves have
been provided and those currently payable without penalty or interest or
the nonpayment of which would not have a Material Adverse Effect;
(u) The Company and each of the Subsidiaries maintains insurance
covering its properties, operations, personnel and businesses as the
Company deems adequate; such insurance insures against such losses and
risks to an extent which is adequate in accordance with customary industry
practice to protect the Company and the Subsidiaries and their respective
businesses; all such insurance is fully in force on the date hereof and
will be fully in force at the time of purchase and any additional time of
purchase;
(v) Neither the Company nor any of the Subsidiaries have
sustained since the date of the last audited financial statements included
or incorporated by reference in the Memorandum any loss or interference
with its respective business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree;
(w) The Company has not sent or received any communication
regarding termination of, or intent not to renew, any of the contracts or
agreements referred to, described in or incorporated by reference in the
Memorandum, and no such termination or non-renewal has been threatened by
the Company or, to the Company's knowledge after due inquiry, any other
party to any such contract or agreement; the Company is not aware that any
key employee or significant group of employees of the
8
Company or any Subsidiary plans to terminate employment with the Company or
any such Subsidiary;
(x) Neither the Company nor the Subsidiaries are engaged in any
unfair labor practice; except for matters which would not, individually or
in the aggregate, have a Material Adverse Effect, (i) there is (A) no
unfair labor practice complaint pending or, to the Company's knowledge,
threatened against the Company or any of the Subsidiaries before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending or to
the Company's knowledge, threatened, (B) no strike, labor dispute, slowdown
or stoppage pending or, to the Company's knowledge, threatened against the
Company or any of the Subsidiaries and (C) no union representation dispute
currently existing concerning the employees of the Company or any of the
Subsidiaries and (ii) to the Company's knowledge, (A) no union organizing
activities are currently taking place concerning the employees of the
Company or any of the Subsidiaries and (B) there has been no violation of
any federal, state, local or foreign law relating to discrimination in the
hiring, promotion or pay of employees, any applicable wage or hour laws or
any provision of the Employee Retirement Income Security Act of 1974
("ERISA") or the rules and regulations promulgated thereunder concerning
the employees of the Company or any of the Subsidiaries;
(y) No "prohibited transaction" (as defined in Section 406 of the
ERISA, or Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time (the "Code")) or "accumulated funding deficiency" (as
defined in Section 302 of ERISA) or any of the events set forth in Section
4043(b) of ERISA (other than events with respect to which the 30-day notice
requirement under Section 4043 of ERISA has been waived) has occurred with
respect to any employee benefit plan which could, singularly or in the
aggregate, have a Material Adverse Effect; each employee benefit plan of
the Company and its Subsidiaries is in compliance in all material respects
with applicable law, including ERISA and the Code; the Company has not
incurred and does not expect to incur liability under Title IV of ERISA
with respect to the termination of, or withdrawal from, any "pension plan";
and each "pension plan" (as defined in ERISA) for which the Company would
have any liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which could cause the loss of such
qualification;
(z) Neither the Company nor any of its Subsidiaries own any
"margin securities" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Bonds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Securities to be considered a
"purpose credit" within the meanings of Regulation T, U or X of the Federal
Reserve Board;
9
(aa) Each of the Company and the Subsidiaries own, or have
obtained valid and enforceable licenses for, or other rights to use, the
inventions, patent applications, patents, trademarks (both registered and
unregistered), tradenames, copyrights, trade secrets and other proprietary
information described or incorporated by reference in the Memorandum as
being owned or licensed by or to them or that are necessary for the conduct
of their respective businesses, except where the failure to own, license or
have such rights would not, individually or in the aggregate, have a
Material Adverse Effect (collectively, "Intellectual Property"); (i) there
are no third parties who have or, to the Company's knowledge, will be able
to establish rights to any Intellectual Property, except for the ownership
rights of the owners of the Intellectual Property which is licensed to the
Company; (ii) to the best of the Company's knowledge there is no
infringement by third parties of any Intellectual Property; (iii) there is
no pending or, to the best of the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the Company's rights in or
to any Intellectual Property, and the Company is unaware of any facts which
could form a reasonable basis for any such claim; (iv) there is no pending
or, to the best of the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any
Intellectual Property, and the Company is unaware of any facts which could
form a reasonable basis for any such claim; (v) there is no pending or, to
the best of the Company's knowledge, threatened action, suit, proceeding or
claim by others that the Company infringes or otherwise violates any
patent, trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any facts which could form a
reasonable basis for any such claim; (vi) to the best of the Company's
knowledge, there is no patent or patent application that contains claims
that interfere with the issued or pending claims of any of the Intellectual
Property; and (vii) to the best of the Company's knowledge there is no
prior art that may render any patent application owned by the Company of
the Intellectual Property unpatentable that has not been disclosed to the
U.S. Patent and Trademark Office;
(bb) The Company and its Subsidiaries are in compliance with all
applicable federal, state, local and foreign laws, regulations, orders and
decrees governing their business as prescribed by the FDA, or any other
federal, state or foreign agencies or bodies, including those bodies and
agencies engaged in the regulation of pharmaceuticals or biohazardous
substances or materials, except where noncompliance would not, singly or in
the aggregate, have a Material Adverse Effect; all preclinical and clinical
studies undertaken to support approval of products for commercialization
have been conducted in compliance with all applicable federal, state or
foreign laws, rules, orders or regulations, including current Good
Laboratory and Good Clinical Practices in all material respects; no filing
or submission to the FDA or any other federal, state or foreign regulatory
body, that is intended to be the basis for any approval, contains any
material omission or material false information;
(cc) The audited financial statements included or incorporated by
reference in the Memorandum, together with the related notes and schedules,
present fairly the consolidated financial position of the Company and the
Subsidiaries as of the dates indicated and the consolidated results of
operations and cash flows of the Company
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and the Subsidiaries for the periods specified and have been prepared in
compliance in all material respects with the requirements of the Exchange
Act and in compliance with the requirements of generally accepted
accounting principles applied on a consistent basis during the periods
involved; any pro forma financial statement or data included or
incorporated by reference in the Memorandum comply with the requirements of
Regulation S-X under the Securities Act, including without limitation
Article 11 thereof, and the assumptions used in the preparation of such pro
forma financial statements or data included or incorporated by reference in
the Memorandum are reasonable, the pro forma adjustments used therein are
appropriate to give effect to the transactions or circumstances described
therein and the pro forma adjustments have been properly applied to the
historical amounts in the compilation of those statements and data; the
other financial and statistical data set forth or incorporated by reference
in the Memorandum are accurately presented and prepared on a basis
consistent with the financial statements and books and records of the
Company; and neither the Company nor the Subsidiaries have any material
liabilities or obligations, direct or contingent (including any off-balance
sheet obligations), and there are no transactions, arrangements or other
relationships between and/or among the Company, any of its affiliates (as
such term is defined in Rule 405 of the Securities Act) and any
unconsolidated entity, including, but not limited to, any structured
finance, special purpose or limited purpose entity that could reasonably be
expected to materially affect the Company's liquidity or the availability
of or requirements for its capital resources that are not disclosed in the
Memorandum;
(dd) Subsequent to the respective dates as of which information
is given in the Memorandum, and except as may be otherwise stated or
incorporated by reference in the Memorandum, there has not been (A) any
material adverse change, or any development involving a prospective
material adverse change, in the business, properties, prospects, regulatory
environment, management, financial condition or results of operations of
the Company and the Subsidiaries, taken as a whole, (B) any transaction
which is material to the Company and the Subsidiaries, taken as a whole,
(C) any obligation, direct or contingent (including any off-balance sheet
obligations), incurred by the Company or any of the Subsidiaries, which is
material to the Company and the Subsidiaries, taken as a whole, (D) any
change in the capital stock or outstanding indebtedness of the Company or
the Subsidiaries or (E) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company;
(ee) The Company and the Subsidiaries and their properties,
assets and operations are in compliance with, and hold all permits,
authorizations and approvals required under, Environmental Laws (as defined
below), except to the extent that failure to so comply or to hold such
permits, authorizations or approvals would not, individually or in the
aggregate, have a Material Adverse Effect; there are no past, present or,
to the Company's knowledge after due inquiry, reasonably anticipated future
events, conditions, circumstances, activities, practices, actions,
omissions or plans that could reasonably be expected to give rise to any
material costs or liabilities to the Company or the Subsidiaries under, or
to interfere with or prevent compliance by the Company or the Subsidiaries
with, Environmental Laws; except as would not, individually or in the
11
aggregate, have a Material Adverse Effect, the Company and each of the
Subsidiaries (i) to the Company's knowledge, is not the subject of any
investigation, (ii) has not received any notice or claim, (iii) is not a
party to or affected by any pending or, to the Company's knowledge,
threatened action, suit or proceeding, (iv) is not bound by any judgment,
decree or order or (v) has not entered into any agreement, in each case
relating to any alleged violation of any Environmental Law or any actual or
alleged release or threatened release or cleanup at any location of any
Hazardous Materials (as defined below) (as used herein, "Environmental Law"
means any federal, state, local or foreign law, statute, ordinance, rule,
regulation, order, decree, judgment, injunction, permit, license,
authorization or other binding requirement, or common law, relating to
health, safety or the protection, cleanup or restoration of the environment
or natural resources, including those relating to the distribution,
processing, generation, treatment, storage, disposal, transportation, other
handling or release or threatened release of Hazardous Materials, and
"Hazardous Materials" means any material (including, without limitation,
pollutants, contaminants, hazardous or toxic substances or wastes) that is
regulated by or may give rise to liability under any Environmental Law);
(ff) In the ordinary course of its business, the Company and each
of the Subsidiaries conducts a periodic review of the effect of the
Environmental Laws on its business, operations and properties, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for cleanup, closure of properties or compliance with
the Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties);
(gg) When the Bonds are issued pursuant to this Agreement, the
Bonds will not be of the same class (within the meaning of Rule 144A) as
securities that are listed on a national securities exchange registered
pursuant to Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system;
(hh) Neither the Company nor any Affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act) (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or would be integrated
with the sale of the Bonds in a manner that would require the registration
under the Securities Act of the Bonds or (ii) offered, solicited offers to
buy or sold the Bonds by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities
Act) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act;
(ii) Assuming the accuracy of the representations and warranties
of the Initial Purchasers in Section 4 hereof, it is not necessary in
connection with the offer, sale and delivery of the Bonds to the Initial
Purchasers pursuant to this Agreement to register the Bonds or the Shares
deliverable upon conversion of the Bonds under the Securities Act or to
qualify the Indenture under the 1939 Act;
12
(jj) Neither the Company nor any of the Subsidiaries is, nor
after giving effect to the offering and sale of the Bonds and the
application of the proceeds thereof as described in the Final Memorandum
will any of them be, required to register as an "investment company" as
defined in the Investment Company Act of 1940, as amended;
(kk) Except as described in the Memorandum, the Company and each
of the Subsidiaries has good and marketable title to all property (real and
personal) described or incorporated by reference in the Memorandum as being
owned by each of them, free and clear of all liens, claims, security
interests or other encumbrances; all the property described in the
Memorandum as being held under lease by the Company or a Subsidiary is held
thereby under valid, subsisting and enforceable leases;
(ll) Except for the Registration Rights Agreement, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to register any
securities with the SEC;
(mm) At the time of purchase there are no securities of or
guaranteed by the Company or any Subsidiary of the Company that are rated
by a "nationally recognized statistical rating organization", as that term
is defined in Rule 436(g)(2) promulgated under the Securities Act;
(nn) The Company and each of the Subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(oo) The minute books of the Company and each of its domestic
subsidiaries have been made available to the Initial Purchaser and counsel
for the Initial Purchaser, and such books (i) contain minutes (or written
consents) of all meetings and actions of the board of directors (including
each board committee) and shareholders (or analogous governing bodies and
interest holders, as applicable) of the Company and each of its domestic
subsidiaries since the time of its respective organization through the date
of the latest meeting and action, and (ii) accurately in all material
respects reflect all transactions referred to in such minutes;
(pp) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14 and 15d-14
under the Exchange Act); such disclosure controls and procedures are
designed to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to the Company's
Chief Executive Officer and its Vice President, Finance and Administration
by others within those entities, and as of the period covered by the
13
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2004, such disclosure controls and procedures were effective to perform the
functions for which they were established; the Company's auditors and the
Audit Committee of the Board of Directors have been advised, based on the
Company's assessment of internal control over financial reporting, as of
the fiscal year ended December 31, 2004, of: (i) any significant
deficiencies in the design or operation of internal controls which could
adversely affect the Company's ability to record, process, summarize, and
report financial data; and (ii) any fraud, whether or not material, that
involves management or other employees who have a role in the Company's
internal controls; any material weaknesses in internal controls as of
December 31, 2004 have been identified for the Company's auditors; and in
connection with the Company's assessment of internal control described
above, there were no significant changes in internal controls or in other
factors that have materially affected internal control over financial
reporting;
(qq) Any statistical and market-related data included or
incorporated by reference in the Memorandum are based on or derived from
sources that the Company believes to be reliable and accurate, and the
Company has obtained the written consent to the use of such data from such
sources to the extent required;
(rr) Neither the Company nor any of its Subsidiaries nor, to the
best of the Company's knowledge, any employee or agent of the Company or
any subsidiary, has made any contribution or other payment to any official
of, or candidate for, any federal, state or foreign office in violation of
any law necessary to be disclosed in the Memorandum in order to make the
statements therein not misleading.
(ss) Neither the Company nor any of the Subsidiaries nor any of
their respective directors, officers, affiliates or controlling persons has
taken, directly or indirectly, any action designed, or which has
constituted or might reasonably be expected to cause or result in, under
the Exchange Act or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Bonds or the Shares issued upon conversion thereof;
(tt) The Company and the Subsidiaries are in compliance in all
material respects with the applicable provisions of the Xxxxxxxx-Xxxxx Act
of 2002 and the rules and regulations in connection therewith, including
without limitation Section 402 related to loans and Sections 302 and 906
related to certifications;
(uu) There are no rulemaking, similar public proceedings or, to
the Company's knowledge, similar private proceedings, before the FDA or
comparable federal, state, local or foreign government bodies which involve
the Company or any of the Subsidiaries, except such proceedings that, if
the subject of an action unfavorable to the Company or any such Subsidiary,
would not result in a Material Adverse Effect; and
(vv) The statements set forth in the Memorandum under the caption
"Description of Notes," insofar as they purport to constitute a summary of
the terms of the Notes, and under the captions "Risk Factors" and "Offering
Memorandum Summary,"
14
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair;
In addition, any certificate signed by any officer of the Company or
any of the Subsidiaries and delivered to the Initial Purchasers or counsel for
the Initial Purchasers in connection with the offering of the Bonds shall be
deemed to be a representation and warranty by the Company or Subsidiary, as the
case may be, as to matters covered thereby, to each Initial Purchaser.
4. Representations and Warranties of the Initial Purchasers. The
Initial Purchasers propose to offer the Bonds for sale upon the terms and
conditions set forth in this Agreement and the Final Memorandum, and each
Initial Purchaser hereby represents and warrants to and agrees with the Company
that:
(a) It will offer and sell the Bonds only to persons whom it
reasonably believes are "qualified institutional buyers" ("QIBs") within
the meaning of Rule 144A in transactions meeting the requirements of Rule
144A in purchasing such Bonds, are deemed to have represented and agreed as
provided in the Final Memorandum under the caption "Notice to Investors";
(b) It is a QIB within the meaning of Rule 144A; and
(c) It has not and will not directly or indirectly, solicit
offers in the United States for, or offer or sell, the Bonds by any form of
general solicitation, general advertising (as such terms are used in
Regulation D) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
5. Certain Covenants of the Company: The Company hereby agrees that:
(a) The Company will prepare the Final Memorandum in a form
approved by the Initial Purchasers and will make no amendment or supplement
to the Final Memorandum to which any of the Initial Purchasers reasonably
objects;
(b) Promptly from time to time, the Company will take such action
as the Initial Purchasers may reasonably request to qualify the Bonds and
the Shares for offering and sale under the securities laws of such
jurisdictions as the Initial Purchasers may reasonably request in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose; provided, that
in connection therewith the Company shall not be required to qualify as a
foreign corporation, to file a general consent to service of process or
subject itself to any tax in any such jurisdiction where it is not now so
qualified or subject;
(c) The Company will furnish the Initial Purchasers with as many
copies of the Final Memorandum, any documents incorporated by reference
therein and any amendment or supplement thereto as the Initial Purchasers
may from time to time reasonably request, and if, at any time prior to the
completion of the resale of the Bonds by the Initial Purchasers, any event
shall have occurred as a result of which the Final
15
Memorandum as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made when such Final Memorandum is delivered, not
misleading, or, if for any other reason it shall be necessary or desirable
during such same period to amend or supplement the Final Memorandum, the
Company will notify the Initial Purchasers and upon the request of the
Initial Purchasers will prepare and furnish without charge to the Initial
Purchasers and to any dealer in securities as many copies as the Initial
Purchasers may from time to time reasonably request of an amended Final
Memorandum or a supplement to the Final Memorandum which will correct such
statement or omission or effect such compliance;
(d) During the period beginning from the date hereof and
continuing until the date 90 days after the date of the Final Memorandum
(the "Restricted Period"), the Company will not, without the prior written
consent of the Representatives, directly or indirectly, issue, offer, sell,
contract to sell, hypothecate, pledge, grant or sell any option, right or
warrant to purchase, or otherwise dispose of, or contract to dispose of, or
announce any offering of or file or cause to be deemed effective any
registration statement under the Securities Act relating to, any Shares,
any securities substantially similar to the Bonds or the Common Stock, any
securities that are convertible into or exchangeable for shares of Common
Stock and debt securities or any securities that are convertible into or
exchangeable for the Bonds or such other debt securities (other than (i)
the issuance of the Bonds; (ii) the issuance of Shares upon conversion of
the Bonds; (iii) the issuance of shares of Common Stock upon conversion or
exercise of convertible or exercisable or exchangeable securities
outstanding as of the date of this Agreement, (iv) the issuance of employee
stock options or shares of restricted stock that are not exercisable and do
not vest, as applicable, during the Restricted Period pursuant to the
Company's stock option plans existing on the date of this Agreement) or (v)
the issuance of shares of Common Stock or options pursuant to employee
stock option or employee stock purchase plans existing on, or upon exercise
of warrants outstanding as of, the date of this Agreement), or enter into
any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock or Bonds
irrespective of whether any transaction mentioned above is to be settled by
delivery of the Common Stock, the Bonds or other securities, in cash or
otherwise;
(e) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act and so long as any of the Bonds (or Shares issued
upon conversion thereof) are "restricted securities" within the meaning of
Rule 144(a)(3) under the Securities Act, for the benefit of holders from
time to time of the Bonds, the Company will furnish at its expense, upon
request, to holders and beneficial owners of Bonds and prospective
purchasers of Bonds information satisfying the requirements of subsection
(d)(4)(i) of Rule 144A;
(f) The Company will cooperate with the Initial Purchasers to
cause the Bonds to be eligible for trading in PORTAL;
16
(g) For so long as the Bonds remain outstanding, the Company will
furnish to the Initial Purchasers copies of all reports or other
communications (financial or other) furnished to stockholders of the
Company, and will deliver to the Initial Purchasers (i) as soon as they are
available, copies of any reports and financial statements furnished to or
filed by the Company with the Commission or any securities exchange on
which the Bonds or any class of securities of the Company is listed;
provided, however, the Company's filing of information specified herein
with the Commission by XXXXX shall satisfy this provision with respect to
such information; and (ii) such additional information concerning the
business and financial condition of the Company as the Initial Purchasers
may from time to time reasonably request (such financial information to be
on a consolidated basis to the extent the accounts of the Company and the
Subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission);
(h) The Company will use the net proceeds received by it from the
sale of the Bonds pursuant to this Agreement in the manner specified in the
Final Memorandum under the caption "Use of Proceeds";
(i) The Company will reserve and keep available at all times free
of preemptive rights, Shares for the purpose of enabling the Company to
satisfy any obligations to issue Shares upon conversion of the Bonds;
(j) the Company will use its best efforts to list, as promptly as
practicable but in no event later than the time that the registration
statement is declared effective in accordance with the Registration Rights
Agreement, and subject to notice of issuance, the Shares on the Nasdaq;
(k) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company will
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including, without limitation, (i) the
fees, disbursements and out-of-pocket expenses of the Company's counsel and
the Company's accountants in connection with the issuance and sale of the
Bonds and all other fees and expenses in connection with the preparation of
each Memorandum and all amendments and supplements thereto, including all
printing costs associated therewith, and the furnishing of copies thereof
to the Initial Purchasers and to dealers (including costs of mailing and
shipment), (ii) all costs related to the preparation, issuance, execution,
authentication and delivery of the Bonds and the Shares, (iii) all costs
related to the transfer and delivery of the Bonds to the Initial
Purchasers, including any transfer or other taxes payable thereon, (iv) the
costs of printing, reproducing and distributing this Agreement by mail,
telex or other means of communication, (v) all expenses in connection with
the qualification of the Bonds and the Shares for offering and sale under
state laws and the cost of printing and furnishing of copies of any blue
sky or legal investment memorandum to the Initial Purchasers and to dealers
(including filing fees and the fees and disbursements of counsel for the
Initial Purchasers in connection with such qualification and in connection
with such blue sky or legal investment memorandum), (vi) any fees payable
to investment rating agencies, if any, with respect to the rating of the
Bonds, (vii) the costs and charges of the Trustee and
17
any transfer agent, registrar or depositary, (viii) the fees and expenses,
if any, incurred in connection with the admission of the Bonds for trading
in PORTAL or any appropriate market system, (ix) the costs and expenses of
the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Bonds,
including, without limitation, expenses associated with the production of
road show slides and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the prior approval of
the Company, travel and lodging expenses of the employees, representatives
and officers of the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show, and (x) all other cost
and expenses incident to the performance of the Company's obligations
hereunder for which provision is not otherwise made in this Section 5(k);
(l) Neither the Company nor any Affiliate will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be integrated with
the sale of the Bonds in a manner which would require the registration
under the Securities Act of the offer and sale of the Bonds pursuant to
this Agreement;
(m) The Company will not to solicit any offer to buy or offer or
sell the Bonds or the Shares by means of any form of general solicitation
or general advertising (as those terms are used in Regulation D) or in any
manner involving a public offering within the meaning of Section 4(2) of
the Securities Act;
(n) During the period after the time of purchase or the
additional time of purchase, if later, the Company will not, and will not
permit Affiliates, to resell any of the Bonds or the Shares which
constitute "restricted securities" under Rule 144 under the Securities Act
that have been reacquired by any of them except pursuant to an effective
registration statement under the Securities Act;
(o) Neither the Company nor any Affiliate will take any action
prohibited by Regulation M under the Exchange Act in connection with the
distribution of the Bonds contemplated hereby; and
(p) The Company and each Subsidiary will comply in all material
respects with all applicable securities and other laws, rules and
regulations, including without limitation, the Xxxxxxxx-Xxxxx Act, and use
its reasonable best efforts to cause the officers and directors of the
Company and each Subsidiary, as the case may be, in their capacities as
such, to comply with such laws, rules and regulations, including without
limitation, the provisions of the Xxxxxxxx-Xxxxx Act.
18
6. Reimbursement of Initial Purchasers' Expenses: If the Firm Bonds
are not delivered for any reason other than the default by one or more of the
Initial Purchasers in their obligations hereunder, the Company will reimburse
the Initial Purchasers for all of their out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) reasonably incurred by the
Initial Purchasers in connection with this Agreement or the offering
contemplated hereunder.
7. Conditions of Initial Purchasers' Obligations: The several
obligations of the Initial Purchasers hereunder are subject to the accuracy in
all material respects of the representations and warranties on the part of the
Company on the date hereof and at the time of purchase. The several obligations
of the Initial Purchasers at the additional time of purchase are subject to the
accuracy in all material respects of the representations and warranties on the
part of the Company on the date hereof, at the time of purchase (unless
previously waived) and at the additional time of purchase, as the case may be.
Additionally, the several obligations of the Initial Purchasers hereunder are
subject to performance by the Company of its obligations hereunder and to the
following conditions:
(a) The Company shall furnish to the Initial Purchasers at the
time of purchase and at the additional time of purchase, as the case may
be, the following opinions of counsel to the Company addressed to the
Initial Purchasers and dated the date of the time of purchase or the date
of the additional time of purchase, as the case may be, and in form
reasonably satisfactory to counsel for the Initial Purchasers:
(i) opinions of Xxxxxx & Xxxxxx, L.L.P. and Xxxxx Xxxx LLP
substantially as set forth in Exhibit A-1 hereto;
(ii) opinion of Xxxx, Xxxxxxxx, Xxxx, Xxxxx & Xxxxxxxx
substantially as set forth in Exhibit A-2 hereto; and
(iii) opinion of Xxxx & Xxxxxxxxxx P.C. substantially as set
forth in Exhibit A-3 hereto.
(b) The Initial Purchasers shall have received on the date of
this Agreement, at the time of purchase and the additional time of
purchase, as the case may be, from KPMG LLP customary comfort letters dated
as of the date of this Agreement, the date of the time of purchase and the
date of the additional time of purchase, as the case may be, and addressed
to the Initial Purchasers, in form and substance satisfactory to counsel
for the Initial Purchasers;
(c) The Initial Purchasers shall have received at the time of
purchase and at the additional time of purchase, as the case may be, the
opinion of Xxxxxxx, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the
Initial Purchasers, dated the date of the time of purchase or the date of
the additional time of purchase, as the case may be, in form and substance
reasonably satisfactory to the Initial Purchasers;
(d) No amendment or supplement to the Final Memorandum, or any
document which upon filing with the Commission would be incorporated by
reference in
19
the Final Memorandum, shall at any time have been made or filed to which
any of the Initial Purchasers have reasonably objected in writing;
(e) At the time of purchase or the additional time of purchase,
as the case may be, the Final Memorandum shall not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(f) Between the time of execution of this Agreement and the time
of purchase or the additional time of purchase, as the case may be, (i) no
material adverse change or any development involving a prospective material
adverse change in the business, properties, management, financial condition
or results of operations of the Company and the Subsidiaries, taken as a
whole shall occur or become known and (ii) no transaction which is material
and unfavorable to the Company (other than as disclosed in the Final
Memorandum) shall have been entered into by the Company or any of the
Subsidiaries;
(g) The Company will, at the time of purchase and, if applicable
at the additional time of purchase, deliver to the Initial Purchasers a
certificate of its Chief Executive Officer and its Vice President, Finance
and Administration in the form attached as Exhibit C hereto;
(h) The Initial Purchasers shall have received copies, duly
executed by the Company and the other parties thereto, of the Registration
Rights Agreement and the Indenture;
(i) Each executive officer and director of the Company shall have
entered into Lock-Up Agreements substantially in the form attached as
Exhibit B hereto on or prior to the date hereof, and each such Lock-Up
Agreement, or a copy thereof, shall have been delivered to you and shall be
in full force and effect at the time of purchase and the additional time of
purchase, as the case may be;
(j) The Company shall have furnished to the Initial Purchasers
such other documents and certificates as to the accuracy and completeness
of any statement in the Final Memorandum as of the time of purchase and the
additional time of purchase, as the case may be, as the Initial Purchasers
may reasonably request; and
(k) The Bonds shall have been designated for trading on PORTAL,
subject only to notice of issuance at or prior to the time of purchase.
8. Termination: The several obligations of the Initial Purchasers
hereunder shall be subject to termination in the absolute discretion of the
Representatives if, (x) since the time of execution of this Agreement or the
earlier respective dates as of which information is given in the Final
Memorandum, there has been any material adverse change or any development
involving a prospective material adverse change in the business, properties,
management, financial condition or results of operations of the Company and the
Subsidiaries taken as a whole, which would, in the judgment of the
Representatives, make it impracticable or
20
inadvisable to proceed with the offering or the delivery of the Bonds on the
terms and in the manner contemplated in the Final Memorandum; (y) at any time
prior to the time of purchase or, with respect to the purchase of any Additional
Bonds, the additional time of purchase, as the case may be, there shall have
occurred: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or Nasdaq;
(ii) a suspension or material limitation in trading in the Company's securities
on Nasdaq; (iii) a general moratorium on commercial banking activities declared
by either federal or New York State authorities or a material disruption in
commercial banking or securities settlement or clearance services in the United
States; (iv) an outbreak or escalation of hostilities or acts of terrorism
involving the United States or a declaration by the United States of a national
emergency or war; or (v) any other calamity or crisis or any change in
financial, political or economic conditions in the United States or elsewhere,
if the effect of any such event specified in clause (iv) or (v) in the
Representatives' judgment or in the judgment of such group of Initial Purchasers
makes it impracticable or inadvisable to proceed with the offering or the
delivery of the Bonds on the terms and in the manner contemplated in the Final
Memorandum.
If you elect to terminate this Agreement as provided in this Section
8, the Company shall be notified as provided for herein.
If the sale to the Initial Purchasers of the Bonds, as contemplated by
this Agreement, is not carried out by the Initial Purchasers for any reason
permitted under this Agreement or if such sale is not carried out because the
Company shall be unable to comply and does not comply with any of the terms of
this Agreement, the Company shall not be under any obligation or liability under
this Agreement (except to the extent provided in Sections 5(k), 6 and 9 hereof),
and the Initial Purchasers shall be under no obligation or liability to the
Company under this Agreement (except to the extent provided in Section 9 hereof)
or to one another hereunder.
9. Indemnity by the Company and the Initial Purchasers:
(a) The Company agrees to indemnify, defend and hold harmless
each Initial Purchaser, its directors and officers, and any person who
controls any Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, an "Initial
Purchaser Indemnified Party"), and the successors and assigns of all the
foregoing persons, from and against any loss, damage, expense, liability or
claim (including the reasonable cost of investigation) which, jointly or
severally, any such Initial Purchaser Indemnified Party or any such person
may incur under the Securities Act, the Exchange Act, the common law or
otherwise, insofar as such loss, damage, expense, liability or claim arises
out of or is based upon any untrue statement or alleged untrue statement of
a material fact contained in any Memorandum, as amended or supplemented, if
applicable, or arises out of or is based upon any omission or alleged
omission to state a material fact necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as any such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or omission or
alleged untrue statement or omission of a material fact contained in or
omitted from and in conformity with information furnished in writing by
21
or on behalf of any Initial Purchaser to the Company expressly for use
therein, which information the parties hereto agree is limited to the
Initial Purchasers' Information (as defined in Section 11).
(b) Each Initial Purchaser severally agrees to indemnify, defend
and hold harmless the Company, its directors and officers and any person
who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (each, a "Company Indemnified Party")
from and against any loss, damage, expense, liability or claim (including
the reasonable cost of investigation) which such Company Indemnified Party
may incur under the Securities Act, the Exchange Act or otherwise, insofar
as such loss, damage, expense, liability or claim arises out of or is based
upon any untrue statement or alleged untrue statement of a material fact
contained in information furnished in writing by or on behalf of such
Initial Purchaser to the Company expressly for use in any Memorandum or
arises out of or is based upon any omission or alleged omission 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, in
connection with such information; provided that the parties hereto hereby
agree that such written information provided by the Initial Purchasers
consists solely of the Initial Purchasers' Information.
(c) If any action, suit or proceeding (each, a "Proceeding") is
brought against any person in respect of which indemnity may be sought
pursuant to either subsection (a) or (b) of this Section 9, such person
(the "Indemnified Party") shall promptly notify the person against whom
such indemnity may be sought (the "Indemnifying Party") in writing of the
institution of such Proceeding and such Indemnifying Party shall assume the
defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such Indemnified Party and payment of all fees and
expenses; provided, however, that the omission to so notify such
Indemnifying Party shall not relieve such Indemnifying Party from any
liability which it may have to such Indemnified Party or otherwise. Such
Indemnified Party shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the employment of such counsel
shall have been authorized in writing by such Indemnifying Party in
connection with the defense of such Proceeding, (ii) such Indemnifying
Party shall not have employed counsel to have charge of the defense of such
Proceeding within 30 days of the receipt of notice thereof or (iii) such
Indemnified Party shall have reasonably concluded upon written advice of
counsel that there may be defenses available to it that are different from,
additional to, or in conflict with those available to such Indemnifying
Party (in which case such Indemnifying Party shall not have the right to
direct that portion of the defense of such Proceeding on behalf of such
Indemnified Party, but such Indemnifying Party may employ counsel and
participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Indemnifying Party), in any of
which events such reasonable fees and expenses shall be borne by such
Indemnifying Party and paid as incurred (it being understood, however, that
such Indemnifying Party shall not be liable for the expenses of more than
one separate counsel in any one Proceeding or series of related Proceedings
together with reasonably necessary
22
local counsel representing the Indemnified Parties who are parties to such
Proceeding). An Indemnifying Party shall not be liable for any settlement
of any such Proceeding effected without its written consent, but if settled
with the written consent of such Indemnifying Party, such Indemnifying
Party agrees to indemnify and hold harmless an Indemnified Party from and
against any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an Indemnified Party shall have
requested an Indemnifying Party to reimburse such Indemnified Party for
fees and expenses of counsel as contemplated by the second sentence of this
paragraph, then such Indemnifying Party agrees that it shall be liable for
any settlement of any Proceeding effected without its written consent if
(i) such settlement is entered into more than 60 business days after
receipt by such Indemnifying Party of the aforesaid request, (ii) such
Indemnifying Party shall not have reimbursed such Indemnified Party in
accordance with such request prior to the date of such settlement and (iii)
such Indemnified Party shall have given such Indemnifying Party at least 30
days' prior written notice of its intention to settle. An Indemnifying
Party shall not, without the prior written consent of any Indemnified
Party, effect any settlement of any pending or threatened Proceeding in
respect of which such Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter
of such Proceeding and does not include an admission of fault, culpability
or a failure to act, by or on behalf of such Indemnified Party.
(d) If the indemnification provided for in this Section 9 is
unavailable to an Indemnified Party under subsections (a) and (b) of this
Section 9 in respect of any losses, damages, expenses, liabilities or
claims referred to therein, then each applicable Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses,
damages, expenses, liabilities or claims (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Initial Purchasers on the other hand from the offering of
the Bonds or (ii) if the allocation provided by clause (i) above 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 Company on the one hand and of the Initial
Purchasers on the other in connection with the statements or omissions
which resulted in such losses, damages, expenses, liabilities or claims, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Initial Purchasers on the
other shall be deemed to be in the same proportion as the total proceeds
from the offering (net of Initial Purchasers' discounts and commissions but
before deducting expenses) received by the Company bear to the discounts
and commissions received by the Initial Purchasers. The relative fault of
the Company on the one hand and of the Initial Purchasers on the other
shall be determined by reference to, among other things, whether the untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company or by the
Initial Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
damages, expenses, liabilities and claims
23
referred to above shall be deemed to include any reasonable legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any Proceeding.
(e) The Company and the Initial Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
subsection (d) above. Notwithstanding the provisions of this Section 9, no
Initial Purchaser shall be required to contribute any amount in excess of
the amount by which the total price at which the Bonds resold by it in the
initial placement of such Bonds were offered to investors exceeds the
amount of any damages which such Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Initial Purchasers' respective
obligations to contribute pursuant to this Section 9 are several in
proportion to the respective principal amount of Bonds they have purchased
hereunder, and not joint. The remedies provided for in this Section 9 are
not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of the Company
and the Initial Purchasers contained in this Agreement shall remain in full
force and effect (regardless of any investigation made by on behalf of any
Initial Purchaser, its directors or officers or any person who controls
such Initial Purchaser within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, or by or on behalf of the Company,
its directors and officers or any person who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), and shall survive any termination of this Agreement or the
issuance and delivery of the Bonds. The Company and the Initial Purchasers
agree promptly to notify the other of the commencement of any litigation or
proceeding against it and, in the case of the Company, against any of the
Company's officers and directors, in connection with the issuance and sale
of the Bonds, or in connection with any Memorandum.
10. Effectiveness; Increase in Initial Purchasers' Commitments: This
Agreement shall become effective upon the execution and delivery hereof by the
parties hereto.
Subject to Sections 8 and 9, if, at the time of purchase, or the
additional time of purchase, as the case may be, any Initial Purchaser shall
default in its obligation to take up and pay for the Bonds to be purchased by it
at such time hereunder (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 9 hereof) and if
the aggregate principal amount of Bonds which all Initial Purchasers so
defaulting shall have agreed but failed to take up and pay for at such time does
not exceed 10% of the total aggregate principal amount of Bonds to be purchased
at such time, the non-defaulting Initial Purchasers shall take up and pay for
(in addition to the aggregate number of Bonds they are
24
obligated to purchase at such time pursuant to Section 1 hereof) the aggregate
principal amount of Bonds agreed to be purchased by all such defaulting Initial
Purchasers at such time, as hereinafter provided. Such Bonds shall be taken up
and paid for by such non-defaulting Initial Purchaser or Initial Purchasers in
such amount or amounts as you may designate with the consent of each Initial
Purchaser so designated or, in the event no such designation is made, such Bonds
shall be taken up and paid for by all non-defaulting Initial Purchasers pro rata
in proportion to the aggregate principal amount of Firm Bonds set opposite the
names of such non-defaulting Initial Purchasers in Schedule A.
Without relieving any defaulting Initial Purchaser from its
obligations hereunder, the Company agrees with the non-defaulting Initial
Purchasers that it will not sell any Firm Bonds hereunder unless all of the Firm
Bonds are purchased by the Initial Purchasers (or by substituted Initial
Purchasers selected by you with the approval of the Company or selected by the
Company with your approval).
If a new Initial Purchaser or Initial Purchasers are substituted by
the Initial Purchasers or by the Company for a defaulting Initial Purchaser or
Initial Purchasers in accordance with the foregoing provision, the Company or
you shall have the right to postpone the time of purchase for a period not
exceeding five business days in order that any necessary changes in the Final
Memorandum and other documents may be effected.
The term "Initial Purchaser" as used in this Agreement shall refer to
and include any Initial Purchaser substituted under this Section 10 with like
effect as if such substituted Initial Purchaser had originally been named in
Schedule A.
If, at the time of purchase, the aggregate principal amount of Firm
Bonds which the defaulting Initial Purchaser or Initial Purchasers agreed to
purchase exceeds 10% of the total principal amount of Firm Bonds which all
Initial Purchasers agreed to purchase hereunder, and if neither the
non-defaulting Initial Purchasers nor the Company shall make arrangements within
the five business day period stated above for the purchase of all the Firm Bonds
which the defaulting Initial Purchaser or Initial Purchasers agreed to purchase
hereunder, this Agreement shall be terminated without further act or deed and
without any liability on the part of the Company to any non-defaulting Initial
Purchaser and without any liability on the part of any non-defaulting Initial
Purchaser to the Company. If, at the additional time of purchase, the aggregate
principal amount of Additional Bonds which the defaulting Initial Purchaser or
Initial Purchasers agreed to purchase exceeds 10% of the total principal amount
of Additional Bonds which all Initial Purchasers agreed to purchase hereunder,
the non-defaulting Initial Purchasers shall have the option to (a) terminate
their obligation hereunder to purchase the Additional Bonds or (b) purchase not
less than the principal amount of Additional Bonds that such non-defaulting
Initial Purchasers would have been obligated to purchase in the absence of such
default. Nothing in this paragraph, and no action taken hereunder, shall relieve
any defaulting Initial Purchaser from liability in respect of any default of
such Initial Purchaser under this Agreement.
11. Information Furnished by the Initial Purchasers: The statements
set forth in the last paragraph on the cover page of and the third, fourth and
fifteenth paragraph under the
25
caption "Plan of Distribution" in the Final Memorandum (the "Initial Purchasers'
Information") constitute the only information furnished by or on behalf of the
Initial Purchasers.
12. Notices: Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by facsimile and:
(a) if to the Initial Purchasers, shall be sufficient in all respects if
delivered or sent to:
X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Syndicate Desk
Telecopy No.: 000-000-0000
and
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Syndicate Department
Telecopy No.: 000-000-0000
with a copy to (for informational purposes only):
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
Telecopy No.: 000-000-0000
and
XX Xxxxx & Co., LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxx, Esq
Telecopy No.: 000-000-0000
(b) if to the Company, shall be sufficient in all respects if delivered or
sent to the Company at the offices of the Company at Encysive Pharmaceuticals
Inc., 0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attention:
Attention: Xxxxx X. Xxxxx, M.D. facsimile no. (000) 000-0000.
13. Governing Law and Construction: THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES
26
THAT WOULD REQUIRE THE APPLICATION OF ANY OTHER LAW. THE SECTION HEADINGS IN
THIS AGREEMENT HAVE BEEN INSERTED AS A MATTER OF CONVENIENCE OF REFERENCE AND
ARE NOT A PART OF THIS AGREEMENT.
14. Parties at Interest: The Agreement herein set forth has been and
is made solely for the benefit of the Initial Purchasers and the Company and the
controlling persons, directors and officers referred to in Section 9 hereof, and
their respective successors, assigns, executors and administrators. No other
person, partnership, association or corporation (including a purchaser, as such
purchaser, from the Initial Purchasers) shall acquire or have any right under or
by virtue of this Agreement.
15. Counterparts: This Agreement may be signed by the parties in
counterparts which together shall constitute one and the same agreement among
the parties. Delivery of an executed counterpart by facsimile shall be effective
as delivery of a manually executed counterpart thereof.
16. Submission to Jurisdiction: Except as set forth below, no
Proceeding may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York or in
the United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and the
Company hereby consents to the jurisdiction of such courts and personal service
with respect thereto. The Company hereby consents to personal jurisdiction,
service and venue in any court in which any Proceeding arising out of or in any
way relating to this Agreement is brought by any third party against the Initial
Purchasers. The Company hereby waives all right to trial by jury in any
Proceeding (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement. The Company agrees that a final judgment
in any such Proceeding brought in any such court shall be conclusive and binding
upon the Company and may be enforced in any other courts in the jurisdiction of
which the Company is or may be subject, by suit upon such judgment.
27
If the foregoing correctly sets forth the understanding between the
Company and the Initial Purchasers, please so indicate in the space provided
below for the purpose, whereupon this letter and your acceptance shall
constitute a binding agreement between the Company and the Initial Purchasers.
Very truly yours,
ENCYSIVE PHARMACEUTICALS INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: President and CEO
Accepted and agreed to as of the date
first above written:
X.X. XXXXXX SECURITIES INC.
By: /s/ Xxxx X'Xxxxx
---------------------------------
Name: Xxxx X'Xxxxx
Title: Vice President
UBS SECURITIES LLC
By: /s/ Xxxx Xxxxx
---------------------------------
Name: Xxxx Xxxxx
Title: Managing Director
XX XXXXX & CO., LLC
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
SCHEDULE A
Principal Amount
Initial Purchasers of Firm Bonds
------------------ ----------------
X.X. XXXXXX SECURITIES INC $ 50,600,000
UBS SECURITIES LLC $ 50,600,000
XX XXXXX & CO., LLC $ 13,800,000
Total $115,000,000
============
Sch A-1
EXHIBIT A-1
OPINION OF XXXXXX & XXXXXX, L.L.P AND XXXXX XXXX LLP
1. The Company has been duly incorporated and is validly existing as a
corporation under the laws of the State of Delaware with requisite
corporate power and authority to own lease and operate its properties and
conduct its business as described in the Final Memorandum except where the
failure to have such power and authority would not, individually or in the
aggregate, have a material adverse effect.
2. Each of the Company's domestic Subsidiaries has been duly organized and is
validly existing as a corporation or other legal entity in good standing
under the laws of its respective jurisdiction of organization with
requisite power and authority to own, lease and operate its respective
properties and to conduct its respective business; all of the issued shares
of capital stock (or analogous ownership interests, as applicable) of each
domestic Subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and except as set forth in
the Final Memorandum are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims.
3. The Company and each of the domestic Subsidiaries are duly qualified or
licensed to do business as foreign corporations and are in good standing in
each jurisdiction identified to us by the Company as those where the
ownership or leasing of their properties or the conduct of their respective
businesses requires such qualification or license, except where the
failure, individually or in the aggregate, to be so qualified or licensed
or be in good standing would not have a Material Adverse Effect.
4. The Company has an authorized and outstanding capital stock as set forth in
the Final Memorandum; the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable, have been issued in compliance with all federal securities
laws and were not issued in violation of any statutory preemptive rights
or, to such counsel's knowledge, contractual preemptive rights, resale
rights, rights of first refusal or similar rights.
5. Each document, if any, filed pursuant to the Exchange Act and incorporated
by reference in the Final Memorandum (except for the financial statements
and schedules and other financial and statistical data as to which such
counsel need not express any opinion) complied when so filed in all
material respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder.
6. The execution, delivery and performance of the Purchase Agreement, the
Registration Rights Agreement, the Indenture and the Bonds and consummation
of the transactions contemplated hereby and thereby including the issuance
of the Bonds and the issuance of the Shares upon conversion of the Bonds,
will not conflict with, result in any breach or violation of or constitute
a default under (nor constitute any event which with notice, lapse of time
or both would result in any breach or violation of or constitute a default
under), (i) the charter or by-laws (or analogous governing instruments, as
applicable) of
A-1
the Company or any of the domestic Subsidiaries or (ii) any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or
instrument known to such counsel after reasonable investigation to which
the Company or any of the domestic Subsidiaries is a party or by which any
of them or their respective properties may be bound or affected, or (iii)
any federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the Company or any of the domestic
Subsidiaries.
7. Neither the Company nor any of the domestic Subsidiaries is in breach or
violation of, or in default under (nor has any event occurred which with
notice, lapse of time, or both would result in any breach or violation of,
constitute a default under or give the holder of any indebtedness (or
person acting on such holder's behalf), the right to require the
repurchase, redemption or repayment of all or part of such indebtedness
under) (i) its respective charter or by-laws (or analogous governing
instruments, as applicable) (ii) any indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to which the
Company or any of the domestic Subsidiaries is a party or by which any of
them or their respective properties may be bound or affected of which such
counsel has knowledge, or (iii) under any federal, state, local or foreign
law, regulation or rule or any decree, judgment or order applicable to the
Company or any of the domestic Subsidiaries except, in the case of clauses
(ii) and (iii), for those breaches, violations or defaults that would not
have a Material Adverse Effect.
8. Except as described in the Final Memorandum, there are no actions, suits
claims, investigations or proceedings pending or, to the best of such
counsel's knowledge, threatened or contemplated to which the Company or any
of the domestic Subsidiaries is or would be a party or of which any of
their respective properties is or would subject at law or in equity, or
before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, which could result
in a judgment, decree or order having, individually or in the aggregate, a
Material Adverse Effect or prevent consummation of the contemplated
transactions.
9. The Company and its domestic Subsidiaries possess all licenses,
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their
businesses, except for such licenses, certificates, authorizations or
permits the failure of which to maintain would not have a Material Adverse
Effect. Neither the Company nor any of its domestic Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect. To the best of such
counsel's knowledge, the Company and its domestic Subsidiaries are in
compliance with all applicable federal, state, local and foreign laws,
regulations, orders and decrees governing their business, except where
noncompliance would not, singly or in the aggregate, have a Material
Adverse Effect.
A-2
10. The Purchase Agreement has been duly authorized, executed and delivered by
the Company and constitutes a legal, valid and binding agreement of the
Company, enforceable in accordance with its terms except (a) as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally and general principles of equity and (b) the rights to indemnity
and contribution may be limited by applicable law.
11. The Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding
agreement of the Company, enforceable in accordance with its terms except
(a) as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws affecting
creditors' rights generally and general principles of equity and (b) the
rights to indemnity and contribution may be limited by applicable law.
12. The Indenture has been duly authorized, executed and delivered by the
Company and constitutes a legal, valid and binding agreement of the
Company, enforceable in accordance with its terms except (a) as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws affecting
creditors' rights generally and general principles of equity and (b) the
rights to indemnity and contribution may be limited by applicable law. The
Indenture conforms in all material respects with the requirements of the
1939 Act and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
13. The Bonds have been duly authorized, executed and delivered by the Company
and when duly authenticated in accordance with the terms of the Indenture
and delivered to and paid for by the Initial Purchaser in accordance with
the terms of the Purchase Agreement will constitute legal, valid and
binding obligations of the Company, enforceable in accordance with their
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or similar laws
affecting creditors' rights generally and general principles of equity, and
will be entitled to the benefits of the Indenture and the Registration
Rights Agreement.
14. The Shares initially issuable upon conversion of the Bonds have been duly
authorized and reserved for issuance upon conversion of the Bonds, and upon
conversion of the Bonds in accordance with their terms and the terms of the
Indenture will be issued free of statutory and contractual preemptive
rights and are initially sufficient in number to meet the conversion
requirements of the Bonds, and such Shares, when so issued upon conversion
of the Bonds in accordance with the terms of the Indenture, will be duly
and validly issued and fully paid and non-assessable.
15. No approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board,
body, authority or agency, or Nasdaq, or approval of stockholders of the
Company, is required in connection with the issuance and sale by the
Company of the Bonds or the issuance of Shares upon conversion of the Bonds
or the consummation of the transactions as contemplated in the Purchase
Agreement other than (i) as may be required under the securities or blue
sky laws of the
A-3
various jurisdictions in which the Bonds and the Shares are being offered
by the Initial Purchasers, (ii) as may be required by Federal or state
securities laws with respect to the Company's obligations under the
Registration Rights Agreement and the listing of the Shares on Nasdaq in
connection therewith, (iii) those required in connection with the
qualification of the Indenture under the 1939 Act, (iv) those required in
connection with arranging for the Bonds to be designated eligible for
trading in PORTAL or for the Bonds to be eligible for clearance and
settlement through the Depository Trust Company and (v) such as have
already been obtained.
16. Assuming the accuracy of the representations and warranties of the Initial
Purchasers, it is not necessary in connection with (i) the offer, sale and
delivery of the Bonds to the Initial Purchasers pursuant to the Purchase
Agreement or (ii) the initial resales of the Bonds by the Initial
Purchasers in the manner contemplated in the Final Memorandum to register
the Bonds under the Securities Act or to qualify the Indenture in respect
thereof under the Trust Indenture Act of 1939, as amended, it being
understood that no opinion is expressed as to any subsequent resale of any
Bond or Share.
17. Neither the Company nor any of the domestic Subsidiaries is, nor after
giving effect to the offering and sale of the Bonds and the application of
the proceeds thereof as described in the Final Memorandum will any of them
be, required to register as an "investment company" as defined in the
Investment Company Act of 1940, as amended.
18. The terms of the Bonds, the Registration Rights Agreement, the Indenture
and the capital stock of the Company, including the Shares, conform as to
legal matters in all material respects to the descriptions thereof
contained in the Final Memorandum.
19. The statements in the Final Memorandum under the captions "Description of
Notes," "Description of Capital Stock," and "Notice to Investors" and in
"Item 3--Legal Proceedings" of the Company's most recent annual report on
Form 10-K, incorporated by reference in the Final Memorandum, in so far as
such statements constitute summaries of legal matters, documents or
proceedings referred to therein, fairly summarize the matters referred to
therein.
20. The statements in the Final Memorandum under the caption "Certain United
States Federal Income Tax Considerations" in so far as such statements
constitute a summary of the United States federal tax laws referred to
therein, are accurate and fairly summarize in all material respects the
United States federal tax laws referred to therein.
21. Based upon such counsel's participation in conferences with officers and
other representatives of the Company, counsel for the Company,
representatives of the independent public accountants of the Company and
representatives of the Initial Purchasers at which the contents of the
Final Memorandum and related matters were discussed, although such counsel
is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Final
Memorandum (except to the extent stated in paragraphs 4, 18 and 19) no
facts have come to such counsel's attention which lead such counsel to
believe that the Final
A-4
Memorandum as of its date or as of the date hereof (except for the
financial statements and schedules and other financial data as to which we
do not express any belief) contained or contains an untrue statement of a
material fact or omitted or omits 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.
A-5
EXHIBIT A-2
OPINION OF XXXX, XXXXXXXX, XXXX, XXXXX & XXXXXXXX
1. To the best of such counsel's knowledge, the Company and its domestic
Subsidiaries are in compliance with all applicable federal, state, local
and foreign laws, regulations, orders and decrees governing their business
and relating to Intellectual Property, except where noncompliance would
not, singly or in the aggregate, have a Material Adverse Effect.
2. To the best of such counsel's knowledge, each of the Company and the
domestic Subsidiaries own, or have obtained valid and enforceable licenses
for, or other rights to use, the inventions, patent applications, patents,
trademarks (both registered and unregistered), tradenames, copyrights,
trade secrets and other proprietary information described or incorporated
by reference in the Final Memorandum as being owned or licensed to them or
that are necessary for the conduct of their respective businesses
(collectively, "Intellectual Property"). To the best of such counsel's
knowledge and other than as described in the Memorandum (i) there are no
third parties who have or, will be able to establish, rights to any
Intellectual Property, except for the ownership rights of the owners of the
Intellectual Property which is licensed to the Company; (ii) there is no
infringement by third parties of any Intellectual Property; (iii) there is
no pending or threatened action, suit, proceeding or claim by a third party
challenging the Company's rights in or to any Intellectual Property, and
such counsel is unaware of any facts which could form a reasonable basis
for any such claim; (iv) there is no pending or threatened action, suit,
proceeding or claim by others (except for ordinary course proceedings
between the Company and the United States Patent and Trademark Office or
any foreign equivalent thereof) challenging the validity or scope of any
Intellectual Property, and such counsel is unaware of any facts which could
form a reasonable basis for any such claim; (v) there is no pending or
threatened action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary rights of others, and such counsel is unaware
of any facts which could form a reasonable basis for any such claim; (vi)
there is no patent or patent application that contains claims that
interfere with the issued or pending claims of any of the Intellectual
Property; and (vii) there is no prior art that may render any patent
application owned by the Company of the Intellectual Property unpatentable
that has not been disclosed to the U.S. Patent and Trademark Office.
3. The description in the Offering Memorandum of statutes, legal or
governmental proceedings and other documents relating to Intellectual
Property are accurate in all material respects.
4. The statements in the Offering Memorandum under the heading "Risk Factors -
Risks Relating to Intellectual Property," to the extent that they
constitute summaries of matters of law or regulation or legal conclusions,
have been reviewed by such counsel and fairly summarize the matters
described therein in all material respects. The statements set forth in the
Company's Annual Report on Form 10-K for the year ended December 31, 2004,
set forth under "Part I - Item 1 - Business - Licenses and Patents," to the
extent that they constitute summaries of matters of law or regulation or
legal conclusions, have been
A-1
reviewed by us and fairly summarize the matters described therein in all
material respects.
A-2
EXHIBIT A-3
OPINION OF XXXX AND XXXXXXXXXX P.C.
To the best of such counsel's knowledge, each of the Company and the domestic
Subsidiaries own, or have obtained valid and enforceable licenses for the
inventions, patent applications, patents, trademarks (both registered and
unregistered), tradenames, copyrights, trade secrets and other proprietary
information described or incorporated by reference in the Final Memorandum as
being owned or licensed to them or that are necessary for the conduct of their
respective businesses (collectively, "Intellectual Property"). Such counsel has
no knowledge that the Company lacks or will be unable to obtain any rights or
licenses to use the Intellectual Property necessary to conduct the Company's
business as now conducted or proposed to be conducted by the Company as
disclosed in the Final Memorandum. To the best of such counsel's knowledge and
other than as described in the Final Memorandum (i) there are no third parties
who have or, will be able to establish, ownership rights to any of the
Intellectual Property owned by the Company; (ii) there is no infringement by
third parties of any Intellectual Property; (iii) there is no pending or
threatened action, suit, proceeding or claim by a third party challenging the
Company's rights in or to any Intellectual Property, and such counsel is unaware
of any facts which could form a reasonable basis for any such claim; (iv) there
is no pending or threatened action, suit, proceeding or claim by others (except
for ordinary course proceedings between the Company and the United States Patent
and Trademark Office or any foreign equivalent thereof) challenging the validity
or scope of any Intellectual Property, and such counsel is unaware of any facts
which could form a reasonable basis for any such claim; (v) there is no pending
or threatened action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade secret
or other proprietary rights of others, and such counsel is unaware of any facts
which could form a reasonable basis for any such claim; (vi) there is no patent
or patent application that contains claims that interfere with the issued or
pending claims of any of the Intellectual Property; and (vii) there is no prior
art that may render any patent application owned by the Company of the
Intellectual Property unpatentable that has not been disclosed to the U.S.
Patent and Trademark Office.
A-3
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
March [ ], 2005
X.X. XXXXXX SECURITIES INC.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
UBS SECURITIES LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XX XXXXX & CO., LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
consummation of the transactions contemplated by the Purchase Agreement (the
"Purchase Agreement") dated as of March [ ], 2005 between Encysive
Pharmaceuticals Inc., a Delaware corporation (the "Company"), and you as the
Initial Purchasers named therein, relating to an offering without registration
under the Securities Act of 1933, as amended (the "Act"), in reliance on Rule
144A under the Act, of Convertible Senior Notes due 2012 (the "Bonds"), of the
Company.
I agree that I will not, for a period from the date hereof until the
end of a period (the "Restricted Period") of 90 days after the date of the Final
Memorandum (as defined in the Purchase Agreement), without the prior written
consent of X.X. Xxxxxx Securities Inc. and UBS Securities LLC, as
representatives for the Initial Purchasers, directly or indirectly, offer, sell,
contract to sell, hypothecate, pledge, sell or grant any option, right or
warrant to purchase, or otherwise dispose of, or contract to dispose of, any
shares of the Company's common stock, par value $.005 per share (the "Common
Stock"), any securities substantially similar to the Bonds or the Common Stock
or any securities that are convertible into or exchangeable for the Bonds or
Common Stock or enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of the ownership of the Common
Stock or Bonds irrespective of whether any transaction mentioned above is to be
settled by delivery of the Common Stock, the Bonds or other securities, in cash
or otherwise[; provided, however, that notwithstanding the foregoing, the
undersigned may sell up to [ ] shares of Common Stock within the Restricted
Period (and any extension thereof pursuant to the succeeding paragraph) without
the prior written consent of UBS Securities LLC and X.X. Xxxxxx Securities Inc.
upon prior notice to UBS Securities LLC and X.X. Xxxxxx Securities Inc] [;
provided, however, that notwithstanding the foregoing, the undersigned, during
the Restricted Period (and any extension thereof pursuant to the succeeding
paragraph) may sell up to an aggregate [ ] shares of Common Stock pursuant to a
written trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934
entered into by the undersigned on [November 29, 2004] [January 24, 2005]]. The
foregoing sentence shall not
B-1
apply to (A) gifts or transfers of shares of Common Stock made by the
undersigned to, or for the benefit of, family members, charitable institutions,
and trusts, limited partnerships or other entities created for estate planning
purposes, the principal beneficiaries of which are family members or charitable
institutions, subject to the condition that any such family member or charitable
institution or other holder shall execute an agreement with the Initial
Purchasers stating that such transferee is receiving and holding the Common
Stock subject to the provisions of this agreement or (B) transfers of Common
Stock by will or intestacy.
If:
(1) during the last 18 days of the Restricted Period, the Company
issues an earnings release; or
(2) prior to the expiration of the Restricted Period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the Restricted Period, the restrictions set forth
herein shall continue to apply until the expiration of the 19-day period
beginning on the issuance of the earnings release.
If for any reason the Purchase Agreement shall be terminated prior to
the time of purchase (as defined in the Purchase Agreement), the agreement set
forth above shall likewise be terminated.
Very truly yours,
----------------------------------------
Name:
Title:
EXHIBIT B-1
LIST OF PARTIES TO EXECUTE LOCK-UP AGREEMENTS
NAME POSITION(S)
---- -----------
1. Xxx Xxxxxxxx Director
2. Xxxxx X. Xxxxx Vice President, Biological Sciences
3. X. Xxxxx Xxxxx Director
4. Xxxxx X. Xxxxxxxx Director
5. Xxxxxxxx X. Xxxxx Vice President, Clinical Development and Chief
Medical Officer
6. Xxxxxx X. Xxxxxxxxxx Director
7. Xxxx X. Xxxxxx, XX Director
8. Xxxxxxx X. X. Xxxxx Senior Vice President, Research and Chief Scientific
Officer
9. Xxxxxxx Xxxxx Vice President, Strategic Planning
10. Xxxxx X. Xxxxx President and Chief Executive Officer
11. Xxxxxxx Xxxxxx Vice President, Regulatory Affairs
12. Xxxxxx Xxxxx Director, Human Resources
13. Xxxxx Xxxxxxxx Vice President, Marketing and Sales
14. Xxxxxxx X. Xxxxxxx Vice President, Finance and Administration
15. Xxxxxxx Xxxxxx Director
16. Xxxx X. Xxxxxxxxx Director
17. Xxx Xxxxxx Director, Investor Relations and Corporate
Communications
18. Xxxxx X. Xxxxxxx Director
19. Xxxxxxx Xxxx Executive Director, Business Development
20. Xxxxx X. Xxxxxxxxx Director
B-1-1
EXHIBIT C
OFFICERS' CERTIFICATE
1. I have reviewed the Memorandum.
2. The representations and warranties of the Company as set forth in the
Purchase Agreement are true and correct as of the time of purchase [and, if
applicable, the additional time of purchase].
3. The Company has performed all of its obligations under the Purchase
Agreement as are to be performed at or before the time of purchase [and at
or before the additional time of purchase, as the case may be].
4. The conditions set forth in paragraphs (e) and (f) of Section 7 of the
Purchase Agreement have been met.
C-1
