DURA PHARMACEUTICALS, INC.
(a Delaware corporation)
Convertible Subordinated Notes due 2002
PURCHASE AGREEMENT
Dated: July ___, 1997
TABLE OF CONTENTS
Pages(s)
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PURCHASE AGREEMENT........................................................... 1
SECTION 1. REPRESENTATIONS AND WARRANTIES........................... 3
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY............ 3
(i) Compliance with Registration Requirements................ 3
(ii) Incorporated Documents................................... 4
(iii) Independent Accountants.................................. 4
(iv) Financial Statements..................................... 4
(v) No Material Adverse Change in Business................... 5
(vi) Good Standing of the Company............................. 5
(vii) Good Standing of Subsidiaries............................ 5
(viii) Capitalization........................................... 6
(ix) Authorization of Agreement............................... 6
(x) Authorization of the Indenture........................... 6
(xi) Authorization of the Securities.......................... 6
(xii) Description of the Securities and the Indenture.......... 7
(xiii) Authorization and Description of Common Stock............ 7
(xiv) Registration or Similar Rights Waived.................... 7
(xv) Absence of Defaults and Conflicts........................ 7
(xvi) Compliance with Laws..................................... 8
(xvii) Absence of Labor Dispute................................. 8
(xviii) Absence of Proceedings................................... 8
(xix) Accuracy of Exhibits..................................... 8
(xx) Possession of Intellectual Property...................... 8
(xxi) Absence of Further Requirements.......................... 9
(xxii) Possession of Licenses and Permits....................... 9
(xxiii) Title to Property........................................ 9
(xxiv) Compliance with Cuba Act................................. 9
(xxv) Investment Company Act.................................. 10
(xxvi) Environmental Laws....................................... 10
(xxvii) Taxes.................................................... 10
(xxviii) Insurance................................................ 10
(xxix) Accounting Controls...................................... 10
(xxx) Market Stabilization..................................... 11
(xxxi) Lock-Up Agreements....................................... 11
(xxxii) Affiliate Transactions................................... 11
(xxxiii) Distribution of Prospectus............................... 11
(b) OFFICER'S CERTIFICATES............................................. 11
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Pages(s)
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SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.................... 12
(a) INITIAL SECURITIES............................................ 12
(b) OPTION SECURITIES............................................. 12
(c) PAYMENT....................................................... 12
(d) DENOMINATIONS; REGISTRATION................................... 13
SECTION 3. COVENANTS OF THE COMPANY...................................... 13
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS 13
(b) FILING OF AMENDMENTS.......................................... 13
(c) DELIVERY OF REGISTRATION STATEMENTS........................... 14
(d) DELIVERY OF PROSPECTUSES...................................... 14
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS..................... 14
(f) BLUE SKY QUALIFICATIONS....................................... 15
(g) RULE 158...................................................... 15
(h) USE OF PROCEEDS............................................... 15
(i) LISTING....................................................... 15
(j) RESTRICTION ON SALE OF DEBT SECURITIES........................ 15
(k) RESTRICTION ON SALE OF CERTAIN SECURITIES..................... 15
(l) REPORTING REQUIREMENTS........................................ 16
SECTION 4. PAYMENT OF EXPENSES........................................... 16
(a) EXPENSES...................................................... 16
(b) TERMINATION OF AGREEMENT...................................... 17
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS....................... 17
(a) EFFECTIVENESS OF REGISTRATION STATEMENT....................... 17
(b) OPINION OF COUNSEL FOR COMPANY................................ 17
(c) OPINION OF PATENT COUNSEL FOR COMPANY......................... 17
(d) OPINION OF REGULATORY COUNSEL FOR COMPANY..................... 17
(e) OPINION OF COUNSEL FOR UNDERWRITERS........................... 17
(f) OFFICERS' CERTIFICATE......................................... 18
(g) ACCOUNTANT'S COMFORT LETTER................................... 18
(h) BRING-DOWN COMFORT LETTER..................................... 18
(i) MAINTENANCE OF RATING......................................... 18
(j) APPROVAL OF LISTING........................................... 19
(k) NO OBJECTION.................................................. 19
(l) LOCK-UP AGREEMENTS............................................ 19
(m) CONDITIONS TO PURCHASE OF OPTION SECURITIES................... 19
(i) Officers' Certificate.................................... 19
(ii) Opinion of Counsel for Company........................... 19
(iii) Opinion of Patent Counsel for Company.................... 19
(iv) Opinion of Regulatory Counsel for Company................ 19
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Pages(s)
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(v) Opinion of Counsel for Underwriters...................... 19
(vi) Bring-down Comfort Letter................................ 20
(vii) No Downgrading........................................... 20
(n) ADDITIONAL DOCUMENTS.......................................... 20
(o) TERMINATION OF AGREEMENT...................................... 20
SECTION 6. INDEMNIFICATION............................................... 20
(a) INDEMNIFICATION OF UNDERWRITERS............................... 20
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS............ 21
(c) ACTIONS AGAINST PARTIES; NOTIFICATION......................... 21
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE............ 22
SECTION 7. CONTRIBUTION.................................................. 22
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
24
SECTION 9. TERMINATION OF AGREEMENT...................................... 24
(a) TERMINATION; GENERAL.......................................... 24
(b) LIABILITIES................................................... 24
SECTION 10. NOTICES....................................................... 24
SECTION 11. PARTIES....................................................... 25
SECTION 12. GOVERNING LAW AND TIME........................................ 25
SECTION 13. EFFECT OF HEADINGS............................................ 26
SCHEDULES
Schedule A - List of Underwriters...................................Sch A-1
Schedule B - Pricing Information....................................Sch B-1
Schedule C - List of Persons and Entities Subject to Lock-Up........Sch C-1
EXHIBITS
Exhibit A - Form of Lock-up Letter......................................A-1
Exhibit B - Form of Opinion of Company's Counsel........................B-1
Exhibit C - Form of Opinion of Patent Counsel...........................C-1
Exhibit D - Form of Opinion of Regulatory Counsel.......................D-1
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Draft of July __, 1997
DURA PHARMACEUTICALS, INC.
(a Delaware corporation)
$200,000,000
Convertible Subordinated Notes due 2002
PURCHASE AGREEMENT
July __, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx, Sachs & Co.
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Dura Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
confirms its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated ("Xxxxxxx Xxxxx") and Xxxxxxx, Xxxxx & Co. (collectively, the
"Underwriters"), with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective principal amounts set forth in said Schedule A of $200,000,000
aggregate principal amount of the Company's Convertible Subordinated Notes due
2002 (the "Notes"), and with respect to the grant by the Company to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of an additional $30,000,000
aggregate principal amount of Notes to cover over-allotments, if any. The
aforesaid $200,000,000 aggregate principal amount of Notes (the "Initial
Securities") to be purchased by the Underwriters and all or any part of the
$30,000,000 aggregate principal amount of Notes subject to the option described
in Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities." The Securities are to be issued pursuant to an
indenture, dated as of July __, 1997 (the "Indenture"), between the Company and
Chase Trust Company of California, as trustee (the "Trustee").
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The Securities are convertible into shares of common stock, par value $.001
per share, of the Company (the "Common Stock") in accordance with the terms of
the Securities and the Indenture, at the initial conversion price specified in
Schedule B hereto.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as they deem advisable after this Agreement
has been executed and delivered and the Indenture has been qualified under the
Trust Indenture Act of 1939, as amended (the "1939 Act").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-30851) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b).
The information included in such prospectus or in such Term Sheet, as the case
may be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for
use in connection with the offering of the Securities is herein called the
"Prospectus." If Rule 434 is relied on, the term "Prospectus" shall refer to
the preliminary prospectus, dated July ___, 1997, together with the Term Sheet
and all references in this Agreement to the date of the Prospectus shall mean
the date of the Term Sheet. For purposes of this Agreement, all references to
the Registration Statement, any preliminary prospectus, the Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("XXXXX").
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All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets the
requirements for use of Form S-3 under the 1933 Act. Each of the Registration
Statement and any Rule 462(b) Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are purchased,
at the Date of Delivery), the Registration Statement, the Rule 462(b)
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations"), and did not and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued and at the Closing Time (and, if any Option Securities are purchased, at
the Date of Delivery), included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If Rule 434 is used, the Company will
comply with the requirements of Rule 434. The representations and warranties
in this subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in
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reliance upon and in conformity with information furnished to the Company in
writing by any Underwriter through Xxxxxxx Xxxxx expressly for use in the
Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the Prospectus,
when they became effective or at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and
the rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), as applicable, and, when read together with the other information
in the Prospectus, at the time the Registration Statement became effective, at
the time the Prospectus was issued and at the Closing Time (and if any Option
Securities are purchased, at the Date of Delivery), did not and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act and the
1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The financial statements included in
the Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company (and,
for relevant periods consistent with the Commission's rules and regulations, the
Company's Subsidiaries (as defined in clause (vii) below)) at the dates
indicated and the statements of operations, shareholders' equity and cash flows
of the Company (and, for relevant periods consistent with the Commission's rules
and regulations, each of the Subsidiaries) for the periods specified; except as
otherwise stated in the Registration Statement, said financial statements have
been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated therein.
The selected financial data and the summary financial information included in
the Prospectus present fairly in accordance with GAAP the information shown
therein and have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement. The pro forma
financial
4
statements and the related notes thereto included in the Registration Statement
and the Prospectus present fairly in accordance with GAAP the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein. No other financial statements or schedules are required to be included
in the Registration Statement.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and the Subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any Subsidiary, other than those in the ordinary
course of business, which are material with respect to the Company and its
Subsidiaries considered as one enterprise, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement,
the Indenture and the Notes; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. Dura Delivery Systems, Inc., a
Delaware corporation ("DDSI"), Health Script Pharmacy Services, Inc., a Colorado
corporation ("Health Script"), Healthco Solutions, Inc., a Colorado corporation
("Healthco"), HS Wholesaler, Inc., a Colorado corporation ("HS Wholesaler") and
DCI, Ltd., a corporation organized under the laws of the Cayman Islands ("DCI")
(DDSI, Health Script, Healthco, HS Wholesaler and DCI are hereinafter referred
to as the "Subsidiaries") are the only subsidiaries of the Company. Except for
the Subsidiaries, neither the Company nor any Subsidiary owns any shares of
stock or any other equity securities of any corporation or has any equity
interests in any firm, partnership, association or other entity. Each
Subsidiary has been duly organized and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect; all of the issued and outstanding capital stock of each such
Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned solely by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
5
outstanding shares of capital stock of any Subsidiary was issued in violation of
the preemptive or similar rights of any securityholder of such Subsidiary
arising by operation of law, under the charter or by-laws of such Subsidiary or
under any agreement to which the Company or such Subsidiary is a party.
(viii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectus or incorporated by reference therein or
pursuant to the exercise of convertible securities, warrants or options referred
to in the Prospectus). The shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights of any
securityholder of the Company arising by operation of law, under the charter or
by-laws of the Company or under any agreement to which the Company is a party.
Except as disclosed in the Prospectus or incorporated by reference therein,
there are no outstanding options, warrants or other rights calling for the
issuance of, and no commitments, plans or arrangements to issue, any shares of
capital stock of the Company or any Subsidiary or any security convertible into
or exchangeable for capital stock of the Company or any Subsidiary.
(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) AUTHORIZATION OF THE INDENTURE. The Indenture has been duly
authorized by the Company and duly qualified under the 1939 Act and, when duly
executed and delivered by the Company and the Trustee, will constitute a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xi) AUTHORIZATION OF THE SECURITIES. The Securities have been
duly authorized and, at the Closing Time, will have been duly executed by the
Company and, when authenticated, issued and delivered in the manner provided for
in the Indenture and delivered against payment of the purchase price therefor as
provided in this Agreement, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law), and will be in the form contemplated by, and entitled to the benefits of,
the Indenture.
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(xii) DESCRIPTION OF THE SECURITIES AND THE INDENTURE. The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Prospectus and will be
in substantially the respective forms filed or incorporated by reference, as the
case may be, as exhibits to the Registration Statement.
(xiii) AUTHORIZATION AND DESCRIPTION OF COMMON STOCK. The Common
Stock conforms to all statements relating thereto contained or incorporated by
reference in the Prospectus and such description conforms to the rights set
forth in the instruments defining the same. Upon issuance and delivery of the
Securities in accordance with this Agreement and the Indenture, the Securities
will be convertible at the option of the holder thereof for shares of Common
Stock in accordance with the terms of the Securities and the Indenture; the
shares of Common Stock issuable upon conversion of the Securities have been duly
authorized and reserved for issuance upon such conversion by all necessary
corporate action and such shares, when issued upon such conversion, will be
validly issued and will be fully paid and non-assessable; no holder of such
shares will be subject to personal liability by reason of being such a holder;
and the issuance of such shares upon such conversion will not be subject to the
preemptive or other similar rights of any securityholder of the Company.
(xiv) REGISTRATION OR SIMILAR RIGHTS WAIVED. There are no persons
with registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the Company
under the 1933 Act who have not waived such rights.
(xv) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor
any Subsidiary is in violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Company or
any Subsidiary is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any Subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults that would
not result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Indenture and the Securities and the
consummation of the transactions contemplated herein, therein and in the
Registration Statement (including the issuance and sale of the Securities and
the use of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds" and the issuance of the shares of
Common Stock issuable upon conversion of the Securities) and compliance by the
Company with its obligations hereunder and under the Indenture and the
Securities have been duly authorized by all necessary corporate action and do
not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or any
Subsidiary or any applicable material law, statute, rule,
7
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their assets, properties or operations. As
used herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or any
Subsidiary.
(xvi) COMPLIANCE WITH LAWS. Except as set forth in the
Prospectus, the Company and the Subsidiaries are in compliance in all material
respects with all applicable laws, statutes, ordinances, rules or regulations,
the enforcement of which, individually or in the aggregate, would be reasonably
expected to have a Material Adverse Effect.
(xvii) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any Subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or any Subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xviii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any
Subsidiary, which is required to be disclosed in the Prospectus (other than as
disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of the
transactions contemplated in this Agreement or the performance by the Company of
its obligations hereunder; the aggregate of all pending legal or governmental
proceedings to which the Company or any Subsidiary is a party or of which any of
their respective property or assets is the subject which are not described in
the Prospectus, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xix) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.
(xx) POSSESSION OF INTELLECTUAL PROPERTY. Except as set forth in
the Prospectus, the Company and its Subsidiaries own or possess adequate
licenses or other rights to use the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively, "patent
and proprietary rights") presently employed by them in connection with the
business now operated by them and neither the Company nor any Subsidiary has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any patent and
8
proprietary rights or of any facts or circumstances that would render any patent
and proprietary rights invalid or inadequate to protect the interest of the
Company or the affected Subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect.
(xxi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder, the
issuance of shares of Common Stock upon conversion of Securities or the
consummation of the transactions contemplated by this Agreement or for the due
execution, delivery or performance of the Indenture by the Company, except such
as have been already obtained or as may be required under the 1933 Act or the
1933 Act Regulations or state securities laws and except for the qualification
of the Indenture under the 1939 Act.
(xxii) POSSESSION OF LICENSES AND PERMITS. The Company and its
Subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies material to the
conduct of the business now operated by them; the Company and its Subsidiaries
are in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xxiii) TITLE TO PROPERTY. The Company and its Subsidiaries have
good and marketable title to all material properties owned by the Company and
its Subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described or incorporated by reference in the Prospectus or (b) do not, singly
or in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or the affected Subsidiaries; and all properties held under lease by the
Company or any Subsidiary are held under valid, subsisting and enforceable
leases.
(xxiv) COMPLIANCE WITH CUBA ACT. The Company has complied with,
and is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.
9
(xxv) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxvi) ENVIRONMENTAL LAWS. Except as described in the Prospectus
or except as would not, singly or in the aggregate, result in a Material Adverse
Effect, (A) neither the Company nor any Subsidiary is in material violation of
any federal, state, local or foreign law, rule, regulation, ordinance or any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and
its Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any Subsidiary and (D) to the best of
the Company's knowledge, there are no events or circumstances that could form
the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any Subsidiary relating to Hazardous Materials or any
Environmental Laws.
(xxvii) TAXES. The Company and the Subsidiaries have filed all
federal, state, local and foreign tax returns that are required to be filed or
have duly requested extensions thereof and have paid all taxes required to be
paid by any of them and any related assessments, fines or penalties, except for
any such tax, assessment, fine or penalty that is being contested in good faith
and by appropriate proceedings; and adequate charges, accruals and reserves have
been provided for in the financial statements referred to in Section 1(a)(iv)
above in respect of all federal, state, local and foreign taxes for all periods
as to which the tax liability of the Company or any Subsidiary has not been
finally determined or remains open to examination by applicable taxing
authorities.
(xxviii) INSURANCE. The Company and the Subsidiaries carry or are
entitled to the benefits of insurance in such amounts and covering such risks as
is generally maintained by companies of established repute engaged in the same
or similar business and all such insurance is in full force and effect.
(xxix) ACCOUNTING CONTROLS. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are
10
executed in accordance with management's general and specific authorizations;
(B) transactions are recorded as necessary to permit preparations of financial
statements in conformity with GAAP and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's general
or specific authorizations; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(xxx) MARKET STABILIZATION. The Company and the Subsidiaries have
not (A) taken, directly or indirectly, any action designed to cause or to result
in, or that has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or (B) since the initial filing
of the Registration Statement (1) sold, bid for, purchased, or attempted to
induce any person to bid for or purchase, or paid anyone any compensation for
soliciting purchases of, the Securities, (2) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of the
Company, or (3) engaged, directly or indirectly, in any other transaction in
violation of Regulation M under the 1934 Act.
(xxxi) LOCK-UP AGREEMENTS. The Company has obtained and delivered
to the Underwriters the agreements, in the form of Exhibit A hereto, of the
persons and entities named in Schedule C annexed hereto to the effect that each
such person will not, for a period of 90 days from the date of this Agreement
and except as otherwise provided in their respective agreement, without the
prior written consent of Xxxxxxx Xxxxx, directly or indirectly, offer to sell,
grant any option for the sale of, or otherwise dispose of any shares of Common
Stock or any securities convertible into or exercisable for Common Stock owned
by such person or entity or with respect to which such person has the power of
disposition.
(xxxii) AFFILIATE TRANSACTIONS. No relationship, direct or
indirect, exists between or among any of the Company or any affiliate of the
Company, on the one hand, and any director, officer, shareholder, customer or
supplier of any of them, on the other hand, which is required by the 1933 Act or
by the 1933 Act Regulations to be described in the Registration Statement or the
Prospectus and which is not so described or is not described as required.
(xxxiii) DISTRIBUTION OF PROSPECTUS. The Company has not distributed
and, prior to the later to occur of (A) Closing Time and (B) completion of the
distribution of the Securities, will not distribute any prospectus (as such term
is defined in the 1933 Act and the 1933 Act Regulations) in connection with the
offering and sale of the Securities other than the Registration Statement, any
preliminary prospectus, the Prospectus or other materials, if any, permitted by
the 1933 Act or by the 1933 Act Regulations and approved by the Underwriters.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Company or any of its Subsidiaries delivered to the Underwriters or to counsel
for the Underwriters shall be deemed a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
11
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price set forth in Schedule B, the aggregate principal
amount of Initial Securities set forth in Schedule A opposite the name of such
Underwriter.
(b) OPTION SECURITIES. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional $30,000,000 aggregate principal
amount of Securities at the same price per share set forth in Schedule B for the
Initial Securities, plus accrued interest, if any, from the Closing Date to the
Date of Delivery (as defined below). The option hereby granted will expire 30
days after the date hereof and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Securities upon
notice by the Underwriters to the Company setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Securities. Any
such time and date of delivery (a "Date of Delivery") shall be determined by the
Underwriters, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
Option Securities, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Option Securities then
being purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 000 Xxxx X Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000
or at such other place as shall be agreed upon by the Underwriters and the
Company, at 7:00 A.M. (California time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof, or such other time not later than ten business days after such date
as shall be agreed upon by the Underwriters and the Company (such time and date
of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Underwriters and
the Company, on each Date of Delivery as specified in the notice from the
Underwriters to the Company.
12
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Underwriters of certificates for the Securities to be purchased by them.
Xxxxxxx Xxxxx, individually and not as representative of the Underwriters, may
(but shall not be obligated to) make payment of the purchase price for the
Initial Securities or the Option Securities, if any, to be purchased by any
Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations ($1,000 or
integral multiples thereof) and registered in such names as the Underwriters may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates, which may be
in temporary form, for the Initial Securities and the Option Securities, if any,
will be made available for examination and packaging by the Underwriters in The
City of New York not later than 10:00 A.M. (Eastern time) on the business day
prior to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Underwriters immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) FILING OF AMENDMENTS. The Company will give the Underwriters notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, whether pursuant
to the 1933 Act, the 1934 Act or otherwise, will furnish the Underwriters with
copies of any such documents a reasonable amount of time prior to such
13
proposed filing or use, as the case may be, and will not file or use any such
document to which the Underwriters or counsel for the Underwriters shall object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished or
will deliver to the Underwriters and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Underwriters, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits). The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company will
furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
14
(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities and the shares of
Common Stock issuable upon conversion of Securities for offering and sale under
the applicable securities laws of such states and other jurisdictions as the
Underwriters may designate and to maintain such qualifications in effect for a
period of not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement. The Company
will also supply the Underwriters with such information as is necessary for the
determination of the legality of the Securities for investment under the laws of
such jurisdictions as the Underwriters may reasonably request.
(g) RULE 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds."
(i) LISTING. The Company will use its best efforts to effect and maintain
the quotation of the Securities on the Nasdaq SmallCap Market and the Common
Stock issuable upon conversion thereof on the Nasdaq National Market and will
file with the Nasdaq SmallCap and National Markets all documents and notices
required thereby of companies that have securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq
SmallCap and National Markets.
(j) RESTRICTION ON SALE OF DEBT SECURITIES. During a period of ninety
(90) days from the date of the Prospectus, the Company will not, without the
prior written consent of Xxxxxxx Xxxxx, directly or indirectly, issue, sell,
offer or contract to sell, grant any option for the sale of, or otherwise
transfer or dispose of, any debt securities of the Company.
(k) RESTRICTION ON SALE OF CERTAIN SECURITIES. During a period of ninety
(90) days from the date of the Prospectus, the Company will not, without the
prior written consent of Xxxxxxx Xxxxx, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any share of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
file any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement
15
or any transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of the Common Stock, whether any such swap
or transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Securities to be sold hereunder,
(B) any shares of Common Stock issued by the Company upon the exercise of an
option or warrant or the conversion of a security outstanding on the date hereof
and referred to in the Prospectus or (C) any shares of Common Stock issued or
options to purchase Common Stock granted pursuant to existing employee benefit
plans of the Company referred to in the Prospectus.
(l) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities or the issuance or delivery of the Common
Stock issuable upon conversion thereof, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters and the
certificates for the Common Stock issuable upon conversion thereof, (iv) the
fees and disbursements of the Company's counsel, accountants and other advisors,
(v) the qualification of the Securities and the Common Stock under securities
laws in accordance with the provisions of Section 3(f) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Underwriters
in connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of the Trustee, including
the fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities, (ix) the fees and expenses of any transfer agent
or registrar for the Common Stock, (x) any fees payable in connection with the
rating of the Securities, (xi) the filing fees incident to, and the reasonable
fees and disbursements of counsel to the Underwriters in connection with, the
review by the National Association of Securities Dealers, Inc. (the "NASD") of
the terms of the sale of the Securities and (xii) the fees and expenses incurred
in connection with the inclusion of the Securities in the Nasdaq SmallCap Market
and the Common Stock issuable upon conversion thereof in the Nasdaq National
Market.
16
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any Subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the Underwriters
shall have received the favorable opinions, dated as of Closing Time, of
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Company, and, to the extent
provided in Exhibit B hereto, Xxxxxxxx X. Xxxxxxxx, General Counsel of the
Company, in form and substance satisfactory to counsel for the Underwriters, to
the effect set forth in Exhibit B hereto.
(c) OPINION OF PATENT COUNSEL FOR COMPANY. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of Lyon & Lyon LLP (solely with respect to patents concerning the Xxxxxx
product), counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, to the effect set forth in Exhibit C hereto.
(d) OPINION OF REGULATORY COUNSEL FOR COMPANY. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of Kleinfeld, Xxxxxx and Xxxxxx, regulatory counsel for the Company, in
form and substance satisfactory to counsel for the Underwriters, to the effect
set forth in Exhibit D hereto.
(e) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the Underwriters,
with respect to such matters as the Underwriters may reasonably request. In
giving such opinion such counsel may rely, as to all matters governed by
17
the laws of jurisdictions other than the law of the States of New York and
California and the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to the
Underwriters. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied upon certificates of officers and
other representatives of the Company and its Subsidiaries and certificates of
public officials.
(f) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Underwriters shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
(g) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Underwriters shall have received from Deloitte & Touche LLP a
letter dated such date, in form and substance satisfactory to the Underwriters,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(h) BRING-DOWN COMFORT LETTER. At Closing Time, the Underwriters shall
have received from Deloitte & Touche LLP a letter, dated as of Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (g) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.
(i) MAINTENANCE OF RATING. At Closing Time, the Securities shall be rated
at least "B-1" by Moody's Investor's Service Inc. and "B" by Standard & Poor's
Ratings Group, a division of XxXxxx-Xxxx, Inc., and the Company shall have
delivered to the Underwriters a letter dated the Closing Time, from each such
rating agency, or other evidence satisfactory to the Underwriters, confirming
that the Securities have such ratings; and since the date of this Agreement,
there shall not have occurred a downgrading in the rating assigned to the
Securities or any of the Company's other debt securities by any "nationally
recognized statistical rating agency," as that term is defined by the Commission
for purposes of Rule 436(g)(2) under the 1933 Act, and no such organization
shall have publicly announced that it has under surveillance or review its
rating of the Securities or any of the Company's other debt securities.
18
(j) APPROVAL OF LISTING. At Closing Time, the Securities and the Common
Stock issuable on conversion thereof shall have been approved for inclusion in
the Nasdaq SmallCap and National Markets, respectively, subject only to official
notice of issuance.
(k) NO OBJECTION. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(l) LOCK-UP AGREEMENTS. At the date of this Agreement, the Underwriters
shall have received an agreement substantially in the form of Exhibit A hereto
signed by the persons listed on Schedule C hereto.
(m) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company or any Subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Underwriters shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(f) hereof
remains true and correct as of such Date of Delivery.
(ii) OPINION OF COUNSEL FOR COMPANY. The favorable opinion of
Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(b) hereof.
(iii) OPINION OF PATENT COUNSEL FOR COMPANY. The favorable
opinion of Lyon & Lyon LLP, patent counsel for the Company, dated such Date of
Delivery, to the same effect as the opinion required by Section 5(c) hereof.
(iv) OPINION OF REGULATORY COUNSEL FOR COMPANY. The favorable
opinion of Kleinfeld, Xxxxxx and Xxxxxx, regulatory counsel for the Company,
dated such Date of Delivery, to the same effect as the opinion required by
Section 5(d) hereof.
(v) OPINION OF COUNSEL FOR UNDERWRITERS. The favorable opinion
of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required by
Section 5(e) hereof.
19
(vi) BRING-DOWN COMFORT LETTER. A letter from Deloitte & Touche
LLP, in form and substance satisfactory to the Underwriters and dated such Date
of Delivery, substantially in the same form and substance as the letter
furnished to the Underwriters pursuant to Section 5(h) hereof, except that the
"specified date" in the letter furnished pursuant to this paragraph shall be a
date not more than five days prior to such Date of Delivery.
(vii) NO DOWNGRADING. Subsequent to the date of this Agreement,
no downgrading shall have occurred in the rating accorded the Securities or of
any of the Company's other securities by any "nationally recognized statistical
rating organization," as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the 1933 Act, and no such organization shall have publicly
announced that it has under surveillance or review its ratings of any of the
Company's securities.
(n) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance to
the Underwriters and counsel for the Underwriters.
(o) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Underwriters by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or the
Prospectus (or any amendment or
20
supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through Xxxxxxx
Xxxxx expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from
21
any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
22
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations
23
to contribute pursuant to this Section 7 are several in proportion to the
principal amount of Initial Securities set forth opposite their respective names
in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
Subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Underwriters may terminate this Agreement,
by notice to the Company, at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Underwriters, impracticable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Company has been suspended or materially
limited by the Commission or the Nasdaq National Market, or if trading generally
on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal or New York or California authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to them at:
24
c/o Merrill Xxxxx & Co.
World Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Xx.
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
Notices to the Company shall be directed to it at:
Dura Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxxx X. Xxxxxxxx
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
000 Xxxx "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
SECTION 11. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
25
SECTION 13. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
26
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
DURA PHARMACEUTICALS, INC.
By: ----------------------------------------------
Cam X. Xxxxxx
Chairman, President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXX, SACHS & CO.
By: XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED
By:----------------------------------------------
Authorized Signatory
27
SCHEDULE A
Principal
Amount of
Name of Underwriter Securities
------------------- ----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated . . . . . . . . . . . .
Xxxxxxx, Sachs & Co. . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . $200,000,000
Sch A - 1
SCHEDULE B
DURA PHARMACEUTICALS, INC.
$200,000,000 Convertible Subordinated Notes due 2002
1. The initial public offering price of the Securities shall be __% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Underwriters for the Initial
Securities shall be __% of the principal amount thereof.
3. The interest rate on the Securities shall be __% per annum.
4. The Securities shall be convertible into shares of common stock, par
value $.001 per share, of the Company at an initial conversion price of $____
per share (equivalent to a conversion rate of ____ shares per $1,000 principal
amount of Securities).
5. The Securities may be redeemed at the option of the Company at any
time after August __, 2000, in whole or from time to time in part, upon not less
than 15 nor more than 60 days' notice given to the Holders. The redemption
prices (including accrued and unpaid interest up to but not including the date
of redemption), expressed as a percentage of the principal amount, for the 12-
month periods beginning August __, 2000 and August __, 2001 are ___% and ___%,
respectively.
Sch B - 1
SCHEDULE C
List of Persons and Entities
Subject to Lock-Up
NAME OF HOLDER SHARES
All directors and officers of the Company All shares of Common Stock
beneficially owned by each
such person
Sch C - 1
FORM OF LOCK-UP PURSUANT TO SECTION 5(l)
EXHIBIT A
July ___, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
Xxxxxxx, Sachs & Co.
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: PROPOSED PUBLIC OFFERING BY DURA PHARMACEUTICALS, INC,
Ladies and Gentlemen:
The undersigned, a shareholder and/or officer and/or director of Dura
Pharmaceuticals, Inc, a Delaware corporation (the "Company"), understands that
Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("Xxxxxxx Xxxxx") and Xxxxxxx, Xxxxx & Co. ("Xxxxxxx, Sachs") propose to enter
into a Purchase Agreement (the "Purchase Agreement") with the Company providing
for the public offering of convertible notes (the "Securities") of the Company
and related Pricing Agreement (the "Pricing Agreement"), which will set forth,
among other things, the public offering price of the Securities. In recognition
of the benefit that such an offering will confer upon the undersigned as a
shareholder and/or officer and/or director of the Company, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
Purchase Agreement that, during a period of ninety (90) days from the date of
the Purchase Agreement, the undersigned will not, without the prior written
consent of Xxxxxxx Xxxxx, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of or transfer, any shares of the
Company's Common Stock, par value $.001 per share (the "Common Stock"), or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now
A-1
owned or hereafter acquired by the undersigned, or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file,
participate in, or request the filing of any registration statement under the
Securities Act of 1933, as amended, with respect to any of the foregoing.
Very truly yours,
Signature:
Print Name:
A-2
EXHIBIT B
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has full corporate power and authority to own or
lease its properties and conduct its business as described in the Registration
Statement and Prospectus and to enter into and perform its obligations under the
Purchase Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect (which
opinion may be given by the General Counsel of the Company).
(iv) The authorized capital stock of the Company conforms as to legal
matters in all material respects to the description thereof contained in the
Registration Statement and Prospectus. The outstanding shares of capital stock
of the Company have been duly and validly authorized and issued, are, to our
knowledge, fully paid and non-assessable, and are not subject to any preemptive
rights (the opinion called for by the last sentence of this paragraph (iv) may
be given by the General Counsel of the Company).
(v) To our knowledge, the Subsidiaries are the Company's sole
subsidiaries. Each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and, to the best of our
knowledge and information, is owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; the
Company, through its ownership of the stock of each Subsidiary is not subject to
liability by reason of being such a holder; and none of the shares of any
Subsidiary was issued in violation of the preemptive rights of any stockholder
or warrantholder of such Subsidiary (the opinion called for by the last sentence
of this paragraph (v) may be given by the General Counsel of the Company).
B-1
(vi) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(vii) The Indenture has been duly authorized, executed and delivered by
the Company and (assuming the due authorization, execution and delivery thereof
by the Trustee) constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(viii) The Securities are in the form contemplated by the Indenture,
have been duly authorized by the Company and, assuming that the Securities have
been duly authenticated by the Trustee in the manner described in its
certificate delivered to you today (which fact such counsel need not determine
by an inspection of the Securities), the Securities have been duly executed,
issued and delivered by the Company and constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and will be entitled to the benefits of the
Indenture.
(ix) Upon issuance and delivery of the Securities in accordance with
the Purchase Agreement and the Indenture, the Securities shall be convertible at
the option of the holder thereof for shares of Common Stock in accordance with
the terms of the Securities and the Indenture; the shares of Common Stock
issuable upon conversion of the Securities have been duly authorized and
reserved for issuance upon such conversion by all necessary corporate action;
such shares, when issued upon such conversion, will be validly issued and will
be fully paid and non-assessable and no holder of such Common Stock is or will
be subject to personal liability by reason of being such a holder.
(x) The issuance of the shares of Common Stock upon conversion of the
Securities is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(xi) Except as disclosed in or specifically contemplated by the
Registration Statement and Prospectus, there are no options, warrants,
conversion privileges, preemptive rights or other rights presently outstanding
calling for the issuance of, or to purchase from the Company, any of the
authorized but unissued capital stock of the Company. The outstanding stock
options relating to the Company's Common Stock have been duly authorized and
validly issued and the description thereof contained in the Prospectus is
accurate in all material respects (the opinion called for by this paragraph (xi)
may be given by the General Counsel of the Company).
B-2
(xii) The Indenture has been duly qualified under the 0000 Xxx.
(xiii) The Securities and the Indenture conform as to legal matters in
all material respects to the descriptions thereof contained in the Prospectus.
(xiv) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; and, to
our knowledge, no stop order proceedings suspending the effectiveness of the
Registration Statement have been instituted or threatened or are pending under
the 1933 Act.
(xv) The form of certificate used to evidence the Common Stock is in
due and proper legal form.
(xvi) To our knowledge, there is no legal or governmental proceeding
pending or threatened to which the Company is or may become a party or to which
any of the properties of the Company is or may become subject that is required
to be described in the Registration Statement or the Prospectus and is not so
described, or of any statute or regulation that is required to be described in
the Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described or filed as required.
(xvii) The statements in the Prospectus under the caption "Description
of Capital Stock," to the extent that such statements constitute a summary of
documents referred to therein or matters of law, have been prepared by or
reviewed by us and are correct in all material respects.
(xviii) All descriptions in the Prospectus of agreements and other
instruments to which the Company or its Subsidiaries are a party are accurate in
all material respects. To our knowledge, no breach or default exists under any
agreement or instrument to which the Company or any Subsidiary is a party and
which is filed as an Exhibit to the Registration Statement or incorporated by
reference therein (the opinion called for by the last sentence of this paragraph
(xviii) may be given by the General Counsel of the Company).
(xix) Neither the Company nor any Subsidiary is in violation of its
charter or by-laws; to the best of our knowledge, the Company and its
Subsidiaries are in compliance with all laws, rules, regulations, judgments,
decrees, orders and statutes in the jurisdictions in which they are conducting
their business, except where the failure to so comply would not have a Material
Adverse Effect (which opinion may be given by the General Counsel of the
Company).
(xx) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Purchase Agreement, the Indenture
and the Securities will not contravene any provision of applicable law or the
articles of incorporation or bylaws of the Company, or, to our knowledge, any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any of its property, or, to our knowledge,
constitute a breach of or default or Repayment Event (as defined in Section
1(a)(xv) of the Purchase Agreement) under any agreement or other instrument
filed as an exhibit to the
B-3
Registration Statement or incorporated by reference therein to which the Company
is a party, and no consent, approval, authorization or order of or qualification
with any governmental body or agency is required for the due authorization,
execution and delivery of the Purchase Agreement or the due execution, delivery
or performance of the Indenture by the Company or for the offering, issuance,
sale or delivery of the Securities and the issuance of shares of Common Stock
upon conversion of Securities, except such as may be required by the securities
or blue sky laws of the various states (on which we need express no opinion) in
connection with the purchase and distribution of the Securities by the
Underwriters.
(xxi) To our knowledge, no holders of securities of the Company have
rights against the Company which have not been waived to the registration of
shares of Common Stock or other securities, because of the filing of the
Registration Statement by the Company or the offering contemplated thereby.
(xxii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
In addition to the foregoing, (i) the documents incorporated by reference
in the Prospectus (other than the financial statements and supporting schedules
included therein or omitted therefrom, as to which we need express no opinion),
when they became effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the requirements of the
1933 Act or the 1934 Act, as applicable, and the rules and regulations of the
Commission thereunder; and (ii) the Registration Statement, the Prospectus, and
each amendment or supplement to the Registration Statement and Prospectus, as of
their respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom, and the
Trustee's Statement of Eligibility on Form T-1 (the "Form T-1"), as to which we
need express no opinion) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations. Nothing has come to
our attention that would lead us to believe that the Registration Statement or
the Prospectus (except for financial statements and schedules and other
financial data included or incorporated by reference therein or omitted
therefrom and the Form T-1, as to which we need make no statement), at the time
the Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus (except for financial statements and schedules and other financial
data included or incorporated by reference therein or omitted therefrom and the
Form T-1, as to which we need make no statement), at the time the Prospectus was
issued, or at the Closing Time, included or includes 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.
In rendering such opinion, such counsel may rely (A) upon the opinions of
Lyon & Lyon LLP and Kleinfeld, Xxxxxx & Xxxxxx and Xxxxxxxx X. Xxxxxxxx, Esq.
with respect to the matters opined upon by each, and (B), as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
B-4
Such opinion shall not state that it is to be governed or qualified by, or that
it is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
B-5
EXHIBIT C
FORM OF OPINION OF COMPANY'S PATENT COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(c)
(i) The Company owns or possesses licenses to patents which are
directed to the Xxxxxx and to certain uses of the Xxxxxx. With regard to the
business presently and as proposed to be conducted by the Company relating to
the Xxxxxx as described in the Registration Statement and the Prospectus, and,
except as described therein, we have not received any notice of infringement of
or conflict with, and does not otherwise know of any basis for notice of any
such infringement of or conflict with, asserted rights of others with respect to
any patents, trademarks, service marks, trade names, copyrights, technology or
know-how.
(ii) To the extent that the statements relating to the Xxxxxx product
contained in the Prospectus under the subheadings "Risk Factors--Patents and
Proprietary Rights" and the first paragraph of "Business--Patents and
Proprietary Rights" refer to opinions of counsel or matters of law, patents or
patent applications or purport to summarize the status of litigation or the
provisions of statutes, regulations, contracts, agreements or other documents,
such statements (A) have been prepared or reviewed by us and accurately reflect
the status of any such patents or patent applications, litigation, the
provisions purported to be summarized and any of our opinions and (B) do not
contain any untrue statements of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
C - 1
EXHIBIT D
FORM OF OPINION OF COMPANY'S REGULATORY COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(d)
(i) We represent the Company in certain matters relating to
regulatory compliance under the Federal Food, Drug and Cosmetic Act and the
obtaining of federal regulatory approvals with respect to the development,
testing, manufacturing, safety, labeling, storage, record keeping or marketing
of the company's products.
(ii) We have read the portion of the Registration Statement and the
Prospectus entitled "Risk Factors-Government Regulation; No Assurance of FDA
Approval"; "Business-Government Regulation" and such other portions which
reference federal food and drug regulatory matters as shall have been agreed
upon between us and counsel for the Underwriters (the "Regulatory Portion").
(iii) While we have not conducted an audit of the Company and are
relying as to matters of fact on the accuracy of the Prospectus, and subject to
the description of the status of the Company's products in the section of the
Prospectus entitled "Business--Government Regulation," we have no reason to
believe that the Company's current business is not being conducted in material
compliance with currently applicable requirements under the Federal Food, Drug
and Cosmetic Act or that the U.S. Food and Drug Administration (the "FDA") is
currently considering taking action that would result in withdrawal from
marketing of any of the Company's currently marketed products.
(iv) We have no reason to believe that the information contained in
the Regulatory Portion of the Registration Statement or the Prospectus at the
time they became effective contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that, at Closing Time, the
information contained in the Regulatory Portion of the Prospectus or any
amendment or supplement to the Regulatory Portion of the Prospectus contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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