DURA PHARMACEUTICALS, INC.
(a Delaware corporation)
Convertible Subordinated Notes due 2002
PURCHASE AGREEMENT
Dated: July 24, 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........ 6
(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
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Pages(s)
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(iv) OPINION OF REGULATORY COUNSEL FOR COMPANY.............. 19
(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
(p) CONSENT OF BANK OF AMERICA................................... 20
SECTION 6. INDEMNIFICATION.............................................. 20
(a) INDEMNIFICATION OF UNDERWRITERS.............................. 20
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS........... 21
(c) ACTIONS AGAINST PARTIES; NOTIFICATION........................ 22
(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...................................................... 25
SECTION 11. PARTIES...................................................... 25
SECTION 12. GOVERNING LAW AND TIME....................................... 26
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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DURA PHARMACEUTICALS, INC.
(a Delaware corporation)
$250,000,000
Convertible Subordinated Notes due 2002
PURCHASE AGREEMENT
July 24, 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
$250,000,000 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 $37,500,000 aggregate principal amount of Notes to cover
over-allotments, if any. The aforesaid $250,000,000 aggregate principal
amount of Notes (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the $37,500,000 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
30, 1997 (the "Indenture"), between the Company and Chase Trust Company of
California, as trustee (the "Trustee").
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.
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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 15,
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").
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
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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 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
3
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 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.
4
(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 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
5
"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.
(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
6
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, 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.
7
(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 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.
8
(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.
(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").
9
(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 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.
10
(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.
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
11
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 $37,500,000
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.
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.
12
(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 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
13
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.
(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
14
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 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
15
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.
(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
16
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 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
17
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.
(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.
18
(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.
(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
19
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.
(p) CONSENT OF BANK OF AMERICA. The Company shall have received from
the Bank of America National Trust & Savings Association (the "Bank"), in
connection with that certain Business Loan Agreement, dated April 14, 1997,
between the Company and the Bank (the "Loan Agreement"), a consent to the
sale of the Securities, or shall have provided evidence to the Underwriters
of termination of the Loan Agreement, in either case, in form and substance
reasonably satisfactory to the Underwriters and their counsel.
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 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;
20
(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 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
21
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.
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
22
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 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
23
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:
x/x Xxxxxxx Xxxxx & Xx.
Xxxxx Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Xx.
with a copy to:
24
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.
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.
25
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: /s/ CAM X. XXXXXX
--------------------------------
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: /s/ XXXXX X. XXXXXXX
--------------------------------
Authorized Signatory
SCHEDULE A
Principal
Amount of
Name of Underwriter Securities
------------------- ----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated....................................... $ 150,000,000
Xxxxxxx, Sachs & Co.......................................... 100,000,000
Total........................................................ $ 250,000,000
-------------
-------------
Sch A - 1
SCHEDULE B
DURA PHARMACEUTICALS, INC.
$250,000,000 Convertible Subordinated Notes due 2002
1. The initial public offering price of the Securities shall be 100% 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 97% of the principal amount thereof.
3. The interest rate on the Securities shall be 3 1/2% 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
$50.635 per share.
5. The Securities may be redeemed at the option of the Company at any
time after July 15, 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 July 15, 2000 and July 15, 2001
are 101.40% and 100.70%, 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
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agreement or other instrument filed as an exhibit to the 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.
Such
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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).
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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.
(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.
D-1
