NOTE PURCHASE AGREEMENT dated February 21, 2008 among AZITHROMYCIN ROYALTY SUB LLC, INSITE VISION INCORPORATED and THE PURCHASER NAMED HEREIN $60,000,000 AZITHROMYCIN PHARMASM SECURED 16% NOTES DUE 2019
Exhibit
10.2
dated
February 21, 2008
among
AZITHROMYCIN
ROYALTY SUB LLC,
INSITE
VISION INCORPORATED
and
THE
PURCHASER NAMED HEREIN
$60,000,000
AZITHROMYCIN PHARMASM
SECURED 16% NOTES DUE 2019
Table
of
Contents
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Page
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ARTICLE
I
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||
|
INTRODUCTORY
|
||
|
Section
1.1
|
Introductory
|
1
|
|
ARTICLE
II
|
||
|
RULES
OF CONSTRUCTION AND DEFINED TERMS
|
||
|
Section
2.1
|
Rules
of Construction and Defined Terms
|
1
|
|
ARTICLE
III
|
||
|
SALE
AND PURCHASE OF ORIGINAL CLASS A NOTES; CLOSING
|
||
|
Section
3.1
|
Sale
and Purchase of Original Class A Notes; Closing
|
2
|
|
ARTICLE
IV
|
||
|
REPRESENTATIONS,
WARRANTIES AND AGREEMENTS OF PURCHASER
|
||
|
Section
4.1
|
Purchase
for Investment and Restrictions on Resales
|
3
|
|
Section
4.2
|
Purchaser
Status
|
4
|
|
Section
4.3
|
Source
of Funds
|
4
|
|
Section
4.4
|
Due
Diligence
|
5
|
|
Section
4.5
|
Enforceability
of this Note Purchase Agreement
|
5
|
|
Section
4.6
|
Inspire
and Pfizer
|
5
|
|
Section
4.7
|
Confidentiality
Agreement
|
6
|
|
Section
4.8
|
Tax
Matters.
|
6
|
|
ARTICLE
V
|
||
|
REPRESENTATIONS
AND WARRANTIES OF THE ISSUER AND THE PARENT
|
||
|
Section
5.1
|
Disclosure
|
7
|
|
Section
5.2
|
Enforceability
of this Note Purchase Agreement
|
7
|
|
Section
5.3
|
Securities
Laws.
|
7
|
|
Section
5.4
|
Investment
Company Act
|
8
|
|
Section
5.5
|
Governmental
Authorizations
|
8
|
|
Section
5.6
|
Compliance
with ERISA
|
8
|
|
Section
5.7
|
Use
of Proceeds; Margin Regulations
|
8
|
|
Section
5.8
|
Independent
Consultant’s Forecasts
|
9
|
|
Section
5.9
|
Other
Representations and Warranties
|
9
|
i
|
ARTICLE
VI
|
||
|
CONDITIONS
TO CLOSING
|
||
|
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|
Section
6.1
|
Proceedings
|
9
|
|
Section
6.2
|
Transactional
Opinion
|
9
|
|
Section
6.3
|
True
Sale and Non-Consolidation Opinions
|
9
|
|
Section
6.4
|
Note
Purchaser’s Counsel Opinion
|
9
|
|
Section
6.5
|
Consummation
of Transactions
|
10
|
|
Section
6.6
|
Certification
as to Private Placement Memorandum
|
10
|
|
Section
6.7
|
Certification
as to Note Purchase Agreement
|
10
|
|
Section
6.8
|
No
Actions
|
10
|
|
Section
6.9
|
Principal
Documents
|
10
|
|
Section
6.10
|
Authorizations
|
11
|
|
Section
6.11
|
Offering
of Original Class A Notes
|
11
|
|
Section
6.12
|
CUSIP
Number
|
11
|
|
Section
6.13
|
Notice
and Instruction to Inspire
|
11
|
|
Section
6.14
|
Compliance
with Laws
|
11
|
|
Section
6.15
|
Filing
of Financing Statements
|
12
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|
ARTICLE
VII
|
||
|
ADDITIONAL
COVENANTS
|
||
|
Section
7.1
|
DTC
|
12
|
|
Section
7.2
|
Expenses
|
12
|
|
ARTICLE
VIII
|
||
|
SURVIVAL
OF CERTAIN PROVISIONS
|
||
|
Section
8.1
|
Survival
of Certain Provisions
|
12
|
|
ARTICLE
IX
|
||
|
NOTICES
|
||
|
Section
9.1
|
Notices
|
13
|
|
ARTICLE
X
|
||
|
SUCCESSORS
AND ASSIGNS
|
||
|
Section
10.1
|
Successors
and Assigns
|
13
|
|
ARTICLE
XI
|
||
|
SEVERABILITY
|
||
|
Section
11.1
|
Severability
|
13
|
ii
|
ARTICLE
XII
|
||
|
WAIVER
OF JURY TRIAL
|
||
|
Section
12.1
|
WAIVER
OF JURY TRIAL
|
13
|
|
ARTICLE
XIII
|
||
|
GOVERNING
LAW; CONSENT TO JURISDICTION
|
||
|
Section
13.1
|
Governing
Law; Consent to Jurisdiction.
|
14
|
|
ARTICLE
XIV
|
||
|
COUNTERPARTS
|
||
|
Section
14.1
|
Counterparts
|
15
|
|
ARTICLE
XV
|
||
|
TABLE
OF CONTENTS AND HEADINGS
|
||
|
Section
15.1
|
Table
of Contents and Headings
|
15
|
|
ARTICLE
XVI
|
||
|
TAX
DISCLOSURE
|
||
|
Section
16.1
|
Tax
Disclosure
|
15
|
|
ARTICLE
XVII
|
||
|
MISCELLANEOUS
|
||
|
Section
17.1
|
Limited
Recourse
|
16
|
|
Annex
A
|
Rules
of Construction and Defined Terms
|
|
|
Schedule
1
|
Purchaser
|
|
iii
February
21, 2008
To
the
Purchaser named in Schedule
1
Ladies
and Gentlemen:
Azithromycin
Royalty Sub LLC, a Delaware limited liability company, and InSite Vision
Incorporated, a Delaware corporation, hereby covenant and agree with you as
follows:
ARTICLE
I
INTRODUCTORY
Section
1.1 Introductory.
The
Issuer
proposes, subject to the terms and conditions stated herein, to issue and sell
to the purchaser named in Schedule
1
(the
“Purchaser”)
and to
the Other Note Purchasers the beneficial interests in the Global Notes
evidencing $60,000,000 aggregate principal amount of the
Issuer’s Azithromycin PhaRMASM
Secured
16% Notes due 2019. The Original Class A Notes are to be issued pursuant to
the
Indenture.
The
Original Class A Notes will be offered and sold to the Purchaser and the Other
Note Purchasers (collectively, the “Note
Purchasers”)
in
transactions exempt from the registration requirements of the Securities Act.
The Issuer
has
prepared the Private Placement Memorandum describing, among other things, the
Original Class A Notes and the security pledged therefor, the Parent’s sale,
transfer, conveyance, assignment, contribution and granting to the Issuer
of the
Purchased Assets and the Parent’s grant of the license under the Residual
License Agreement.
As
described in the Private Placement Memorandum, the Issuer
will use
the net proceeds from the offering of the Original Class A Notes to fund a
portion of the purchase price to obtain the Purchased Assets, to pay the
expenses associated with the issuance of the Original Class A Notes and to
fund
the Interest Reserve Account in the amount of $5,000,000.
ARTICLE
II
RULES
OF CONSTRUCTION AND DEFINED TERMS
Section
2.1 Rules
of Construction and Defined Terms.
The
rules
of construction set forth in Annex
A
shall
apply to this Note Purchase Agreement and are hereby incorporated by reference
into this Note Purchase Agreement as if set forth fully in this Note Purchase
Agreement. Capitalized terms used but not otherwise defined in this Note
Purchase Agreement shall have the respective meanings given to such terms in
Annex
A,
which
is hereby incorporated by reference into this Note Purchase Agreement as if
set
forth fully in this Note Purchase Agreement. Not
all
terms defined in Annex
A
are used
in this Note Purchase Agreement.
1
ARTICLE
III
SALE
AND PURCHASE OF ORIGINAL CLASS A NOTES; CLOSING
Section
3.1 Sale
and Purchase of Original Class A Notes; Closing.
On the
basis of the representations and warranties contained in, and subject to the
terms and conditions of, this Note Purchase Agreement, the Issuer agrees to
issue and sell the Original Class A Notes to the Purchaser, and the Purchaser
agrees to purchase, the principal amount of Original Class A Notes set forth
opposite its name on Schedule
1.
The
Purchaser will purchase such principal amount of Original Class A Notes at
a
purchase price equal to 100% of the principal amount thereof (the “Price”).
Contemporaneously with entering into this Note Purchase Agreement, the Issuer
is
entering into separate Note Purchase Agreements (the “Other
Agreements”)
substantially identical to this Note Purchase Agreement with other note
purchasers (the “Other
Note Purchasers”),
providing for the sale on the Closing Date to each of the Other Note Purchasers
of Original Class A Notes in the principal amount specified opposite its name
in
Schedule
1
to such
Other Agreement, at a purchase price equal to 100% of the principal amount
thereof (the “Other
Prices”
and,
together with the Price, the “Purchase
Price”).
The
Issuer shall not be obligated to deliver, and no Note Purchaser shall be
required to purchase, any of the Original Class A Notes except upon delivery
of
and payment for all the Original Class A Notes to be purchased on the Closing
Date.
On
the
Closing Date, the Issuer will deliver one or more Global Notes for the account
of DTC evidencing the aggregate principal amount of Original Class A Notes
to be
acquired by all Note Purchasers pursuant to the Note Purchase Agreements. The
Issuer will deliver the Global Notes to DTC against payment by each such Note
Purchaser of its respective portion of the aggregate Purchase Price for its
beneficial interest therein by wire transfer of immediately available funds
to
the Trustee Closing Account. Delivery to each Note Purchaser of the Original
Class A Notes shall be made through the facilities of DTC on the Closing Date,
upon payment therefor by each such Note Purchaser of its respective portion
of
the aggregate Purchase Price by wire transfer of immediately available funds
to the
Trustee Closing Account. The Issuer and the Parent shall cause the Trustee
to
hold all such funds in trust for the Note Purchasers pending completion of
the
closing of the transactions contemplated by this Note Purchase Agreement. Upon
receipt by the Trustee of the aggregate Purchase Price from all Note Purchasers
and the satisfaction of the conditions to closing set forth in Article VI,
the
Issuer and the Parent shall cause the Trustee to disburse the Purchase Price
in
accordance with Section 3.3 of the Indenture. If the aggregate Purchase Price
shall not have been received by the Trustee by 3:30 p.m. (New York City time)
on
the Closing Date, or if the closing of the transactions contemplated by the
Note
Purchase Agreements shall not otherwise be capable of being consummated by
3:30
p.m. (New York City time) on the Closing Date, then each Note Purchaser who
has
paid its respective portion of the Purchase Price shall have the right to
instruct the Trustee at or after 3:30 p.m. (New York City time) on the Closing
Date to return, and the Issuer and the Parent shall cause the Trustee to return,
such portion of the Purchase Price to such Note Purchaser prior to the close
of
business on the Closing Date or as soon thereafter as reasonably
practicable.
If
the
Global
Notes shall not be tendered for the benefit of any Note Purchaser for the
account of DTC in accordance with the foregoing provisions of this Section
3.1,
or any of the conditions specified in Article VI shall not have been fulfilled
to the satisfaction of any Note Purchaser, such Note Purchaser shall, at its
election, be relieved of all obligations (other than confidentiality
obligations) under the applicable Note Purchase Agreement.
2
ARTICLE
IV
REPRESENTATIONS,
WARRANTIES AND AGREEMENTS OF PURCHASER
The
Purchaser agrees and acknowledges that the Issuer, the Parent and the Placement
Agent and their respective counsel may rely upon the accuracy and performance
of
the representations, warranties and agreements of the Purchaser contained in
this Article IV.
Section
4.1 Purchase
for Investment and Restrictions on Resales.
The
Purchaser:
(a) acknowledges
that the Original Class A Notes have not been and will not be registered under
the Securities Act or the securities laws of any U.S. state or any other
jurisdiction and may not be offered, sold, pledged or otherwise transferred
except as set forth in the Private Placement Memorandum, the Indenture and
the
legend regarding transfers on its Original Class A Notes, in compliance with
such securities laws;
(b) agrees
that, if it should resell or otherwise transfer the Original Class A Notes,
in
whole or in part, it will do so only pursuant to an exemption from, or in a
transaction not subject to, registration under the Securities Act, applicable
state or foreign securities laws, the respective rules and regulations
promulgated thereunder and the provisions of this Note Purchase Agreement,
and
only
to a Person whom it reasonably believes, at the time any buy order for such
Original Class A Notes is originated, is
(i) the
Issuer or a subsidiary thereof, (ii) for so long as such Original Class A Notes
are eligible for resale pursuant to Rule 144A, a QIB that purchases for its
own
account or for the account of a QIB, to whom notice is given that the transfer
is being made in reliance on Rule 144A, (iii) an Institutional Accredited
Investor inside the United States, in respect of which the Purchaser shall
reasonably believe that at such time such entity and each other entity, if
any,
for whom such entity may be acting with respect to the Original Class A Notes
has sufficient knowledge and experience in financial and business matters to
be
capable of evaluating the merits and risks of the purchase of the Original
Class
A Notes and is able and prepared to bear the economic risk of investing in
and
holding the Original Class A Notes, that is purchasing such Original Class
A
Notes for its own account or for the account of such an Institutional Accredited
Investor for investment purposes and not with a view to, or for offer or sale
in
connection with, any distribution in violation of the Securities Act or (iv)
an
Institutional Accredited Investor outside the United States in an offshore
transaction in compliance with Rule 903 or 904 of Regulation S (if available),
in each case unless consented to by the Issuer and such offer, sale or other
transfer occurs following the Resale Restriction Termination Date;
(c) agrees
that it will give to each Person to whom it transfers the Original Class A
Notes, in whole or in part, notice of the restrictions on transfer of the
Original Class A Notes;
(d) agrees
that it will cause any Person to whom it intends to transfer the Original Class
A Notes to execute and deliver a resale confidentiality agreement with the
Issuer substantially in the form attached to the Indenture and agrees not to
make available any confidential information about the Issuer, the Parent,
Inspire or Subject Products, including the Private Placement Memorandum, to
such
Person, and the Purchaser otherwise agrees to comply with the procedures
relating to the execution and delivery of such resale confidentiality agreement
set forth in the Indenture;
3
(e) acknowledges
the restrictions and requirements applicable to transfers of the Original Class
A Notes described under the heading “Transfer Restrictions” in the Private
Placement Memorandum and contained in the Indenture and agrees that it will
only
offer or sell the Original Class A Notes in accordance with such section and
the
Indenture and only to Permitted Holders; and
(f) represents
that it is purchasing the Original Class A Notes for investment purposes and
not
with a view to resale or distribution thereof in contravention of the
requirements of the Securities Act.
Section
4.2 Purchaser
Status.
The
Purchaser represents and warrants that it is purchasing the Original Class
A
Notes for its own account or an account with respect to which it exercises
sole
investment discretion and that it and any such account is (i) a QIB and such
purchase meets the requirements of Rule 144A under the Securities Act, (ii)
an
Institutional Accredited Investor, is not acquiring the Original Class A Notes
with a view to any resale or distribution thereof other than in accordance
with
the restrictions set forth below, has sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of the purchase of the Original Class A Notes and is able and prepared to bear
the economic risk of investing in and holding the Original Class A Notes, (iii)
an Institutional Accredited Investor that is not a U.S. person and has acquired
such Original Class A Notes in an offshore transaction in compliance with
Regulation S or (iv) a person or entity consented to by the Issuer in its sole
discretion where such offer or sale occurs following the Resale Restriction
Termination Date.
Section
4.3 Source
of Funds.
The
Purchaser represents, warrants and covenants that either:
(a) no
Plan
Assets have been used to purchase an Original Class A Note; or
(b) to
the
extent that Plan Assets are used to purchase an Original Class A Note, one
or
more statutory or administrative exemptions applies such that the use of such
Plan Assets to purchase and hold such Original Class A Notes will not constitute
a non-exempt prohibited transaction within the meaning of Section 406 of ERISA
or Section 4975 of the Code,
In
addition, the Purchaser represents, warrants and covenants that either:
(i)
no
assets of a governmental, church or foreign plan have been used to purchase
an
Original Class A Note; or
(ii)
to
the extent such assets are used, neither the purchase nor holding of the
Original Class A Notes will constitute or result in a violation of any
Applicable Law that is similar to the prohibited transaction provisions of
Section 406 of ERISA or Section 4975 of the Code.
4
Section
4.4 Due
Diligence.
The
Purchaser acknowledges that (i) it has made, either alone or together with
its advisors, such independent investigation of the Issuer, the Parent, Inspire,
Pfizer and their respective managements, assets and related matters, and such
separate and independent investigation of the Purchased Assets and related
matters, as the Purchaser deems to be, or such advisors have advised to be,
necessary or advisable in connection with the purchase of the Original Class
A
Notes pursuant to the transactions contemplated by this Note Purchase Agreement,
(ii) it and its advisors have received all information and data that it and
such advisors believe to be necessary in order to reach an informed decision
as
to the advisability of the purchase of the Original Class A Notes pursuant
to
the transactions contemplated by this Note Purchase Agreement, (iii) it
understands the nature of the potential risks and potential rewards of the
purchase of the Original Class A Notes, (iv) it is a sophisticated investor
with investment experience and, in the event of a
default
on the Original Class A Notes, any termination of any of the Principal Documents
or termination of the Royalty Payments under the Inspire License Agreement
or
any liquidation or winding up of the Issuer, has the ability to bear complete
loss of its investment, (v) it has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of
purchasing the Original Class A Notes and can bear the economic risks of
investing in the Original Class A Notes for an indefinite period of time, (vi)
it has received and reviewed the Private Placement Memorandum and each of the
Transaction Documents and has been furnished by the Parent with an opportunity
to review the Principal Documents (except in the case of the Pfizer License
Agreement, which has been made available by the Parent only in redacted form)
and (vii) it has determined that the rates, prices or amounts and other terms
of
the purchase and sale of the Original Class A Notes reflect those in the
relevant market for similar transactions and it is purchasing the Original
Class
A Notes with a full understanding of all of the terms, conditions and risks
thereof (economic and otherwise), and it is capable of assuming and willing
to
assume (financially and otherwise) those risks. The Purchaser acknowledges
that
it has obtained its own attorneys, business advisors and tax advisors as to
legal, business and tax advice (or has decided not to obtain such advice) and
has not relied on the Issuer, the Parent or the Placement Agent for any such
advice. Except for (A) the representations, warranties and covenants made by
the
Issuer and the Parent in this Note Purchase Agreement and the other Transaction
Documents and (B) the legal opinions provided to the Trustee or the Note
Purchasers in connection with the transactions contemplated by the Transaction
Documents, the Purchaser is relying on its own investigation and analysis in
entering into the transactions contemplated hereby.
Section
4.5 Enforceability
of this Note Purchase Agreement.
This
Note Purchase Agreement has been duly authorized, executed and delivered by
the
Purchaser and constitutes the valid, legally binding and enforceable obligations
of the Purchaser, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general principles of equity.
Section
4.6 Inspire
and Pfizer.
The
Purchaser acknowledges and agrees that neither Inspire nor Pfizer is a party
to
the transactions to which this Note Purchase Agreement relates, neither Inspire
nor Pfizer has participated in the preparation of any document related thereto,
including the Private Placement Memorandum, and neither Inspire nor Pfizer
makes
any representations or warranties whatsoever with respect to the transactions
contemplated by the Private Placement Memorandum, including the issuance of
the
Original Class A Notes by the Issuer, the value thereof, the value of the rights
transferred by the Parent to the Issuer with respect thereto or the risks
associated therewith.
5
Section
4.7 Confidentiality
Agreement.
The
Purchaser acknowledges and agrees that it is bound by the terms and conditions
of the confidentiality agreement referenced in Schedule
1
(including, if the Purchaser is not a party thereto, as if it were a party
thereto), agrees to execute any documents reasonably requested by the Issuer
to
evidence such obligation and acknowledges and agrees that such confidentiality
agreement remains in effect and will survive the execution and delivery of
this
Note Purchase Agreement and the closing of the purchase of the Original Class
A
Notes pursuant to its terms.
Section
4.8 Tax
Matters.
(a) The
Purchaser represents and warrants that either (i) it is not, and will not
become, a partnership, Subchapter S corporation or grantor trust for U.S.
federal income tax purposes or (ii) it is a partnership, Subchapter S
corporation or grantor trust for U.S. federal income tax purposes but (A) none
of the direct or indirect beneficial owners of any of the interests in such
holder have allowed or caused, or will allow or cause, 50% or more of the value
of such interests to be attributable to such ownership of Notes or (B) such
partnership, Subchapter S corporation or grantor trust was not formed with
a
principal purpose of permitting the Issuer to satisfy the 100-partner limitation
in Treasury Regulation Section 1.7704-1(h)(1)(ii) (assuming for this purpose
that the Original Class A Notes were classified as equity, and not debt, for
U.S. federal income tax purposes), and the Purchaser will not participate or
transfer an interest in any Original Class A Note to any Person who is of a
type
described in clause (i) above but is not of a type described in clause (ii)
above.
(b) Except
as
otherwise required by law, the Purchaser agrees to treat, and shall treat,
the
Original Class A Notes as debt of the Parent for U.S. federal income tax
purposes.
(c) The
Purchaser understands and acknowledges that failure to provide the Issuer,
the
Trustee or any Paying Agent with the applicable U.S. federal income tax
certifications (generally, an Internal Revenue Service Form W-9 (or successor
applicable form) in the case of a person that is a United States person (within
the meaning of Section 7701(a)(30) of the Code) or an appropriate Internal
Revenue Service Form W-8 (or successor applicable form) in the case of a person
that is not a United States person (within the meaning of Section 7701(a)(30)
of
the Code)) may result in U.S. federal back-up withholding from payments in
respect of the Original Class A Notes.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF THE ISSUER AND THE PARENT
Each
of
the Issuer and the Parent, jointly and severally, represents and warrants to
the
Purchaser as follows:
6
Section
5.1 Disclosure.
The
Private Placement Memorandum, as of its date and the date hereof, together
with
any amendments or supplements thereto, any summaries thereof approved by the
Issuer and any other written information relating to the offering of the
Original Class A Notes prepared by the Issuer or the Parent (or prepared by
the
Placement Agent and approved by the Issuer or the Parent) and provided by the
Issuer or the Parent to the Purchaser (or provided by the Placement Agent to
the
Purchaser with the approval of the Issuer or the Parent) in connection with
the
transactions contemplated hereby, did not and do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. From the date of the Private Placement Memorandum until
the date hereof and except as disclosed therein, there has been no material
adverse change or development involving or anticipated to involve a prospective
material adverse change in their business relating to the Purchased Assets
or
the Principal Documents or their ability to perform their respective obligations
under the Transaction Documents.
Section
5.2 Enforceability
of this Note Purchase Agreement.
This
Note Purchase Agreement has been duly authorized, executed and delivered by
the
Issuer and the Parent and constitutes the valid, legally binding and (subject
to
general equitable principles, insolvency, liquidation, reorganization and other
laws of general application relating to creditors’ rights) enforceable
obligations of the Issuer and the Parent.
Section
5.3 Securities
Laws.
(a) No
securities of the same class (within the meaning of Rule 144A(d)(3)(i) under
the
Securities Act) as the Original Class A Notes have been issued and sold by
the
Issuer within the six-month period immediately prior to the date
hereof.
(b) Neither
the Issuer or the Parent nor any affiliate (as defined in Rule 144 under the
Securities Act) of the Issuer or the Parent has directly, or through any agent,
(i) sold, offered for sale, solicited offers to buy or otherwise negotiated
in
respect of any security (as defined in the Securities Act) that is or will
be
integrated with the sale of the Original Class A Notes in a manner that would
require the registration under the Securities Act of the Original Class A Notes
or (ii) engaged in any form of general solicitation or general advertising
in
connection with the offering of the Original Class A Notes (as those terms
are
used in Regulation D under the Securities Act), or offered to sell or solicited
offers to buy Original Class A Notes in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act, including publication
or release of articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio,
or
internet or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(c) Assuming
the accuracy of the representations and warranties of the Note Purchasers in
each Note Purchase Agreement and assuming the accuracy of the statements in
the
certificate to be delivered by the Placement Agent pursuant to Section 6.11,
the
Indenture is not required to be qualified under the Trust Indenture
Act.
7
(d) Assuming
the accuracy of the representations and warranties of the Note Purchasers in
each Note Purchase Agreement and assuming the accuracy of the statements in
the
certificate to be delivered by the Placement Agent pursuant to Section 6.11,
no
registration under the Securities Act of the Original Class A Notes is required
in connection with the sale of the Original Class A Notes to the Note Purchasers
as contemplated by the Note Purchase Agreements.
Section
5.4 Investment
Company Act.
Assuming the accuracy of the representations and warranties of the Note
Purchasers in each Note Purchase Agreement and after giving effect to the
offering and sale of the Original Class A Notes and the purchase by the Issuer
of the Purchased Assets, the Issuer will not be required to register as an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.
Section
5.5 Governmental
Authorizations.
No
consent, approval or authorization of, or registration, filing or declaration
with, any Governmental Authority is required in connection with the execution,
delivery or performance by the Parent or the Issuer of this Note Purchase
Agreement or the transactions contemplated hereby other than such filings as
shall have been made prior to the date hereof and such filings required to
be
made after the date hereof under applicable federal and state securities laws,
such as applicable state blue sky filings.
Section
5.6 Compliance
with ERISA.
Each
Plan
maintained by the Issuer or the Parent has been operated and administered
substantially in compliance with all Applicable Laws. Neither the Issuer nor
the
Parent has incurred any material liability or penalty or could be reasonably
expected to incur any material liability or penalty pursuant to Title I or
IV of
ERISA or pursuant to the Code. None of the Issuer, the Parent or any ERISA
Affiliate currently maintains or has maintained within the preceding six years
a
pension plan that is subject to Title IV of ERISA. The execution and delivery
of
this Note Purchase Agreement and the issuance and sale of the Original Class
A
Notes hereunder will not involve any transaction that is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could
be
imposed pursuant to Sections 4975(c)(1)(A)-(D) of the Code. The representation
by the Issuer and the Parent in the preceding sentence is made in reliance
upon
and subject to the accuracy of the Note Purchasers’ representation in Section
4.3 of each Note Purchase Agreement as to the sources of the funds used to
pay
the Purchase Price of the Original Class A Notes to be purchased by the Note
Purchasers.
Section
5.7 Use
of
Proceeds; Margin Regulations.
No part
of the proceeds from the sale of the Original Class A Notes hereunder will
be
used, directly or indirectly, for the purpose of buying or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying
or
trading in any securities under such circumstances as to involve the Issuer
or
the Parent in a violation of Regulation X of said Board (12 CFR 224) or to
involve any broker or dealer in a violation of Regulation T of said Board
(12 CFR 220). As used in this Section 5.7, the terms “margin stock” and
“purpose of buying or carrying” shall have the meanings assigned to them in said
Regulation U.
8
Section
5.8 Independent
Consultant’s Forecasts.
Neither
the Issuer nor the Parent has any reason to believe that the sales forecast
projections of AzaSite included in the Independent Consultant’s Report (a) are
not based upon assumptions (as they are described in the Independent
Consultant’s Report) that the Issuer or the Parent believes in good faith to be
consistent in all material respects with operation of the Principal Documents
and (b) are not based on assumptions that are reasonable in light of the
circumstances of the Issuer and the Parent, products subject to their licenses
and the terms of their licenses and patents.
Section
5.9 Other
Representations and Warranties.
Each of
the representations and warranties made by the Issuer in Section 5.1 of the
Indenture and by the Parent in Section 5.1 of the Purchase and Sale Agreement
and Section 4.1 of the Pledge and Security Agreement is hereby incorporated
herein by reference as if fully set forth herein and given for the benefit
of
the Purchaser.
ARTICLE
VI
CONDITIONS
TO CLOSING
The
obligations of the Purchaser hereunder are subject to the accuracy, on and
as of
the date hereof and the Closing Date, of the representations and warranties
of
the Issuer and the Parent contained herein, to the accuracy of the statements
of
the Issuer and the Parent and their respective officers made in any certificates
delivered pursuant hereto, to the performance by the Issuer and the Parent
of
their respective obligations hereunder and to each of the following additional
terms and conditions:
Section
6.1 Proceedings.
All
proceedings and legal matters incident to the
formation and constitution of the Issuer and the issuance of the Original Class
A Notes, and all other legal matters relating to the Transaction Documents
and
the transactions contemplated hereby and thereby, shall be reasonably
satisfactory in all material respects to the Purchaser, and the Issuer and
the
Parent shall have furnished to the Purchaser all documents and information
that
it or counsel to the Purchaser may reasonably request to enable them to pass
upon such matters.
Section
6.2 Transactional
Opinion.
O’Melveny & ▇▇▇▇▇ LLP shall have furnished to the Note Purchasers their
opinion, as special counsel to the Issuer and the Parent, addressed to the
Note
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Note Purchasers.
Section
6.3 True
Sale and Non-Consolidation Opinions.
Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP shall have furnished to the Note Purchasers
their reasoned opinion addressed to the Note Purchasers, dated the Closing
Date,
as to the sale, transfer, conveyance, assignment, contribution and granting
by
the Parent of the Purchased Assets to the Issuer constituting a true sale and
capital contribution and not a secured loan and as to the non-consolidation
of
the Issuer in a bankruptcy proceeding of the Parent, which opinion shall be
in
form and substance reasonably satisfactory to the Note Purchasers.
Section
6.4 Note
Purchaser’s Counsel Opinion.
Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP, special counsel to the Note Purchasers,
shall have furnished to the Note Purchasers their opinion addressed to the
Note
Purchasers dated the Closing Date as to such matters related to the Transaction
Documents as the Note Purchasers may reasonably request.
9
Section
6.5 Consummation
of Transactions.
All of
the transactions contemplated by the Transaction Documents to be completed
on or
before the Closing Date shall have been consummated or shall be consummated
concurrently with the transactions contemplated hereby in compliance with
Applicable Law, the Purchaser shall have received executed copies of the
Transaction Documents (which shall be in full force and effect) and the Trustee
shall have received one or more certificates (endorsed for transfer)
representing all of the Capital Securities of the Issuer to be held by the
Trustee pursuant to the terms of the Pledge and Security Agreement.
Section
6.6 Certification
as to Private Placement Memorandum.
The
Parent shall have furnished to the Note Purchasers a certificate, dated the
Closing Date, of a Responsible Officer of the Parent stating that (i) such
person has carefully examined the Private Placement Memorandum, (ii) to his
or
her knowledge, the Private Placement Memorandum, as of its date, did not include
any untrue statement of a material fact and did not 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, and (iii) to his
or
her knowledge, since the date of the Private Placement Memorandum, no event
has
occurred that should have been set forth in a supplement or amendment to the
Private Placement Memorandum so that the Private Placement Memorandum as of
the
Closing Date would not include any untrue statement of a material fact and
would
not omit to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
Section
6.7 Certification
as to Note Purchase Agreement.
Each of
the Issuer and the Parent shall have furnished to the Note Purchasers a
certificate, dated the Closing Date, of its respective Responsible Officer,
stating that, as of the Closing Date, the representations and warranties of
the
Issuer or the Parent, as the case may be, in and incorporated into this Note
Purchase Agreement are true and correct in all material respects (except that
any such representations or warranties that are qualified in respect of
materiality or Material Adverse Effect shall be true and correct in all
respects) and the Issuer or the Parent, as the case may be, has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder on or prior to the Closing Date.
Section
6.8 No
Actions.
No
action shall have been taken and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any Governmental Authority that would,
as of the Closing Date, prevent the issuance or sale of the Original Class
A
Notes, and no injunction, restraining order or order of any other nature by
any
federal or state court of competent jurisdiction shall have been issued as
of
the Closing Date that would prevent the issuance or sale of the Original Class
A
Notes.
Section
6.9 Principal
Documents.
The
Principal Documents, each in the form previously furnished by the Parent to
counsel to the Note Purchasers, shall be in full force and effect, and the
Note
Purchasers shall have received upon prior written request therefor a true,
correct and complete copy of each of the Principal Documents (except in the
case
of the Pfizer License Agreement, which will be delivered in redacted
form).
10
Section
6.10 Authorizations.
Each of
the Issuer and the Parent shall have furnished to the Note Purchasers (i) a
copy
of the resolutions, consents or other documents, certified by a Responsible
Officer of the Issuer or the Parent, as the case may be, as of the Closing
Date,
duly authorizing the execution, delivery and performance of the Transaction
Documents to which it is a party and any other documents to be executed on
or
prior to the Closing Date by or on behalf of it in connection with the
transactions contemplated thereby, and (ii) certified copies of its respective
organizational documents, including as such documents have been amended to
effect the transactions contemplated by the Transaction Documents.
Section
6.11 Offering
of Original Class A Notes.
The
Placement Agent shall have delivered to the Issuer a certificate as to the
manner of the offering of the Original Class A Notes and the number and
character of the offerees contacted, which certificate shall state that the
Placement Agent (i) did not solicit offers for, or offer, the Original Class
A
Notes by means of any form of general solicitation or general advertising or
in
any manner involving a public offering within the meaning of Section 4(2) of
the
Securities Act and (ii) solicited offers for the Original Class A Notes only
from, and offered the Original Class A Notes only to, (a) Persons who it
reasonably believed were QIBs or Institutional Accredited Investors or, if
any
such Person was buying for one or more institutional accounts for which such
Person was acting as fiduciary or agent, only when such Person reasonably
believed that each such account was a QIB or Institutional Accredited Investor,
as applicable and (b) in the case of offers outside the United States, to
institutions that are not U.S. persons (as defined in Regulation S) in
accordance with Rule 903 of Regulation S, and shall further state that counsel
to the Issuer and the Parent and to the Note Purchasers may rely thereon in
rendering their respective opinions to be delivered hereunder.
Section
6.12 CUSIP
Number.
Standard & Poor’s CUSIP Service Bureau, as agent for the National
Association of Insurance Commissioners, shall have issued a CUSIP number for
the
Original Class A Notes.
Section
6.13 Notice
and Instruction to
Inspire.
The
Note Purchasers shall have received a copy of the notice and instruction
provided to Inspire by the Parent pursuant to Section 4.1 of the Purchase and
Sale Agreement, which shall be certified by a Responsible Officer of the Parent
as having been sent to Inspire on or prior to the Closing Date.
Section
6.14 Compliance
with Laws.
If
requested by a Note Purchaser, the Issuer shall have provided such Note
Purchaser with such information as it may reasonably request to enable such
Note
Purchaser to determine whether such purchase shall (i) be permitted by the
laws
and regulations of each jurisdiction to which such Note Purchaser is subject,
without recourse to provisions (such as Section 1405(a)(8) of the New York
Insurance Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment and (ii) not
violate any Applicable Law (including Regulation T, U or X of the Board of
Governors of the Federal Reserve System).
11
Section
6.15 Filing
of Financing Statements.
The
filings of financing statements under the UCC and other recordings required
or
reasonably requested to be made to perfect a security interest in the Purchased
Assets sold, transferred, conveyed, assigned, contributed and granted on the
Closing Date, including those specified in Exhibit
B
to the
Purchase and Sale Agreement, and the Collateral, including those specified
in
Exhibit
E
to the
Indenture, shall have been duly made.
ARTICLE
VII
ADDITIONAL
COVENANTS
Section
7.1 DTC.
The
Issuer will, and the Parent will cause the Issuer to, use commercially
reasonable best efforts to comply with all agreements set forth in the
representation letter of the Issuer to DTC relating to the approval of the
Original Class A Notes by DTC for “book-entry” transfer.
Section
7.2 Expenses.
The
Issuer and the Parent jointly and severally agree to pay or cause to be paid
all
reasonable, documented Transaction Expenses of Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
LLP, acting as outside counsel to the Placement Agent, it being understood
that
neither the Issuer nor the Parent will reimburse any other expenses of any
Note
Purchasers (including expenses of any other counsel).
ARTICLE
VIII
SURVIVAL
OF CERTAIN PROVISIONS
Section
8.1 Survival
of Certain Provisions.
The
representations, warranties, covenants and agreements contained in this Note
Purchase Agreement shall survive (a) the execution and delivery of this Note
Purchase Agreement and the Original Class A Notes and (b) the purchase or
transfer by any Note Purchaser of any Original Class A Note or portion thereof
or interest therein. All such provisions are binding upon and may be relied
upon
by any subsequent holder or beneficial owner of an Original Class A Note that
has executed and delivered to the Registrar a Confidentiality Agreement in
compliance with the procedures set forth in the Indenture, regardless of any
investigation made at any time by or on behalf of any Note Purchaser or any
other holder of an Original Class A Note; provided,
however,
that
the representations and covenants contained in Section 4.8 may be relied upon
regardless of whether such holder or owner has executed and delivered to the
Registrar such Confidentiality Agreement. All statements contained in any
certificate or other instrument delivered by or on behalf of any party hereto
pursuant to this Note Purchase Agreement shall be deemed to have been relied
upon by each other party hereto and shall survive the consummation of the
transactions contemplated hereby regardless of any investigation made by or
on
behalf of any such party. This Note Purchase Agreement and the other Transaction
Documents embody the entire agreement and understanding among the parties hereto
and supersede all prior agreements and understandings relating to the subject
matter hereof, other than the separate Confidentiality Agreements entered into
between each Note Purchaser and the Issuer relating to the transactions
contemplated hereby.
12
ARTICLE
IX
NOTICES
Section
9.1 Notices.
All
statements, requests, notices and agreements hereunder shall be in writing
and
delivered by hand, mail, overnight courier or telefax as follows:
(a) if
to the
Purchaser, in accordance with Schedule
1;
and
(b) if
to the
Issuer or the Parent, in accordance with Section 12.5 of the
Indenture.
ARTICLE
X
SUCCESSORS
AND ASSIGNS
Section
10.1 Successors
and Assigns.
This
Note Purchase Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors, permitted assignees and
permitted transferees. So long as any of the Notes are outstanding, neither
the
Issuer nor the Parent may assign any of its rights or obligations hereunder
or
any interest herein without the prior written consent of the
Purchaser.
ARTICLE
XI
SEVERABILITY
Section
11.1 Severability.
Any
provision of this Note Purchase Agreement that is prohibited or unenforceable
in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
ARTICLE
XII
WAIVER
OF JURY TRIAL
Section
12.1 WAIVER
OF JURY TRIAL.
THE
PURCHASER, THE ISSUER AND THE PARENT HEREBY WAIVE TRIAL BY JURY IN ANY ACTION
BROUGHT ON OR WITH RESPECT TO THIS NOTE PURCHASE AGREEMENT, THE ORIGINAL CLASS
A
NOTES, THE TRANSACTION DOCUMENTS, THE PRIVATE PLACEMENT MEMORANDUM AND ALL
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13
ARTICLE
XIII
GOVERNING
LAW; CONSENT TO JURISDICTION
Section
13.1 Governing
Law; Consent to Jurisdiction.
(a) THIS
NOTE
PURCHASE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
(b) Any
legal
action or proceeding with respect to this Note Purchase Agreement may be brought
in the courts of the State of New York located in the Borough of Manhattan,
The
City of New York or of the United States federal court sitting in the Borough
of
Manhattan, The City of New York, and, by execution and delivery of this Note
Purchase Agreement, each party hereto consents, for itself and in respect of
its
property, to the non-exclusive jurisdiction of those courts. Each party hereto
irrevocably consents to service of process in the manner provided for notices
in
Section 9.1. Nothing in this Note Purchase Agreement shall affect the right
of
any party hereto to serve process in any other manner permitted by law. Each
party hereto irrevocably waives, to the maximum extent permitted by law, any
objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, that it may now or hereafter have to the
bringing of any action or proceeding in such jurisdiction in respect of this
Note Purchase Agreement or any document related hereto. Each party hereto waives
personal service of any summons, complaint or other process, which may be made
by any other means permitted by New York law.
(c) If,
for
the purpose of obtaining a judgment or order in any court, it is necessary
to
convert a sum due hereunder to any Noteholder from U.S. dollars into another
currency, each of the Issuer and the Parent has agreed, and each Noteholder
by
holding an Original Class A Note will be deemed to have agreed, to the fullest
extent that they may effectively do so, that the rate of exchange used shall
be
that at which, in accordance with normal banking procedures, such party could
purchase U.S. dollars with such other currency in the Borough of Manhattan,
The
City of New York on the Business Day preceding the day on which final judgment
is given.
(d) The
obligation of each of the Issuer and the Parent in respect of any sum payable
by
it to a Noteholder shall, notwithstanding any judgment or order in a Judgment
Currency, be discharged only to the extent that, on the Business Day following
receipt by such Noteholder of such security of any sum adjudged to be so due
in
the Judgment Currency, such Noteholder may in accordance with normal banking
procedures purchase U.S. dollars with the Judgment Currency. If the amount
of
U.S. dollars so purchased is less than the sum originally due to such Noteholder
in the Judgment Currency (determined in the manner set forth in Section
13.1(b)), each of the Issuer and the Parent agrees, as a separate obligation
and
notwithstanding any such judgment, to indemnify such Noteholder against such
loss, and, if the amount of the U.S. dollars so purchased exceeds the sum
originally due to such Noteholder, such Noteholder agrees to remit to the Issuer
or the Parent, as the case may be, such excess, provided that such Noteholder
shall have no obligation to remit any such excess to the extent that the Issuer
or the Parent, as the case may be, shall have failed to pay such Noteholder
any
obligations due and payable under the Original Class A Notes of such Noteholder,
in which case such excess may be applied to such obligations of the Issuer
or
the Parent, as the case may be, under such Original Class A Notes in accordance
with the terms thereof. The foregoing indemnity shall constitute a separate
and
independent obligation of the Issuer and the Parent and shall continue in full
force and effect notwithstanding any such judgment or order as
aforesaid.
14
ARTICLE
XIV
COUNTERPARTS
Section
14.1 Counterparts.
This
Note Purchase Agreement may be executed in any number of counterparts, each
of
which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Note Purchase Agreement.
ARTICLE
XV
TABLE
OF CONTENTS AND HEADINGS
Section
15.1 Table
of Contents and Headings.
The
Table of Contents and headings of the Articles and Sections of this Note
Purchase Agreement have been inserted for convenience of reference only, are
not
to be considered a part hereof and shall in no way modify or restrict any of
the
terms or provisions hereof.
ARTICLE
XVI
TAX
DISCLOSURE
Section
16.1 Tax
Disclosure.
Notwithstanding anything expressed or implied to the contrary herein, the
Purchaser and its respective employees, representatives and agents may disclose
to any and all Persons, without limitation of any kind, the tax treatment and
the tax structure of the transactions contemplated by this Note Purchase
Agreement and the agreements and instruments referred to herein and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Purchaser relating to such tax treatment and tax structure;
provided,
however,
that
neither the Purchaser nor any employee, representative or other agent thereof
shall disclose any other information that is not relevant to understanding
the
tax treatment and tax structure of such transactions (including the identity
of
any party and any information that could lead another to determine the identity
of any party) or any other information to the extent that such disclosure could
reasonably result in a violation of any federal or state securities law. For
these purposes, the tax treatment of the transactions contemplated by this
Note
Purchase Agreement and the agreements and instruments referred to herein means
the purported or claimed U.S. federal or state tax treatment of such
transactions. Moreover, the tax structure of the transactions contemplated
by
this Note Purchase Agreement and the agreements and instruments referred to
herein includes any fact that may be relevant to understanding the purported
or
claimed U.S. federal or state tax treatment of such transactions.
15
ARTICLE
XVII
MISCELLANEOUS
Section
17.1 Limited
Recourse.
Each of
the parties hereto accepts that the enforceability against the Issuer of the
obligations of the Issuer hereunder shall be limited to the assets of the
Issuer, whether tangible or intangible, real or personal (including the
Collateral) and the proceeds thereof. Once all such assets have been realized
upon and such assets (and proceeds thereof) have been applied in accordance
with
Article III of the Indenture, any outstanding obligations of the Issuer shall
be
extinguished. Each of the parties hereto further agrees that it shall take
no
action against any employee, director, officer or administrator of the Issuer
or
the Trustee in relation to this Note Purchase Agreement; provided,
that
nothing herein shall limit the Issuer (or its permitted successors or assigns,
including any party hereto that becomes such a successor or assign) from
pursuing claims, if any, against any such person. The provisions of this Section
17.1 shall survive termination of this Note Purchase Agreement; provided,
further,
that
the foregoing shall not in any way limit, impair or otherwise affect any rights
of any party to proceed against any employee, director, officer or administrator
of the Issuer (a) for intentional and willful fraud or intentional and willful
misrepresentations on the part of or by such employee, director, officer or
administrator or (b) for the receipt of any distributions or payments to which
the Issuer or any successor in interest is entitled, other than distributions
expressly permitted pursuant to the other Transaction Documents.
[SIGNATURE
PAGE FOLLOWS]
16
IN
WITNESS WHEREOF, the undersigned parties hereby execute this Note Purchase
Agreement, in one or more counterparts, effective and binding on the date first
written above.
|
By:
|
InSite
Vision Incorporated, its Manager
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
INSITE
VISION INCORPORATED
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
[PURCHASER
SIGNATURE PAGE]
SCHEDULE
1
Confidentiality
Agreement Referenced In Section 4.7:
Date:
__________, 2008
Parties:
Issuer and ________________________________________________________
Number
(See Top Right of First Page of Confidentiality Agreement):
_______________
|
Purchaser
|
Principal
Amount
of
|
Notice
Information
|
||
|
Original
Class
A Notes
|
1-1
Annex
A
See
Annex
A to the Purchase and Sale Agreement by and between Azithromycin Royalty Sub
LLC
and the Company dated February 21, 2008, attached as Exhibit 10.1 to this
Quarterly Report on Form 10-Q".