Exhibit 4.16
INHALE THERAPEUTIC SYSTEMS, INC.
(a Delaware corporation)
$200,000,000
3 1/2% Convertible Subordinated Notes due 2007
PURCHASE AGREEMENT
October 11, 2000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Deutsche Bank Securities Inc.
▇▇▇▇▇▇ Brothers Inc.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
c/▇ ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Inhale Therapeutic Systems, Inc., a Delaware corporation (the
"Company"), confirms its agreement with ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Initial Purchasers named in
SCHEDULE A hereto (collectively, the "Initial Purchasers", which term shall also
include any initial purchaser substituted as hereinafter provided in Section 8
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Deutsche Bank Securities Inc. are acting as
representatives (in such capacity, the "Representatives"), with respect to the
issue and sale by the Company and the purchase by the Initial Purchasers, acting
severally and not jointly, of the respective principal amounts set forth in said
SCHEDULE I of $200,000,000 aggregate principal amount of the Company's 3 1/2%
Convertible Subordinated Notes due 2007 (the "Firm Notes"), and with respect to
the grant by the Company to the Initial Purchasers, acting severally and not
jointly, of the option described in Section 2(b) hereof (the "Option") to
purchase all or any part of an additional $50,000,000 principal amount of the
Company's 3 1/2% Convertible Subordinated Notes due 2007 to cover
over-allotments, if any (the "Optional Notes" and, together with the Firm Notes,
the "Notes").
The Notes will be convertible into fully paid, nonassessable shares of
common stock of the Company, par value $0.0001 per share (the "Common Stock"),
on the terms, and subject to the conditions, set forth in the Indenture. As used
herein, "Conversion Shares" means the shares of Common Stock into which the
Notes are convertible. The Notes will be issued pursuant to an
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Indenture (the "Indenture") to be dated as of the First Delivery Date (as
defined in Section 2(a)), between the Company and Chase Manhattan Bank and Trust
Company, National Association, as Trustee (the "Trustee").
The Notes will be offered and sold without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions therefrom. The Company has prepared and delivered to each Initial
Purchaser copies of a preliminary offering memorandum dated October 9, 2000 (the
"Preliminary Offering Memorandum") and has prepared and will deliver to each
Initial Purchaser, on the date hereof or the next succeeding day, copies of a
final offering memorandum dated October 11, 2000 (the "Final Offering
Memorandum"), each for use by such Initial Purchaser in connection with its
solicitation of purchases of, or offering of, the Notes. "Offering Memorandum"
means, with respect to any date or time referred to in this Agreement, the most
recent offering memorandum (whether the Preliminary Offering Memorandum or the
Final Offering Memorandum, or any amendment or supplement to either such
document), including exhibits thereto and any documents incorporated therein by
reference, which has been prepared and delivered by the Company to the Initial
Purchasers in connection with their solicitation of purchases of, or offering
of, the Notes.
Holders of the Notes (including the Initial Purchasers and their direct
and indirect transferees) will be entitled to the benefits of a Resale
Registration Rights Agreement, dated the First Delivery Date, between the
Company and the Initial Purchasers (the "Registration Rights Agreement"),
pursuant to which the Company will agree to file with the Securities and
Exchange Commission (the "Commission") a shelf registration statement pursuant
to Rule 415 under the Securities Act (the "Registration Statement") covering the
resale of the Notes and the Conversion Shares, and to use its best efforts to
cause the Registration Statement to be declared effective.
This Agreement, the Indenture, the Notes and the Registration Rights
Agreement are referred to herein collectively as the "Operative Documents".
Capitalized terms used herein without definition have the respective
meanings specified in the Offering Memorandum.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents and warrants to each Initial Purchaser as of the date hereof
and as of each Delivery Date (as defined in Section 2(b)) and agrees with each
Initial Purchaser, as follows:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, did not as of its respective date, and the Offering Memorandum will
not as of a Delivery Date (as defined in Section 2(b)), contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED that the Company makes no
representation or warranty as to information contained in or omitted from the
Preliminary Offering Memorandum or the Offering Memorandum in reliance upon and
in conformity with written information furnished to the Company by or on the
behalf of any Initial Purchaser through the Representatives specifically for
inclusion therein.
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(b) Assuming the accuracy of the representations and warranties of the
Initial Purchasers contained in Section 6 and their compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Notes to the Initial Purchasers and the offer, resale
and delivery of the Notes by the Initial Purchasers in the manner contemplated
by this Agreement, the Indenture, the Registration Rights Agreement and the
Offering Memorandum, to register the Notes or the Conversion Shares under the
Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct of
its businesses requires such qualification (except for where the failure to be
so qualified would not have a material adverse effect on the affairs,
management, business, properties, financial condition, results of operations or
prospects of the Company, whether or not arising in the ordinary course of
business (a "Material Adverse Effect")), and has all power and authority
necessary to own or hold its properties and to conduct the businesses in which
it is engaged, as described in the Offering Memorandum; and the Company has no
subsidiaries.
(d) The authorized, issued and outstanding capital stock of the
Company, as of June 30, 2000, is as set forth in the Offering Memorandum under
the column entitled "Actual" under the caption "Capitalization", and all of the
issued and outstanding shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and nonassessable; 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; the
capital stock of the Company conforms to the description thereof contained in
the Offering Memorandum and such description conforms to the rights set forth in
the instruments defining the same; the Conversion Shares, which are authorized
on the date hereof, have been duly and validly authorized and reserved for
issuance upon conversion of the Notes by all necessary corporate action and are
free of preemptive rights; all Conversion Shares, when so issued and delivered
upon such conversion in accordance with the terms of the Indenture, will be duly
and validly authorized and issued, fully paid and nonassessable and free and
clear of all liens, encumbrances, equities or claims; and the issuance of such
Conversion Shares upon such conversion will not be subject to the preemptive or
other similar rights of any securityholder of the Company.
(e) The execution, delivery and performance of the Operative Documents
by the Company and the issuance of the Notes and the Conversion Shares and the
consummation of the transactions contemplated hereby and thereby will not (x)
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the properties or
assets of the Company is subject, (y) result in any violation of the provisions
of the certificate of incorporation or bylaws of the Company or (z) result in
any violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties or assets; and except (i) with respect to the transactions
contemplated by the Registration Rights Agreement, as may be required under the
Securities Act, the Trust Indenture Act and the rules and regulations
promulgated thereunder and (ii) as
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required by the state securities or "blue sky" laws, no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of the Operative Documents by the Company, and the consummation of
the transactions contemplated hereby and thereby.
(f) The Company has all necessary corporate right, power and authority
to execute and deliver this Agreement and perform its obligations hereunder; and
this Agreement and the transactions contemplated hereby have been duly
authorized, executed and delivered by the Company.
(g) The Company has all necessary corporate right, power and authority
to execute and deliver the Indenture and perform its obligations thereunder; the
Indenture has been duly authorized by the Company, and upon the effectiveness of
the Registration Statement, will be qualified under the Trust Indenture Act; on
the First Delivery Date, the Indenture will have been duly executed and
delivered by the Company and, assuming due authorization, execution and delivery
of the Indenture by the Trustee, will constitute a legally valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, subject to general
principles of equity and to limitations on availability of equitable relief,
including specific performance (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing; and the
Indenture conforms in all material respects to the description thereof contained
in the Offering Memorandum and will be in substantially the form last delivered
to the Initial Purchasers prior to the date of this Agreement.
(h) The Company has all necessary corporate right, power and authority
to execute and deliver the Registration Rights Agreement and perform its
obligations thereunder; the Registration Rights Agreement and the transactions
contemplated thereby have been duly authorized by the Company; when the
Registration Rights Agreement is duly executed and delivered by the Company
(assuming due authorization, execution and delivery by the Initial Purchasers),
it will be a legally valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, subject to general principles of equity and to
limitations on availability of equitable relief, including specific performance
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing, and except with respect to the rights of
indemnification and contribution thereunder, where enforcement thereof may be
limited by federal or state securities laws or the policies underlying such
laws; and the Registration Rights Agreement conforms in all material respects to
the description thereof contained in the Offering Memorandum and will be in
substantially the form last delivered to the Initial Purchasers prior to the
date of this Agreement.
(i) The Company has all necessary corporate right, power and authority
to execute, issue and deliver the Notes and perform its obligations thereunder;
the Notes have been duly authorized by the Company; when the Notes are executed,
authenticated and issued in accordance with the terms of the Indenture and
delivered to and paid for by the Initial Purchasers pursuant to this Agreement
on the respective Delivery Date (assuming due authentication of the
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Notes by the Trustee), such Notes will constitute legally valid and binding
obligations of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, subject to general principles of equity
and to limitations on availability of equitable relief, including specific
performance (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing; and the Notes conform in all
material respects to the description thereof contained in the Offering
Memorandum and will be in substantially the form last delivered to the Initial
Purchasers prior to the date of this Agreement.
(j) Except for the Registration Rights Agreement and the Stock Purchase
Agreement, dated January 18, 1995, between the Company and Pfizer, Inc.
("Pfizer"), the Stock Purchase Agreement, dated March 1, 1996, as amended,
between the Company and ▇▇▇▇▇▇ Healthcare Corporation, the Restated Investor
Rights Agreement, dated April 29, 1993, as amended October 29, 1993, among the
Company and certain stockholders of the Company, the Resale Registration Rights
Agreement, dated October 13, 1999, between the Company and the initial
purchasers named therein, the Registration Rights Agreement between the Company
and Alliance Pharmaceutical Corp., dated January 24, 2000, and the Resale
Registration Rights Agreement, dated February 8, 2000, between the Company and
the initial purchasers named therein, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
(other than rights which have been waived or satisfied) to require the Company
to file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in any securities being registered pursuant
to any registration statement filed by the Company under the Securities Act.
(k) The Company has not sustained, since the date of the latest audited
financial statements included in the Offering Memorandum, any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree; and, since such dates, there has not been
any change in the capital stock or long-term debt of the Company or any material
adverse change in or affecting the affairs, management, business, properties,
financial condition, stockholders' equity, results of operations or prospects of
the Company, whether or not arising in the ordinary course of business, except:
(i) as described in the Offering Memorandum, (ii) any grants under the Company's
employee stock plans in accordance with the terms of such plans as described in
the Offering Memorandum, or other shares of Common Stock (or rights to receive
Common Stock) issued to service providers to the Company in the ordinary course
of business ("Authorized Grants"), (iii) operating losses incurred in the
ordinary course of business, (iv) the issuance and sale of the Outstanding
Debentures (as defined below), (v) an aggregate of 20,000 warrants to purchase
Common Stock issued to 201 Industrial Partnership and SCIMED PROP III, Inc. in
connection with transactions related to the sale, transfer, contribution and
lease of Company property and facilities (the "Authorized Warrants"), (vi) the
issuance of Common Stock pursuant to a 100% stock dividend in August 2000 (vii)
shares of Common Stock (the "Old Conversion Shares") into which each of the
Company's outstanding 6-3/4% Convertible Subordinated Debentures due 2006 and
the Company's outstanding 5% Convertible Subordinated Debentures due 2007 (the
"Outstanding Debentures") are convertible
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or (viii) an aggregate of 1,566 shares of Common Stock of the Company issued to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in connection with a the acquisition and license of certain
intellectual property (the "▇▇▇▇▇▇▇▇ Issuance").
(l) The financial statements of the Company (including the related
notes and supporting schedules) included in the Offering Memorandum present
fairly the financial condition and results of operations of the Company, at the
dates and for the periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The selected financial information included in
the Offering Memorandum present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited financial
statements included in the Offering Memorandum.
(m) ▇▇▇▇▇ & Young LLP, who have certified the financial statements of
the Company included in the Offering Memorandum, whose report appears in the
Offering Memorandum, are independent accountants as required by the Securities
Act and the rules and regulations promulgated thereunder.
(n) The Company has good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by it, in
each case free and clear of all liens, encumbrances, security interests, claims
and defects, except such as are described in the Offering Memorandum or such as
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; and all real property and personal property held under lease or
sublease by the Company is held by it under valid, subsisting and enforceable
leases (or subleases, as the case may be) in full force and effect, with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property by the Company. The Company has no notice
of any material claim of any sort that has been asserted by anyone adverse to
the rights of the Company under any of the leases or subleases mentioned above,
or affecting or questioning the rights of such the Company thereof to the
continued possession of the leased or subleased premises under any such lease or
sublease.
(o) The Company carries, or is covered by, insurance as is customary
for companies similarly situated and engaged in similar businesses in similar
industries.
(p) The Company owns, or possesses adequate rights to use, all material
trademarks, service marks, trade names, trademark registrations, service mark
registrations, copyrights and licenses necessary for the conduct of its
business, and has no reason to believe that the conduct of its business will
conflict with, and has not received any notice of any claim of conflict with,
any such rights of others.
(q) The Company owns, or possesses adequate rights to use, all material
patents necessary for the conduct of its business. Except as set forth in the
Offering Memorandum, no valid U.S. patent is, or to the knowledge of the Company
would be, infringed by the activities of the Company in the manufacture, use,
offer for sale or sale of any product or component thereof as described in the
Offering Memorandum. The patent applications (the "Patent Applications") filed
by or on behalf of the Company described in the Offering Memorandum have been
properly
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prepared and filed on behalf of the Company; each of the Patent Applications and
patents (the "Patents") described in the Offering Memorandum is assigned or
licensed to the Company, and, except as set forth or contemplated in the
Offering Memorandum, no other entity or individual has any right or claim in any
Patent, Patent Application or any patent to be issued therefrom; and, to the
knowledge of the Company, each of the Patent Applications discloses potentially
patentable subject matter. There are no actions, suits or judicial proceedings
pending relating to patents or proprietary information to which the Company is a
party or of which any property of the Company is subject, and, to the knowledge
of the Company, no actions, suits or judicial proceedings are threatened by
governmental authorities or, except as set forth or contemplated in the Offering
Memorandum, others. The Company is not aware of, except as set forth or
contemplated in the Offering Memorandum, any claim by others that the Company is
infringing or otherwise violating any patents or other intellectual property
rights of others and is not aware of any rights of third parties to any of the
Company's Patent Applications, licensed Patents or licenses which could affect
materially the use thereof by the Company. Except as set forth in the Offering
Memorandum, the Company owns or possesses sufficient licenses or other rights to
use all patents, trade secrets, technology and know-how necessary to conduct the
Company's business as described in the Offering Memorandum.
(r) Except as disclosed in the Offering Memorandum, the Company has
filed with the Food and Drug Administration (the "FDA") and the California Food
and Drug Branch ("CFDB") for and received approval of all registrations,
applications, licenses, requests for exemptions, permits and other regulatory
authorizations necessary to conduct the Company's business as it is described in
the Offering Memorandum; the Company is in material compliance with all such
registrations, applications, licenses, requests for exemptions, permits and
other regulatory authorizations, and all applicable FDA and CFDB rules and
regulations, guidelines and policies, including but not limited to, applicable
FDA and CFDB rules, regulations and policies relating to current good
manufacturing practice ("CGMP") and current good laboratory practice ("CGLP");
the Company has no reason to believe that any party granting any such
registration, application, license, request for exemption, permit or other
authorization is considering limiting, suspending or revoking the same and knows
of no basis for any such limitation, suspension or revocation.
(s) The human clinical trials, animal studies and other preclinical
tests conducted by the Company or in which the Company has participated that are
described in the Offering Memorandum or the results of which are referred to in
the Offering Memorandum, and, to the knowledge of the Company, such studies and
tests conducted on behalf of the Company, were and, if still pending, are being
conducted in accordance with commonly used or appropriate experimental
protocols, procedures and controls applied by research scientists generally in
the preclinical or clinical study of new drugs; the descriptions or the results
of such studies and tests contained in the Offering Memorandum are accurate and
complete in all material respects, and the Company has no knowledge of any other
studies or tests, the results of which reasonably call into question the results
described or referred to in the Offering Memorandum; and the Company has not
received any notices or other correspondence from the FDA or any other
governmental agency requiring the termination, suspension or modification of any
animal studies or other preclinical tests, or clinical studies conducted by or
on behalf of the Company or in which the Company has participated that are
described in the Offering Memorandum or the results of which are referred to in
the Offering Memorandum.
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(t) Except as disclosed in the Offering Memorandum, there are no legal
or governmental proceedings pending to which the Company is a party or of which
any property or asset of the Company is the subject which, if determined
adversely to the Company might have a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the consummation of
the transactions contemplated by this Agreement or the performance by the
Company of its obligations hereunder; to the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or,
except as set forth or contemplated in the Offering Memorandum, threatened by
others; and the aggregate of all pending legal or governmental proceedings to
which the Company is a party or of which any of its property or assets is the
subject (other than the Company's patent applications currently pending before
the U.S. Patent and Trademark Office or before any foreign governmental
authority that administers the registration of patents), which are not described
in the Offering Memorandum, including ordinary routine litigation incidental to
the business, could not reasonably be expected to result in a Material Adverse
Effect.
(u) No event has occurred nor has any circumstance arisen which, had
the Notes been issued on such Delivery Date, would constitute a default or an
Event of Default (as such term is defined in the Indenture).
(v) The Company is not (i) in violation of its certificate of
incorporation or bylaws, (ii) in default, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) in violation of any law, ordinance,
governmental rule, regulation or court decree to which it or its properties or
assets may be subject or has failed to obtain any license, permit, certificate,
franchise or other governmental authorization or permit necessary to the
ownership of its properties or to the conduct of its business, except to the
extent that any such default, event or violation described in the foregoing
clauses (i), (ii) and (iii) would not have a Material Adverse Effect.
(w) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(x) The Company is subject to the reporting requirements of Section 13
or Section 15(d) of the Exchange Act. The Company has timely and properly filed
with the Commission all reports and other documents required to have been filed
by it with the
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Commission pursuant to the Exchange Act and the Exchange Act Regulations
("Exchange Act Reports"); PROVIDED, HOWEVER, that the Company makes no such
representation or warranty with respect to any statement in or omission from the
Exchange Act Reports relating, directly or indirectly, to the conversion of any
of the Company's Outstanding Debentures.
(y) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof or has
requested extensions thereof and has paid all taxes due thereon, and no tax
deficiency has been determined adversely to the Company which has had (nor does
the Company have any knowledge of any tax deficiency which, if determined
adversely to the Company, might have) a Material Adverse Effect.
(z) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company (or, to the
knowledge of the Company, any of its predecessors in interest) at, upon or from
any of the property now or previously owned or leased by the Company in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit, except for
any violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions a Material Adverse Effect; there has been no
material spill, discharge, leak, emission, injection, escape, dumping or release
of any kind onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or with respect to which the Company
has knowledge, except for any such spill, discharge, leak, emission, injection,
escape, dumping or release which would not have or would not be reasonably
likely to have, singularly or in the aggregate with all such spills, discharges,
leaks, emissions, injections, escapes, dumpings and releases, a Material Adverse
Effect; and the terms "hazardous wastes", "toxic wastes", "hazardous substances"
and "medical wastes" shall have the meanings specified in any applicable local,
state, federal and foreign laws or regulations with respect to environmental
protection.
(aa) There are no contracts or other documents which would be required
to be described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 that have not been
so described in the Offering Memorandum.
(bb) There is no relationship, direct or indirect, between or among the
Company, on the one hand, and the directors, officers, shareholders, customers
or suppliers of the Company, on the other hand, which would be required to be
described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 that has not been so
described.
(cc) Since the date as of which information is given in the Offering
Memorandum through the date hereof, the Company has not (i) issued or granted
any securities (other than Authorized Grants, the Authorized Warrants or the Old
Conversion Shares), (ii) incurred any material liability or obligation, direct
or contingent, other than liabilities and obligations which were incurred in the
ordinary course of business, (iii) entered into any material transaction not in
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the ordinary course of business (other than privately negotiated transactions
relating to the conversion of any of the Company's Outstanding 2007 Debentures
as described in the Offering Memorandum) or (iv) declared or paid any dividend
on its capital stock.
(dd) Except as disclosed in the Offering Memorandum, (i) there are no
outstanding securities convertible into or exchangeable for, or warrants, rights
or options issued by the Company to purchase, any shares of the capital stock of
the Company (except, in the case of options, any Authorized Grants or in the
case of warrants, the Authorized Warrants), (ii) there are no statutory,
contractual, preemptive or other rights to subscribe for or to purchase any
Common Stock that do not by their terms terminate upon the First Delivery Date
and (iii) there are no restrictions upon transfer of the Common Stock pursuant
to the Company's certificate of incorporation or bylaws.
(ee) The Company (i) makes and keeps materially accurate books and
records and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.
(ff) Neither the Company nor any director, officer, agent or employee
acting on behalf of the Company has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity, (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds, (iii)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977 or (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
(gg) No labor disturbance by the employees of the Company exists or, to
the knowledge of the Company, is imminent which might be expected to have a
Material Adverse Effect.
(hh) The Company is not, and upon the issuance and sale of the Notes as
herein contemplated and the application of the net proceeds therefrom as
described in the Offering Memorandum 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.
(ii) Assuming the accuracy of the representations and warranties of the
Initial Purchasers contained in Section 6 and their compliance with the
agreements set forth therein, the Securities will be eligible for resale
pursuant to Rule 144A. No securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as the Notes are listed on any
national securities exchange registered under Section 6 of the Exchange Act or
quoted on an automated inter-dealer quotation system.
(jj) None of the Company or any of its Affiliates (as defined in Rule
501(b) of Regulation D under the Securities Act ("Regulation D")) (other than
the Initial Purchasers, about
10
which no representation is made by the Company), has, directly or through an
agent, engaged or will engage in any form of general solicitation or general
advertising in connection with the offering of the Notes (as those terms are
used in Regulation D) under the Securities Act or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act; the
Company has not entered into any contractual arrangement with respect to the
distribution of the Notes except for this Agreement and the Company will not
enter into any such arrangement.
(kk) None of the Company or any of its affiliates (other than the
Initial Purchasers, about which no representation is made by the Company), has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any "security" (as defined in the
Securities Act) which is or will be integrated with the sale of the Notes in a
manner that would require the registration under the Securities Act of the
Notes.
(ll) The Company has not taken, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company in connection with the offering of the
Notes.
2. PURCHASE, SALE AND DELIVERY OF NOTES.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to sell to
each Initial Purchaser, and each Initial Purchaser agrees, severally and not
jointly, to purchase from the Company, at a purchase price of 97.00% of the
principal amount thereof (the "purchase price") the principal amount of Firm
Notes set forth opposite such Initial Purchaser's name in SCHEDULE I hereto (or
such number increased as set forth in Section 8).
Delivery of and payment for the Firm Notes shall be made at the office
of Brown & Wood LLP, One World Trade Center, New York, New York 10048, at 10:00
a.m. (New York City time) on October 17, 2000, or such later date as the Initial
Purchasers shall designate, which date and time may be postponed by agreement
between the Initial Purchasers and the Company or as provided in Section 8 (such
date and time of delivery and payment for the Firm Notes being herein called the
"First Delivery Date"). Delivery of the Firm Notes shall be made to the Initial
Purchasers against payment of the purchase price by the Initial Purchasers.
Payment for the Firm Notes shall be effected either by wire transfer of
immediately available funds to an account with a bank in The City of New York,
the account number and the ABA number for such bank to be provided by the
Company to the Initial Purchasers at least two business days in advance of the
First Delivery Date, or by such other manner of payment as may be agreed by the
Company and the Initial Purchasers. It is understood that each Initial Purchaser
has authorized the Representatives, for its account, to accept delivery of,
issue a receipt for, and make payment of the purchase price for, the Firm Notes
that it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
representative of the Initial Purchasers, may (but shall not be obligated to)
make payment of the purchase price for the Firm Notes to be purchased by any
Initial Purchaser whose funds have not been received by the First Delivery Date
but such payment shall not relieve such Initial Purchaser from its obligations
hereunder.
11
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants the
Option to the Initial Purchasers to purchase, severally and not jointly, the
Optional Notes at the same price as the Initial Purchasers shall pay for the
Firm Notes and the principal amount of the Optional Notes to be sold to each
Initial Purchaser shall be that principal amount which bears the same ratio to
the aggregate principal amount of Optional Notes being purchased as the
principal amount of Firm Notes set forth opposite the name of such Initial
Purchaser in SCHEDULE I hereto (or such number increased as set forth in Section
8). The Option may be exercised only to cover over-allotments in the sale of the
Firm Notes by the Initial Purchasers. The Option may be exercised once in whole
or in part at any time not more than 30 days subsequent to the date of this
Agreement upon notice in writing or by facsimile by the Representatives to the
Company setting forth the amount (which shall be an integral multiple of $1,000)
of Optional Notes as to which the Initial Purchasers are exercising the Option.
The date for the delivery of and payment for the Optional Notes, being
herein referred to as an "Optional Delivery Date", which may be the First
Delivery Date (the First Delivery Date and the Optional Delivery Date, if any,
being sometimes referred to as a "Delivery Date"), shall be determined by the
Initial Purchasers but shall not be later than five full business days after
written notice of election to purchase Optional Notes is given. Delivery of the
Optional Notes shall be made to the Initial Purchasers against payment of the
purchase price by the Initial Purchasers. Payment for the Optional Notes shall
be effected either by wire transfer of immediately available funds to an account
with a bank in The City of New York, the account number and the ABA number for
such bank to be provided by the Company to the Initial Purchasers at least two
business days in advance of the Optional Delivery Date, or by such other manner
of payment as may be agreed by the Company and the Initial Purchasers. It is
understood that each Initial Purchaser has authorized the Representatives, for
its account, to accept delivery of, issue a receipt for, and make payment of the
purchase price for, the Optional Notes that it has agreed to purchase. ▇▇▇▇▇▇▇
▇▇▇▇▇, individually and not as representative of the Initial Purchasers, may
(but shall not be obligated to) make payment of the purchase price for the
Optional Notes to be purchased by any Initial Purchaser whose funds have not
been received by the Delivery Date but such payment shall not relieve such
Initial Purchaser from its obligations hereunder.
(c) The Company will deliver against payment of the purchase price the
Notes initially sold to qualified institutional buyers ("QIBs"), as defined in
Rule 144A under the Securities Act ("Rule 144A") in the form of one or more
permanent global certificates (the "Global Notes"), registered in the name of
Cede & Co., as nominee for The Depository Trust Company ("DTC"). Beneficial
interests in the Notes initially sold to QIBs will be shown on, and transfers
thereof will be effected only through, records maintained in book-entry form by
DTC and its participants.
The Global Notes will be made available, at the request of the Initial
Purchasers, for checking at least 24 hours prior to such Delivery Date. The
Certificated Notes will be made available, at the request of the Initial
Purchasers, for checking at least 48 hours prior to such Delivery Date.
12
(d) Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligations
of the Initial Purchasers hereunder.
3. FURTHER AGREEMENTS OF THE COMPANY. The Company further agrees with
each Initial Purchaser as follows:
(a) The Company will advise the Initial Purchasers promptly of any
proposal to amend or supplement the Offering Memorandum and not to effect any
such amendment or supplement without the consent of the Initial Purchasers
and/or Brown & Wood LLP, counsel to the Initial Purchasers. Neither the consent
of the Initial Purchasers, nor the Initial Purchaser's delivery of any such
amendment or supplement, shall constitute a waiver of any of the conditions set
forth in Section 5. The Company will immediately notify each Initial Purchaser,
and confirm such notice in writing, of (i) any filing made by the Company of
information relating to the offering of the Notes by the Company with any
securities exchange or any other regulatory body in the United States or any
other jurisdiction, and (ii) prior to the completion of the placement of the
Notes by the Initial Purchasers as evidenced by a notice in writing from the
Initial Purchasers to the Company, any material changes in or affecting the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of the Company which (x) make any statement in the Offering Memorandum
false or misleading or (y) are not disclosed in the Offering Memorandum. In such
event or if during such time any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Offering Memorandum
in order that the Offering Memorandum will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading, to promptly notify the Initial
Purchasers and/or Brown & Wood LLP, counsel to the Initial Purchasers, and
prepare, subject to the first sentence of this Section 3(a), such amendment or
supplement as may be necessary to correct such untrue statement or omission.
(b) The Company will furnish to the Initial Purchasers and to Brown &
Wood LLP, counsel to the Initial Purchasers, copies of the Preliminary Offering
Memorandum and the Offering Memorandum (and all amendments and supplements
thereto) in each case as soon as available and in such quantities as the Initial
Purchasers reasonably request for internal use and for distribution to
prospective purchasers; and to furnish to the Initial Purchasers on the date
hereof four copies of the Offering Memorandum signed by duly authorized officers
of the Company, one of which will include the independent auditors' reports
therein manually signed by such independent auditors. The Company will pay the
expenses of printing and distributing to the Initial Purchasers all such
documents.
(c) The Company will use its reasonable efforts to take such action as
the Initial Purchasers may reasonably request from time to time, to qualify the
Notes and the Conversion Shares for offering and sale under the securities laws
of such jurisdictions as the Initial Purchasers may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in such
jurisdictions in the United States for as long as may be necessary to complete
the resale of the Notes; PROVIDED that in connection therewith, the Company
shall not be required to qualify as a foreign corporation or otherwise subject
itself to taxation in any jurisdiction in which it is not otherwise so qualified
or subject.
13
(d) The Company will apply the proceeds from the sale of the Notes as
set forth under "Use of Proceeds" in the Offering Memorandum.
(e) During a period of 90 days from the date of the Offering
Memorandum, the Company will not, and will cause its directors and officers not
to, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (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 Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(collectively, the "Restricted Securities") or file any registration statement
under the Securities Act with respect to any Restricted Securities, or (ii)
enter into any swap or any other agreement or any transaction (other than the
Operative Documents) that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of any Restricted Securities,
whether any such swap or transaction described in clause (i) or (ii) above is to
be settled by delivery of Restricted Securities, in cash or otherwise. The
foregoing sentence shall not apply to Authorized Grants, the issuance of shares
pursuant to Authorized Warrants, the Old Conversion Shares, the Conversion
Shares or the sale of up to $125 million in the aggregate of the Company's
Common Stock (as measured on the date of such sales(s)) only (x) in a private
placement or (y) in connection with the Company's acquisition of companies. The
Company further agrees not to permit to become effective under the Securities
Act during a period of 90 days from the date of the Offering Memorandum a
registration statement, other than a registration statement on Form S-4 relating
to the acquisition of the entity or of the outstanding securities of the entity
discussed under "Recent Events" in the Offering Memorandum, covering any shares
of the Company's Common Stock sold pursuant to a transaction described in
clauses (x) and (y) above. The Company further agrees to cause each officer and
director of the Company to furnish to the Initial Purchasers, prior to the First
Delivery Date, a letter or letters, in form and substance satisfactory to
counsel to the Initial Purchasers, pursuant to which each such person shall
agree not to enter into any transaction described in clause (i) or (ii) of the
first sentence of this paragraph; PROVIDED, HOWEVER, that such restrictions
shall not apply to the sale of up to 500,000 shares of Common Stock in the
aggregate by all such officers and directors.
(f) The Company agrees that it will not, and will cause its Affiliates
(as defined in Rule 501(b) of Regulation D) not to, directly or indirectly,
solicit any offer to buy, sell or make any offer or sale of, or otherwise
negotiate in respect of, securities of the Company of any class if, as a result
of the doctrine of "integration" referred to in Rule 502 under the Securities
Act, such offer or sale would render invalid (for the purpose of (i) the sale of
the Notes by the Company to the Initial Purchasers, (ii) the resale of the Notes
by the Initial Purchasers to subsequent purchasers or (iii) the resale of the
Notes or Conversion Shares by such subsequent purchasers to others) the
exemption from the registration requirements of the Securities Act provided by
Section 4(2) thereof or by Rule 144A thereunder or otherwise. Notwithstanding
the foregoing, no stockholder of the Company that does not control, is not
controlled by or is not under common control with, an officer or director of the
Company shall be deemed to be an Affiliate for purposes of this paragraph.
(g) For so long as any of the Notes are "restricted securities" within
the meaning of Rule 144(a)(3) under the Securities Act, the Company will provide
to any holder of the Notes or to any prospective purchaser of the Notes
designated by any holder, upon request of such holder
14
or prospective purchaser, information required to be provided by Rule 144A(d)(4)
of the Securities Act if, at the time of such request, the Company is not
subject to the reporting requirements under Section 13 or 15(d) of the Exchange
Act.
(h) Until the expiration of two years after the original issuance of
the Notes, the Company will not, and will cause its Affiliates (as defined in
Rule 501(b) of Regulation D) not to, resell any Notes or Conversion Shares which
are "restricted securities" (as such term is defined under Rule 144(a)(3) under
the Securities Act), whether as beneficial owner or otherwise (except as agent
acting as a securities broker on behalf of and for the account of customers in
the ordinary course of business in unsolicited broker's transactions).
Notwithstanding the foregoing, no stockholder of the Company that does not
control, is not controlled by or is not under common control with, an officer or
director of the Company shall be deemed to be an Affiliate for purposes of this
paragraph.
(i) Each of the Notes will bear, to the extent applicable, the legend
contained in "Notice to Investors" in the Offering Memorandum for the time
period and upon the other terms stated therein, except after the Notes are
resold pursuant to a registration statement effective under the Securities Act.
(j) The Company will take such steps as shall be necessary to ensure
that it shall not become an "investment company" within the meaning of such term
under the Investment Company Act, and the rules and regulations of the
Commission thereunder.
(k) None of the Company or any of its affiliates will take, directly or
indirectly, any action which is designed to stabilize or manipulate, or which
constitutes or which might reasonably be expected to cause or result in
stabilization or manipulation, of the price of any security of the Company in
connection with the offering of the Notes.
(l) The Company will execute and deliver the Registration Rights
Agreement in form and substance satisfactory to the Initial Purchasers.
(m) The Company will use its best efforts to assist the Initial
Purchasers in arranging to cause the Notes to be accepted to trade in the PORTAL
market ("PORTAL") of the National Association of Securities Dealers, Inc.
("NASD").
(n) The Company will use its best efforts to cause the Notes to be
accepted for clearance and settlement through the facilities of DTC.
(o) The Company will use its best efforts to have the Conversion Shares
approved by the Nasdaq National Market ("Nasdaq") for inclusion prior to the
effectiveness of the Registration Statement.
4. EXPENSES. The Company agrees to pay:
(a) the costs incident to the authorization, issuance, sale and
delivery of the Notes, and any taxes payable in that connection;
15
(b) the costs incident to the preparation, printing and distribution of
the Preliminary Offering Memorandum, the Offering Memorandum and any amendment
or supplement to the Offering Memorandum, all as provided in this Agreement;
(c) the costs of producing and distributing the Operative Documents;
(d) the fees and expenses of ▇▇▇▇▇▇ Godward LLP and Ernst & Young LLP;
(e) the costs of distributing the terms of agreement relating to the
organization of the underwriting syndicate and selling group to the members
thereof by mail, telex or other means of communication;
(f) the fees and expenses of qualifying the Notes under the securities
laws of the several jurisdictions as provided in Section 3(c);
(g) all costs and expenses incident to (i) the preparation of the "road
show" presentation materials and (ii) the road show travelling expenses of the
Company;
(h) the costs of preparing the Notes;
(i) all expenses and fees in connection with the application for
inclusion of the Notes in the PORTAL market and the inclusion of the Conversion
Shares on the NASDAQ;
(j) the fees and expenses (including fees and disbursements of counsel)
of the Trustee, and the costs and charges of any registrar, transfer agent,
paying agent or conversion agent; and
(k) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement;
PROVIDED that, except as provided in this Section 4 and in Section 7, the
Initial Purchasers shall pay their own costs and expenses, including the costs
and expenses of their counsel and any transfer taxes on the Notes which they may
sell.
5. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The several
obligations of the Initial Purchasers hereunder are subject to the accuracy,
when made and on each Delivery Date, of the representations and warranties of
the Company contained herein, to the performance by the Company of its
obligations hereunder, and to each of the following additional terms and
conditions:
(a) No Initial Purchaser shall have discovered and disclosed to the
Company prior to or on such Delivery Date that the Offering Memorandum or any
amendment or supplement thereto contains any untrue statement of a fact which,
in the opinion of counsel to the Initial Purchasers, is material or omits to
state any fact which is material and necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
16
(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of the Operative Documents and the Offering
Memorandum or any amendment or supplement thereto, and all other legal matters
relating to the Operative Documents and the transactions contemplated thereby
shall be satisfactory in all material respects to counsel to the Initial
Purchasers, and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.
(c) ▇▇▇▇▇▇ Godward LLP shall have furnished to the Initial Purchasers
their written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated such Delivery Date, in form and substance satisfactory to
the Initial Purchasers, to the effect that:
(i) 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, based solely on certificates of public officials, is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect on the Company, whether or not arising in the ordinary
course of business, and has all corporate power and authority necessary
to own or hold its properties and conduct the businesses in which it is
engaged, as described in the Offering Memorandum; and, to the knowledge
of such counsel, the Company has no subsidiaries;
(ii) the Conversion Shares, which are authorized on the date
hereof, have been duly and validly authorized and reserved for issuance
upon conversion of the Notes by all necessary corporate action and are
free of preemptive rights; all Conversion Shares, when so issued and
delivered upon such conversion in accordance with the terms of the
Indenture, will be duly and validly authorized and issued, fully paid
and nonassessable and free and clear of all liens, encumbrances,
equities or claims imposed by or arising from actions of the Company;
(iii) The statements in the Offering Memorandum under the
captions "Description of the Notes" and "Description of Capital Stock",
insofar as they purport to summarize the provisions of the Indenture,
the Registration Rights Agreement, the Notes and the Common Stock
(including the Conversion Shares) are accurate and complete in all
material respects to the extent required if such statements were
contained in a registration statement on Form S-3 under the Securities
Act;
(iv) There is no restriction upon the voting or transfer of,
any shares of Common Stock pursuant to the Company's certificate of
incorporation or bylaws;
(v) To the knowledge of such counsel and other than as set
forth in the Offering Memorandum, there are no legal or governmental
proceedings pending to which the Company is a party or of which any
property or asset of the Company is the subject which, if determined
adversely to the Company might have a material adverse effect on the
Company or which might reasonably be expected to materially and
adversely affect the consummation of the transactions contemplated by
this Agreement or the performance by the Company of its obligations
hereunder; to the actual knowledge of such counsel, no such proceedings
are overtly threatened or contemplated by governmental authorities or,
except as set forth or contemplated in the Offering Memorandum, overtly
threatened by others; and, to the actual knowledge of
17
such counsel, the aggregate of all pending legal or governmental
proceedings to which the Company is a party or of which any of its
property or assets is the subject (other than the Company's patent
applications currently pending before the U.S. Patent and Trademark
Office or before any foreign governmental authority that administers
the registration of patents) which are not described in the Offering
Memorandum, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a material
adverse effect on the Company.
(vi) The execution, delivery and performance of this
Agreement, the Indenture and the Registration Rights Agreement and the
issuance of the Notes and the Conversion Shares and the consummation of
the transactions contemplated hereby and thereby do not result in any
violation of the provisions of the certificate of incorporation or
bylaws of the Company or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its properties or
assets; and, except as may be required by the securities or "blue sky"
laws of any state of the United States in connection with the sale of
the Notes, no consent, approval, authorization or order of, or filing
or registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement
and the Indenture by the Company and the issuance of the Notes and the
Conversion Shares and the consummation of the transactions contemplated
hereby and thereby;
(vii) No registration of the Notes or the Conversion Shares
under the Securities Act, and no qualification of the Indenture or an
indenture under the Trust Indenture Act, is required in connection with
the offer, sale and delivery of the Notes or in connection with the
conversion of the Notes into Conversion Shares, in each case, in the
manner contemplated by the Offering Memorandum, this Agreement and the
Indenture;
(viii) The statements in the Offering Memorandum under the
caption "Certain United States Federal Income Tax Considerations",
insofar as they purport to constitute summaries of matters of United
States federal income tax law and regulations or legal conclusions with
respect thereto, constitute accurate summaries of the matters described
therein in all material respects to the extent required if such
statements were contained in a registration statement on Form S-3 under
the Securities Act;
(ix) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(x) The Company has all necessary corporate right, power and
authority to execute and deliver each of the Operative Documents to
which it is a party and to perform its obligations thereunder and to
issue, sell and deliver the Notes and the Conversion Shares to the
Initial Purchasers;
18
(xi) This Agreement has been duly authorized, executed and
delivered by the Company;
(xii) The Indenture has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery thereof by the Trustee, constitutes a legally valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms except as the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, subject to general principles of equity and to
limitations on availability of equitable relief, including specific
performance (regardless of whether such enforceability is considered in
a proceeding in equity or at law) or by an implied covenant of good
faith and fair dealing;
(xiii) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery thereof by the Initial
Purchasers, constitutes a valid and legally binding agreement of the
Company enforceable against the Company in accordance with its terms
except as rights to indemnity contained therein may be limited by
applicable law and except as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, subject to general principles of equity and to
limitations on availability of equitable relief, including specific
performance (regardless of whether such enforceability is considered in
a proceeding in equity or at law), by an implied covenant of good faith
and fair dealing; and
(xiv) The Notes have been duly authorized by the Company and
when executed, issued and authenticated in accordance with terms of the
Indenture and delivered to and paid for by the Initial Purchasers, will
constitute legally valid and binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, subject to general principles of
equity and to limitations on availability of equitable relief,
including specific performance (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by
an implied covenant of good faith and fair dealing.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the federal laws of the United States of America,
the laws of the State of New York and the Delaware General Corporation Law and
may state that it is relying, in respect of matters of New York law, upon Brown
& Wood LLP, and in respect of matters of fact, upon certificates of officers of
the Company, PROVIDED that such counsel shall state that it believes that the
Initial Purchasers and it are justified in relying upon such certificates. Such
counsel shall also have furnished to the Initial Purchasers a written statement,
addressed to the Initial Purchasers and dated such Delivery Date, in form and
substance satisfactory to the Initial Purchasers, to the effect that during the
course of preparing the Offering Memorandum, such counsel participated in
conferences with officers and other representatives of the Company, the
Company's independent public accountants, the Initial Purchasers and their
counsel, at which the contents of
19
the Offering Memorandum were discussed, and while such counsel has not
independently verified and is not passing upon the accuracy, completeness or
fairness of the statements made in the Offering Memorandum except as explicitly
set forth above, no facts have come to the attention of such counsel which lead
it to believe that the Offering Memorandum (other than the financial statements,
financial and statistical data and supporting schedules as to which such counsel
shall make no statement), as of its date or as of such Delivery Date, contained
or contains any untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(d) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., General Counsel and Secretary of the
Company, shall have furnished to the Initial Purchasers his written opinion,
addressed to the Initial Purchasers and dated such Delivery Date, in form and
substance satisfactory to the Initial Purchasers, to the effect that:
(i) The authorized, issued and outstanding capital stock of the
Company, as of June 30, 2000, is as set forth in the Offering
Memorandum under the column entitled "Actual" under the caption
"Capitalization", and all of the issued and outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued, are fully paid and nonassessable;
(ii) Except as disclosed in the Offering Memorandum, there are no
preemptive or other rights to subscribe for or to purchase from the
Company, or any restriction upon the voting or transfer of, any shares
of Common Stock pursuant to any agreement or other instrument to which
the Company is a party known to such counsel; the issuance of the
Conversion Shares, upon conversion of the Notes in accordance with the
terms of the Indenture, will not be subject to the preemptive or other
similar rights of any securityholder of the Company and
(iii) The execution, delivery and performance of this Agreement,
the Indenture and the Registration Rights Agreement and the issuance of
the Notes and the Conversion Shares and the consummation of the
transactions contemplated hereby and thereby do not result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which the
Company is a party or by which the Company is bound or to which any of
the property or assets of the Company is subject.
Such counsel shall also have furnished to the Initial Purchasers a
written statement, addressed to the Initial Purchasers and dated such Delivery
Date, in form and substance satisfactory to the Initial Purchasers, to the
effect that he has no reason to believe that the statements under the captions
"Risk Factors--Our patents may not protect our products and our products may
infringe on third-party patent rights" and "Patents and Proprietary Rights" in
the Offering Memorandum, as of its date or as of such Delivery Date, contained
or contains any untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
20
(e) Brown & Wood LLP, shall have furnished to the Initial Purchasers
their written opinion, as counsel to the Initial Purchasers, addressed to the
Initial Purchasers and dated such Delivery Date, in form and substance
satisfactory to the Initial Purchasers.
(f) With respect to the letter of ▇▇▇▇▇ & Young LLP delivered to the
Initial Purchasers concurrently with the execution of this Agreement (the
"initial letter"), the Company shall have furnished to the Initial Purchasers a
letter (the "bring-down letter") of such accountants, addressed to the Initial
Purchasers and dated such Delivery Date (i) confirming that they are independent
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Offering Memorandum, as of a date not more than five
days prior to the date of the bring-down letter), the conclusions and findings
of such firm with respect to the financial information and other matters covered
by the initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(g) The Company shall have furnished to the Initial Purchasers on such
Delivery Date a certificate, dated such Delivery Date and delivered on behalf of
the Company by one of its co-chief executive officers and its chief financial
officer, in form and substance satisfactory to the Initial Purchasers, to the
effect that:
(i) The representations, warranties and agreements of the Company
in Section 1 are true and correct as of the date given and as of such
Delivery Date; and the Company has complied in all material respects
with all its agreements contained herein to be performed prior to or on
such Delivery Date;
(ii) (A) The Company has not sustained since the date of the latest
audited financial statements included in the Offering Memorandum any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, except (x) as
set forth or contemplated in the Offering Memorandum and (y) for
operating losses incurred in the ordinary course of business, or (B)
since such date there has not been any change in the capital stock or
long-term debt of the Company (except for issuances of shares of Common
Stock upon conversion of Old Debentures or exercise of outstanding
options or warrants described in the Offering Memorandum or pursuant to
Authorized Grants, Authorized Warrants or the ▇▇▇▇▇▇▇▇ Issuance), or
any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company, except as
set forth or contemplated in the Offering Memorandum; and
(iii) Such officer has carefully examined the Offering Memorandum
and, in such officer's opinion (A) the Offering Memorandum, as of its
date, did not include any untrue statement of a material fact and did
not omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, and (B) since the date of the Offering Memorandum, no
event has
21
occurred which should have been set forth in a supplement or
amendment to the Offering Memorandum.
(h) The Indenture shall have been duly executed and delivered by the
Company and the Trustee and the Notes shall have been duly executed and
delivered by the Company and duly authenticated by the Trustee.
(i) The Company and the Initial Purchasers shall have executed and
delivered the Registration Rights Agreement (in form and substance satisfactory
to the Initial Purchasers) and the Registration Rights Agreement shall be in
full force and effect.
(j) The NASD shall have accepted the Notes for trading on PORTAL.
(k) (i) The Company shall not have sustained since the date of the
latest audited financial statements included in the Offering Memorandum any loss
or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, except (A) as set forth or contemplated in
the Offering Memorandum and (B) for operating losses incurred in the ordinary
course of business, or (ii) since such date there shall not have been any change
in the capital stock or long-term debt of the Company (except for issuances of
shares of Common Stock upon conversion of Old Debentures or exercise of
outstanding options or warrants described in the Offering Memorandum or pursuant
to Authorized Grants, Authorized Warrants or the ▇▇▇▇▇▇▇▇ Issuance), or any
change, or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity or results
of operations of the Company, except as set forth or contemplated in the
Offering Memorandum, the effect of which, in any such case described in clause
(i) or (ii), is, in the reasonable judgment of the Initial Purchasers, so
material and adverse as to make it impracticable or inadvisable to proceed with
the sale or the delivery of the Notes being delivered on such Delivery Date on
the terms and in the manner contemplated in the Offering Memorandum.
(l) The Company shall have furnished to the Initial Purchasers such
further information, certificates and documents as the Initial Purchasers may
reasonably request to evidence compliance with the conditions set forth in this
Section 5.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
to the Initial Purchasers.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representatives by notice to the Company at any time at or prior to the
First Delivery Date, 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 and 7 shall survive any such termination and remain in full force and
effect.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF INITIAL PURCHASERS.
Each Initial Purchaser, severally and not jointly, represents and warrants that
such Initial Purchaser is a QIB. Each Initial Purchaser, severally and not
jointly, agrees with the Company that:
22
(a) The Notes and the Conversion Shares have not been and will not be
registered under the Securities Act in connection with the initial offering of
the Notes.
(b) Such Initial Purchaser is a QIB;
(c) Such Initial Purchaser will not offer or sell the Notes in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising in the United States; and
(d) Such Initial Purchaser has not offered or sold, and will not offer
or sell, any Notes in the United States except to persons whom it reasonably
believes to be QIBs.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each Initial
Purchaser, its officers and employees and each person, if any, who controls any
Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of the Notes), to which that Initial Purchaser, officer,
employee or controlling person may become subject:
(i) insofar as such loss, claim, damage, liability or action arises
out of, or is based upon: (A) any untrue statement or alleged untrue
statement of a material fact contained in (I) any Preliminary Offering
Memorandum or the Offering Memorandum, or in any amendment or
supplement thereto, or (II) any blue sky application or other document
prepared or executed by the Company (or based upon any written
information furnished by the Company) filed in any jurisdiction
specifically for the purpose of qualifying any or all of the Notes
under the securities laws of any state or other jurisdiction (such
application, document or information being hereinafter called a "Blue
Sky Application"), or (B) the omission or alleged omission to state
therein any material fact necessary to make the statements therein not
misleading; or
(ii) 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 7(c))
any such settlement is effected with the written consent of the
Company,
and shall reimburse each Initial Purchaser and each such officer, employee and
controlling person promptly upon demand for any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇, except as reimbursement of such fees may be limited by Section 7(c)),
reasonably incurred by that Initial Purchaser, officer, employee or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred;
23
PROVIDED, HOWEVER, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Offering Memorandum or the Offering
Memorandum, or in any such amendment or supplement, or in any Blue Sky
Application in reliance upon and in conformity with the written information
furnished to the Company by or on behalf of any Initial Purchaser specifically
for inclusion therein and described in Section 7(e); PROVIDED, FURTHER, that as
to any Preliminary Offering Memorandum, this indemnity agreement shall not inure
to the benefit of any Initial Purchaser, its officers or employees or any person
controlling that Initial Purchaser on account of any loss, claim, damage,
liability or action arising from the sale of Notes to any person by that Initial
Purchaser if that Initial Purchaser failed to send or give a copy of the
Offering Memorandum, as the same may be amended or supplemented, to that person,
and the untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact in such Preliminary
Offering Memorandum was corrected in the Offering Memorandum, unless such
failure resulted from non-compliance by the Company with Section 3(b). The
foregoing indemnity agreement is in addition to any liability which the Company
may otherwise have to any Initial Purchaser or to any officer, employee or
controlling person of that Initial Purchaser.
(b) Each Initial Purchaser, severally and not jointly, shall indemnify
and hold harmless, the Company, its officers and directors, and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof, to which the
Company or any such director, officer or controlling person may become subject,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon:
(i) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto, or in any Blue
Sky Application, or
(ii) the omission or alleged omission to state therein any material
fact necessary to make the statements therein not misleading,
but in each case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with the written information furnished to the Company by or on behalf
of that Initial Purchaser specifically for inclusion therein and described in
Section 7(e), and shall reimburse the Company and any such director, officer or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any Initial Purchaser may otherwise have to the Company or any such
director, officer or controlling person.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 7, notify the
24
indemnifying party in writing of the claim or the commencement of that action;
PROVIDED, HOWEVER, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 7 except to
the extent it has been materially prejudiced by such failure and, PROVIDED,
FURTHER, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise than
under this Section 7. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; PROVIDED,
HOWEVER, that the Initial Purchasers shall have the right to employ counsel to
represent jointly the Initial Purchasers and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Initial Purchasers
against the Company under this Section 7, if the Initial Purchasers shall have
reasonably concluded that there may be one or more legal defenses available to
the Initial Purchasers and their respective officers, employees and controlling
persons that are different from or additional to those available to the Company
and its officers, employees and controlling persons, the fees and expenses of a
single separate counsel shall be paid by the Company. No indemnifying party
shall:
(i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld) settle or compromise
or consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim
or action) unless such settlement, compromise or consent (1) includes
an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding and (2) 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, or
(ii) be liable for any settlement of any such action effected
without its written consent (which consent shall not be unreasonably
withheld) but if settled with its written consent or if there be a
final judgment of the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from
and against any loss of liability by reason of such settlement or
judgment.
(d) If the indemnification provided for in this Section 7 shall for any
reason be unavailable or insufficient to hold harmless an indemnified party
under Section 7(a) or 7(b) in respect of any loss, claim, damage or liability,
or any action in respect thereof, referred to therein, each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof:
25
(i) in such proportion as shall be appropriate to reflect the
relative benefits received by the Company on the one hand and the
Initial Purchasers on the other from the offering of the Notes, or
(ii) if the allocation provided by clause 7(d)(i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 7(d)(i) but also the
relative fault of the Company on the one hand and the Initial
Purchasers on the other with respect to the statements or omissions or
alleged statements or alleged omissions that resulted in such loss,
claim, damage or liability (or action in respect thereof), as well as
any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other with respect to such offering shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Notes purchased under this Agreement (before deducting expenses) received by the
Company on the one hand, and the total discounts and commissions received by the
Initial Purchasers with respect to the Notes purchased under this Agreement, on
the other hand, bear to the total gross proceeds from the offering of the Notes
under this Agreement, in each case as set forth in the table on the cover page
of the Offering Memorandum.
The relative fault shall be determined by reference to whether the
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 the Initial Purchasers, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if the amount of contributions pursuant to this Section 7(d) were
to be determined by PRO RATA allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section 7(d) shall be deemed to include, for purposes of this
Section 7(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, preparing or defending any
such litigation, investigation or proceeding by any governmental agency or body,
or commenced or threatened action or claim.
Notwithstanding the provisions of this Section 7(d), no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Notes resold by it in the initial placement
of such Notes were offered to investors exceeds the amount of any damages which
such Initial Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
26
For purposes of this Section 7(d), each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Initial Purchaser, and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution as the Company. The Initial
Purchasers' obligations to contribute as provided in this Section 7(d) are
several in proportion to their respective purchase obligations and not joint.
(e) The Initial Purchasers severally confirm that the statements (i)
with respect to the offering of the Notes set forth in the third sentence of the
ninth paragraph on the cover page of the Offering Memorandum; (ii) in the third
sentence of the second paragraph under the heading "Plan of Distribution" in the
Offering Memorandum; (iii) in the fourth paragraph under "Plan of Distribution";
(iv) in the first paragraph under the heading "Plan of Distribution--Commissions
and Discounts" in the Offering Memorandum; (v) in the paragraph under the
heading "Plan of Distribution--Notes Are Not Being Registered" in the Offering
Memorandum; (vi) in the third and fourth sentences of the first paragraph under
the heading "Plan of Distribution--New Issue of Notes" in the Offering
Memorandum; and (vii) in the first and third sentences of the first paragraph
under the heading "Plan of Distribution--Price Stabilization and Short
Positions" in the Offering Memorandum are correct and constitute the only
information furnished in writing to the Company by or on behalf of the Initial
Purchasers specifically for inclusion in the Offering Memorandum.
8. DEFAULTING INITIAL PURCHASERS.
If, on any Delivery Date, any Initial Purchaser defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Initial Purchasers shall be obligated to purchase the aggregate
principal amount of Notes which the defaulting Initial Purchaser agreed but
failed to purchase on such Delivery Date in the respective proportions which the
total aggregate principal amount of Notes set opposite the name of each
remaining non-defaulting Initial Purchaser in Schedule 1 hereto bears to the
total aggregate principal amount of Notes set opposite the names of all the
remaining non-defaulting Initial Purchasers in Schedule 1 hereto; PROVIDED,
HOWEVER, that the remaining non-defaulting Initial Purchasers shall not be
obligated to purchase any Notes on such Delivery Date if the total aggregate
principal amount of Notes which the defaulting Initial Purchasers agreed but
failed to purchase on such date exceeds 9.09% of the total aggregate principal
amount at maturity of Notes to be purchased on such Delivery Date, and any
remaining non-defaulting Initial Purchaser shall not be obligated to purchase
more than 110% of the aggregate principal amount at maturity of Notes which it
agreed to purchase on such Delivery Date pursuant to the terms of Section 2. If
the foregoing maximums are exceeded, the remaining non-defaulting Initial
Purchasers, or those other purchasers satisfactory to the Initial Purchasers who
so agree, shall have the right, but shall not be obligated, to purchase on such
Delivery Date, in such proportion as may be agreed upon among them, the total
aggregate principal amount of Notes to be purchased on such Delivery Date. If
the remaining Initial Purchasers or other purchasers satisfactory to the Initial
Purchasers do not elect to purchase on such Delivery Date the aggregate
principal amount of Notes which the defaulting Initial Purchasers agreed but
failed to purchase, this Agreement (or with respect to the Optional Delivery
Date, the obligation of the Initial Purchasers to purchase the Optional Notes)
shall terminate without liability on the part of any non-defaulting Initial
Purchasers and
27
the Company, except that the Company will continue to be liable for the payment
of expenses to the extent set forth in Sections 4 and 10. As used in this
Agreement, the term "Initial Purchaser" includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 8, purchases Notes which a
defaulting Initial Purchaser agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Initial Purchaser
of any liability it may have to the Company for damages caused by its default.
If other purchasers are obligated or agree to purchase the Notes of a defaulting
or withdrawing Initial Purchaser, either the remaining non-defaulting Initial
Purchasers or the Company may postpone the Delivery Date for up to seven full
business days in order to effect any changes in the Offering Memorandum or in
any other document or arrangement that, in the opinion of counsel to the Company
or counsel to the Initial Purchasers, may be necessary.
9. TERMINATION.
(a) The obligations of the Initial Purchasers hereunder may be
terminated by the Initial Purchasers by notice given to and received by the
Company prior to delivery of and payment for the Notes if, prior to that time:
(i) there has occurred one of the events described in Section 5(k), or (ii)
there has occurred any material adverse change in the financial markets in the
United States, 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
Representatives, impracticable to market the Notes or to enforce contracts for
the sale of the Notes, or (iii) 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 Stock 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) a banking moratorium has been
declared by either Federal or New York authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 10 and PROVIDED, FURTHER, that Sections 1, 7 and 13 shall
survive such termination and remain in full force and effect.
10. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES. If (a) the Company
shall fail to tender the Notes for delivery to the Initial Purchasers for any
reason permitted under this Agreement or (b) the Initial Purchasers shall
decline to purchase the Notes for any reason permitted under this Agreement
(including the termination of this Agreement pursuant to Section 9), the Company
shall reimburse the Initial Purchasers for the fees and expenses of their
counsel and for such other out-of-pocket expenses as shall have been incurred by
them in connection with this Agreement and the proposed purchase of the Notes,
and upon demand the Company shall pay the full amount thereof to the Initial
Purchasers. If this Agreement is terminated pursuant to Section 8 by reason of
the default of one or more Initial Purchasers, the
28
Company shall not be obligated to reimburse any defaulting Initial Purchaser on
account of those expenses.
11. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail,
telex or facsimile transmission to c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., North Tower, World
Financial Center, New York, New York 10281, Attention: ▇▇▇▇ ▇. ▇▇▇▇ (Fax:
▇▇▇-▇▇▇-▇▇▇▇); and
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to Inhale Therapeutic Systems, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. (Fax:
▇▇▇-▇▇▇-▇▇▇▇).
PROVIDED, HOWEVER, that any notice to an Initial Purchaser pursuant to Section
7(c) shall be delivered or sent by mail, telex or facsimile transmission to each
such Initial Purchaser, which address will be supplied to any other party hereto
by ▇▇▇▇▇▇ Brothers Inc. upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by ▇▇▇▇▇▇▇ ▇▇▇▇▇.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the officers and
employees of each Initial Purchaser and the person or persons, if any, who
control each Initial Purchaser within the meaning of Section 15 of the
Securities Act and any indemnity agreement of the Initial Purchasers contained
in Section 7(b) of this Agreement shall be deemed to be for the benefit of
directors, officers and employees of the Company, and any person controlling the
Company within the meaning of Section 15 of the Securities Act. Nothing
contained in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section 12, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
13. SURVIVAL. The respective indemnities, representations, warranties
and agreements of the Company and the Initial Purchasers contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Notes and shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any of them or
any person controlling any of them.
14. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the rules and regulations promulgated under the
Securities Act.
29
15. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
30
If the foregoing correctly sets forth the agreement between the Company
and the Initial Purchasers, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
INHALE THERAPEUTIC SYSTEMS, INC.
By: ___________________________
Name:
Title:
Accepted and agreed by:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
DEUTSCHE BANK SECURITIES INC.
▇▇▇▇▇▇ BROTHERS INC.
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: _________________________________
Authorized Representative
31
SCHEDULE 1
PRINCIPAL AMOUNT
INITIAL PURCHASERS OF FIRM NOTES
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ..........................................$100,000,000
Deutsche Bank Securities Inc...........................................$60,000,000
▇▇▇▇▇▇ Brothers Inc. ..................................................$24,000,000
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.........................................$16,000,000
Total............................................................$200,000,000