NEW RIVER PHARMACEUTICALS INC. (a Virginia corporation)
(a
Virginia corporation)
3.50%
Convertible Subordinated Notes due 2013
Dated:
July 19, 2006
(a
Virginia corporation)
$125,000,000
3.50%
Convertible Subordinated Notes due 2013
July
19,
2006
▇▇▇▇▇▇▇
▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇.▇.
▇▇▇▇▇▇▇▇▇ + Co., LLC
|
c/▇
|
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
|
Incorporated
|
4
World Financial Center
|
Ladies
and Gentlemen:
New
River
Pharmaceuticals Inc., a Virginia corporation (the “Company”), confirms its
agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated (“▇▇▇▇▇▇▇ ▇▇▇▇▇”) and ▇.▇. ▇▇▇▇▇▇▇▇▇ + Co., LLC (together
with ▇▇▇▇▇▇▇ ▇▇▇▇▇, the “Initial Purchasers”), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ is acting
as representative, with respect to (i) 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 Schedule A hereto of $125,000,000
aggregate principal amount of the Company’s Convertible Subordinated Notes due
2013 (the “Initial Securities”) and (ii) the grant by the Company to the Initial
Purchasers of the option described in Section 2(b) hereof to purchase all
or any
part of an additional $18,750,000 aggregate principal amount of the Company’s
Convertible Subordinated Notes due 2013 (the “Option Securities” and together
with the Initial Securities, the “Securities”). The Securities are to be issued
pursuant to an indenture to be dated as of July 25, 2006 (the “Indenture”)
between the Company and The Wilmington Trust Company, as trustee (the
“Trustee”). The Securities issued in book-entry form will be issued to Cede
& Co. as nominee of The Depository Trust Company (“DTC”).
The
Securities are convertible, subject to certain conditions as described in
the
Final Offering Memorandum (as defined below), prior to maturity (unless
previously redeemed or otherwise purchased) into shares of common stock,
par
value $0.001 per share, of the Company (the “Common Stock”) in accordance with
the terms of the Securities and the Indenture.
The
Company understands that the Initial Purchasers propose to make an offering
of
the Securities on the terms and in the manner set forth herein and agrees
that
the Initial Purchasers may resell, subject to the conditions set forth herein,
all or a portion of the Securities to purchasers (“Subsequent Purchasers”) at
any time after this Agreement has been executed and delivered. The Securities
are to be offered and sold through the Initial Purchasers without being
registered under the Securities Act of 1933, as amended (the “1933 Act”), in
reliance upon exemptions therefrom. Pursuant to the terms of the Securities
and
the Indenture, investors that acquire Securities may only resell or otherwise
transfer such Securities if such Securities are hereafter registered under
the
1933 Act or if an exemption from the registration requirements of the 1933
Act
is available (including the exemption afforded by Rule 144A (“Rule 144A”) of the
rules and regulations promulgated under the 1933 Act by the Securities and
Exchange Commission (the “Commission”)). On or prior to the Initial Closing Time
(as defined below), the Company will enter into a registration rights agreement
with ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “Registration Rights Agreement”), pursuant to which,
subject to the conditions set forth therein, the Company will be required
to
file and use its commercially reasonable efforts to have declared effective
a
registration statement (the “Registration Statement”) under the 1933 Act to
register resales of the Securities and the shares of Common Stock issuable
upon
conversion thereof.
The
Company has (a) prepared and delivered to each Initial Purchaser copies of
(i) a
preliminary offering memorandum dated July 18, 2006 and (ii) a pricing term
sheet dated July 19, 2006, attached hereto as Schedule B, which includes
the
pricing terms and other information with respect to the Securities and other
matters not included in the Preliminary Offering Memorandum, as defined below
(the “Pricing Term Sheet”) and (b) has prepared and will deliver to each Initial
Purchaser, as promptly as possible prior to the Initial Closing Time, copies
of
a final offering memorandum dated July 19, 2006 (the “Final Offering
Memorandum”), each for use by such Initial Purchaser in connection with its
solicitation of purchases of, or offering of, the Securities. “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, if any, 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 Securities.
All
references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” in the Offering
Memorandum (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information
which
are incorporated by reference in the Offering Memorandum; and all references
in
this Agreement to amendments or supplements to the Offering Memorandum shall
be
deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934, as amended (the “1934 Act”) which is incorporated by
reference in the Offering Memorandum.
The
preliminary offering memorandum dated July 18, 2006, as amended and supplemented
immediately prior to the Applicable Time (as defined below), including any
documents filed under the 1934 Act prior to the Applicable Time and incorporated
by reference therein, is referred to herein as the “Preliminary Offering
Memorandum,” and the Preliminary Offering Memorandum together with the Pricing
Term Sheet are collectively referred to herein as the “Disclosure Package.”
“Applicable Time” means 7:00 A.M. (Eastern Time) on July 20, 2006 or such other
time as agreed by the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION
1. Representations
and Warranties by the Company.
(a) Representations
and Warranties.
The
Company represents and warrants to each Initial Purchaser as of the Applicable
Time and as of Closing Time referred to in Section 2(c) hereof, and agrees
with
each Initial Purchaser, as follows:
(i) Disclosure
Package and Final Offering Memorandum.
As of
the Applicable Time, neither (x) the Disclosure Package nor (y) any individual
Supplemental Offering Materials (as defined below), when considered together
with the Disclosure Package, and at the Closing Time, neither the Disclosure
Package, the Final Offering Memorandum, nor any individual Supplemental Offering
Document (as defined below), when considered together with the Disclosure
Package, will include any untrue statement of a material fact or omit to
state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
2
“Supplemental
Offering Materials” means any “written communication” (within the meaning of the
1933 Act Regulations (as defined below)) prepared by or on behalf of the
Company, or used or referred to by the Company, that constitutes an offer
to
sell or a solicitation of an offer to buy the Securities other than the Offering
Memorandum or amendments or supplements thereto (including the Pricing Term
Sheet), including, without limitation, any road show relating to the Securities
that constitutes such a written communication.
As
of its
issue date and as of the Closing Time, the Final 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 under which they were made, not misleading.
The
representation and warranties in this subsection shall not apply to statements
in or omissions from the Disclosure Package or the Final Offering Memorandum
made in reliance upon and in conformity with written information furnished
to
the Company by any Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for
use
therein. The Company has not distributed, and the Company will not distribute,
prior to the later of the Closing Time and the completion of the Initial
Purchasers’ distribution of the Securities, which shall be deemed to be no later
than the Closing Time unless the Company otherwise receives notice from ▇▇▇▇▇▇▇
▇▇▇▇▇, any offering material in connection with the offering and sale of
the
Securities other than the Preliminary Offering Memorandum, the Final Offering
Memorandum and the Disclosure Package.
(ii) Incorporated
Documents.
The
Offering Memorandum as delivered from time to time shall incorporate by
reference the most recent Annual Report of the Company on Form 10-K filed
with
the Commission and each Quarterly Report of the Company on Form 10-Q and
each
Current Report of the Company on Form 8-K filed with the Commission since
the
end of the fiscal year to which such Annual Report relates. The documents
incorporated or deemed to be incorporated by reference in the Offering
Memorandum at the time they were or hereafter are filed with the Commission
complied and will comply in all material respects with the requirements of
the
1934 Act and the rules and regulations of the Commission thereunder (the
“1934
Act Regulations”), and, when read together with the other information in the
Disclosure Package at the Applicable Time, and the Disclosure Package and
the
Final Offering Memorandum at the Closing Time, did not and will not include
an
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary to make the statements therein not
misleading.
(iii) Independent
Accountants.
The
accountants who certified the financial statements and supporting schedules
included in the Disclosure Package and the Final Offering Memorandum are
independent public accountants with respect to the Company and its subsidiary
within the meaning of the 1933 Act and the rules and regulations thereunder
(the
“1933 Act Regulations”).
(iv) Financial
Statements.
The
financial statements, together with the related schedules and notes, included
in
the Disclosure Package and the Final Offering Memorandum, present fairly
the
financial position of the Company and its subsidiary at the dates indicated
and
the statement of operations, shareholders’ equity and cash flows of the Company
and its subsidiary for the periods specified, except as noted in the notes
thereto; said financial statements have been prepared in conformity with
generally accepted accounting principles (“GAAP”) applied on a consistent basis
throughout the periods involved. The supporting schedules, if any, included
in
the Disclosure Package and the Final Offering Memorandum, present fairly
in
accordance with GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the Disclosure
Package and the Final 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 Disclosure Package and the Final Offering
Memorandum.
3
(v) No
Material Adverse Change in Business.
Since
the respective dates as of which information is given in the Disclosure Package
and the Final Offering Memorandum, except as otherwise stated therein, (A)
there
has been no material adverse change in the condition, financial or otherwise,
or
in the earnings, business affairs or business prospects of the Company and
its
subsidiary considered as one enterprise, whether or not arising in the ordinary
course of business (a “Material Adverse Effect”), (B) there have been no
transactions entered into by the Company or its subsidiary, other than those
in
the ordinary course of business, which are material with respect to the Company
and its subsidiary considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company
on
any class of its capital stock.
(vi) Good
Standing of the Company.
The
Company has been duly organized and is validly existing as a corporation
in good
standing under the laws of the Commonwealth of Virginia and has corporate
power
and authority to own, lease and operate its properties and to conduct its
business as described in the Disclosure Package and the Final Offering
Memorandum and to enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or
the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vii) Good
Standing of the Company’s Subsidiary.
Lotus
Biochemical (Bermuda) Ltd., a Bermuda corporation and the Company’s only
subsidiary, has been duly organized and is validly existing as a corporation
in
good standing under the laws of Bermuda, has corporate power and authority
to
own, lease and operate its properties and to conduct its business as described
in the Disclosure Package and the Final Offering Memorandum and is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by
reason
of the ownership or leasing of property or the conduct of business, except
where
the failure so to qualify or to be in good standing would not result in a
Material Adverse Effect; except as otherwise disclosed in the Disclosure
Package
and the Final Offering Memorandum, all of the issued and outstanding capital
stock of Lotus Biochemical (Bermuda) Ltd. has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company directly,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; none of the outstanding shares of capital stock of Lotus
Biochemical (Bermuda) Ltd. was issued in violation of any preemptive or similar
rights of any securityholder of Lotus Biochemical (Bermuda) Ltd.
4
(viii) Capitalization
and Other Capital Stock Matters.
The
total shareholders’ equity of the Company is as set forth in the Disclosure
Package and the Final Offering Memorandum in the column entitled “Actual” under
the caption “Capitalization” as of the respective dates set forth therein, and
the actual, authorized, issued and outstanding number of shares of Common
Stock
of the Company is as set forth in the section entitled “Description of Capital
Stock” in the Final Offering Memorandum as of the date set forth therein, and
there have been no changes to such amounts (except for subsequent issuances,
if
any, pursuant to this Agreement, pursuant to reservations, agreements, employee
benefit plans referred to in the Disclosure Package and the Final Offering
Memorandum or pursuant to the exercise of convertible securities or options
referred to in the Disclosure Package and the Final Offering Memorandum).
The
Common Stock conforms in all material respects to the description thereof
set
forth in the Disclosure Package and the Final Offering Memorandum. All of
the
outstanding shares of Common Stock have been duly authorized and validly
issued,
are fully paid and nonassessable and have been issued in compliance with
federal
and state securities laws. Upon issuance and delivery of the Securities in
accordance with this Agreement and the Indenture, the Securities will be
convertible at the option of the holder thereof into shares of Common Stock
in
accordance with the terms of the Securities and the Indenture; the shares
of
Common Stock issuable upon conversion of the Securities have been duly
authorized and reserved for issuance upon such conversion by all necessary
corporate action and such shares, when issued upon such conversion in accordance
with the terms of the Securities, will be validly issued and will be fully
paid
and non-assessable; no holder of such shares will be subject to personal
liability by reason of being such a holder; and the issuance of such shares
upon
such conversion will not be subject to the preemptive or other similar rights
of
any securityholder of the Company. None of the outstanding shares of Common
Stock were issued in violation of any preemptive rights, rights of first
refusal
or other similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital
stock of the Company or its subsidiary other than those accurately described
in
the Disclosure Package and the Final Offering Memorandum. The description
of the
Company’s stock option, stock bonus and other stock plans or arrangements, and
the options or other rights granted thereunder, set forth or incorporated
by
reference in the Disclosure Package and the Final Offering Memorandum,
accurately and fairly describes such plans, arrangements, options and rights
in
all material respects.
(ix) Stock
Exchange Listing.
The
Common Stock is registered pursuant to Section 12(g) of the 1934 Act and
is
listed on the Nasdaq National Market (the “NASDAQ”), and the Company has taken
no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the 1934 Act or delisting the Common
Stock from the NASDAQ, nor has the Company received any notification that
the
Commission or the NASDAQ is contemplating terminating such registration or
listing.
(x) Corporate
Power.
The
Company has full right, power and authority to execute and deliver this
Agreement, the Securities, the Indenture, the Registration Rights Agreement,
the
OTC Convertible Note Hedge, the OTC Warrant Transaction and the Forward Stock
Purchase Transaction (collectively, the “Transaction Documents”) and to perform
its obligations hereunder and thereunder; and all action required to be taken
for the due and proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions contemplated
thereby has been duly and validly taken.
(xi) Authorization
of Agreement.
This
Agreement has been duly authorized, executed and delivered by the
Company.
(xii) Authorization
of the Indenture.
The
Indenture has been duly authorized by the Company and, when executed and
delivered by the Company and the Trustee, will constitute a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to
or
affecting enforcement of creditors’ rights generally and by general principles
of equity (regardless of whether enforcement is considered in a proceeding
in
equity or at law).
5
(xiii) Authorization
of the Registration Rights Agreement.
The
Registration Rights Agreement has been duly authorized by the Company and,
at
the Initial Closing Time, will be duly executed and delivered by, and will
constitute a valid and binding agreement of, the Company, enforceable in
accordance with its terms, except as the enforcement thereof may be limited
by
bankruptcy, insolvency (including, without limitation, all laws relating
to
fraudulent transfers), reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors’ rights generally, by general
principles of equity (regardless of whether enforcement is considered in
a
proceeding in equity or at law) and, as to rights of indemnification, by
principles of public policy.
(xiv) Authorization
of the Securities.
The
Securities have been duly authorized and, at Closing Time, will have been
duly
executed by the Company and, when authenticated, issued and delivered in
the
manner provided for in the Indenture and delivered against payment of the
purchase price therefor as provided in this Agreement, will constitute valid
and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited
by
bankruptcy, insolvency (including, without limitation, all laws relating
to
fraudulent transfers) reorganization, moratorium or other similar laws affecting
enforcement of creditors’ rights generally and by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at
law), and will be in the form contemplated by, and entitled to the benefits
of,
the Indenture.
(xv) Description
of Transaction Documents.
The
description of the Transaction Documents and the rights, preferences and
privileges of the capital stock of the Company, including the shares of Common
Stock issuable upon conversion of the Securities, contained in the Disclosure
Package and the Final Offering Memorandum, are accurate in all material
respects.
(xvi) Absence
of Defaults and Conflicts.
Neither
the Company nor its subsidiary is in violation of its charter or by-laws
or in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, deed of trust,
loan
or credit agreement, note, lease or other agreement or instrument to which
the
Company or its subsidiary is a party or by which or any of them may be bound,
or
to which any of the property or assets of the Company or its subsidiary is
subject (collectively, “Agreements and Instruments”) except for such defaults
that would not result in a Material Adverse Effect; and the execution, delivery
and performance of the Transaction Documents and any other agreement or
instrument entered into or issued or to be entered into or issued by the
Company
in connection with the transactions contemplated hereby or thereby or in
the
Disclosure Package and the Final Offering Memorandum and the consummation
of the
transactions contemplated herein and in the Disclosure Package and the Final
Offering Memorandum (including the issuance and sale of the Securities and
the
use of the proceeds from the sale of the Securities as described in the
Disclosure Package and the Final Offering Memorandum under the caption “Use of
Proceeds”) and compliance by the Company with its obligations hereunder do not
and will not, whether with or without the giving of notice or passage of
time or
both, conflict with or constitute a breach of, or default or Repayment Event
(as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or its
subsidiary pursuant to, the Agreements and Instruments except for such
conflicts, breaches or defaults or Repayment Events or liens, charges or
encumbrances that, singly or in the aggregate, would not result in a Material
Adverse Effect, nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or its subsidiary or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or its subsidiary or any of their assets,
properties or operations. As used herein, a “Repayment Event” means any event or
condition which gives the holder of any note, debenture or other evidence
of
indebtedness (or any person acting on such holder’s behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or its subsidiary.
6
(xvii) Absence
of Labor Dispute.
No
labor dispute with the employees of the Company or its subsidiary exists
or, to
the knowledge of the Company, is imminent, and the Company is not aware of
any
existing or imminent labor disturbance by the employees of any of its or
its
subsidiary’s principal suppliers, manufacturers, customers or contractors,
which, in either case, would result in a Material Adverse Effect.
(xviii) Absence
of Proceedings.
There
is no action, suit, proceeding, inquiry or investigation before or brought
by
any court or governmental agency or body, domestic or foreign, now pending,
or,
to the knowledge of the Company, threatened, against or affecting the Company
or
its subsidiary which might result in a Material Adverse Effect, or which
might
materially and adversely affect the properties or assets of the Company or
its
subsidiary or the consummation of the transactions contemplated by this
Agreement or the performance by the Company of its obligations hereunder.
The
aggregate of all pending legal or governmental proceedings to which the Company
or its subsidiary is a party or of which any of their respective property
or
assets is the subject which are not described in the Disclosure Package and
the
Final Offering Memorandum, including ordinary routine litigation incidental
to
the business, could not reasonably be expected to result in a Material Adverse
Effect.
(xix) Absence
of Manipulation.
Neither
the Company nor any affiliate, as such term is defined in Rule 501(b) under
the 1933 Act (“Affiliate”), of the Company has taken, nor will the Company or
any Affiliate of the Company take, directly or indirectly, any action which
is
designed to or which has constituted or which would be expected to cause
or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(xx) Possession
of Intellectual Property.
The
Company and its subsidiary own or possess adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names or other intellectual
property (collectively, “Intellectual Property”) related to the business now
operated by them, and neither the Company nor its subsidiary has received
any
notice or is otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any facts
or
circumstances which would render any Intellectual Property invalid or inadequate
to protect the interest of the Company or its subsidiary therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling
or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
(xxi) Absence
of Further Requirements.
Subject
to compliance by the Initial Purchasers with the representations and warranties
of the Initial Purchasers and the procedures set forth in Section 6 hereof,
no filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority
or
agency is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale
of the
Securities hereunder or the consummation of the transactions contemplated
by the
Transaction Documents or for the due execution, delivery or performance of
the
Transaction Documents by the Company, except (A) such as have been already
obtained or will be made on or prior to the Initial Closing Time and (B) as
may be required under the securities or blue sky laws of the various states
in
which the Securities will be offered or sold and the 1933 Act with respect
to
the registration of the resale of the Securities under the 1933 Act pursuant
to
the Registration Rights Agreement.
7
(xxii) Possession
of Licenses and Permits.
The
Company and its subsidiary possess such permits, licenses, approvals, consents
and other authorizations (collectively, “Governmental Licenses”) issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure
so to possess would not, singly or in the aggregate, result in a Material
Adverse Effect; the Company and its subsidiary are in compliance with the
terms
and conditions of all such Governmental Licenses, except where the failure
so to
comply would not, singly or in the aggregate, result in a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and
effect,
except where the invalidity of such Governmental Licenses or the failure
of such
Governmental Licenses to be in full force and effect would not, singly or
in the
aggregate, result in a Material Adverse Effect; and neither the Company nor
its
subsidiary has received any notice of proceedings relating to the revocation
or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would
result in a Material Adverse Effect.
(xxiii) Title
to Property.
The
Company and its subsidiary have good and marketable title to all real property
owned by the Company and its subsidiary and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind except
such
as (a) are described in the Disclosure Package and the Final Offering Memorandum
or (b) do not, singly or in the aggregate, materially affect the value of
such
property and do not interfere with the use made and proposed to be made of
such
property by the Company or its subsidiary; and all of the leases and subleases
material to the business of the Company and its subsidiary, considered as
one
enterprise, and under which the Company or its subsidiary holds properties
described in the Disclosure Package and the Final Offering Memorandum, are
in
full force and effect, and neither the Company nor its subsidiary has any
notice
of any material claim of any sort that has been asserted by anyone adverse
to
the rights of the Company or its subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or
its
subsidiary thereof to the continued possession of the leased or subleased
premises under any such lease or sublease.
(xxiv) Environmental
Laws.
Except
as described in the Disclosure Package and the Final Offering Memorandum
and
except such matters as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor its subsidiary is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of
human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products, asbestos-containing
materials or mold (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the
Company and its subsidiary have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
with
their requirements, (C) there are no pending or, to the Company’s knowledge,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or its subsidiary and (D) there are no events or circumstances that
would reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or its subsidiary
relating to Hazardous Materials or Environmental Laws.
8
(xxv) Accounting
Controls and Disclosure Controls.
The
Company and its subsidiary considered as one enterprise maintain a system
of
internal accounting controls sufficient to provide reasonable assurances
that
(A) transactions are executed in accordance with management’s general or
specific authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets; (C) access to assets is permitted only in accordance
with management’s general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Except as described in the Disclosure Package or Final Offering Memorandum,
since the end of the Company’s most recent audited fiscal year, there has been
(1) no material weakness in the Company’s internal control over financial
reporting (as defined in Rules 13a-15 and 15d-15 under the 1934 Act
Regulations) (whether or not remediated) and (2) no change in the Company’s
internal control over financial reporting that has materially affected, or
is
reasonably likely to materially affect, the Company’s internal control over
financial reporting. The Company and its subsidiary employ disclosure controls
and procedures (as defined in Rules 13a-15 and 15d-15 under the 1934 Act
Regulations) that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
1934
Act is recorded, processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms, and is accumulated and
communicated to the Company’s management, including its principal executive
officer or officers and principal financial officer or officers, as appropriate,
to allow timely decisions regarding disclosure.
(xxvi) Compliance
with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
There
is and has been no failure on the part of the Company or any of the Company’s
directors or officers, in their capacities as such, to comply in all material
respects with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules
and
regulations promulgated in connection therewith (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”),
including Section 402 related to loans and Sections 302 and 906 related to
certifications.
(xxvii) Payment
of Taxes.
All
United States federal income tax returns of the Company and its subsidiary
required by law to be filed have been filed and all taxes shown by such returns
or otherwise assessed, which are due and payable, have been paid, except
assessments against which appeals have been or will be promptly taken and
as to
which adequate reserves have been provided. For the United States federal
income
tax returns of the Company through the fiscal year ended January 1, 2006,
no assessment in connection therewith has been made against the Company.
The
Company and its subsidiary have filed all other tax returns that are required
to
have been filed by them pursuant to applicable foreign, state, local or other
law except insofar as the failure to file such returns would not result in
a
Material Adverse Effect, and has paid all taxes due pursuant to such returns
or
pursuant to any assessment received by the Company and its subsidiary, except
for such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. The charges, accruals and reserves
on the
books of the Company in respect of any income and corporation tax liability
for
any years not finally determined are adequate (in accordance with GAAP) to
meet
any assessments or re-assessments for additional income tax for any years
not
finally determined, except to the extent of any inadequacy that would not
result
in a Material Adverse Effect.
9
(xxviii) Insurance.
The
Company and its subsidiary carry or are entitled to the benefits of insurance
in
such amounts and covering such risks as is generally maintained by companies
of
similar size engaged in the same or similar business, and all such insurance
is
in full force and effect. The Company has no reason to believe that it or
its
subsidiary will not be able (A) to renew its existing insurance coverage
as and
when such policies expire or (B) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as
now
conducted and at a cost that would not result in a Material Adverse Change.
Neither of the Company nor its subsidiary has been denied any insurance coverage
which it has sought or for which it has applied.
(xxix) Statistical
and Market-Related Data.
Any
statistical and market-related data included in the Disclosure Package and
the
Final Offering Memorandum are based on or derived from sources that the Company
believes to be reliable and accurate, and the Company has obtained the written
consent to the use of such data from such sources to the extent such written
consent is required.
(xxx) Investment
Company Act.
The
Company is not required, and after giving effect to the issuance and sale
of the
offered Securities and the application of the net proceeds therefrom as
described in the Disclosure Package and the Final Offering Memorandum under
“Use
of Proceeds,” will not be required, to register as an “investment company” under
the Investment Company Act of 1940, as amended (the “1940 Act”).
(xxxi) Registration
Rights.
There
are no persons with registration rights or other similar rights to have any
securities registered by the Company under the 1933 Act, other than with
respect
to the registration of the resale of the Securities under the 1933 Act pursuant
to the Registration Rights Agreement.
(xxxii) Similar
Offerings.
Neither
the Company nor any of its Affiliates has, directly or indirectly (other
than
through the Initial Purchasers, as to whom the Company makes no representation),
solicited any offer to buy, sold or offered to sell or otherwise negotiated
in
respect of, or will solicit any offer to buy, sell or offer to sell or otherwise
negotiate in respect of, in the United States or to any United States citizen
or
resident, any security which is or would be integrated with the sale of the
Securities in a manner that would require the offered Securities to be
registered under the 1933 Act.
(xxxiii) Rule
144A Eligibility.
The
Securities are eligible for resale pursuant to Rule 144A and will not be,
at
Closing Time, of the same class as securities listed on a national securities
exchange registered under Section 6 of the 1934 Act, or quoted in a U.S.
automated interdealer quotation system.
(xxxiv) No
General Solicitation.
None of
the Company, its Affiliates or any person acting on its or any of their behalf
(other than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage, in connection with the offering
of
the offered Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933
Act.
10
(xxxv) No
Registration Required.
Subject
to compliance by the Initial Purchasers with the representations and warranties
of the Initial Purchasers and the procedures set forth in Section 6 hereof,
it
is not necessary in connection with the offer, sale and delivery of the offered
Securities to the Initial Purchasers and to each Subsequent Purchaser in
the
manner contemplated by this Agreement, the Offering Memorandum to register
the
Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the “1939 Act”).
(xxxvi) Foreign
Corrupt Practices Act.
Neither
the Company nor, to the knowledge of the Company, any director, officer,
agent,
employee, Affiliate or other person acting on behalf of the Company or its
subsidiary is aware of or has taken any action, directly or indirectly, that
would result in a violation by such persons of the Foreign Corrupt Practices
Act
of 1977, as amended, and the rules and regulations thereunder (the “FCPA”),
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or
other
property, gift, promise to give, or authorization of the giving of anything
of
value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA and the Company and, to the
knowledge of the Company, its Affiliates have conducted their businesses
in
compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue
to
ensure, continued compliance therewith.
(xxxvii) Money
Laundering Laws.
The
operations of the Company are and have been conducted at all times in compliance
with applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the
money
laundering statutes of all jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
with respect to the Money Laundering Laws is pending or, to the knowledge
of the
Company, threatened.
(xxxviii) OFAC.
Neither
the Company nor, to the knowledge of the Company, any director, officer,
agent,
employee, Affiliate or person acting on behalf of the Company is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute
or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of
any
person currently subject to any U.S. sanctions administered by
OFAC.
(xxxix) Related
Party Transactions.
No
relationship, direct or indirect, exists between or among any of the Company
or
its subsidiary or any Affiliate of the Company or its subsidiary, on the
one
hand, and any former or current director, officer, shareholder, customer
or
supplier of any of them (including any member of their immediate family),
on the
other hand, which is required by the 1933 Act or by the 1933 Regulations
to be
described in a registration statement on Form S-1 which is not so described
as required in all material respects in the Offering Memorandum.
(xl) Solvency.
The
Company is, and immediately after Closing Time and immediately upon consummation
of the transactions contemplated herein and in the Offering Memorandum will
be,
Solvent. As used herein, the term “Solvent” means, with respect to an entity, on
a particular date, that on such date (a) the fair market value of the assets
of
such entity is greater than the total amount of liabilities (including
contingent liabilities) of such entity, (b) the present fair salable value
of
the assets of the entity is greater than the amount that will be required
to pay
the probable liabilities of such entity on its debt as they become absolute
and
mature, (c) the entity is able to realize upon its assets and pay its debts
and
other liabilities (including contingent obligations) as they mature, and
(d) the
entity does not have unreasonably small capital.
11
(xli) Suppliers.
No
supplier of merchandise to the Company or its subsidiary has ceased shipments
to
the Company or its subsidiary, other than in the normal and ordinary course
of
business consistent with past practices, which cessation would not reasonably
be
expected to result in a Material Adverse Effect.
(xlii) Senior
Indebtedness.
No
event of default exists under any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument constituting Senior Indebtedness
(as defined in the Indenture).
(xliii) ERISA
Compliance.
The
Company and its subsidiary and any “employee benefit plan” (as defined under the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
and published interpretations thereunder (collectively, “ERISA”)) established or
maintained by the Company, its subsidiary or their “ERISA Affiliates” (as
defined below) are in compliance in all material respects with ERISA. “ERISA
Affiliate” means, with respect to the Company or its subsidiary, any member of
any group of organizations described in Sections 414, or of the Internal
Revenue
Code of 1986, as amended, and the regulations and published interpretations
thereunder (the “Code”) of which the Company or its subsidiary is a member. No
“reportable event” (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any “employee benefit plan” established or
maintained by the Company, its subsidiary or any of their ERISA Affiliates.
No
“employee benefit plan” subject to Title IV of ERISA established or
maintained by the Company, its subsidiary or any of their ERISA Affiliates,
if
such “employee benefit plan” were terminated, would have any “amount of unfunded
benefit liabilities” (as defined under ERISA). Neither the Company, its
subsidiary nor any of their ERISA Affiliates has incurred or reasonably expects
to incur any liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections
412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan” established
or maintained by the Company, its subsidiary or any of their ERISA Affiliates
that is intended to be qualified under Section 401 of the Code is so qualified
and nothing has occurred, whether by action or failure to act, which would
cause
the loss of such qualification.
(b) Officer’s
Certificates.
Any
certificate signed by any officer of the Company or its subsidiary delivered
to
▇▇▇▇▇▇▇ ▇▇▇▇▇ or to counsel for the Initial Purchasers shall be deemed a
representation and warranty by the Company to each Initial Purchaser as to
the
matters covered thereby.
SECTION
2. Sale
and Delivery to the Initial Purchasers; Closing.
(a) Initial
Securities.
On the
basis of the representations, warranties and agreements herein contained
and
subject to the terms and conditions herein set forth, the Company agrees
to sell
to each Initial Purchaser, severally and not jointly, and each Initial
Purchaser, severally and not jointly, agrees to purchase from the Company,
the
aggregate principal amount of Initial Securities set forth in Schedule A
hereto
opposite the name of such Initial Purchaser, at a price of 97.00% of the
principal amount thereof.
(b) Option
Securities.
In
addition, on the basis of the representations, warranties and agreements
herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Initial Purchasers to purchase up to an
additional $18,750,000 aggregate principal amount of Option Securities at
the
same purchase price as the Initial Purchasers paid for the Initial Securities,
plus accrued and unpaid interest from the Initial Closing Time to, but
excluding, the Option Closing Time. The option hereby granted will expire
13
days after the Initial Closing Time and may be exercised at any time, in
whole
or in part, upon notice by ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the Company setting forth the
number
of Option Securities as to which the Initial Purchasers are then exercising
the
option and the time and date of payment and delivery for such Option Securities.
Any such time and date of delivery (the “Option Closing Time”) shall be
determined by the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇, but shall not be later than
seven
full business days after the exercise of said option, nor in any event prior
to
the Initial Closing Time, as hereinafter defined. The option hereby granted
may
be exercised only for the purpose of covering overallotments, if any, made
in
connection with the offering and distribution of the
Securities.
12
(c) Payment.
Payment
of the purchase price for, and delivery of certificates for, the Initial
Securities shall be made at the office of Shearman & Sterling LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as shall
be
agreed upon by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Company, at 9:00 A.M. (Eastern time)
on the
fourth business day after the date hereof (unless postponed in accordance
with
the provisions of Section 11) or such other time not later than ten business
days after such date as shall be agreed upon by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Company
(such time and date of payment and delivery being herein called “Initial Closing
Time” and the Initial Closing Time and the Option Closing Time, each being the
applicable “Closing Time”).
In
addition, in the event that the Initial Purchasers have exercised its option
to
purchase all or any of the Option Securities, payment of the purchase price
for,
and delivery of certificates for, such Option Securities shall be made at
the
above-mentioned offices, or at such other place as shall be agreed upon by
▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Company, on the Option Closing Time as specified in
the
notice from ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the Company.
Payment
shall be made to the Company by wire transfer of immediately available funds
to
a bank account designated by the Company, against delivery to ▇▇▇▇▇▇▇ ▇▇▇▇▇
for
the respective accounts of the Initial Purchasers of certificates for the
Securities to be purchased by them. It is understood that each Initial Purchaser
has authorized ▇▇▇▇▇▇▇ ▇▇▇▇▇, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Securities which 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 Securities to be purchased by any Initial Purchaser
whose
funds have not been received by Closing Time, but such payment shall not
relieve
such Initial Purchaser from its obligations hereunder.
(d) Denominations;
Registration.
Certificates for the Securities shall be registered in the name of
Cede & Co., as nominee of DTC, and shall be in such denominations
($1,000 or integral multiples of $1,000 in excess thereof) as ▇▇▇▇▇▇▇ ▇▇▇▇▇
may
request in writing at least one full business day before Closing Time. The
certificates representing the Securities shall be made available for examination
and packaging by the Initial Purchasers in The City of New York not later
than
10:00 A.M. on the last business day prior to Closing Time.
SECTION
3. Covenants
of the Company.
The
Company covenants with each Initial Purchaser as follows:
(a) Offering
Memorandum.
The
Company, as promptly as possible, will furnish to each Initial Purchaser,
without charge, such number of copies of the Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser may reasonably request; provided,
however,
that
the Company shall not be required to furnish copies of the exhibits to the
documents incorporated by reference therein to the extent such exhibits are
available on ▇▇▇▇▇.
13
(b) Notice
and Effect of Material Events.
The
Company will immediately notify each Initial Purchaser, and confirm such
notice
in writing, of (x) any filing made by the Company of information relating
to the
offering of the Securities with any securities exchange or any other regulatory
body in the United States or any other jurisdiction; provided,
however,
that
the Company shall not be required to notify the Initial Purchasers with respect
to filings made by the Company pursuant to the 1934 Act and the 1934 Act
Regulations, and (y) prior to the completion of the placement of the offered
Securities 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 and its subsidiary considered as one enterprise
which
(i) make any statement in the Disclosure Package, any Offering Memorandum
or any
Supplemental Offering Material false or misleading or (ii) are not disclosed
in
the Disclosure Package or the Offering Memorandum. In such event or if during
such time any event shall occur as a result of which it is necessary, in
the
reasonable opinion of any of the Company, its counsel, the Initial Purchasers
or
counsel for the Initial Purchasers, to amend or supplement the Offering
Memorandum in order that the Offering Memorandum not include any untrue
statement of a material fact or omit to state a material fact necessary in
order
to make the statements therein not misleading in the light of the circumstances
then existing, the Company will forthwith amend or supplement the Offering
Memorandum by preparing and furnishing to each Initial Purchaser an amendment
or
amendments of, or a supplement or supplements to, the Offering Memorandum
(in
form and substance satisfactory in the reasonable opinion of counsel for
the
Initial Purchasers) so that, as so amended or supplemented, 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 Subsequent
Purchaser, not misleading.
(c) Amendment
and Supplements to the Offering Memorandum; Preparation of Pricing Term Sheet;
Supplemental Offering Materials.
The
Company will advise each Initial Purchaser promptly of any proposal to amend
or
supplement the Offering Memorandum and will not effect such amendment or
supplement without the consent of the Initial Purchasers. Neither the consent
of
the Initial Purchasers, nor the Initial Purchasers’ delivery of any such
amendment or supplement, shall constitute a waiver of any of the conditions
set
forth in Section 5 hereof. The Company will prepare the Pricing Term Sheet,
in
form and substance satisfactory to ▇▇▇▇▇▇▇ ▇▇▇▇▇, and shall furnish as soon
as
practicable but no later than 4 hours prior to the Applicable Time to each
Initial Purchaser, without charge, as many copies of the Pricing Term Sheet
as
such Initial Purchaser may reasonably request. The Company represents and
agrees
that, unless it obtains the prior consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, it has not made
and
will not make any offer relating to the Securities by means of any Supplemental
Offering Materials.
(d) Qualification
of Securities for Offer and Sale.
The
Company will use its reasonable best efforts, in cooperation with the Initial
Purchasers, to qualify the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions as the Initial Purchasers
may designate and to maintain such qualifications in effect as long as required
for the sale of the Securities; provided, however, that the Company shall
not be
obligated to file any general consent to service of process or to qualify
as a
foreign corporation or as a dealer in securities in any jurisdiction in which
it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so
subject.
(e) [Intentionally
Omitted]
14
(f) DTC.
The
Company will cooperate with the Initial Purchasers and use its reasonable
best
efforts to permit the Securities to be eligible for clearance and settlement
through the facilities of DTC.
(g) Use
of Proceeds.
The
Company will use the net proceeds received by it from the sale of the Securities
in the manner specified in the Offering Memorandum under “Use of
Proceeds”.
(h) Restriction
on Sale of Securities.
Except
as otherwise contemplated by the Offering Memorandum and the Transaction
Documents, during a period of 90 days from the date of the Final Offering
Memorandum (the “Lock-up Period”), the Company shall not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, (i) issue, sell,
offer
or agree to sell, grant any option for the sale of, or otherwise transfer
or
dispose of, any other debt securities of the Company, or securities of the
Company that are convertible into, or exchangeable for, the Securities or
such
other debt securities, (ii) offer, pledge, announce the intention to sell,
sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of,
lend or
otherwise transfer or dispose of any shares of Common Stock or securities
convertible into or exchangeable or exercisable for or repayable with Common
Stock, or file any registration statement under the 1933 Act with respect
to any
of the foregoing or (iii) enter into any swap or other agreement or any
transaction that transfers, in whole or in part, the economic consequences
of
ownership of the Common Stock, or any securities convertible into or
exchangeable or exercisable for or repayable with Common Stock, whether any
such
swap or transaction described in clause (ii) or (iii) above is to be settled
by
delivery of Common Stock or such other securities, in cash or otherwise;
provided,
however,
that
the Company may offer, issue and sell shares of Common Stock or securities
convertible into or exchangeable or exercisable for shares of Common Stock
(A) pursuant to any employee benefit plan, (B) upon the conversion or
exercise of securities outstanding on the date hereof or (C) issued
or
to be issued by the Company in connection with an acquisition,
provided
that (1) in the case of an acquisition of a private company, the recipient
of
such shares or securities shall enter into a lock-up agreement for the balance
of the Lock-up Period and (2) in the case of an acquisition of a public company,
such shares or securities shall not be issued until the expiration of the
Lock-up Period.
(i) PORTAL
Designation.
The
Company will use its reasonable best efforts to permit the Securities to
be
designated PORTAL securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. (“NASD”)
relating to trading in the PORTAL Market.
(j) Listing
on Securities Exchange.
The
Company will use its reasonable best efforts to cause all shares of Common
Stock
issuable upon conversion of the Securities to be listed on the NASDAQ or
listed
on a “national securities exchange” registered under Section 6 of the 1934 Act
on which shares of its Common Stock are then listed.
(k) Reporting
Requirements.
Until
the offering of the Securities is complete, the Company will file all documents
required to be filed with the Commission pursuant to the 1934 Act within
the
time periods required by the 1934 Act and the 1934 Act Regulations.
(l) Reservation
of Shares of Common Stock.
The
Company shall reserve and keep available at all times, free of preemptive
rights, shares of Common Stock for the purpose of enabling the Company to
satisfy any obligations to issue shares of Common Stock upon conversion of
the
Securities.
15
SECTION
4. Payment
of Expenses.
(a) Expenses.
The
Company will pay all expenses incident to the performance of its obligations
under this Agreement, including (i) the preparation, printing, and delivery
to
the Initial Purchasers and any filing of the Disclosure Package or any Offering
Memorandum (including financial statements and any schedules or exhibits
and any
document incorporated therein by reference) and of each amendment or supplement
thereto or of any Supplemental Offering Material, (ii) the preparation, printing
and delivery to the Initial Purchasers of this Agreement, any agreement among
the Initial Purchasers, the Indenture and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Initial Purchasers and the certificates
for the Common Stock issuable upon conversion thereof, including any transfer
taxes, any stamp or other duties payable upon the sale, issuance and delivery
of
the Securities to the Initial Purchasers, the issuance and delivery of the
Common Stock issuable upon conversion thereof and any charges of DTC in
connection therewith, (iv) the fees and disbursements of the Company’s counsel,
accountants and other advisors, (v) the qualification of the Securities and
the
shares of Common Stock issuable upon conversion thereof under securities
laws in
accordance with the provisions of Section 3(d) hereof, including filing fees
and
the reasonable and documented fees and disbursements of counsel for the Initial
Purchasers in connection therewith and in connection with the preparation
of the
Blue Sky Survey, any supplement thereto, (vi) the fees and expenses of the
Trustee, including the reasonable and documented fees and disbursements of
counsel for the Trustee in connection with the Indenture and the Securities,
(vii) the costs and expenses of the Company relating to investor presentations
on any “road show” undertaken in connection with the marketing of the Securities
including, without limitation, expenses associated with the production of
road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations, travel and lodging expenses
of the
representatives and officers of the Company and any such consultants,
(viii) any fees payable in connection with the rating of the Securities,
(ix) any fees and expenses payable in connection with the initial and continued
designation of the Securities as PORTAL securities under the PORTAL Market
Rules
pursuant to NASD Rule 5322, (x) any fees of the NASD in connection with the
Securities and (xi) the fees and expenses of any transfer agent or
registrar for the Common Stock.
(b) Termination
of Agreement.
If this
Agreement is terminated by ▇▇▇▇▇▇▇ ▇▇▇▇▇ in accordance with the provisions
of
Section 5 or Section 10(a)(i) hereof, the Company shall reimburse the Initial
Purchasers for all of their reasonable and documented out-of-pocket expenses,
including the reasonable and documented fees and disbursements of counsel
for
the Initial Purchasers.
SECTION
5. Conditions
of Initial Purchasers’ Obligations.
The
obligations of the Initial Purchasers hereunder are subject to the accuracy
of
the representations and warranties of the Company contained in Section 1
hereof
as of the date hereof and as of the Closing Time or in certificates of any
officer of the Company or its subsidiary delivered pursuant to the provisions
hereof, to the performance by the Company of its covenants and other obligations
hereunder, and to the following further conditions:
(a) Opinions
of Counsel for Company.
At
Closing Time, the Initial Purchasers shall have received the favorable opinions
and negative assurance letter, dated as of Closing Time, of (1) Hunton
& ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, in form and substance satisfactory
to counsel for the Initial Purchasers, to the effect set forth in
Exhibit A-1 hereto; (2) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel for the
Company with respect to patents and proprietary rights, in form and substance
satisfactory to counsel for the Initial Purchasers, to the effect set forth
in
Exhibit A-2 hereto and (3) Kleinfeld, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, regulatory counsel
for the Company with respect to regulatory matters, in form and substance
satisfactory to counsel for the Initial Purchasers, to the effect set forth
in
Exhibit A-3 hereto. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon
certificates of officers of the Company and its subsidiary and certificates
of
public officials.
16
(b) Opinion
of Counsel for Initial Purchasers.
At
Closing Time, the Initial Purchasers shall have received the favorable opinion,
dated as of Closing Time, of ▇▇▇▇▇▇▇▇ & Sterling LLP, counsel for the
Initial Purchasers, with respect to the matters set forth in (v) through
(ix),
inclusive, (xi) and the penultimate paragraph of Exhibit A hereto. In giving
such opinion such counsel may rely, as to all matters governed by the laws
of
jurisdictions other than the law of the State of New York and the federal
law of
the United States, upon the opinions of counsel satisfactory to ▇▇▇▇▇▇▇ ▇▇▇▇▇.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon certificates
of
officers of the Company and its subsidiary and certificates of public
officials.
(c) Officers’
Certificate.
At
Closing Time, there shall not have been, since the date hereof or since the
respective dates as of which information is given in the Disclosure Package
or
the Final Offering Memorandum (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement), any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiary considered as one
enterprise, whether or not arising in the ordinary course of business, and
▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has
been
no such material adverse change, (ii) the representations and warranties
in
Section 1 hereof are true and correct with the same force and effect as though
expressly made at and as of Closing Time, and (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed
or
satisfied at or prior to Closing Time.
(d) Accountants’
Comfort Letter.
At the
time of the execution of this Agreement, the Initial Purchasers shall have
received from KPMG LLP a letter dated such date, in form and substance
satisfactory to ▇▇▇▇▇▇▇ ▇▇▇▇▇, containing statements and information of the
type
ordinarily included in accountants’ “comfort letters” to Initial Purchasers with
respect to the financial statements and certain financial information contained
in the Disclosure Package and the Final Offering Memorandum.
(e) Bring-down
Comfort Letter.
At
Closing Time, the Initial Purchasers shall have received from KPMG LLP a
letter,
dated as of Closing Time, to the effect that they reaffirm the statements
made
in the letter furnished pursuant to subsection (d) of this Section, except
that
the specified date referred to shall be a date not more than three business
days
prior to Closing Time.
(f) [Intentionally
Omitted]
(g) PORTAL.
At the
Initial Closing Time, the Securities shall have been designated for trading
on
PORTAL.
(h) Lock-up
Letter.
On or
prior to the date of this Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have received an
agreement substantially in the form of Exhibit B attached hereto signed by
the
persons listed in Schedule C attached hereto.
(i) Indenture
and Registration Rights Agreement.
At or
prior to the Initial Closing Time, each of the Company and the Trustee shall
have executed and delivered the Indenture, and the Company and the Initial
Purchasers shall have executed and delivered the Registration Rights
Agreement.
(j) Bond
Hedge and Warrant Documents.
At or
prior to the Initial Closing Time, the OTC Convertible Note Hedge, the OTC
Warrant Transaction and the Forward Stock Purchase Transaction, in form and
substance reasonably satisfactory to the Initial Purchasers, shall have been
duly executed and delivered by the Company and be in full force and
effect.
17
(k) Conditions
to Purchase of Option Securities.
In the
event that the Initial Purchasers exercise its option provided in Section
2(b)
hereof to purchase all or any portion of the Option Securities, the obligations
of the Initial Purchasers to purchase such Option Securities is subject to
the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company or its subsidiary
hereunder being true and correct as of the Option Closing Time and that,
at the
Option Closing Time, the Initial Purchasers shall have received:
(i) Officers’
Certificate.
A
certificate, dated the Option Closing Time, of the President or a Vice President
of the Company and of the chief financial officer or chief accounting officer
of
the Company confirming that the certificate delivered at the Initial Closing
Time pursuant to Section 5(c) hereof remains true and correct as of the Option
Closing Time;
(ii) Opinions
of Counsel for Company.
The
favorable opinions of (1) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company,
relating to the Option Securities to be purchased on the Option Closing Time,
(2) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel for the Company with respect to
patents and proprietary rights and (3) Kleinfeld, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP,
regulatory counsel for the Company with respect to regulatory matters, all
in
form and substance satisfactory to counsel for the Initial Purchasers, dated
the
Option Closing Time and otherwise to the same effect as the opinions required
by
Section 5(a) hereof;
(iii) Opinion
of Counsel for Initial Purchasers.
The
favorable opinion of ▇▇▇▇▇▇▇▇ & Sterling LLP, counsel for the Initial
Purchasers, dated the Option Closing Time, relating to the Option Securities
to
be purchased on the Option Closing Time and otherwise to the same effect
as the
opinion required by Section 5(b) hereof; and
(iv) Bring
down Comfort Letter.
A
letter from KPMG LLP, in form and substance satisfactory to the Initial
Purchasers and dated the Option Closing Time, substantially in the same form
and
substance as the letter furnished to the Initial Purchasers pursuant to Section
5(d) hereof, except that the “specified date” in the letter furnished pursuant
to this subparagraph shall be a date not more than three days prior to the
Option Closing Time.
(l) Additional
Documents.
At
Closing Time, counsel for the Initial Purchasers shall have been furnished
with
such documents and opinions as they may reasonably require for the purpose
of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance
and
sale of the Securities as herein contemplated shall be reasonably satisfactory
in form and substance to ▇▇▇▇▇▇▇ ▇▇▇▇▇ and counsel for the Initial
Purchasers.
(m) Termination
of Agreement.
If any
condition specified in this Section shall not have been fulfilled when and
as
required to be fulfilled, this Agreement may be terminated by ▇▇▇▇▇▇▇ ▇▇▇▇▇
by
notice to the Company at any time at or prior to Closing Time, 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, 7, 8 and 9 shall survive
any
such termination and remain in full force and effect.
SECTION
6. Subsequent
Offers and Resales of the Securities.
(a) Offer
and Sale Procedures.
Each
Initial Purchaser and the Company hereby establish and agree to observe the
following procedures in connection with the offer and sale of the
Securities:
(i) Offers
and Sales.
Offers
and sales of the Securities shall be made only to such persons and in such
manner as is contemplated by the Offering Memorandum.
18
(ii) No
General Solicitation.
No
general solicitation or general advertising (within the meaning of Rule 502(c)
under the 1933 Act) will be used in the United States in connection with
the
offering or sale of the Securities.
(iii) Purchases
by Non-Bank Fiduciaries.
In the
case of a non-bank Subsequent Purchaser of a Security acting as a fiduciary
for
one or more third parties, each third party shall, in the judgment of the
Initial Purchasers, be a “qualified institutional buyer” within the meaning of
Rule 144A under the 1933 Act (a “Qualified Institutional Buyer”).
(iv) Subsequent
Purchaser Notification.
Each
Initial Purchaser will take reasonable steps to inform, and cause each of
its
U.S. Affiliates to take reasonable steps to inform, persons acquiring Securities
from such Initial Purchaser or its Affiliate, as the case may be, in the
United
States that the Securities (A) have not been and will not be registered under
the 1933 Act, (B) are being sold to them without registration under the 1933
Act
in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be offered,
sold or otherwise transferred except (1) to the Company, (2) outside the
United
States in accordance with Regulation S under the 1933 Act, or (3) inside
the
United States in accordance with (x) Rule 144A to a person whom the seller
reasonably believes is a Qualified Institutional Buyer that is purchasing
such
Securities for its own account or for the account of a Qualified Institutional
Buyer to whom notice is given that the offer, sale or transfer is being made
in
reliance on Rule 144A or (y) pursuant to another available exemption from
registration under the 1933 Act.
(v) Minimum
Principal Amount.
No sale
of the Securities to any one Subsequent Purchaser will be for less than U.S.
$1,000 principal amount and no Security will be issued in a smaller principal
amount. If the Subsequent Purchaser is a non-bank fiduciary acting on behalf
of
others, each person for whom it is acting must purchase at least U.S. $1,000
principal amount of the Securities.
(vi) Transfer
Restriction.
The
transfer restrictions and the other provisions set forth in the Offering
Memorandum under the caption “Transfer Restrictions,” including the legend
required thereby, shall apply to the Securities except as otherwise agreed
by
the Company and the Initial Purchasers. Following the sale of the Securities
by
the Initial Purchasers to each Subsequent Purchaser pursuant to the terms
hereof, the Initial Purchasers shall not be liable or responsible to the
Company
for any losses, damages or liabilities suffered or incurred by the Company,
including any losses, damages or liabilities under the 1933 Act, arising
from or
relating to any subsequent resale or transfer of any Security
(b) Covenants
of the Company.
The
Company covenants with each Initial Purchaser as follows:
(i) Integration.
The
Company agrees that it will not and will cause its Affiliates 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 1933
Act, such offer or sale would render invalid (for the purpose of (i) the
sale of
the offered Securities by the Company to the Initial Purchasers, (ii) the
resale
of the offered Securities by the Initial Purchasers to Subsequent Purchasers
or
(iii) the resale of the offered Securities by such Subsequent Purchasers
to
others) the exemption from the registration requirements of the 1933 Act
provided by Section 4(2) thereof or by Rule 144A thereunder or
otherwise.
19
(ii) Rule
144A Information.
The
Company agrees that, in order to render the offered Securities eligible for
resale pursuant to Rule 144A under the 1933 Act, while any of the offered
Securities remain outstanding, it will make available, upon request, to any
holder of offered Securities or prospective purchasers of Securities the
information specified in Rule 144A(d)(4), unless the Company furnishes
information to the Commission pursuant to Section 13 or 15(d) of the 1934
Act.
(iii) Restriction
on Repurchases.
Until
the expiration of two years after the original issuance of the offered
Securities, the Company will not, and will cause its Affiliates not to, resell
any offered Securities which are “restricted securities” (as such term is
defined under Rule 144(a)(3) under the 1933 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) that have been reacquired by any of them and shall
immediately upon any purchase of any such Securities submit such Securities
to
the Trustee for cancellation.
(c) Qualified
Institutional Buyer.
Each
Initial Purchaser severally and not jointly represents and warrants to, and
agrees with, the Company that:
(i) it
is a
Qualified Institutional Buyer and an “accredited investor” within the meaning of
Rule 501(a) under the 1933 Act (an “Accredited Investor”) with such
knowledge in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Securities;
and
(ii) neither
it, nor any of its Affiliates, nor any person acting on its behalf, has engaged
or will engage, in connection with the offering of the Securities, in any
form
of general solicitation or general advertising within the meaning of
Rule 502(c) under the 1933 Act.
The
Initial Purchasers understand that the Company, and for purposes of the opinions
to be delivered to it pursuant to Section 5 hereof, counsel to the Company
and counsel to the Initial Purchasers will rely upon the accuracy and truth
of
the foregoing representations, and the Initial Purchasers hereby consent
to such
reliance.
SECTION
7. Indemnification.
(a) Indemnification
of Initial Purchasers.
The
Company agrees to indemnify and hold harmless each Initial Purchaser, its
Affiliates, its selling agents and each person, if any, who controls any
Initial
Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the
1934 Act as follows:
(i) against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the Disclosure Package, the Final Offering Memorandum (or
any
amendment or supplement thereto) or any Supplemental Offering Materials,
or the
omission or alleged omission therefrom of a material fact necessary in order
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading;
(ii) against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
to the extent of the aggregate amount paid in settlement of any litigation,
or
any investigation or proceeding by any governmental agency or body, commenced
or
threatened, or of any claim whatsoever based upon any such untrue statement
or
omission, or any such alleged untrue statement or omission; provided that
(subject to Section 7(d) below) any such settlement is effected with the
written
consent of the Company; and
20
(iii) against
any and all expense whatsoever, as incurred (including the reasonable and
documented fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇),
reasonably incurred and documented in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon
any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
provided,
however,
that
this indemnity agreement shall not apply to any loss, liability, claim, damage
or expense to the extent arising out of any untrue statement or omission
or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by any Initial Purchaser
through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Disclosure Package, the Final
Offering Memorandum (or any amendment or supplement thereto) or in any
Supplemental Offering Materials.
(b) Indemnification
of Company.
Each
Initial Purchaser severally agrees to indemnify and hold harmless the Company
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained
in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made
in the
Disclosure Package, the Final Offering Memorandum or any Supplemental Offering
Materials in reliance upon and in conformity with written information furnished
to the Company by any Initial Purchaser through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for
use
therein.
(c) Actions
against Parties; Notification.
Each
indemnified party shall give notice as promptly as reasonably practicable
to
each indemnifying party of any action commenced against it in respect of
which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder
to
the extent it is not materially prejudiced as a result thereof and in any
event
shall not relieve it from any liability which it may have otherwise than
on
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 7(a) above, counsel to the indemnified parties shall be selected
by
▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in the case of parties indemnified pursuant to Section
7(b)
above, counsel to the indemnified parties shall be selected by the Company.
An
indemnifying party may participate at its own expense in the defense of any
such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
the
reasonable and documented fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall (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 litigation, or any investigation or proceeding
by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section or Section 8 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise
or
consent (A) includes an unconditional release of each indemnified party
from all liability arising out of such litigation, investigation, proceeding
or
claim and (B) 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 prior
written consent (which consent shall not be unreasonably
withheld).
21
(d) Settlement
without Consent if Failure to Reimburse.
Notwithstanding clause (ii) of Section 7(c), if at any time an indemnified
party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel, such indemnifying party agrees that it
shall
be liable for any settlement of the nature contemplated by Section 7(a)(ii)
effected without its written consent if (i) such settlement is entered into
more
than 45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified
party
in accordance with such request prior to the date of such
settlement.
SECTION
8. Contribution.
If the
indemnification provided for in Section 7 hereof is for any reason unavailable
to or insufficient to hold harmless an indemnified party in respect of any
losses, liabilities, claims, damages or expenses referred to therein, then
each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party,
as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Initial Purchasers,
on the other hand, from the offering of the Securities pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only
the
relative benefits referred to in clause (i) above but also the relative fault
of
the Company, on the one hand, and of the Initial Purchasers, on the other
hand,
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The
relative benefits received by the Company, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Initial Purchasers, bear
to
the aggregate initial offering price of the Securities, in such case as set
forth in the table on the cover page of the Final Offering
Memorandum.
The
relative fault of the Company, on the one hand, and the Initial Purchasers,
on
the other hand, shall be determined by reference to, among other things,
whether
any such untrue or alleged untrue statement of a material fact or omission
or
alleged omission to state a material fact relates to information supplied
by the
Company or by the Initial Purchasers and the parties’ relative intent,
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 contribution pursuant to this Section were 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 account of the equitable
considerations referred to above in this Section. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section shall be deemed to include any
legal
or other expenses reasonably incurred and documented by such indemnified
party
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue
statement or omission or alleged omission.
Notwithstanding
the provisions of this Section, no initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at
which
the Securities purchased and sold by it hereunder 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.
22
No
person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
For
purposes of this Section, each person, if any, who controls any Initial
Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the
1934 Act and each Initial Purchaser’s Affiliates and selling agents 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 1933
Act
or Section 20 of the 1934 Act, and the Company’s Affiliates and agents shall
have the same rights to contribution as the Company. The Initial Purchasers’
respective obligations to contribute pursuant to this Section are several
in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint. The obligations of the
Company and the Initial Purchasers pursuant to this Section 8 shall be in
addition to any liability that the Company or the Initial Purchaser may
otherwise have.
SECTION
9. Representations,
Warranties and Agreements to Survive.
All
representations, warranties and agreements contained in this Agreement or
in
certificates of officers of the Company or its subsidiary submitted pursuant
hereto shall remain operative and in full force and effect, regardless of
(i)
any investigation made by or on behalf of any Initial Purchaser or its
Affiliates or selling agents, any person controlling any Initial Purchaser,
its
officers or directors or any person controlling the Company and (ii) delivery
of
and payment for the Securities.
SECTION
10. Termination
of Agreement.
(a) Termination;
General.
▇▇▇▇▇▇▇
▇▇▇▇▇ may terminate this Agreement, by notice to the Company, at any time
at or
prior to Closing Time (i) if there has been, since the time of execution
of this
Agreement or since the date as of which information is given in the Preliminary
Offering Memorandum, the Disclosure Package or the Final Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date
of
this Agreement), any material adverse change in the condition, financial
or
otherwise, or in the earnings, business affairs or business prospects of
the
Company and its subsidiary considered as one enterprise, whether or not arising
in the ordinary course of business, such as to make it, in the judgment of
▇▇▇▇▇▇▇ ▇▇▇▇▇, impracticable or inadvisable to market the Securities on the
terms and in the manner contemplated by the Disclosure Package or the Final
Offering Memorandum, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions,
in
each case the effect of which is such as to make it, in the judgment of ▇▇▇▇▇▇▇
▇▇▇▇▇, impracticable or inadvisable to market the Securities on the terms
and in
the manner contemplated by the Disclosure Package or the Final Offering
Memorandum or to enforce contracts for the sale of the Securities, or (iii)
if
trading in any securities of the Company has been suspended or materially
limited by the Commission or NASDAQ, or if trading generally on the American
Stock Exchange or the New York Stock Exchange or in NASDAQ 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, NASD or any other governmental
authority, or (iv) a material disruption has occurred in commercial banking
or
securities settlement or clearance services in the United States, or (v)
if a
banking moratorium has been declared by either Federal or New York
authorities.
23
(b) Liabilities.
If this
Agreement is terminated pursuant to this Section, such termination shall
be
without liability of any party to any other party except as provided in Section
4 hereof, and provided further that Sections 1, 7, 8 and 9 shall survive
such
termination and remain in full force and effect.
SECTION
11. Default
by Initial Purchaser.
If any
Initial Purchaser shall fail at Closing Time to purchase the Securities which
it
is obligated to purchase under this Agreement (the “Defaulted Securities”),
▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have the right, within 24 hours thereafter, to make
arrangements for the non-defaulting Initial Purchaser to purchase all, but
not
less than all, of the Defaulted Securities in such amounts as may be agreed
upon
and upon the terms herein set forth; if, however, ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall not
have
completed such arrangements within such 24-hour period, then:
(a) if
the
number of Defaulted Securities does not exceed 10% of the aggregate principal
amount of the Securities to be purchased hereunder, the non-defaulting Initial
Purchaser shall be obligated to purchase the full amount thereof,
or
(b) if
the
number of Defaulted Securities exceeds 10% of the aggregate principal amount
of
the Securities to be purchased hereunder, this Agreement shall terminate
without
liability on the part of the non-defaulting Initial Purchaser.
No
action
taken pursuant to this Section shall relieve the defaulting Initial Purchaser
from liability in respect of its default.
In
the
event of any such default which does not result in a termination of this
Agreement, either ▇▇▇▇▇▇▇ ▇▇▇▇▇ or the Company shall have the right to postpone
Closing Time for a period not exceeding seven days in order to effect any
required changes in the Offering Memorandum or in any other documents or
arrangements. As used herein, the term “Initial Purchaser” includes any person
substituted for an Initial Purchaser under this Section.
SECTION
12. Tax
Disclosure.
Notwithstanding any other provision of this Agreement, immediately upon
commencement of discussions with respect to the transactions contemplated
hereby, the Company (and each employee, representative or other agent of
the
Company) may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to the Company relating to such tax treatment
and
tax structure. For purposes of the foregoing, the term “tax treatment” is the
purported or claimed federal income tax treatment of the transactions
contemplated hereby, and the term “tax structure” includes any fact that may be
relevant to understanding the purported or claimed federal income tax treatment
of the transactions contemplated hereby.
SECTION
13. Notices.
All
notices and other communications hereunder shall be in writing and shall
be
deemed to have been duly given if mailed or transmitted by any standard form
of
telecommunication. Notices to the Initial Purchasers shall be directed to
▇▇▇▇▇▇▇ ▇▇▇▇▇ at 4 World Financial Center, New York, New York 10080, attention
of Sam Thong (Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇); and notices to the Company shall
be
directed to it at New River Pharmaceuticals Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇
▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇, Chairman of the Board, President and
Chief
Executive Officer (Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to Hunton &
▇▇▇▇▇▇▇▇ LLP, Riverfront Plaza, East Tower, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. (Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇).
24
SECTION
14. No
Advisory or Fiduciary Relationship.
The
Company acknowledges and agrees that (a) the purchase and sale of the Securities
pursuant to this Agreement, including the determination of the offering price
of
the Securities and any related discounts and commissions, is an arm’s-length
commercial transaction between the Company, on the one hand, and the Initial
Purchasers, on the other hand, (b) in connection with the offering contemplated
hereby and the process leading to such transaction each Initial Purchaser
is and
has been acting solely as a principal and is not the agent or fiduciary of
the
Company, or its shareholders, creditors, employees or any other party, (c)
no
Initial Purchaser has assumed or will assume an advisory or fiduciary
responsibility in favor of the Company with respect to the offering contemplated
hereby or the process leading thereto (irrespective of whether such Initial
Purchaser has advised or is currently advising the Company on other matters)
and
no Initial Purchaser has any obligation to the Company with respect to the
offering contemplated hereby except the obligations expressly set forth in
this
Agreement, (d) the Initial Purchasers and their respective Affiliates may
be
engaged in a broad range of transactions that involve interests that differ
from
those of each of the Company, and (e) the Initial Purchasers have not provided
any legal, accounting, regulatory or tax advice with respect to the offering
contemplated hereby and the Company has consulted its own legal, accounting,
regulatory and tax advisors to the extent it deemed appropriate.
SECTION
15. Integration.
This
Agreement supersedes all prior agreements and understandings (whether written
or
oral) between the Company and the Initial Purchasers, or any of them, with
respect to the subject matter hereof.
SECTION
16. Parties.
This
Agreement shall inure to the benefit of and be binding upon the Initial
Purchasers and the Company and their respective successors. Nothing expressed
or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Initial Purchasers and the Company
and their respective successors and the controlling persons and officers
and
directors referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement
and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Initial Purchasers and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person,
firm or
corporation. No purchaser of Securities from any Initial Purchaser shall
be
deemed to be a successor by reason merely of such purchase.
SECTION
17. GOVERNING
LAW.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE
STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICT
OF
LAW RULES).
SECTION
18. TIME.
TIME
SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH
HEREIN,
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION
19. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original, but all such counterparts shall together constitute
one and the same Agreement.
SECTION
20. Effect
of Headings.
The
Section headings herein are for convenience only and shall not affect the
construction hereof.
25
If
the
foregoing is in accordance with your understanding of our agreement, please
sign
and return to the Company a counterpart hereof, whereupon this instrument,
along
with all counterparts, will become a binding agreement between the Initial
Purchaser and the Company in accordance with its terms.
|
Very
truly yours,
|
|||
|
By
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
||
|
Name:
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
||
|
Title:
|
Chief
Operating Officer, Chief Financial
|
||
|
Officer
and Secretary
|
|||
CONFIRMED
AND ACCEPTED,
as
of the
date first above written:
▇▇▇▇▇▇▇
▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
|
By
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇
|
||
|
Name:
|
▇▇▇▇▇▇
▇▇▇▇▇
|
||
|
Title:
|
Director
|
||
For
itself and as representative of the other Initial Purchaser named in
Schedule A hereto.
26
SCHEDULE
A
|
Principal
Amount of Securities
|
||||
|
Name
of Initial Purchaser
|
||||
|
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
|
$
|
112,500,000
|
||
|
▇.▇.
▇▇▇▇▇▇▇▇▇ + Co., LLC
|
$
|
12,500,000
|
||
|
Total
|
$
|
125,000,000
|
||
Sch
A-1
SCHEDULE
B
Pricing
Term Sheet
**QIBS
ONLY**
**APPROVED
FOR EXTERNAL USE**
~
125,000,000 144A Subordinated Convertible Notes Due 2013 Pricing
~
[New
River Pharmaceuticals Inc. Logo]
(NRPH/NASDAQ)
Issuer: New
River
Pharmaceuticals Inc
Ticker/Exchange: (NRPH/NASDAQ)
Gross
Proceeds: $125,000,000
Overallotment: $18,750,000
Net
Proceeds: Approximately
$120.9 million after deducting initial purchasers’ discounts, commissions and
offering expenses (or approximately $139.1 million if the initial purchasers
exercise in full their overallotment option to purchase additional
notes)
144A
Subordinated Convertible Notes Due 2013:
Issue
Price:
$1,000.00
Principal
Amount per Note:
$1,000
Maturity:
August
1, 2013
Yield:
3.50%
per annum
Conversion
Premium: 25.0%
Sch
B-1
Last
Sale (7/19/2006): $27.51
Conversion
Price: $34.39
Conversion
Rate: 29.0803*
Conversion
Rate Cap: 36.3504
*
Subject to anti-dilution adjustments
Contingent
Conversion Trigger: 120%
of
the initial conversion price per share of common stock (Initially
$41.27)
Conversion
During Month Prior to Maturity:A
holder
may convert its notes at any time on or after 7/1/13 through the close of
business on the business day preceding the maturity date.
Conversion
Reference Period: For
notes
that are converted during the one month period prior to the maturity date
of the
notes, the 20 consecutive trading days preceding and ending on the maturity
date; and in all other instances, the 20 consecutive trading days beginning
on
the third trading day following the conversion date.
Interest
Pay Dates:
8/1
& 2/1 beginning 2/1/07
Adjustment
to Conversion Rate Upon a Fundamental Change: In
the
event of a fundamental change, a holder may elect to convert its notes and
New
River Pharmaceuticals will pay a make-whole premium by increasing the conversion
rate applicable to such notes, as set forth in the offering
memorandum.
Sch
B-2
Make-whole
premium upon Fundamental Change (Increase in Applicable Conversion
Rate)
|
7/25/2006
|
8/1/2007
|
8/1/2008
|
8/1/2009
|
8/1/2010
|
8/1/2011
|
8/1/2012
|
8/1/2013
|
||||||||||
|
$27.51
|
7.2701
|
7.2701
|
7.2701
|
7.2701
|
7.2701
|
7.2701
|
7.2701
|
0.0000
|
|||||||||
|
$30.00
|
6.4242
|
6.0129
|
5.5821
|
5.1448
|
4.6931
|
4.2653
|
3.8851
|
0.0000
|
|||||||||
|
Stock
|
$35.00
|
5.2363
|
4.8089
|
4.3385
|
3.8259
|
3.2444
|
2.5896
|
1.7646
|
0.0000
|
||||||||
|
Price
|
$40.00
|
4.4492
|
4.0412
|
3.586
|
3.0813
|
2.5007
|
1.8358
|
1.0159
|
0.0000
|
||||||||
|
on
|
$45.00
|
3.8929
|
3.5093
|
3.0857
|
2.6158
|
2.0771
|
1.4687
|
0.7611
|
0.0000
|
||||||||
|
Effective
|
$50.00
|
3.4815
|
3.1278
|
2.7365
|
2.3041
|
1.8141
|
1.2658
|
0.6559
|
0.0000
|
||||||||
|
Date
|
$75.00
|
2.3061
|
2.0644
|
1.7957
|
1.5020
|
1.1816
|
0.8242
|
0.4320
|
0.0000
|
||||||||
|
$100.00
|
1.7244
|
1.5502
|
1.3454
|
1.1249
|
0.8858
|
0.6177
|
0.3238
|
0.0000
|
|||||||||
|
$150.00
|
1.1521
|
1.0352
|
0.8959
|
0.7487
|
0.5898
|
0.4110
|
0.2152
|
0.0000
|
|||||||||
|
$200.00
|
0.8663
|
0.7783
|
0.6716
|
0.5597
|
0.4414
|
0.3073
|
0.1605
|
0.0000
|
|||||||||
|
$250.00
|
0.6933
|
0.6236
|
0.5362
|
0.4464
|
0.3519
|
0.2440
|
0.1269
|
0.0000
|
|||||||||
|
$300.00
|
0.5795
|
0.5205
|
0.4464
|
0.3711
|
0.2921
|
0.2017
|
0.1036
|
0.0000
|
Put
Dates:
None
Registration: 144A
with
Registration Rights
Dividend
Protection:
Anti-dilution protection via a conversion rate adjustment.
Fundamental
Change Permits Purchase of Notes by New River Pharmaceuticals at the Option
of
the Holder:
In the
event of a fundamental change, each holder has the right to require New River
Pharmaceuticals to purchase for cash all or any portion of the holder’s notes at
a price equal to 100% of the principal amount of notes to be purchased, plus
accrued and unpaid interest.
Consideration
Received Upon Merger: In
the
event New River Pharmaceuticals is a party to a consolidation, merger, binding
share exchange, transfer or lease of all or substantially all of its assets,
settlement of the conversion value will be based on the kind and amount of
cash,
securities or other assets that a New River Pharmaceuticals common shareholder
received in the transaction. In the event that New River Pharmaceuticals
common
shareholders have the opportunity to elect the form of consideration to be
received in such transaction, then from and after the effective date of such
transaction, the notes will be convertible into the consideration that a
majority of the New River Pharmaceuticals common shareholders who made such
an
election received in such transaction.
Sch
B-3
Trade
Date: 7/19/2006
Settlement
Date: 7/25/2006
144A
CUSIP: ▇▇▇▇▇▇▇▇▇
Sole-Bookrunner: ▇▇▇▇▇▇▇
▇▇▇▇▇
Co-Manager:
▇▇
▇▇▇▇▇▇▇▇▇
You
should rely only on the information contained or incorporated by reference
in
the preliminary offering memorandum dated July 18, 2006, as supplemented
by this
final pricing term sheet in making an investment decision with respect to
these
securities.
New
River Pharmaceuticals Inc is a specialty pharmaceutical company that develops
generational improvements
of prescribed drugs
**QIBS
ONLY**
**APPROVED
FOR EXTERNAL USE**
The
information in this Pricing Supplement supplements the Preliminary Offering
Memorandum and supersedes the information in the Preliminary Offering Memorandum
to the extent inconsistent with the information in the Preliminary Offering
Memorandum. This Pricing Supplement is qualified in its entirety by reference
to
the Preliminary Offering Memorandum. Capitalized terms not defined herein
shall
have the respective meanings as set forth in the Preliminary Offering
Memorandum.
These
securities have not been registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States or under any
state
securities laws absent registration or an applicable exemption from registration
requirements. For details about eligible offers, deemed representations and
agreements by investors and transfer restrictions, see “Transfer Restrictions”
in the Preliminary Offering Memorandum.
This
Pricing Supplement and any offer if made subsequently is directed only at
persons in member states of the European Economic Area who are “qualified
investors” within the meaning of Article 2(1)(e) of the Prospectus Directive
(Directive 2003/71/EC) (“Qualified Investors”). Any person in the EEA who
acquires the securities in any offer (an “investor”) or to whom any offer of the
securities is made will be deemed to have represented and agreed that it
is a
Qualified Investor. Any investor will also be deemed to have represented
and
agreed that any securities acquired by it in the offer have not been acquired
on
behalf of persons in the EEA other than Qualified Investors or persons in
the UK
and other member states (where equivalent legislation exists) for whom the
investor has authority to make decisions on a wholly discretionary basis,
nor
have the securities been acquired with a view to their offer or resale in
the
EEA to persons where this would result in a requirement for publication by
the
company, ▇▇▇▇▇▇▇ ▇▇▇▇▇ International (“MLI”) or any other manager of a
prospectus pursuant to Article 3 of the Prospectus Directive. The company,
MLI
and their affiliates, and others will rely upon the truth and accuracy of
the
foregoing representations and agreements.
ANY
DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO
THIS
COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES
WERE
AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA
BLOOMBERG OR ANOTHER EMAIL SYSTEM
Sch
B-4
SCHEDULE
C
List
of
Directors and Executive Officers
of
the
Company Subject to Lock-Up
▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇
Sch
C-1
Exhibit
A-1
FORM
OF
OPINION OF COMPANY’S COUNSEL
TO
BE
DELIVERED PURSUANT TO
SECTION
5(a)(1)
(i) The
Company has been duly incorporated and is validly existing as a corporation
in
good standing under the laws of the Commonwealth of Virginia, with corporate
power and authority to own, lease and operate its properties and to conduct
its
business as described in the Offering Memorandum and to enter into and perform
its obligations under the Purchase Agreement.
(ii) The
Company is duly qualified as a foreign corporation to transact business and
is
in good standing in the States of New Jersey and Tennessee and the Commonwealth
of Virginia.
(iii) The
authorized, issued and outstanding capital stock of the Company is as set
forth
in the Offering Memorandum in the column entitled “Actual” under the caption
“Capitalization” (except for subsequent issuances, if any, pursuant to the
Purchase Agreement or pursuant to reservations, agreements, employee benefit
plans or the exercise of convertible securities or options referred to in
the
Offering Memorandum); the shares of issued and outstanding capital stock
of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; and 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 under the Virginia Stock Corporation Act (the
“VSCA”), the Company’s Amended and Restated Articles of Incorporation (the
“Articles of Incorporation”) or Amended and Restated Bylaws (the “Bylaws”) or,
to such counsel’s knowledge, contractual preemptive or similar
rights.
(iv) The
Purchase Agreement has been duly authorized, executed and delivered by the
Company.
(v) The
Indenture has been duly authorized, executed and delivered by the Company
and
(assuming the due authorization, execution and delivery thereof by the Trustee)
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as the enforcement thereof
may
be limited by bankruptcy, insolvency (including, without limitation, all
laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws relating to or affecting enforcement of creditors’ rights generally, or by
general principles of equity (regardless of whether enforcement is considered
in
a proceeding in equity or at law).
(vi) The
Registration Rights Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditors’ rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at
law).
(vii) The
Securities are in the form contemplated by the Indenture, have been duly
authorized by the Company and, when executed by the Company and authenticated
by
the Trustee in the manner provided in the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee) and
issued and delivered against payment of the purchase price therefor, will
constitute valid and binding obligations of the Company, enforceable against
the
Company in accordance with their terms, except as the enforcement thereof
may be
limited by bankruptcy, insolvency, reorganization, moratorium (including,
without limitation, all laws relating to fraudulent transfers), or other
similar
laws relating to or affecting enforcement of creditor’s rights generally, or by
general principles of equity (regardless of whether enforcement is considered
in
a proceeding in equity or at law), and will be entitled to the benefits of
the
Indenture.
A-1-1
(viii)
Upon
issuance and delivery of the Securities in accordance with the Purchase
Agreement and the Indenture, the Securities shall be convertible at the option
of the holder thereof for shares of Common Stock in accordance with the terms
of
the Securities and the Indenture; the shares of Common Stock issuable upon
conversion of the Securities have been duly authorized and, as of the Closing
Time, reserved for issuance upon such conversion by all necessary corporate
action; such shares, when issued upon such conversion and assuming that at
the
time of such issuance the Company has a sufficient number of authorized and
unissued shares of Common Stock available therefor, will be validly issued
and
will be fully paid and non-assessable and no holder of such Common Stock
is or
will be subject to personal liability by reason of being such a
holder.
(ix) The
issuance of the shares of Common Stock upon conversion of the Securities
is not
subject to the preemptive or other similar rights of any securityholder of
the
Company under the VSCA, the Articles of Incorporation or the Bylaws or, to
such
counsel’s knowledge, contractual preemptive or similar rights.
(x) The
information included in the Preliminary Offering Memorandum and Final Offering
Memorandum under the caption “Description of Notes,” to the extent that it
constitutes matters of law, summaries of legal matters, documents referred
to
therein or legal conclusions, has been reviewed by us and fairly summarizes
the
matters set forth therein in all material respects.
(xi) The
information included in the Preliminary Offering Memorandum and Final Offering
Memorandum under the caption “Description Of Capital Stock,” to the extent that
it constitutes matters of law, summaries of legal matters, documents referred
to
therein or legal conclusions, has been reviewed by us and fairly summarizes
the
matters set forth therein in all material respects.
(xii) The
Securities and the Indenture conform in all material respects to the
descriptions thereof contained in the Offering Memorandum.
(xiii) The
documents incorporated by reference in the Offering Memorandum (other than
the
financial statements and supporting schedules and other financial data therein,
as to which no opinion need be rendered), when they were filed with the
Commission complied as to form in all material respects with the requirements
of
the 1934 Act and the rules and regulations of the Commission
thereunder.
(xiv) To
our
knowledge, there is not pending or threatened any action, suit, proceeding,
inquiry or investigation, to which the Company or its subsidiary is a party,
or
to which the property of the Company or its subsidiary is subject, before
or
brought by any federal, Virginia or New York court or governmental agency
or
body, which would reasonably be expected to result in a Material Adverse
Effect,
or which would reasonably be expected to materially and adversely affect
the
properties or assets thereof or the consummation of the transactions
contemplated in the Purchase Agreement or the performance by the Company
of its
obligations thereunder or the transactions contemplated by the Offering
Memorandum.
(xv) The
statements set forth in the Preliminary Offering Memorandum and the Final
Offering Memorandum under the caption “Certain U.S. Federal Income Tax
Considerations,” insofar as such statements purport to summarize matters of U.S.
federal income and estate tax laws or legal conclusions with respect thereto,
and subject to the limitations, qualifications and assumptions set forth
therein, fairly summarize the matters set forth therein.
A-1-2
(xvi) All
descriptions in the Offering Memorandum of contracts and other documents
to
which the Company or its subsidiary are a party are accurate in all material
respects; to our knowledge, there are no franchises, contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments that would
be
required to be described or referred to in the Offering Memorandum that are
not
described or referred to in the Offering Memorandum other than those described
or referred to therein or incorporated by reference thereto, and the
descriptions thereof or references thereto are correct in all material
respects.
(xvii) In
reliance upon the representations and warranties of the Company and the Initial
Purchasers in the Purchase Agreement, no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree
of, any
federal, Virginia or New York court or governmental authority or agency
(“Governmental Approvals”) is necessary or required in connection with the due
authorization, execution and delivery of the Purchase Agreement or the due
execution, delivery or performance of the Indenture and the Registration
Rights
Agreement by the Company or for the offering, issuance, sale or delivery
of the
Securities to the Initial Purchasers or the initial resale of the Securities
by
the Initial Purchasers, in each case, in accordance with the terms of the
Purchase Agreement, except for such Governmental Approvals that shall have
been
obtained or made prior to the Closing Time or as may be required by the
securities or blue sky laws of the various states in which the Securities
will
be offered or sold, the 1933 Act with respect to the registration of the
resale
of the Securities under the 1933 Act pursuant to the Registration Rights
Agreement and the Trust Indenture Act of 1939, it being understood that no
opinion is expressed as to any resale of Securities subsequent to the resales
thereof by the Initial Purchasers.
(xviii) In
reliance upon the representations and warranties of the Company and the Initial
Purchasers in the Purchase Agreement, it is not necessary in connection with
the
offer, sale and delivery of the Securities to the Initial Purchasers or in
connection with the initial resale of the Securities by the Initial Purchasers,
in each case, in the manner contemplated by the Purchase Agreement and the
Offering Memorandum to register the Securities under the 1933 Act or to qualify
the Indenture under the Trust Indenture Act of 1939, it being understood
that no
opinion is expressed as to any resale of Securities subsequent to the resales
thereof by the Initial Purchasers.
(xix) The
execution, delivery and performance of the Purchase Agreement, the Indenture,
the Registration Rights Agreement and the Securities and the consummation
of the
transactions contemplated in the Purchase Agreement and in the Offering
Memorandum (including the use of the proceeds from the sale of the Securities
as
described in the Offering Memorandum under the caption “Use Of Proceeds”) and
compliance by the Company with its obligations under the Purchase Agreement,
the
Indenture, the Registration Rights Agreement and the Securities do not and
will
not, whether with or without the giving of notice or lapse of time or both,
violate or constitute a breach of, or default or Repayment Event under or
result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiary thereof pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, known to us, to which the Company
or
its subsidiary is a party or by which it or any of them may be bound, or
to
which any of the property or assets of the Company or its subsidiary is subject
(except for such violation, breaches, defaults or Repayment Events or liens,
charges or encumbrances that would not have a Material Adverse Effect), nor
will
such action result in any violation of the provisions of the charter or by-laws
of the Company or its subsidiary, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any federal,
Virginia or New York government, government instrumentality or court having
jurisdiction over the Company or its subsidiary or any of their respective
properties, assets or operations.
A-1-3
(xx) The
Company is not required, and after giving effect to the issuance and sale
of the
Securities and the application of the net proceeds therefrom as described
in the
Offering Memorandum will not be required to, register as “investment company”
under the 1940 Act.
Nothing
has come to our attention that would lead us to believe that (1) the Disclosure
Package (except for the financial statements and schedules and other financial
data included or incorporated by reference therein or omitted therefrom,
as to
which we need make no statement), as of the Applicable Time, included any
untrue
statement of a material fact or omitted to state any material fact necessary
in
order to make the statements therein, in the light of circumstances under
which
they were made, not misleading or (2) that the Offering Memorandum (except
for
financial statements and schedules and other financial data included or
incorporated by reference therein or omitted therefrom as to which we need
make
no statement), as of the date of the Offering Memorandum or at Closing Time,
included or includes an untrue statement of a material fact or omitted or
omits
to state a material fact necessary in order to make the statements therein,
in
the light of the circumstances under which they were made, not
misleading.
A-1-4
Exhibit A-2
FORM
OF
OPINION OF COMPANY’S PATENT COUNSEL
TO
BE
DELIVERED PURSUANT TO
SECTION 5(a)(2)
1. The
information contained in the Offering Memorandum and the Form 10-K relating
to
patents or proprietary rights (the “Patents and Proprietary Rights”) under the
heading “RISK FACTORS — Risks Related to the Business — We may be involved in
lawsuits to protect or enforce our patents, which could be expensive and
time-consuming”;“ — If we fail to protect our intellectual property rights, our
ability to pursue the development of our technologies and products would
be
negatively affected”; “ — We have not commissioned an extensive investigation
concerning our freedom to practice or the validity or enforceability of our
Carrierwave technology and have only recently commissioned an investigation
concerning our freedom to practice or the validity or the enforceability
for our
product candidates, and we may be held to infringe the intellectual property
rights of others”; “BUSINESS — Patents and Proprietary Rights” and “BUSINESS -
Strategy - Seeking Intellectual Property Protection for Our Platform and
Drug
Candidates”, in each case to the extent that such information constitutes
matters of the federal laws of the United States (collectively, “the
“Intellectual Property Information”), as of the date of the Form 10-K, the
Offering Memorandum and as of the date hereof, are complete statements or
summaries of the matters therein set forth in all material respects and present
fairly the information therein set forth in all material respects.
2. To
our
knowledge, attached hereto at Exhibit A is a true and correct copy of all
patents and patent applications held in the name of the Company and/or being
prosecuted by or on behalf of the Company (the "Company Patents"). To our
knowledge, the Company is the exclusive owner of all right, title, and interest
in the Company Patents; all such Company Patents have been properly prepared
as
to form and to our knowledge have been assigned solely to the Company, which
assignments are either recorded in the U.S. Patent and Trademark Office or
other
foreign patent office specified in Exhibit A, as applicable, and to the extent
identified in Exhibit A have been submitted for recording in the U.S. Patent
and
Trademark Office or such other foreign patent office, as applicable; and
each of
such pending Company Patents is being prosecuted by or on behalf of the
Company.
3. To
our
knowledge, there are no legal or governmental proceedings (excepting official
actions issued by the U.S. Patent and Trademark Office during ex
parte
prosecution of patent and trademark applications by the Company) adverse
to the
Company pending or threatened relating to the Patents and Proprietary
Rights.
4. To
our
knowledge, no contracts or other documents, relating to the Patents and
Proprietary Rights of the Company that are of a character required to be
described in the Offering Memorandum, or to be filed as an exhibit to the
Form
10-K, have not been so described or filed as required.
5. To
our
knowledge, the Company is not infringing or otherwise violating, and the
manufacture and sale of any product of the Company arising out of the Patents
and Proprietary Rights in the manner described in the Offering Memorandum
and
Form 10-K, would not infringe or otherwise violate, any patents, trade secrets,
trademarks, service marks or other proprietary information or materials of
third
parties.
6. We
have
no knowledge of any facts that would preclude the Company from having valid
ownership or license rights, as applicable, to the Patents and Proprietary
Rights; to our knowledge, there appear to be no patents held by third parties
that would prevent the Company from manufacturing and selling products arising
out of the Patents and Proprietary Rights in the manner described in the
Offering Memorandum and Form 10-K, except as described in the Offering
Memorandum and Form 10-K; and we have no knowledge of any facts which form
a
basis for a finding of unenforceability or invalidity of any of the Patents
and
Proprietary Rights.
A-2-1
7. We
have
no knowledge of any fact with respect to the patent applications of the Company
related to the Patents and Proprietary Rights presently on file that (i)
would
preclude the issuance of patents with respect to such applications, or (ii)
would lead us to conclude that such patents, when issued, would not be valid
and
enforceable in accordance with applicable regulations.
Nothing
has come to our attention in the course of such discussions and reviews that
leads us to believe that, (A) as of the Applicable Time, the
Intellectual Property Information contained in
the
Disclosure Package included any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements therein,
in
the light of circumstances under which they were made, not misleading or
(B)
that the Intellectual Property Information contained in the Offering Memorandum
or any amendment or supplement thereto, as of the date of the Offering
Memorandum, as of the date of any such amended or supplemented Offering
Memorandum or as of the date hereof, included or includes an untrue statement
of
a material fact or omitted or omits to state a material fact necessary in
order
to make the statements therein, in light of the circumstances under which
they
were made, not misleading.
A-2-2
Exhibit A-3
FORM
OF
OPINION OF COMPANY’S REGULATORY COUNSEL
TO
BE
DELIVERED PURSUANT TO
SECTION
5(a)(3)
W
are of
the opinion that the statements (1) under the captions “Summary - Our Most
Advanced Product Candidates”, “Risk Factor”-“If the FDA does not accept our
filing for NRP290 under Section 505(b)(1) and we are unable to file for approval
under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act or if
we are
required to generate additional data related to safety and efficacy in order
to
obtain approval under Section 505(b)(1) or 505(b)(2), we may be unable to
meet
our anticipated development and commercialization timelines”, “If the FDA
requires that NRP104 be scheduled by the DEA before the product is commercially
sold, we will be unable to begin commercial sale of that product until the
DEA
completes scheduling proceedings, and if NRP104 is scheduled by the DEA in
Schedule II under the Controlled Substances Act (CSA), the potential market
for
the drug may be significantly reduced” and “Failure by our third-party
manufacturers to comply with the regulatory guidelines set forth by the FDA
and
DEA with respect to our product candidates could delay or prevent the completion
of clinical trials, the approval of any product candidates or the
commercialization of our products” in the Offering Memorandum; and (2) under the
captions “Business - Overview”, “Business - Our Solution”, “Business -
Government Regulation,” “Risk Factor” - “We have received an observation from
the FDA noting that we did not submit an IND before conducting certain clinical
studies in 2001”, “If the FDA does not accept our filing under Section 505(b)(1)
and we are unable to file for approval under Section 505(b)(2) of the Federal
Food, Drug and Cosmetic Act or if we are required to generate additional
data
related to safety and efficacy in order to obtain approval under Section
505(b)(1) or 505(b)(2), we may be unable to meet our anticipated development
and
commercialization timelines”, “If the FDA requires that NRP104 be scheduled by
the DEA before the product is commercially sold, we will be unable to begin
commercial sale of that product until the DEA completes scheduling proceedings,
and if NRP104 is scheduled by the DEA in Schedule II under the Controlled
Substances Act (CSA), the potential market for the drug may be significantly
reduced” and “Failure by our third-party manufacturers to comply with the
regulatory guidelines set forth by the FDA and DEA with respect to our product
candidates could delay or prevent the completion of clinical trials, the
approval of any product candidates or the commercialization of our products” in
the Form 10-K (such sections in (1) and (2) above hereinafter referred to
collectively as “The Regulatory Sections”), insofar as such statements purport
to summarize applicable provisions of the FFDCA and the CSA and the regulations
promulgated thereunder, are accurate summaries in all material respects of
the
requirements purported to be summarized under such captions in the Offering
Memorandum or Form 10-K; as the case may be, and insofar as such statements
state that the Company has filed an IND application for NRP 104, that the
DEA
has indicated that NRP 104 is not a scheduled substance at the present time
and
that the FDA issued an observation on Form FDA 483 relating to the Company’s
conduct of pharmacokinetic studies on thyroid compounds in humans in 2001,
are
accurate summaries, in all material respects, of certain of the documents
and
correspondence that we reviewed relating to the status of the products and
operations of the Company and present fairly the information therein set
forth.
A-3-1
During
the course of preparation of the Offering Memorandum and Form 10-K, we reviewed
certain documents and correspondence provided to us by the Company, publicly
available documents related to the Company, and participated in discussions
with
certain officers and employees of the Company, all with respect to the FDA
and
DEA regulatory matters dealt with in The Regulatory Sections. While we have
not
undertaken to determine independently, and we do not assume any responsibility
for, the accuracy, completeness, or fairness of the statements under the
above-referenced captions in the Offering Memorandum or Form 10-K, we may
state
on the basis of these discussions and review of documents and correspondence
provided to us by the Company in connection with our review of the statements
contained in such captioned sections that no facts have come to our attention
that cause us to believe that the statements in The Regulatory Sections,
insofar
as such statements relate to FDA and DEA regulatory matters, as of the date
hereof, contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of
the circumstances under which they were made, not misleading.
A-3-2
Exhibit
B
FORM
OF
LOCK-UP
The
undersigned, a stockholder, and an officer and/or director of New River
Pharmaceuticals Inc., a Virginia corporation (the “Company”),
understands that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated (“▇▇▇▇▇▇▇
▇▇▇▇▇”),
proposes to enter into a Purchase Agreement (the “Purchase
Agreement”)
with
the Company, providing for the offering (the “Offering”),
pursuant to Rule 144A under the Securities Act of 1933, as amended (the
“Securities
Act”),
of
3.50% Convertible Subordinated Notes due 2013 of the Company. Capitalized
terms
used herein and not otherwise defined shall have the meanings set forth in
the
Purchase Agreement.
In
recognition of the benefit that the Offering will confer upon the undersigned
as
a stockholder, and an officer and/or director of the Company, and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned hereby agrees that, during a period of 90 days
from the date of the Purchase Agreement, the undersigned will not, without
the
prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, (i) 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
for
the sale of, or otherwise dispose of or transfer any shares of the Company’s
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock, whether now owned or hereafter acquired by the undersigned
or
with respect to which the undersigned has or hereafter acquires the power
of
disposition, or file, or cause to be filed, any registration statement under
the
Securities Act of 1933, as amended, with respect to any of the foregoing
(collectively, the “Lock-Up
Securities”)
or
(ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Lock-Up Securities, whether any such swap or transaction
is
to be settled by delivery of Common Stock or other securities, in cash or
otherwise.
Notwithstanding
the foregoing, and subject to the conditions below, the undersigned may transfer
the Lock-Up Securities without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇,
provided that (1) ▇▇▇▇▇▇▇ ▇▇▇▇▇ receives a signed lock-up agreement for the
balance of the lock-up period from each donee, trustee, distributee, or
transferee, as the case may be, (2) any such transfer shall not involve a
disposition for value, (3) such transfers are not required to be reported
in any
public report or filing with the Securities and Exchange Commission, or
otherwise and (4) the undersigned does not otherwise voluntarily effect any
public filing or report regarding such transfers:
(i) as
a
bona
fide
gift or
gifts; or
(ii) to
any
trust the beneficiaries of which are exclusively the undersigned or a member
of
the immediate family of the undersigned, including grandchildren (to the
extent
consistent with the Securities Act and state securities laws); or
(iii) the
transfer of Lock-Up Securities in satisfaction of the exercise of stock options
outstanding on the date hereof.
The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of the
Lock-Up Securities except in compliance with the foregoing
restrictions.
B-1