CB Draft 7/21/00
6,325,000 Shares of Common Stock
Inspire Pharmaceuticals, Inc.
UNDERWRITING AGREEMENT
______, 2000
DEUTSCHE BANK SECURITIES INC.
CHASE SECURITIES INC.
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Deutsche Bank Securities Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Inspire Pharmaceuticals, Inc., a corporation organized and existing
under the laws of Delaware (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of 5,500,000 shares (the
"Firm Shares") of its common stock, par value $0.001 per share (the "Common
Stock"), and, for the sole purpose of covering over-allotments in connection
with the sale of the Firm Shares, at the option of the Underwriters, up to an
additional 825,000 shares (the "Additional Shares") of Common Stock. The Firm
Shares and any Additional Shares purchased by the Underwriters are referred to
herein as the "Shares." The Shares are more fully described in the Registration
Statement referred to below.
1. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations of
the Commission thereunder (the "Regulations") a registration statement, and may
have filed an amendment or amendments thereto, on Form S-1 (No. 333-31174), for
the registration of the Shares under the Act. Such registration statement,
including the prospectus, financial statements and schedules, exhibits and all
other documents filed as a part thereof, as amended at the time of effectiveness
of the registration statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A
or Rule 434 of the Regulations, is herein called the "Registration
Statement" and the prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations or filed as part of the Registration
Statement at the time of effectiveness if no Rule 424(b) or Rule 434 filing is
required, is herein called the "Prospectus". Any registration statement filed
pursuant to Rule 462(b) of the Regulations is herein called the "Rule 462(b)
Registration Statement", and after such filing any reference herein to the term
"Registration Statement" shall include such Rule 462(b) Registration Statement.
The term "preliminary prospectus" as used herein means a preliminary prospectus
as described in Rule 430 of the Regulations. All of the Shares have been duly
registered under the Act pursuant to the Registration Statement or, if any Rule
462(b) Registration Statement is filed, have been or will be duly registered
under the Act with the filing of such Rule 462(b) Registration Statement.
Neither the Commission nor the Blue Sky or securities authority of any
jurisdiction has issued a stop order suspending the effectiveness of the
Registration Statement, preventing or suspending the use of any preliminary
prospectus, the Prospectus, the Registration Statement or any amendment or
supplement thereto, refusing to permit the effectiveness of the Registration
Statement or suspending the registration or qualification of the Shares, nor, to
the Company's knowledge, has any of such authorities instituted or threatened to
institute any proceedings with respect to a stop order.
(b) At the time of the effectiveness of the Registration Statement
or any Rule 462(b) Registration Statement or the effectiveness of any
post-effective amendment to the Registration Statement, when the Prospectus is
first filed with the Commission pursuant to Rule 424(b) or Rule 434 of the
Regulations, when any supplement to or amendment of the Prospectus is filed with
the Commission and at the Closing Date and the Additional Closing Date, if any
(as hereinafter respectively defined), the Registration Statement and the
Prospectus and any amendments thereof and supplements thereto (including any
prospectus wrapper) complied or will comply in all material respects with the
applicable provisions of the Act and the Regulations and does not or will not
contain an untrue statement of a material fact and does not or will not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein (i) in the case of the Registration Statement, not
misleading and (ii) in the case of the Prospectus, in light of the circumstances
under which they were made, not misleading, and the Prospectus, any preliminary
prospectus and any supplement thereto or prospectus wrapper prepared in
connection therewith, at their respective times of issuance and at the Closing
Date, complied and will comply in all material respects with any applicable laws
or regulations of foreign jurisdictions in which the Prospectus and such
preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the offer and sale of the Directed Shares (as
hereinafter defined). When any related preliminary prospectus was first filed
with the Commission (whether filed as part of the registration statement for the
registration of the Shares or any amendment thereto or pursuant to Rule 424(a)
of the Regulations) and when any amendment thereof or supplement thereto was
first filed with the Commission, such preliminary prospectus and any amendments
thereof and supplements thereto complied in all material respects with the
applicable provisions of the Act and the Regulations and did not contain an
untrue statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. No representation and warranty is made in this subsection (b),
however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related preliminary prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information
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furnished in writing to the Company by or on behalf of any Underwriter through
you as herein stated expressly for use in connection with the preparation
thereof. If Rule 434 is used, the Company will comply with the requirements of
Rule 434.
(c) PricewaterhouseCoopers LLP, who have certified the financial
statements and supporting schedules included in the Registration Statement, are
independent public accountants as required by the Act and the Regulations.
(d) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth in
the Registration Statement and the Prospectus, there has been no material
adverse change in the business, prospects, properties, operations, condition
(financial or other) or results of operations of the Company ("Material Adverse
Change"), whether or not arising from transactions in the ordinary course of
business, and since the date of the latest balance sheet presented in the
Registration Statement and the Prospectus, the Company has not incurred or
undertaken any liabilities or obligations, direct or contingent, which are
material to the Company, except for liabilities or obligations which are
reflected in the Registration Statement and the Prospectus.
(e) This Agreement and the transactions contemplated herein have
been duly and validly authorized by the Company, and this Agreement has been
duly and validly executed and delivered by the Company and is enforceable
against the Company in accordance with its terms, except as rights to indemnity
may be limited by federal or state securities laws relating thereto and except
as enforcement (i) may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights and
remedies generally, (ii) is subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or law)
and (iii) is subject to the effect of public policy considerations or court
decisions which may limit rights to obtain indemnification.
(f) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
pursuant to, any contract, agreement, instrument, franchise, license or permit
to which the Company is a party or by which it or any of its properties or
assets may be bound, except where such conflict, breach, default, lien, charge
or encumbrance would not have a material adverse effect (considered individually
or when aggregated with other such instances) on the business, prospects (as of
the date of this Agreement), properties, operations, condition (financial or
other), or results of operations of the Company (a "Material Adverse Effect") or
(ii) violate or conflict with any provision of the amended and restated
certificate of incorporation or the by-laws of the Company or any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its properties or assets. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any court or
any public, governmental or regulatory agency or body having jurisdiction over
the Company or any of its properties or assets is required for the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, including the issuance, sale and delivery of
the Shares to be issued, sold
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and delivered by the Company hereunder, except the registration under the Act of
the Shares and such consents, approvals, authorizations, orders, registrations,
filings, qualifications, licenses and permits as may be required under state
securities or Blue Sky laws or foreign equivalents of such regulations or
statutes, where applicable, in connection with the purchase and distribution of
the Shares by the Underwriters.
(g) Upon the sale of the Firm Shares on the Closing Date, the only
shares of capital stock of the Company issued and outstanding (other than the
Shares) will be ________ shares of Common Stock. All of the issued and
outstanding shares of capital stock of the Company are duly and validly
authorized and issued, fully paid and nonassessable, and none of such shares was
issued in violation of or is subject to any preemptive or similar rights. The
Shares have been duly and validly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when delivered by the Company in
accordance with this Agreement, will be duly and validly issued and outstanding,
fully paid and nonassessable and will not have been issued in violation of or be
subject to any preemptive or similar rights. The Company had, at December 31,
1999, an authorized and outstanding capitalization as set forth in the
Registration Statement and the Prospectus. The authorized capital stock of the
Company, including the Firm Shares and the Additional Shares, conforms to the
description thereof contained in the Registration Statement and the Prospectus.
Except as disclosed in the Registration Statement and the Prospectus, there are
no outstanding options, warrants or other rights calling for the issuance of,
and no commitments, obligations, plans or arrangements to issue, any shares of
capital stock of the Company or any security convertible into or exchangeable
for capital stock of the Company. The outstanding stock options and warrants
relating to the Common Stock have been duly authorized and validly issued and
conform to the descriptions thereof contained in the Registration Statement and
the Prospectus.
(h) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation. The Company is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction in which the character
and location of its properties (owned, leased or licensed) or nature or conduct
of its business makes such qualification necessary, except where the failure to
so qualify would not have a Material Adverse Effect. The Company has all
requisite power and authority and, except where such failure would not have a
Material Adverse Effect, all necessary consents, approvals, authorizations,
orders, registrations, qualifications, licenses and permits (collectively,
"Governmental Licenses") of and from all public, regulatory or governmental
agencies and bodies, to own, lease and operate its properties and conduct its
business as now being conducted and as described in the Registration Statement
and the Prospectus, and each such Governmental License is valid and in full
force and effect. No such Governmental License contains a materially burdensome
restriction not adequately disclosed in the Registration Statement and the
Prospectus, and the Company has not received any notice of proceedings to the
revocation of any such Governmental Licenses. The Company is in compliance with
all applicable laws, orders, rules, regulations, ordinances and directives,
except where the failure to be in compliance could not have a Material Adverse
Effect. The Company does not have any subsidiaries as defined in Rule 405 of the
Regulations. The Company does not presently own or control, directly or
indirectly, any interest in any other corporation, association or other business
entity.
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(i) The Company is not in violation of any provision of its amended
and restated certificate of incorporation or of its by-laws or in breach of, or
in default under (nor has any event occurred that with notice, lapse of time, or
both, would constitute a breach of, or default under), except where such breach
or default would not have a Material Adverse Effect, any provision of any
agreement, instrument, franchise, lease, license or permit to which the Company
is a party or by which any of its properties or assets may be bound or affected
or any judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets.
(j) There is no litigation, arbitration, proceeding, investigation
or claim to which the Company is a party or to which any property or assets of
the Company are subject which is pending or, to the knowledge of the Company,
threatened or contemplated against the Company which might result in any
Material Adverse Effect or any development involving a Material Adverse Effect
or which is required to be disclosed in the Registration Statement and the
Prospectus.
(k) Neither the Company nor, to the knowledge of the Company, any of
its directors, officers or affiliates (as defined in the Regulations) has taken
or will take, directly or indirectly, any action designed to cause or result in,
or which constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares or a violation of Regulation M under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(l) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and the Prospectus
present fairly the financial position of the Company as of the dates indicated
and the results of its operations for the periods specified; said financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis; and the supporting schedules included
in the Registration Statement present fairly the information required to be
stated therein; and the selected financial data and the summary financial
information included in the Registration Statement and the Prospectus present
fairly the information shown therein and have been compiled on a basis
consistent with that of the financial statements included in the Registration
Statement and the Prospectus.
(m) Except as described in the Registration Statement and the
Prospectus and except for rights that have been effectively waived in writing
(complete and accurate copies of which have been provided to the Underwriters
prior to the date of this Agreement), which waivers are in full force and
effect, (i) no holder of securities of the Company has any rights to cause the
Company to issue to it, or register pursuant to the Act, any securities of the
Company because of the filing of the Registration Statement or otherwise, in
connection with the sale of the Shares contemplated hereby or otherwise and (ii)
no holder of securities of the Company has preemptive rights or other rights to
purchase any of the Shares.
(n) The Company is not, and upon consummation of the transactions
contemplated hereby and the application of the proceeds therefrom as described
in the
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Prospectus will not be, an "investment company" or a person "controlled" by an
"investment company" under the Investment Company Act of 1940.
(o) The Common Stock of the Company, including the Shares, have been
approved for quotation on the National Association of Securities Dealers
Automated Quotation National Market System.
(p) The Company owns or possesses valid and enforceable licenses or
other rights to use all inventions, patents, patent applications, trademarks,
service marks, trade names, copyrights, technology, software, databases,
Internet domain names, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), proprietary techniques (including processes and substances) and
other intellectual property rights described in the Registration Statement and
the Prospectus (collectively, "Intellectual Property") free and clear of all
liens, claims and encumbrances, except where the failure to own or possess such
rights would not reasonably be expected to have a Material Adverse Effect; other
than as described in the Registration Statement and the Prospectus: (i) there
are no third parties who have any rights in the Intellectual Property that could
preclude the Company from conducting its business as currently conducted or as
presently contemplated to be conducted as described in the Registration
Statement and the Prospectus; (ii) there are no pending or threatened actions,
suits, proceedings, investigations or claims by others challenging the rights of
the Company or (if the Intellectual Property is licensed) the licensor thereof
in any Intellectual Property owned or licensed to the Company; (iii) neither the
Company nor (if the Intellectual Property is licensed) the licensor thereof has
infringed, or received any notice of infringement of or conflict with, any
rights of others with respect to the Intellectual Property; and (iv) there is no
dispute between it and any licensor with respect to any Intellectual Property.
The Company has taken all reasonable steps to protect, maintain and safeguard
the Intellectual Property for which improper or unauthorized disclosure would
impair its value or validity. True and correct copies of all licenses and other
agreements between the Company and any third party relating to the Intellectual
Property, and all amendments and supplements thereto, have been provided to the
Underwriters or to counsel for the Underwriters.
(q) The Company has timely filed all federal, state, local and
foreign income and franchise tax returns and reports required to be filed and
has paid all taxes shown thereon and all assessments received by it to the
extent that such taxes have become due and are not being contested in good
faith, and there is no tax deficiency that has been or, to the Company's
knowledge, might be asserted or threatened against the Company that might have a
Material Adverse Effect; and all tax liabilities are adequately provided for on
the books of the Company.
(r) The Company maintains insurance with insurers of recognized
financial responsibility of the types and in the amounts (i) generally deemed
adequate for its business and consistent with insurance coverage maintained by
similar companies in similar businesses and (ii) required under any of the
Company's agreements, licenses or other contracts, all of which insurance is in
full force and effect; the Company has no reason to believe that it will not be
able to renew its existing insurance as and when such coverage expires or to
obtain similar insurance with similar insurers adequate and customary for its
business and sufficient to satisfy any requirements of its contracts at a cost
that would not have a Material Adverse Effect.
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(s) Except where it would not have a Material Adverse Effect: (i)
the Company is in compliance with all applicable federal, state, local or
foreign laws, regulations, rules, ordinances, orders or directives relating to
pollution or (in connection therewith) protection of human health and safety,
the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"); (ii) to the Company's knowledge, no material expenditures
are or will be required to comply with the Environmental Laws, and the Company
holds all permits, licenses and approvals required to conduct its business
thereunder and is in compliance with all terms and conditions of any such
permit, license or approval; (iii) to the Company's knowledge, all properties
and assets leased or owned, including, without limitation, all structures,
contents, soil, subsoil and groundwater, do not contain Hazardous Materials; and
(iv) to the Company's knowledge, the Company has no liability or obligation,
whether to any governmental authority or to any other person or entity, for
damages, claims, penalties, forfeitures or otherwise, as a consequence of the
generation, transportation or disposal of any Hazardous Materials or otherwise
under the Environmental Laws.
(t) As of the date of this Agreement and except as described in the
Registration Statement and the Prospectus, the Company is not required to file
or obtain any registration, application, license, request for exemption, permit
or other regulatory authorization with the U.S. Food and Drug Administration
(the "FDA") or any other federal, state, local or foreign regulatory body in
order to conduct its business as described in the Registration Statement and
Prospectus.
(u) The human clinical trials, animal studies and other preclinical
tests conducted by or on behalf of the Company that are described in the
Registration Statement and the Prospectus (the "Company Studies"), have been and
will continue to be conducted in accordance with experimental protocols,
procedures and controls generally used by qualified experts in preclinical or
clinical trials; the descriptions of the results of such Company Studies
contained in the Registration Statement and Prospectus are accurate and complete
in all material respects; and the Company has no knowledge of any other trials,
studies or tests, the results of which reasonably call into question the results
described or referred to in the Registration Statement and Prospectus.
(v) The Company has good and marketable title to all properties
(real and personal) owned by the Company, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind except such as do not, singly or in the aggregate, materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company; and all properties held
under lease or license by the Company are held under valid, existing and
enforceable leases or licenses.
(w) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with
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management's general and specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with management's
general or specific authorizations, and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(x) No labor dispute with the employees of the Company is pending,
or, to the Company's knowledge, is imminent; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, collaborative or strategic partners, manufacturers or
contractors that could result in any Material Adverse Effect.
(y) Each employee benefit plan, within the meaning of Section 3(3)
of the Employee Retirement Income Securities Act of 1974, as amended ("ERISA"),
that is maintained, administered or contributed to by the Company for employees
or former employees of the Company has been maintained in compliance with its
respective terms and the requirements of any applicable statutes, orders, rules
and regulations, including but not limited to ERISA and the Internal Revenue
Code of 1986, as amended (the "Code"). No prohibited transaction, within the
meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with
respect to any such plan that could result in liability to the Company,
excluding transactions effected pursuant to a statutory or administrative
exemption. For each such plan that is subject to the funding rules of Section
412 of the Code or Section 302 of ERISA, no "accumulated funding deficiency," as
defined in Section 412 of the Code, has been incurred, whether or not waived,
and the fair market value of the assets of each such plan (excluding for these
purposes accrued but unpaid contributions) exceeds the present value of all
benefits accrued under such plan determined using reasonable actuarial
assumptions.
(z) The Company has reviewed its operations and those of any third
parties with which the Company has a material relationship to evaluate the
extent to which the business or operations of the Company have been or will be
affected by the Year 2000 Problem (as defined herein). As a result of such
review, the Company has no reason to believe, and does not believe, that the
Year 2000 Problem will have a Material Adverse Effect or result in any material
loss or interference with the Company's business or operations. The "Year 2000
Problem" as used herein means any significant risk that computer hardware or
software used in the receipt, transmission, processing, manipulation, storage,
retrieval, retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of dates or
time periods occurring after December 31, 1999, function at least as effectively
as in the case of dates or time periods occurring prior to January 1, 2000.
(aa) The statistical and market-related data included in the
Registration Statement and the Prospectus are derived from sources which the
Company reasonably and in good faith believes to be accurate, reasonable and
reliable, and such data agree with the sources from which they were derived.
(bb) There are no contracts, licenses, agreements or other documents
which are required to be described in the Registration Statement and the
Prospectus or filed as exhibits to
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the Registration Statement by the Act or by the Regulations which have not been
described in the Registration Statement and the Prospectus or filed as exhibits
to the Registration Statement.
(cc) No relationship, direct or indirect, exists between or among
the Company or any of its affiliates on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company on the other hand,
which is required to be described in the Registration Statement and the
Prospectus that is not so described.
2. Purchase, Sale and Delivery of the Shares.
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(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price per share of $_____, the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the offices of __________________________,
or at such other place as shall be agreed upon by you and the Company, at ______
A.M. on the third or fourth business day (as permitted under Rule 15c6-1 under
the Exchange Act) (unless postponed in accordance with the provisions of Section
9 hereof) following the date of the effectiveness of the Registration Statement
(or, if the Company has elected to rely upon Rule 430A of the Regulations, the
third or fourth business day (as permitted under Rule 15c6-1 under the Exchange
Act) after the determination of the initial public offering price of the
Shares), or such other time not later than ten business days after such date as
shall be agreed upon by you and the Company (such time and date of payment and
delivery being herein called the "Closing Date"). Payment shall be made to the
Company by wire transfer of immediately available funds, against delivery to you
for the respective accounts of the Underwriters of certificates for the Firm
Shares to be purchased by them. Certificates for the Firm Shares shall be
registered in such name or names and in such authorized denominations as you may
request in writing at least two full business days prior to the Closing Date.
The Company will permit you to examine and package such certificates for
delivery at least one full business day prior to the Closing Date. As used
herein, the term "business day" means any day other than a day on which banks
are permitted or required to be closed in New York City.
(c) In addition, the Company hereby grants to the Underwriters the
option to purchase up to 825,000 Additional Shares at the same purchase price
per share to be paid by the Underwriters to the Company for the Firm Shares as
set forth in this Section 2, for the sole purpose of covering over-allotments in
the sale of Firm Shares by the Underwriters. This option may be exercised at any
time, in whole or in part, on or before the thirtieth day following the date of
the Prospectus, by written notice by you to the Company. Such notice shall set
forth the aggregate number of Additional Shares as to which the option is being
exercised and the date and time, as reasonably determined by you, when the
Additional Shares are to be delivered (such date and time being herein sometimes
referred to as the "Additional Closing Date"); provided, however, that the
Additional Closing Date shall not be earlier than the Closing Date or earlier
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than the second full business day after the date on which the option shall have
been exercised nor later than the eighth full business day after the date on
which the option shall have been exercised (unless such time and date are
postponed in accordance with the provisions of Section 9 hereof). Certificates
for the Additional Shares shall be registered in such name or names and in such
authorized denominations as you may request in writing at least two full
business days prior to the Additional Closing Date. The Company will permit you
to examine and package such certificates for delivery at least one full business
day prior to the Additional Closing Date.
(d) The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same ratio to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 9 hereof) bears to the total number of Firm
Shares being purchased from the Company, subject, however, to such adjustments
to eliminate any fractional shares as you in your sole discretion shall make.
(e) Payment of the purchase price for the Additional Shares shall be
made by wire transfer of immediately available funds at the offices of
____________________________, or such other place as shall be agreed upon by you
and the Company, upon delivery of the certificates for the Additional Shares to
you for the respective accounts of the Underwriters.
3. Offering.
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(a) Upon your authorization of the release of the Firm Shares, the
Underwriters propose to offer the Shares for sale to the public upon the terms
set forth in the Prospectus.
(b) The Company and the Underwriters hereby agree that up to
five-and-one-half percent (5 1/2%) of the Firm Shares to be purchased by the
Underwriters (the "Directed Shares") shall be reserved for sale by the
Underwriters to certain eligible employees of, and certain persons designated
by, the Company (the "Directed Shares Purchasers") as part of the distribution
of the Shares by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the National Association of
Securities Dealers, Inc. and all other applicable laws, rules and regulations,
provided, however, that under no circumstances will Deutsche Bank Securities
Inc. or any other Underwriter be liable to the Company or to any of the Directed
Shares Purchasers for any action taken or omitted in good faith in connection
with transactions effected with regard to the Directed Shares Purchasers. To the
extent that such Directed Shares are not orally confirmed for purchase by such
persons by the end of the first day after the date of this Agreement, such
Directed Shares will be offered to the public as part of the offering
contemplated hereby.
4. Covenants of the Company. The Company covenants and agrees with the
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Underwriters that:
(a) If the Registration Statement has not yet been declared
effective, the Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
possible, and if Rule 430A is used or the filing of the
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Prospectus is otherwise required under Rule 424(b) or Rule 434, the Company will
file the Prospectus (properly completed if Rule 430A has been used) pursuant to
Rule 424(b) or Rule 434 within the prescribed time period and will provide
evidence satisfactory to you of such timely filing. If the Company elects to
rely on Rule 434, the Company will prepare and file a term sheet that complies
with the requirements of Rule 434.
The Company will notify you immediately (and, if requested by you,
will confirm such notice in writing) (i) when the Registration Statement and any
amendments thereto become effective, (ii) of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor and (v) of the receipt of any comments from the
Commission relating to the Registration Statement. If the Commission shall
propose or enter a stop order at any time, the Company will make every
reasonable effort to prevent the issuance of any such stop order and, if issued,
to obtain the lifting of such order as soon as possible. The Company will not
file any amendment to the Registration Statement, make any filing under Rule
462(b) of the Regulations or file any amendment of or supplement to the
Prospectus (including the prospectus required to be filed pursuant to Rule
424(b) or Rule 434) that differs from the prospectus on file at the time of the
effectiveness of the Registration Statement before or after the effective date
of the Registration Statement to which you shall reasonably object in writing
after being timely furnished in advance a copy thereof.
(b) The Company will comply with the Act and the Regulations so as
to permit the completion of the distribution of the Shares as contemplated in
this Agreement and the Prospectus. If at any time when a prospectus relating to
the Shares is required to be delivered under the Act any event shall have
occurred as a result of which the Prospectus as then amended or supplemented
would, in the judgment of the Underwriters or the Company, include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall be
necessary at any time to amend or supplement the Prospectus or Registration
Statement to comply with the Act or the Regulations, the Company will notify you
promptly and prepare and file with the Commission an appropriate amendment or
supplement (in form and substance reasonably satisfactory to you) which will
correct such statement or omission and will use its best efforts to have any
amendment to the Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you three signed copies of
the Registration Statement, as initially filed with the Commission, and all
amendments thereto (including exhibits) and will maintain in the Company's files
manually signed copies of such documents for at least five years from the date
of filing. The Company will promptly deliver to each of the Underwriters such
number of copies of any preliminary prospectus, the Prospectus, the Registration
Statement, and all amendments of and supplements to such documents, if any, as
you may reasonably request, and the Company hereby consents to the use of such
copies for purposes permitted by the Act.
11
(d) The Company will endeavor in good faith, in cooperation with
you, at or prior to the time of effectiveness of the Registration Statement, to
qualify the Shares for offering and sale under the securities laws relating to
the offering or sale of the Shares of such jurisdictions as you may designate
and to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process. The Company will promptly advise you of the
receipt by the Company of any notification with respect to suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and will use every reasonable
effort to obtain the withdrawal of any order of suspension as soon as possible.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 180 days from the date of the Prospectus,
(i) the Company will not, without the prior written consent of Deutsche Bank
Securities Inc. on behalf of the Underwriters, directly or indirectly, issue,
sell, offer or agree to sell, grant any option, warrant or other right to
purchase or otherwise sell or dispose of (or announce any offer of sale,
contract of sale, sale, grant of any option, warrant or other right to purchase
or other sale or disposition of), pledge, make any short sale or maintain any
short position, establish or maintain a "put equivalent position" (within the
meaning of Rule 16-a-1(h) under the Exchange Act), enter into any swap,
derivative transaction or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Common Stock
(whether any such transaction is to be settled by delivery of Common Stock,
other securities, cash or other consideration) or otherwise dispose of, any
Common Stock (or any securities convertible into, exercisable for or
exchangeable for Common Stock) or interest therein of the Company, except for
the grant by the Company of options for shares of Common Stock under, and the
issuance by the Company of shares of Common Stock pursuant to the exercise of
options outstanding under, the Amended and Restated 1995 Stock Plan as in effect
on the date hereof (provided that the Company shall only so issue shares during
such 180 days to persons who are not, at the time of the closing of the sale of
the Firm Shares on the Closing Date, officers or directors of the Company or
stockholders having beneficial ownership of at least 1% of the outstanding
Common Stock of the Company), and except for (A) the issuance of Common Stock
(or warrants exercisable for Common Stock) issued to Genentech Inc. pursuant to
the terms of those agreements dated December 17, 1999 between the Company and
Genentech Inc. and (B) the issuance of Common Stock (or any securities
convertible into, exercisable for or exchangeable for Common Stock) issued in
connection with strategic alliances or joint ventures entered into by the
Company after the date hereof relating to the Company's INS365 Ophthalmic,
provided that, in the case of securities issued pursuant to clause (A) or clause
(B), each holder of any securities so issued delivers (or has delivered) to the
Underwriters its agreement not to engage in any of the aforesaid transactions on
its own behalf during such 180-day period, and (ii) the Company will obtain the
undertaking of each of its officers and directors and all of its stockholders
having beneficial ownership of at least 1% of the outstanding
12
Common Stock of the Company, as of the time of the closing of the sale of the
Firm Shares hereunder on the Closing Date, not to engage in any of the
aforementioned transactions on their own behalf, other than the Company's sale
of Shares hereunder. The Underwriters hereby consent to the disposition during
the foregoing 180-day period by Directed Share Purchasers of any of the Directed
Shares acquired by the Directed Share Purchasers, in any case where the Company
has not agreed to secure an undertaking from such person pursuant to (ii) above.
(g) During a period of three years from the date of the Prospectus,
the Company will furnish to you and, upon their request, each of the other
Underwriters, (i) copies of any reports or other communications that the Company
shall send to its stockholders or shall from time to time publish or publicly
disseminate, (ii) copies of all reports, financial statements and proxy or
information statements filed by the Company with the Commission or any national
securities exchange or automated quotation system, and (iii) such other
information as you may reasonably request regarding the Company, subject to the
provisions of any written agreement that, in the opinion of outside counsel to
the Company, prohibit the Company from furnishing such information under any
circumstances including, without limitation, an agreement by you to be subject
to the provisions of such written agreement.
(h) The Company will apply the proceeds from the sale of the Shares
as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares to be
included in the National Association of Securities Dealers Automated Quotation
National Market System and to maintain such quotation so long as any of the
Shares are outstanding.
(j) The Company will file with the Commission in its periodic
reports pursuant to Section 13 or 15 of the Exchange Act such information as may
be required pursuant to Rule 463 of the Regulations.
(k) The Company, during the period when the Prospectus is required
to be delivered under the Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations thereunder.
(l) The Company hereby agrees that it will ensure that the Directed
Shares are restricted as required by the National Association of Securities
Dealers, Inc. rules from sale, transfer, assignment, pledge or hypothecation for
a period of three months following the date of this Agreement. The Underwriters
will notify the Company as to which persons will need to be so restricted. At
the request of the Underwriters, the Company will direct the transfer agent to
place a stop transfer restriction upon such securities for such a period of
time. Should the Company release, or seek to release, from such restrictions any
of the Directed Shares, the Company agrees to reimburse the Underwriters for any
reasonable expenses (including without limitation legal expenses) they incur in
connection with such release.
(m) The Company will use its best efforts to do and perform all
things required or necessary to be done and performed under this Agreement by
the Company prior to or after
13
the Closing Date or any Additional Closing Date, as the case may be, and to
satisfy all conditions precedent to the delivery of the Shares.
5. Payment of Expenses. Whether or not the transactions contemplated
in this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any amendments
or supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents (including this
Agreement, the Master Agreement Among Underwriters and the Master Selected
Dealers Agreement) and all other documents related to the public offering of the
Shares (including those supplied to the Underwriters in quantities as
hereinabove stated), (ii) the issuance, transfer and delivery of the Shares to
the Underwriters, including any transfer or other taxes payable thereon, (iii)
the qualification of the Shares under state or foreign securities or Blue Sky
laws or regulations, including the costs of printing and mailing a preliminary
and final "Blue Sky Survey" and the fees of counsel for the Underwriters and
such counsel's disbursements in relation thereto, (iv) quotation of the Shares
on the National Association of Securities Dealers Automated Quotation National
Market System, (v) filing fees of the Commission and the National Association of
Securities Dealers, Inc., (vi) the cost of printing certificates representing
the Shares, (vii) the cost and charges of any transfer agent or registrar for
the Shares and (viii) all costs and expenses of the Underwriters, including the
fees and disbursements of counsel for the Underwriters, in connection with
matters related to the Directed Shares which are designated by the Company for
sale to Directed Share Purchasers.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Coudert Brothers
("Underwriters' Counsel") pursuant to this Section 6 of any misstatement or
omission, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement, including any Rule 462(b)
Registration Statement, shall have become effective and all necessary approvals
of the National Association of Securities Dealers Automated Quotation National
Market System shall have been received, not later than, if pricing pursuant to
Rule 430A, 5:30 P.M., New York time, on the date of this Agreement, if pricing
pursuant to a pricing amendment, 12:00 Noon, New York time, on the date an
amendment to the Registration Statement containing the public offering price has
been filed with the Commission, or at such later time and date as shall have
been consented to in writing by you; if the Company shall have elected to rely
upon Rule 430A or Rule 434 of the Regulations, the Prospectus shall have been
filed with the Commission in a timely fashion in accordance with Section 4(a)
hereof; and, at or prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof shall have
14
been issued and no proceedings therefor shall have been initiated or threatened
by the Commission.
(b) At the Closing Date you shall have received the opinion of
Smith, Stratton, Wise, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company, dated the date
of such Closing Date addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation. The Company is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or
conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which will not in
the aggregate have a material adverse effect on the Company. The Company
has all requisite corporate authority to own, lease and license its
respective properties and conduct its business as now being conducted and
as described in the Registration Statement and the Prospectus. The Company
does not have any subsidiaries as defined in Rule 405 of the Regulations.
(ii) The Company has an authorized capital stock as set forth in the
Registration Statement and the Prospectus. All outstanding shares of
capital stock are duly and validly authorized and issued, are fully paid
and nonassessable and were not issued in violation of or subject to any
preemptive or similar rights. To such counsel's knowledge, except as
disclosed in the Registration Statement and Prospectus, there are no
outstanding options, warrants or other rights calling for the issuance of,
and no commitments, obligations, plans or arrangements to issue, any
shares of capital stock of the Company or any security convertible into or
exchangeable for capital stock of the Company. All outstanding stock
options and warrants relating to the Common Stock have been duly
authorized and validly issued.
The Shares to be delivered on the Closing Date have been duly and
validly authorized and, when delivered by the Company to the Underwriters
against payment therefor in accordance with this Agreement, will be duly
and validly issued, fully paid and nonassessable and will not have been
issued in violation of or subject to any preemptive or similar rights. The
Common Stock, the Firm Shares and the Additional Shares conform to the
description thereof contained in the Registration Statement and the
Prospectus.
(iii) The Shares have been approved (upon issuance as contemplated
by the Underwriting Agreement) for quotation in the National Association
of Securities Dealers Automated Quotation System National Market System.
(iv) This Agreement has been duly and validly authorized, executed
and delivered by the Company.
(v) Such counsel does not know of any litigation, arbitration,
proceeding, investigation or claim to which the Company is a party or to
which any property or assets
15
of the Company are subject which is pending or threatened against the
Company which is of a character required to be disclosed in the
Registration Statement and the Prospectus which has not been properly
disclosed therein or of any statute, regulation, contract, license,
agreement or other document that is required to be described in the
Registration Statement and the Prospectus or required to be filed as an
exhibit to the Registration Statement has not been described or filed as
required.
(vi) The Company has the corporate power and authority to enter into
the Underwriting Agreement and to issue, sell and deliver to the
Underwriters the Shares to be issued and sold by it thereunder. The
execution, delivery, and performance of the Underwriting Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby do not and will not (A) conflict with or result in a
breach of any of the terms and provisions of, or constitute a default (or
an event which with notice or lapse of time, or both, would constitute a
default) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant
to, any contract, agreement, instrument, franchise, lease, license or
permit known to such counsel to which the Company is a party or by which
it or its properties or assets may be bound or (B) contravene any
provision of applicable law, violate or conflict with any provision of the
amended and restated certificate of incorporation or the by-laws of the
Company or, to the knowledge of such counsel, any judgment, decree or
order, or any statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets. No consent, approval,
authorization, order, registration, filing, qualification, license or
permit of or with any court or any public, governmental, or regulatory
agency or body having jurisdiction over the Company or any of its
properties or assets is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale and delivery of the
Shares to be issued, sold and delivered by the Company hereby, except for
(1) such as may be required under state securities or Blue Sky laws or
regulations (or foreign securities laws or regulations, if applicable) in
connection with the purchase and distribution of the Shares by the
Underwriters (as to which such counsel need express no opinion) and (2)
such as have been made or obtained under the Act.
(vii) To such counsel's knowledge, there are no contracts,
agreements or other documents or instruments required to be described or
referred to in the Registration Statement and the Prospectus or to be
filed as exhibits to the Registration Statement other than those described
or referred to or filed as required.
(viii) The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto (other than the financial
statements and notes and schedules thereto and other financial data
derived therefrom, as to which no opinion need be rendered) comply as to
form in all material respects with the requirements of the Act and the
Regulations.
(ix) The statements in the Registration Statement and the Prospectus
under the captions "Certain Transactions", "Description of Capital Stock"
and "Shares Eligible for Future Sale", insofar as such statements
constitute matters of law or legal conclusions,
16
have been reviewed by such counsel and fairly present such matters and
conclusions, and the form of certificate evidencing the Common Stock and
filed as an exhibit to the Registration Statement complies with the laws
of the State of Delaware and any applicable requirements of the Company's
restated certificate of incorporation and by-laws and the National
Association of Securities Dealers Automated Quotation System National
Market System.
(x) The Company is not, and upon consummation of the transactions
contemplated hereby and the application of the proceeds therefrom as
described in the Prospectus will not be, an "investment company" or a
person "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(xi) The Registration Statement is effective under the Act, and, to
the knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof has
been issued and no proceedings therefor have been initiated or threatened
by the Commission. All filings required by Rule 424(a) and Rule 424(b) of
the Regulations have been made.
In addition, such opinion shall also contain a statement that such counsel
has participated in conferences with certain officers and representatives of the
Company, the independent public accountants for the Company, the Underwriters
and the Underwriters' counsel at which the contents of the Registration
Statement and the Prospectus and related matters were discussed and no facts
have come to the attention of such counsel which would lead such counsel to
believe that either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A(b) or Rule 434, if applicable),
or any amendment thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as of its date (or any
amendment thereof or supplement thereto made prior to the Closing Date as of the
date of such amendment or supplement) and as of the Closing Date contained or
contains an untrue statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements, including the notes and
schedules thereto and other financial data derived therefrom).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such
17
statements or certificates shall be delivered to Underwriters' Counsel. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and, in their opinion, you
and they are justified in relying thereon.
(c) At the Closing Date, you shall have received the opinion of Howrey
▇▇▇▇▇ ▇▇▇▇▇▇ & White, LLP, patent counsel for the Company, dated the Closing
Date addressed to the Underwriters and in the form previously agreed with
Underwriters' Counsel.
(d) All proceedings taken in connection with the sale of the Firm Shares
and the Additional Shares as herein contemplated shall be satisfactory in form
and substance to you and to Underwriters' Counsel, and the Underwriters shall
have received from said Underwriters' Counsel a favorable opinion, dated as of
the Closing Date with respect to the issuance and sale of the Shares, the
Registration Statement and the Prospectus and such other related matters as you
may reasonably require, and the Company shall have furnished to Underwriters'
Counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(e) At the Closing Date you shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company, dated the Closing
Date, to the effect that (i) the condition set forth in subsection (a) of this
Section 6 has been satisfied, (ii) as of the date hereof and as of the Closing
Date the representations and warranties of the Company set forth in Section 1
hereof are true and correct, (iii) as of the Closing Date the obligations of the
Company to be performed hereunder on or prior thereto have been duly performed
and (iv) subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company has not sustained any
loss or interference with its business or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and there has
not been any Material Adverse Change, or any development involving a Material
Adverse Effect, except in each case as described in or contemplated by the
Prospectus.
(f) At the time this Agreement is executed and at the Closing Date, you
shall have received a letter from PricewaterhouseCoopers LLP, independent public
accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in form
and substance satisfactory to you, stating that: (i) they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the Regulations; (ii) in their opinion, the financial statements and
schedules of the Company included in the Registration Statement and the
Prospectus and covered by their opinion therein comply as to form in all
material respects with the applicable accounting requirements of the Act and the
applicable published rules and regulations of the Commission thereunder; (iii)
on the basis of procedures consisting of a reading of the latest available
unaudited interim financial statements of the Company and of the latest
available unaudited monthly financial statements of the Company (which, in the
case of the letter delivered on the Closing Date, shall be at least as of
______, 2000), a reading of the minutes of meetings and consents of the
stockholders and board of directors of the Company and the committees of such
board subsequent to December 31, 1999, inquiries of officers and other employees
of the Company who have responsibility for financial and accounting matters of
the Company with respect to transactions and events subsequent to December 31,
1999 and other specified procedures and inquiries to a date not more
18
than five days prior to the date of such letter (provided that the letter
delivered on the Closing Date shall use a "cut-off" date not earlier than the
date hereof), nothing has come to their attention that would cause them to
believe that: (A) the unaudited financial statements and schedules of the
Company presented in the Registration Statement and the Prospectus do not comply
as to form in all material respects with the applicable accounting requirements
of the Act and the applicable published rules and regulations of the Commission
thereunder or that such unaudited financial statements are not in conformity
with generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus; (B) with respect to the period
subsequent to March 31, 2000 there were, as of the date of the most recent
available monthly financial statements of the Company, if any, and as of a
specified date not more than five days prior to the date of such letter
(provided that the letter delivered on the Closing Date shall use a "cut-off"
date not earlier than the date hereof), any changes in the capital stock or
long-term indebtedness of the Company or any decrease in the net current assets
or stockholders' equity of the Company, in each case as compared with the
amounts shown in the most recent balance sheet presented in the Registration
Statement and the Prospectus, except for changes or decreases which the
Registration Statement and the Prospectus disclose have occurred or may occur or
which are set forth in such letter; or (C) that during the period from April 1,
2000 to the date of the most recent available monthly financial statements of
the Company, if any, and to a specified date not more than five days prior to
the date of such letter (provided that the letter delivered on the Closing Date
shall use a "cut-off" date not earlier than the date hereof), there was any
decrease, as compared with the corresponding period in the prior fiscal year, in
revenues, or increase in net loss, except for decreases or increases, as the
case may be, which the Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in such letter; and (iv) they have
compared specific dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the Company set forth in
the Registration Statement and the Prospectus, which have been specified by you
prior to the date of this Agreement, to the extent that such amounts, numbers,
percentages, and information may be derived from the general accounting and
financial records of the Company or from schedules furnished by the Company, and
excluding any questions requiring an interpretation by legal counsel, with the
results obtained from the application of specified readings, inquiries, and
other appropriate procedures specified by you set forth in such letter, and
found them to be in agreement.
(g) Prior to the Closing Date the Company shall have furnished to you such
further information, certificates and documents as you may reasonably request.
(h) You shall have received from each person who is a director or officer
of the Company or stockholder beneficially owning at least 1% of the outstanding
Common Stock of the Company, as of the time of the closing of the sale of the
Firm Shares hereunder at the Closing Date, an agreement to the effect that such
person will not, without the prior written consent of Deutsche Bank Securities
Inc. on behalf of the Underwriters, during the period commencing on the date of
the Prospectus and ending 180 days thereafter, (1) issue, sell, offer or agree
to sell, grant any option for the sale of, pledge, make any short sale or
maintain any short position, establish or maintain a "put equivalent position"
(within the meaning of Rule 16-a-1(h) under the Exchange Act), enter into any
swap, derivative transaction or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of
19
Common Stock (whether any such transaction is to be settled by delivery of
shares of Common Stock, other securities, cash or other consideration) or
otherwise dispose of any Common Stock (or any securities convertible into,
exercisable for or exchangeable for Common Stock) or interest therein of the
Company or (2) make any demand for, or exercise his, her or its rights, if any,
to require the Company to register its Common Stock and to receive notice
thereof.
(i) At the Closing Date, the Shares shall have been quoted on the National
Association of Securities Dealers Automated Quotation National Market System.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to you or to Underwriters'
Counsel pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and substance to you and to Underwriters'
Counsel, all obligations of the Underwriters hereunder may be cancelled by you
at, or at any time prior to, the Closing Date and the obligations of the
Underwriters to purchase the Additional Shares may be cancelled by you at, or at
any time prior to, the Additional Closing Date. Notice of such cancellation
shall be given to the Company in writing, or by telephone, facsimile, telex or
telegraph, confirmed in writing.
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon (i) (A) any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Shares, as originally filed, or any amendment thereof, or
any related preliminary prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or (B) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii) (A) the violation of any applicable
laws or regulations of foreign jurisdictions where Directed Shares have been
offered or (B) any untrue statement or alleged untrue statement of a material
fact included in the supplement or prospectus wrapper material distributed in
connection with the reservation and sale of the Directed Shares to Directed
Share Purchasers or the omission or alleged omission therefrom of a material
fact necessary to make the statements therein, when considered in conjunction
with the Prospectus or preliminary prospectus, not misleading; provided,
however, that the Company will not be liable in any such case to the extent but
only to the extent that any such loss, liability, claim, damage or expense
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through you expressly for use therein. This indemnity agreement
will be in
20
addition to any liability which the Company may otherwise have including under
this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify and
hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the registration
of the Shares, as originally filed, or any filed amendment thereof, or any
related preliminary prospectus or the Prospectus, or any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein; provided,
however, that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount and commission applicable to the
Shares purchased by such Underwriter hereunder. This indemnity will be in
addition to any liability which any Underwriter may otherwise have including
under this Agreement. The Company acknowledges that the statements set forth in
the last paragraph of the cover page and in the third, twelfth, thirteenth and
fourteen paragraphs and the list of Underwriters and the number of shares listed
opposite their respective names in the first paragraph under the caption
"Underwriters" in the Prospectus constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the registration
statement for the registration of the Shares, as originally filed, or any filed
amendment thereof, or any related preliminary prospectus or the Prospectus, or
any amendment thereof or supplement thereto, as the case may be.
(c) In connection with the offer and sale of the Directed Shares, the
Company agrees, promptly upon a request in writing, to indemnify and hold
harmless the Underwriters from and against any and all losses, liabilities,
claims, damages and expenses incurred by it as a result of (i) the failure of
the Directed Shares Purchasers to pay for and accept delivery of the Directed
Shares which, by the end of the day following the date of this Agreement, were
subject to a properly confirmed agreement to purchase such Directed Shares or
(ii) the refusal of any Directed Shares Purchasers that are also employees of
the Company properly to confirm their respective agreements to purchase the
Directed Shares that they had agreed to purchase by the end of the first day
after the date of this Agreement.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim
21
in respect thereof is to be made against the indemnifying party under such
subsection, notify each party against whom indemnification is to be sought in
writing of the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it may have
under this Section 7, except to the extent (but only to the extent) such failure
prejudices the rights of such indemnifying party). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
8. Contribution. In order to provide for contribution in circumstances in
------------
which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company and one or more of the Underwriters may be
subject, in such proportions as is appropriate to reflect the relative benefits
received by the Company and the Underwriters from the offering of the Shares or,
if such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received proper
notice as provided in Section 7 hereof, in such proportion as is appropriate to
reflect not only the relative benefits referred to above but also the relative
fault of the Company and the Underwriters 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 and the Underwriters shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and (y) the underwriting discounts and commissions
22
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission or any violation of the nature referred to in Section
7(a)(ii). The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 8, (i) in no case shall any Underwriter be liable or responsible
for any amount in excess of the underwriting discount and commission applicable
to the Shares purchased by such Underwriter hereunder, and (ii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding the provisions of this Section 8
and the preceding sentence, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 8. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
-------------------------
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, the Firm Shares or Additional Shares to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
the respective proportions which the numbers of Firm Shares set forth opposite
their respective names in Schedule I hereto bear to the aggregate number of Firm
Shares set forth opposite the names of the non-defaulting Underwriters.
23
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, you may in your discretion
arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within five calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Sections 5, 7(a) and 8 hereof) or the Underwriters, but nothing
in this Agreement shall relieve a defaulting Underwriter or Underwriters of its
or their liability, if any, to the other Underwriters and the Company for
damages occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Additional Closing Date, as
the case may be, for a period, not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of Underwriters' Counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 9 with like
effect as if it had originally been a party to this Agreement with respect to
such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All representations and
------------------------------------------
warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective upon the later of when (i)
you and the Company shall have received notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. If either the
initial public offering price or the purchase price per Share has not been
agreed upon prior to 5:00 P.M., New York time, on the sixth full business day
after the Registration Statement shall have become effective, this Agreement
shall thereupon terminate without liability to the Company or the Underwriters
except as herein expressly provided. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Company by notifying you or by you by
notifying the Company. Notwithstanding the
24
foregoing, the provisions of this Section 11 and of Sections 1, 5, 7 and 8
hereof shall at all times be in full force and effect.
(b) You shall have the right to terminate this Agreement at any time
prior to the Closing Date or the obligations of the Underwriters to purchase the
Additional Shares at any time prior to the Additional Closing Date, as the case
may be, if (A) any domestic or international event or act or occurrence has
materially disrupted, or in your opinion will in the immediate future materially
disrupt, the market for the Company's securities or securities in general; or
(B) if trading on the New York or American Stock Exchanges or on NASDAQ shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York or American Stock Exchanges or on NASDAQ by the New York or
American Stock Exchanges or NASDAQ or by order of the Commission or any other
governmental authority having jurisdiction; or (C) if a banking moratorium has
been declared by a state or federal authority or if any new restriction
materially adversely affecting the distribution of the Firm Shares or the
Additional Shares, as the case may be, shall have become effective; or (D) (i)
if the United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States or (ii) if there shall have been such
change in political, financial or economic conditions, if the effect of any such
event in (i) or (ii) in your judgment makes it impracticable or inadvisable to
proceed with the offering, sale and delivery of the Firm Shares or the
Additional Shares, as the case may be, on the terms contemplated by the
Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, facsimile, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all
out-of-pocket expenses (including the fees and expenses of their counsel)
incurred by the Underwriters in connection herewith.
12. Notices. All communications hereunder, except as may be otherwise
-------
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, sent by facsimile, telex or telegraph
and confirmed in writing, to such Underwriter c/o Deutsche Bank Securities Inc.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Equity Syndicate;
facsimile number (▇▇▇) ▇▇▇-▇▇▇▇; if sent to the Company, shall be mailed,
delivered, sent by facsimile, telex or telegraph and confirmed in writing to the
Company, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D., President and Chief Executive Officer; facsimile
number (▇▇▇) ▇▇▇-▇▇▇▇.
13. Parties. This Agreement shall inure solely to the benefit of, and shall
-------
be binding upon, the Underwriters and the Company and the controlling persons,
directors, officers, employees and agents referred to in Sections 7 and 8, and
their respective successors and assigns,
25
and no other person shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of this Agreement or
any provision herein contained. The term "successors and assigns" shall not
include a purchaser, in its capacity as such, of Shares from any of the
Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
15. Counterparts. This Agreement may be signed in two or more counterparts,
------------
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
16. Headings. The headings of the sections of this Agreement have been
--------
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
[Signature Page Follows]
26
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
INSPIRE PHARMACEUTICALS, INC.
By
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D.
Title: President and Chief
Executive Officer
Accepted as of the date first above written
DEUTSCHE BANK SECURITIES INC.
CHASE SECURITIES INC.
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
By DEUTSCHE BANK SECURITIES INC.
By
--------------------------------
Name:
Title:
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
------------------- ----------------------
Deutsche Bank Securities Inc.
Chase Securities Inc.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
Total....................................