EXHIBIT 10.24
$80,000,000
ATHEROGENICS, INC.
4-1/2% CONVERTIBLE NOTES DUE 2008
PURCHASE AGREEMENT
August 13, 2003
August 13, 2003
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇ Brothers, Inc.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
AtheroGenics, Inc., a Georgia corporation (the "COMPANY"), proposes to
issue and sell to the several purchasers named in Schedule I hereto (the
"INITIAL PURCHASERS") $80,000,000 principal amount of its 4-1/2% Convertible
Notes due 2008 (the "FIRM SECURITIES") to be issued pursuant to the provisions
of an Indenture dated as of August 19, 2003 (the "INDENTURE") between the
Company and The Bank of New York Trust Company of Florida, N.A., as Trustee (the
"TRUSTEE"). The Company also proposes to issue and sell to the Initial
Purchasers not more than an additional $20,000,000 principal amount of its
4-1/2% Convertible Notes due 2008 (the "ADDITIONAL SECURITIES") if and to the
extent that you, as managers of the Offering, shall have determined to exercise,
on behalf of the Initial Purchasers, the right to purchase such 4-1/2%
Convertible Notes due 2008 granted to the Initial Purchasers in Section 2
hereof. The Firm Securities and the Additional Securities are hereinafter
collectively referred to as the "SECURITIES". The Securities will be convertible
into shares of common stock, no par value, of the Company together with the
rights evidenced by such common stock to the extent provided in the Rights
Agreement, dated as of November 9, 2001, between the Company and American Stock
Transfer & Trust Company (unless such rights shall have been redeemed or
terminated previously) (the "UNDERLYING SECURITIES").
The Securities and the Underlying Securities will be offered by the Initial
Purchasers without being registered under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), to qualified institutional buyers in compliance with the
exemption from registration provided by Rule 144A under the Securities Act.
The Initial Purchasers and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement dated the Closing
Date (as defined herein) between the Company and the Initial Purchasers (the
"REGISTRATION RIGHTS AGREEMENT").
In connection with the sale of the Securities, the Company has prepared an
offering memorandum (the "MEMORANDUM") including or incorporating by reference a
description of the terms of the Securities and the Underlying Securities, the
terms of the offering and a description of the Company. As used herein, the term
"Memorandum" shall include the documents incorporated by
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reference therein. The terms "SUPPLEMENT," "AMENDMENT" and "AMEND" as used
herein with respect to the Memorandum shall include all documents deemed to be
incorporated by reference in the Memorandum that are filed subsequent to the
date of the Memorandum with the Securities and Exchange Commission (the
"COMMISSION") pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT").
1. Representations and Warranties. The Company represents and warrants
to, and agrees with, you that:
(a) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Memorandum complied or
will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder and
(ii) the Memorandum, in the form used by the Initial Purchasers to confirm
sales and on the Closing Date (as defined in Section 4), will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to statements or
omissions in the Memorandum based upon information relating to any Initial
Purchasers or to the Plan of Distribution furnished to the Company in
writing by such Initial Purchaser expressly for use therein.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company.
(c) The Company does not have any subsidiaries; provided, however,
the Company has caused a charter to be filed in Delaware under the name AGI
Technologies, Inc., which entity has had no operations and has incurred no
liabilities.
(d) This Agreement has been duly authorized, executed and delivered
by the Company.
(e) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Memorandum.
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(f) The shares of common stock, no par value, of the Company
outstanding prior to the issuance of the Securities have been duly
authorized and are validly issued, fully paid and non-assessable.
(g) The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally and equitable principles of general applicability, and will be
entitled to the benefits of the Indenture and the Registration Rights
Agreement pursuant to which such Securities are to be issued.
(h) The Underlying Securities issuable upon conversion of the
Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the
Securities, will be validly issued, fully paid and non-assessable, and the
issuance of the Underlying Securities will not be subject to any preemptive
or similar rights.
(i) Each of the Indenture and the Registration Rights Agreement has
been duly authorized, executed and delivered by, and (assuming the due
authorization, execution and delivery thereof by the other parties thereto)
is a valid and binding agreement of, the Company, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and equitable principles of
general applicability and except as rights to indemnification and
contribution under the Registration Rights Agreement may be limited under
applicable law.
(j) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indenture, the
Registration Rights Agreement and the Securities will not contravene any
provision of applicable U.S. law or the articles of incorporation or
by-laws of the Company, as each has been amended to date, or any agreement
or other instrument binding upon the Company that is material to the
Company, or any judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Company, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement, the Indenture, the Registration Rights Agreement or
the Securities, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Securities and by
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Federal and state securities laws with respect to the Company's obligations
under the Registration Rights Agreement and except for the qualification of
the Indenture under the Trust Indenture Act of 1939.
(k) There has not occurred any material adverse change, or any
development reasonably likely to result in a material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company, taken as a whole, from that set forth in the
Memorandum provided to prospective purchasers of the Securities (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement).
(l) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company is a party or to which
any of the properties of the Company is subject other than proceedings
accurately described in all material respects in the Memorandum and
proceedings that would not have a material adverse effect on the Company or
on the power or ability of the Company to perform its obligations under
this Agreement, the Indenture, the Registration Rights Agreement or the
Securities or to consummate the transactions contemplated by the
Memorandum.
(m) The Company is not, and after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Memorandum will not be, required to register as an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended.
(n) The Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) has received all permits, licenses or other approvals required
of it under applicable Environmental Laws to conduct its business and (iii)
is in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals, or
failure to comply with the terms and conditions of such permits, licenses
or approvals would not, singly or in the aggregate, have a material adverse
effect on the Company.
(o) There are no costs or liabilities associated with compliance by
the Company with Environmental Laws (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license
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or approval, any related constraints on operating activities and any
potential liabilities to third parties) which would, singly or in the
aggregate, have a material adverse effect on the Company.
(p) The Company has all consents, approvals, orders, certificates,
authorizations and permits issued by, and has made all declarations and
filings with, all appropriate federal, state or foreign governmental or
self-regulatory authorities and all courts and other tribunals necessary to
conduct its business and to own, lease or license and use its properties in
the manner described in the Memorandum, except for such consents,
approvals, orders, certificates, authorizations, permits, declarations and
filings the failure of which to have, maintain or make would not have a
material adverse effect on the Company, and the Company has not received
any notice of proceedings relating to the revocation or modification of any
such consent, approval, order, certificate, authorization or permit.
(q) Except as disclosed in the Memorandum, the Company owns or
possesses, or has rights to all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by it in connection with the business now operated by it or, with
respect to AGI-1067, proposed to be operated by it as described in the
Memorandum, and the Company has not received any notice of infringement of
or conflict with asserted rights of others with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the Company.
(r) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the Company to
include such securities with the Securities and the Underlying Securities
to be registered pursuant to the Registration Rights Agreement other than
such contracts, agreements or understandings as have been waived with
respect to the transactions contemplated hereunder.
(s) There are no contracts or other documents, relating to patents or
patent applications owned or licensed by, or licenses of patents or patent
applications held by, the Company of a character required to be filed as an
exhibit to the Company's annual report on Form 10-K for fiscal 2002 or to
the Company's quarterly reports on Form 10-Q for the first
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fiscal quarter of 2003, or required to be described in the Memorandum or in
such Form 10-K or Form 10-Q that are not so filed or described.
(t) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act, an "AFFILIATE") of the Company
has directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Securities Act) which is or will be integrated with the sale
of the Securities in a manner that would require the registration under the
Securities Act of the Securities or (ii) offered, solicited offers to buy
or sold the Securities by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities
Act) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
(u) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers in the manner
contemplated by this Agreement to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended.
(v) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(w) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
granted or issued by the Company relating to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of the
Company, except as otherwise disclosed in the Memorandum or incorporated by
reference therein and except for options granted to directors and employees
of the Company in the ordinary course of business since December 31, 2002.
(x) The consolidated financial statements included or incorporated by
reference in the Memorandum, together with related schedules and notes,
present fairly, in all material respects, the financial position, results
of operations and changes in financial position of the Company on the basis
stated therein at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set
forth in the Memorandum are, in all material respects, accurately presented
and prepared on a basis consistent with such financial statements and the
books and records of the Company.
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(y) The Company has established and maintained disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) that
are adequate and effective and designed to ensure that material information
relating to the Company is made known to its chief executive officer and
chief financial officer by others within the Company.
(z) The Company maintains a system of accounting controls sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles or
any other criteria applicable to such statements and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Initial Purchasers, and each Initial Purchaser, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective principal amount of Firm Securities set forth in
Schedule I hereto opposite its name at a purchase price of 97% of the principal
amount thereof (the "PURCHASE PRICE") plus accrued interest, if any, to the
Closing Date.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Initial Purchasers the Additional Securities, and the Initial Purchasers
shall have the right to purchase, severally and not jointly, up to $20,000,000
principal amount of Additional Securities at the Purchase Price plus accrued
interest, if any, to the date of payment and delivery. You may exercise this
right on behalf of the Initial Purchasers in whole or from time to time in part
by giving written notice not later than 30 days after the date of this
Agreement. Any exercise notice shall specify the principal amount of Additional
Securities to be purchased by the Initial Purchasers and the date on which such
Additional Securities are to be purchased. Each purchase date must be at least
two business days after the written notice is given and may not be earlier than
the closing date for the Firm Securities nor later than ten business days after
the date of such notice. On each day, if any, that Additional Securities are to
be purchased (an "OPTION CLOSING DATE"), each Initial Purchaser agrees,
severally and not jointly, to purchase the principal amount of Additional
Securities (subject to such adjustments to eliminate fractional Securities as
you may determine) that bears the same proportion to the total principal amount
of Additional Securities to be purchased on such Option Closing Date as the
principal amount of Firm Securities set forth
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in Schedule I opposite the name of such Initial Purchaser bears to the total
principal amount of Firm Securities.
The Company hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Initial Purchasers, it will not,
during the period ending 90 days after the date of the Memorandum, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of common stock of the Company or any securities convertible into or
exercisable or exchangeable for common stock of the Company or (ii) enter into
any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of the common stock of the
Company, whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of common stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the sale of the
Securities under this Agreement, (B) the issuance by the Company of any shares
of common stock upon the exercise of an option or warrant or the conversion of
the Securities or of a security outstanding on the date hereof or (C) the grant
by the Company of options to purchase common stock of the Company or (D)
transactions by any person other than the Company relating to common stock of
the Company or other securities of the Company acquired in open market
transactions after the completion of the offering of the Securities.
3. Terms of Offering. You have advised the Company that the Initial
Purchasers will make an offering of the Securities purchased by the Initial
Purchasers hereunder on the terms to be set forth in the Memorandum, as soon as
practicable after this Agreement is entered into as in your judgment is
advisable.
4. Payment and Delivery. Payment for the Firm Securities shall be made to
the Company by wire transfer in Federal or other funds immediately available to
a bank account designated by the Company in New York City against delivery of
such Firm Securities for the respective accounts of the several Initial
Purchasers at 10:00 a.m., New York City time, on August 19, 2003, or at such
other time on the same or such other date, not later than August 26, 2003, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Securities shall be made to the Company by wire
transfer in Federal or other funds immediately available in New York City
against delivery of such Additional Securities for the respective accounts of
the several Initial Purchasers at 10:00 a.m., New York City time, on the date
specified in the corresponding notice described in Section 2 or at such other
time on the same or on such other date, in any event not later than September
25, 2003, as shall be designated in writing by you.
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The Securities shall be in definitive form or global form, as specified by
you, and registered in such names and in such denominations as you shall request
in writing not later than one full business day prior to the Closing Date or the
applicable Option Closing Date, as the case may be. The Securities shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Initial Purchasers, with any
transfer taxes payable in connection with the transfer of the Securities to the
Initial Purchasers duly paid, against payment of the Purchase Price therefor
plus accrued interest, if any, to the date of payment and delivery.
5. Conditions to the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase and pay for the Firm
Securities on the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded the Company or any of
the Company's securities or in the rating outlook for the Company by
any "nationally recognized statistical rating organization," as such
term is defined for purposes of Rule 436(g)(2) under the Securities
Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
from that set forth in the Memorandum provided to prospective
purchasers of the Securities that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to market
the Securities on the terms and in the manner contemplated in the
Memorandum.
(b) The Initial Purchasers shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Section 5(a)(i) and to the effect
that the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the Company
has complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied hereunder on or before the Closing
Date.
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The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Initial Purchasers shall have received on the Closing Date
opinions of (i) ▇▇▇▇▇▇▇ Long & ▇▇▇▇▇▇▇▇ LLP, outside counsel for the
Company, and (ii) King & Spalding LLP, patent counsel for the Company, in
each case dated the Closing Date, to the effect set forth in Exhibits A-1
and A-2, respectively. Such opinions shall be rendered to the Initial
Purchasers at the request of the Company and shall so state therein. The
opinion shall also state that The Bank of New York Trust Company of
Florida, N.A. may rely, solely in its capacity as Trustee under the
Indenture, on such opinion for purposes of authenticating the Securities.
(d) The Initial Purchasers shall have received on the Closing Date an
opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Initial Purchasers, dated
the Closing Date, to the effect set forth in Exhibit C. The opinion shall
also state that The Bank of New York Trust Company of Florida, N.A. may
rely, solely in its capacity as Trustee under the Indenture, on such
opinion for purposes of authenticating the Securities.
(e) The Initial Purchasers shall have received on each of the date
hereof and the Closing Date a letter, dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the Initial
Purchasers, from Ernst & Young LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Memorandum; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(f) The "lock-up" agreements, each substantially in the form of
Exhibit B hereto, between you and the executive officers and directors of
the Company relating to sales and certain other dispositions of shares of
common stock or certain other securities, delivered to you on or before the
date hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Initial Purchasers to purchase Additional
Securities hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization, execution and
authentication of the Additional Securities to be sold on such Option Closing
Date and other matters related to the execution and authentication of such
Additional Securities.
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6. Covenants of the Company. In further consideration of the
agreements of the Initial Purchasers contained in this Agreement, the Company
covenants with each Initial Purchaser as follows:
(a) To furnish to you in New York City, without charge, prior to
10:00 a.m. New York City time on the business day next succeeding the
date of this Agreement and during the period mentioned in Section
6(c), as many copies of the Memorandum, any documents incorporated by
reference therein and any supplements and amendments thereto as you
may reasonably request.
(b) Before amending or supplementing the Memorandum, to furnish
to you a copy of each such proposed amendment or supplement and not to
use any such proposed amendment or supplement to which you reasonably
object.
(c) If, during such period after the date hereof and prior to
the date on which all of the Securities shall have been sold by the
Initial Purchasers, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Memorandum
in order to make the statements therein, in the light of the
circumstances when the Memorandum is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Initial
Purchasers, it is necessary to amend or supplement the Memorandum to
comply with applicable law, forthwith to prepare and furnish, at its
own expense, to the Initial Purchasers, either amendments or
supplements to the Memorandum so that the statements in the Memorandum
as so amended or supplemented will not, in the light of the
circumstances when the Memorandum is delivered to a purchaser, be
misleading or so that the Memorandum, as amended or supplemented, will
comply with applicable law.
(d) To endeavor to qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request; provided, however, that the Company will not
be required to qualify to do business in any jurisdiction in which it
is not then so qualified, to file any general consent to service of
process or to take any other action that would subject it to general
service of process or to taxation in any such jurisdiction where it is
not then so subject.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses, if any, incident to the performance of
its obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the issuance and sale of the Securities
and all other fees
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or expenses in connection with the preparation of the Memorandum and
all amendments and supplements thereto, including all printing costs
associated therewith, and the delivering of copies thereof to the
Initial Purchasers, in the quantities herein above specified, (ii) all
costs and expenses related to the transfer and delivery of the
Securities to the Initial Purchasers, including any transfer or other
taxes payable thereon, (iii) the cost of printing or producing any
Blue Sky or legal investment memorandum in connection with the offer
and sale of the Securities under state securities laws and all
expenses in connection with the qualification of the Securities for
offer and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees up to an
aggregate of $5,000 and disbursements of counsel for the Initial
Purchasers in connection with such qualification and in connection
with the Blue Sky or legal investment memorandum, (iv) any fees
charged by rating agencies for the rating of the Securities, if any,
(v) the fees and expenses, if any, incurred in connection with the
admission of the Securities for trading in PORTAL or any appropriate
market system, (vi) the costs and charges of the Trustee and any
transfer agent, registrar or depositary, (vii) the cost of the
preparation, issuance and delivery of the Securities, (viii) the costs
and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the
offering of the Securities, including, without limitation, expenses
associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company
and any such consultants, and the cost of any aircraft chartered in
connection with the road show, and (ix) all other cost and expenses
incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section.
It is understood, however, that except as provided in this Section,
Section 8, and the last paragraph of Section 10, the Initial
Purchasers will pay all of their costs and expenses, including fees
and disbursements of their counsel, transfer taxes payable on resale
of any of the Securities by them and any advertising expenses
connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require the
registration under the Securities Act of the Securities.
(g) Not to solicit any offer to buy, or offer or sell, the
Securities or the Underlying Securities by means of any form of
general solicitation or general advertising (as those terms are used
in Regulation D
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under the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act.
(h) While any of the Securities or the Underlying Securities
remain "restricted securities" within the meaning of the Securities
Act, to make available, upon request, to any seller of such Securities
the information specified in Rule 144A(d)(4) under the Securities Act,
unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act.
(i) If requested by you, to use its reasonable best efforts to
permit the Securities to be designated PORTAL securities in accordance
with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. relating to trading in the PORTAL Market.
(j) During the applicable Rule 144 period after the Closing Date
or any Option Closing Date, if later, the Company will not, and will
not permit any of its affiliates (as defined in Rule 144 under the
Securities Act) to resell any of the Securities or the Underlying
Securities which constitute "restricted securities" under Rule 144
that have been reacquired by any of them.
(k) Not to take any action prohibited by Regulation M under the
Exchange Act in connection with the distribution of the Securities
contemplated hereby.
7. Offering of Securities; Restrictions on Transfer. (a) Each
Initial Purchaser, severally and not jointly, represents and warrants that it is
a qualified institutional buyer as defined in Rule 144A under the Securities Act
(a "QIB"). Each Initial Purchaser, severally and not jointly, agrees with the
Company that (i) it will not solicit offers for, or offer or sell, such
Securities by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act and (ii) it will solicit offers for such Securities only from, and will
offer such Securities only to, persons that it reasonably believes to be QIBs
that in purchasing such Securities are deemed to have represented and agreed as
provided in the Memorandum under the caption "Transfer Restrictions".
8. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Initial Purchaser, each person, if any, who controls any
Initial Purchaser within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, and each affiliate of any Initial Purchaser
within the meaning of Rule 405 under the Securities Act which affiliate directly
or indirectly participated in the distribution of the Securities from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any
14
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Initial Purchaser including information contained in the Plan of Distribution in
the Memorandum furnished to the Company in writing by or on behalf of such
Initial Purchaser through you expressly for use therein; provided, however, that
the foregoing indemnity agreement with respect to any Memorandum shall not inure
to the benefit of any Initial Purchaser from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, or any person
controlling such Initial Purchaser or any affiliate of any Initial Purchaser
within the meaning of Rule 405 under the Securities Act which affiliate directly
or indirectly participated in the distribution of the Securities, if a copy of
the Memorandum was not sent or given by or on behalf of such Initial Purchaser
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Securities to such person, and if the
Memorandum would have cured the defect giving rise to such losses, claims,
damages or liabilities, unless such failure is the result of noncompliance by
the Company with Section 6(a) hereof.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Memorandum, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to such Initial
Purchaser furnished to the Company in writing by or on behalf of such Initial
Purchaser through you expressly for use in the Memorandum.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a) or 8(b), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified
15
party to represent the indemnified party and any others the indemnifying party
may designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses of
more than one separate firm (in addition to any local counsel) for all Initial
Purchasers and all persons, if any, who control any Initial Purchaser within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act or who are affiliates of any Initial Purchaser within the meaning of Rule
405 under the Securities Act which affiliates directly or indirectly
participated in the distribution of the Securities and (ii) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company, its directors, its officers and each person, if any, who controls
the Company within the meaning of either such Section, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Initial Purchasers and such control persons and such
affiliates of any Initial Purchasers, such firm shall be designated in writing
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated. In the case of any such separate firm for
the Company, and such directors, officers and control persons of the Company,
such firm shall be designated in writing by the Company. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
16
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the
Securities or (ii) if the allocation provided by clause 8(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Initial Purchasers on the other
hand in connection with the offering of the Securities shall be deemed to be in
the same respective proportions as the net proceeds from the offering of the
Securities (before deducting expenses) received by the Company and the total
discounts and commissions received by the Initial Purchasers bear to the
aggregate offering price of the Securities. The relative fault of the Company on
the one hand and of the Initial Purchasers on the other hand 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 by the Initial
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Initial
Purchasers' respective obligations to contribute pursuant to this Section 8 are
several in proportion to the respective principal amount of Securities they have
purchased hereunder, and not joint.
(e) The Company and the Initial Purchasers agree that it would not be
just or equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Initial Purchaser shall be required to
contribute any amount in excess of the
17
amount by which the total price at which the Securities resold by it in the
initial placement of such Securities were offered to investors exceeds the
amount of any damages that such Initial Purchaser has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company and the Initial Purchasers contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Initial Purchaser,
any person controlling any Initial Purchaser or any affiliate of any Initial
Purchaser which affiliate directly or indirectly participated in the
distribution of the Securities, or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Securities.
9. Termination. The Initial Purchasers may terminate this Agreement
by notice given to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or
(v) there shall have occurred any outbreak or escalation of hostilities, or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Securities on the
terms and in the manner contemplated in the Memorandum. Notwithstanding anything
to the contrary in this Agreement, in the event the Underwriters shall terminate
this Agreement pursuant to Section 9, the Company shall only be required to pay
the expenses to the Underwriters and Underwriter's counsel described in Section
7 hereof if such termination is solely due to the event specified in clause (ii)
of this Section 9 and within the control of the Company.
10. Effectiveness; Defaulting Initial Purchasers. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
18
If, on the Closing Date, or an Option Closing Date, as the case may
be, any one or more of the Initial Purchasers shall fail or refuse to purchase
Securities that it or they have agreed to purchase hereunder on such date, and
the aggregate principal amount of Securities which such defaulting Initial
Purchaser or Initial Purchasers agreed but failed or refused to purchase is not
more than one-tenth of the aggregate principal amount of Securities to be
purchased on such date, the other Initial Purchasers shall be obligated
severally in the proportions that the principal amount of Firm Securities set
forth opposite their respective names in Schedule I bears to the aggregate
principal amount of Firm Securities set forth opposite the names of all such
non-defaulting Initial Purchasers, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Initial Purchaser or
Initial Purchasers agreed but failed or refused to purchase on such date;
provided that in no event shall the principal amount of Securities that any
Initial Purchaser has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such
principal amount of Securities without the written consent of such Initial
Purchaser. If, on the Closing Date any Initial Purchaser or Initial Purchasers
shall fail or refuse to purchase Firm Securities which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of Securities
with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of Firm Securities to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such Firm
Securities are not made within 24 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Initial Purchaser
or of the Company. In any such case either you or the Company shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Memorandum or in any other
documents or arrangements may be effected. If, on an Option Closing Date, any
Initial Purchaser or Initial Purchasers shall fail or refuse to purchase
Additional Securities and the aggregate principal amount of Additional
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Additional Securities to be purchased on such
Option Closing Date, the non-defaulting Initial Purchasers shall have the option
to (a) terminate their obligation hereunder to purchase the Additional
Securities to be sold on such Option Closing Date or (b) purchase not less than
the principal amount of Additional Securities that such non-defaulting Initial
Purchasers would have been obligated to purchase in the absence of such default.
Any action taken under this paragraph shall not relieve any defaulting Initial
Purchaser from liability in respect of any default of such Initial Purchaser
under this Agreement.
If this Agreement shall be terminated by the Initial Purchasers, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement
within the control of the Company, or if for any reason the Company shall be
unable to perform its
19
obligations under this Agreement due to circumstances within the control of the
Company, the Company will reimburse the Initial Purchasers or such Initial
Purchasers as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Initial Purchasers in connection
with this Agreement or the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
13. 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.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
20
Very truly yours,
ATHEROGENICS, INC.
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Sr.VP Finance and
Administration and Chief
Financial Officer
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Acting severally on behalf of itself and the several Initial Purchasers
named in Schedule I hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Executive Director
21
SCHEDULE I
$80,000,000 OF FIRM SECURITIES
INITIAL PURCHASER TO BE PURCHASED
----------------- -------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.......................... $ 58,000,000
▇▇▇▇▇▇ Brothers, Inc....................................... 16,000,000
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc. .............................. 6,000,000
------------
Total:............................................ $ 80,000,000
============
EXHIBIT A-1
OPINION OF ▇▇▇▇▇▇▇, LONG & ▇▇▇▇▇▇▇▇ LLP
The opinion of ▇▇▇▇▇▇▇, Long & ▇▇▇▇▇▇▇▇ LLP, to be delivered pursuant
to Section 5(c) of the Purchase Agreement shall be to the effect that:
A. The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the state of Georgia, has
the corporate power and authority to own its property and to conduct its
business as described in the Memorandum and is duly qualified to transact
business and is in good standing in the State of Georgia.
B. The shares of common stock, no par value, of the Company
outstanding prior to the issuance of the Securities to be sold by the Company
have been duly authorized and are validly issued, fully paid and
non-assessable.
C. The shares of common stock, no par value, of the Company
issuable upon conversion of the Securities have been duly authorized and
reserved and, when issued in accordance with the terms of the Indenture, will
be validly issued, fully paid and non-assessable, and the issuance of such
shares of common stock will not be subject to any preemptive or similar rights.
D. The Transaction Documents have been duly authorized, executed
and delivered by the Company and are enforceable against the Company.
E. The Securities are in the form contemplated by the Indenture,
have been duly authorized by the Company for issuance and sale pursuant to the
Purchase Agreement and the Indenture and, when executed by the Company and
authenticated by the Trustee in the manner provided in the Indenture, and
delivered against payment of the purchase price therefor, will constitute valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting enforcement of the rights and remedies of creditors or
by general equitable principles.
F. The execution and delivery by the Company of the Transaction
Documents and the Securities do not, and if the Company were now to perform its
obligations under the Transaction Documents and the Securities such performance
would not, result in any: (i) violation of the Company's Articles of
Incorporation or Bylaws; (ii) violation of any existing federal or State of
Georgia law or regulation to which the Company is subject; (iii) violation of
any judicial or administrative order or decree to which, to our knowledge, the
Company is
subject; (iv) violation, to our knowledge, of any Material Written Agreement to
which the Company is a party or by which it is bound, except for such
violations as would not, individually or in the aggregate, have a material
adverse effect on the Company and except for such provisions as have been
waived with respect to the transactions contemplated by the Transaction
Documents.
Such counsel may assume that the term "Material Written Agreement"
referred to in clause (iv) above, includes only those agreements listed in the
Exhibit Index, Exhibits 10.02 through 10.22, of the Company's Form 10-K for the
fiscal year ended December 31, 2002 and Exhibit 10.23 of the Company's Form
10-K for the quarter ended June 30, 2003.
G. No consent, approval, authorization or order of, or
qualification with, any U.S. governmental body or agency is required for the
performance by the Company of its obligations under the Transaction Documents,
except such as have been obtained or may be made by the Company after the
Closing Date, except such as may be required by the securities or blue sky laws
of the various states in connection with the offer and sale of the Securities,
as to which such counsel expresses no opinion, and except such as may be
required by federal and state securities laws with respect to the Company's
obligations under the Registration Rights Agreement.
H. The Securities conform in all material respects to the
description thereof contained in the Memorandum under the caption "Description
of Notes."
I. Subject to the assumptions and qualifications set forth in
the discussion in the Memorandum under the caption "U.S. Federal Income Tax
Considerations" (the "Discussion"), such counsel is of the opinion that the
Discussion describes the material U.S. federal income tax consequences of the
purchase, ownership and disposition of the Securities and the shares of common
stock into which the Securities may be converted under the U.S. federal income
tax laws in effect as of the date of the Memorandum.
J. The description of the rights and preferences of the
Company's capital stock included in the Memorandum under the caption
"Description of Capital Stock," when read in conjunction with the other
information contained in the Memorandum, fairly summarizes in all material
respects the rights and preferences of such capital stock; provided, however,
that that such counsel has relied on representations of officers of the Company
with respect to factual matters contained in such statements.
K. To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which the Company is a party
or to which any of the properties of the Company is subject that are required
to be described in the Memorandum and are not so described, or any contracts or
other documents
A-1 - Page 2
that are required to be described in the Memorandum that are not described as
required.
L. The Company is not, and after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as
described in the Memorandum will not be, required to register as an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
M. Assuming the accuracy of the representations, warranties and
covenants of the Company and the Initial Purchasers contained in the Purchase
Agreement, no registration of the Securities under the Securities Act, and no
qualification of an indenture under the Trust Indenture Act with respect
thereto, is required in connection with the purchase of the Securities by the
Initial Purchasers or the initial resale of the Securities by the Initial
Purchasers to QIBs in the manner contemplated by the Purchase Agreement and the
Memorandum other than any registration or qualification that may be required in
connection with the Registration Rights Agreement.
N. Nothing has come to the attention of such counsel which would
cause such counsel to believe that each periodic report filed pursuant to the
Exchange Act and incorporated by reference in the Memorandum did not comply as
to form when filed with the Commission in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission
thereunder (it being understood that such counsel expresses no statement of
belief as to the financial statements and schedules or other financial and
statistical data, included or incorporated by reference therein).
O. Nothing has come to the attention of such counsel which would
lead such counsel to believe that the Memorandum, as of its date or at the
Closing Date, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel expresses no statement of
belief as to the financial statements and schedules or other financial and
statistical data derived therefrom, included or incorporated by reference in
the Memorandum).
With respect to the matters referred to in paragraph O above, counsel
may state that his or her beliefs are based upon his or her participation in
the preparation of the Memorandum (and any amendments or supplements thereto)
and review and discussion of the contents thereof and review of the documents
incorporated by reference therein, but are without independent check or
verification except as specified.
Notwithstanding anything in such counsel's opinion to the contrary,
neither such counsel's opinion nor the statement contemplated by the
immediately
A-1 - Page 3
preceding paragraph is intended to cover or include the matters described in
the sections "Risk Factors - Our failure to protect adequately or enforce our
intellectual property rights or secure rights to third party patents could
materially adversely affect our proprietary position in the marketplace or
prevent the commercialization of our products" included in, or "Business -
Patents and Intellectual Property" included in the Company's Form 10-K for the
fiscal year ended December 31, 2002 and incorporated by reference into the
Memorandum, or any other matter relating to any patents, patent applications or
intellectual property rights associated therewith or related thereto owned or
used by or licensed to or from the Company; provided, however, the immediately
preceding paragraph is intended to cover or include the ownership and use by
the Company of the trademarks "AtheroGenics" and associated design, "AGI,"
"Oxykine" and "v-protectant" as described in the Memorandum.
A-1 - Page 4
EXHIBIT A-2
OPINION OF KING & SPALDING LLP
The opinion of King & Spalding LLP, to be delivered pursuant to
Section 5(c) of the Purchase Agreement shall be to the effect that:
A. The Company owns or possesses adequate licenses or other
rights to patents and patent applications which are necessary to the conduct,
or currently employed by it in connection with the conduct, of its business
regarding the development and intended sale of AGI-1067, AGIX 4207, AGIX 4207
I.V. or AGI 1096 ("Intended Products") as described in the Offering Memorandum
and the Forms 10-K and 10-Q;
B. The Company has not received any notice of, and is not aware
of, any actionable infringement of any patent rights of the Company by others,
other than as described in a letter to Amylin Pharmaceuticals, Inc. dated July
10, 2000, a copy of which is attached to such opinion;
C. The Company has not received any notice of, and is not aware
of, any infringement by the Company of patents of others which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the current operations of the Company;
D. Other than with respect to patent prosecution and
maintenance, with respect to patents and patent applications owned or licensed
by the Company, there are no legal or governmental proceedings pending or
threatened, which, singly or in the aggregate, if determined adversely against
the Company, would have a material adverse effect on the current operations of
the Company;
E. The Company has not received any notice of, and is not aware
of, the granting of any patent rights to third parties, or the filing of any
patent applications by third parties, on AGI-1067, AGIX 4207, AGIX 4207 I.V. or
AGI 1096, other than patent rights and patent applications licensed by the
Company, that would have a material adverse effect on the Company;
F. No third party, other than Emory University and the United
States government, possesses rights H to Intended Products, which, if
exercised, could reasonably be expected to result in a material adverse effect
on the current operations of the Company;
G. In connection with the filing of all patent applications
filed or caused to be filed by the Company with the United States Patent and
Trademark Office (the "PTO"), which are described under the Covered Captions
and which cover Intended Products as described by the Offering Memorandum and
Form 10-
K, the Company has complied with the PTO's duty of candor and disclosure and
has made no material misrepresentation in any such application or in any
application filed with any applicable non-U.S. or international patent
authorities; and
H. No basis for a finding of invalidity and/or unenforceability
of any issued patents covering Intended Products owned by the Company exists.
Further, with respect to patents and patent applications owned or
licensed by, or licenses held by, the Company, such counsel advise that nothing
has come to their attention in the course of their representation of the
Company that caused counsel to believe that the statements under the Covered
Captions in the Registration Statement, at the time the Registration Statement
became effective, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements made therein not misleading, or in the Covered Captions of the
Prospectus or the Form 10-K, at the time the Prospectus was issued or at the
date hereof, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
A-2 - Page 2
EXHIBIT B
[FORM OF LOCK-UP LETTER]
August _____, 2003
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") proposes to enter into a Purchase Agreement (the "PURCHASE
AGREEMENT") with AtheroGenics, Inc., a Georgia corporation (the "Company"),
providing for the offering (the "OFFERING") by the several Initial Purchasers,
including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "INITIAL PURCHASERS"), of the Company's
Convertible Notes due 2008 (the "SECURITIES"). The Securities will be
convertible into shares of common stock, no par value, of the Company (the
"COMMON STOCK").
To induce the Initial Purchasers to continue their efforts in
connection with the Offering, the undersigned hereby agrees that, without the
prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the offering
memorandum relating to the Offering (the "MEMORANDUM"), (1) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap 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
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise; provided, however, that
this Lock-Up Agreement shall terminate immediately if the Offering is not
consummated prior to August 31, 2003. The foregoing sentence shall not apply to
(a) the sale of any Securities to the Initial Purchasers pursuant to the
Purchase Agreement or (b) transactions relating to shares of Common Stock or
other securities acquired in open market transactions after the completion of
the Offering. In addition, the undersigned agrees that, without the prior
written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the Memorandum, make any
demand for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock. The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of the undersigned's shares of Common Stock
except in compliance with the foregoing restrictions. The undersigned further
agrees to suspend any existing trading plans or other arrangements pursuant to
Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and agrees
not to enter into any such plan or arrangement during the period commencing on
the date hereof and ending 90 days after the date of the Memorandum (unless
this Lock-Up Agreement is earlier terminated as provided above).
Notwithstanding the foregoing, the undersigned may exercise warrants
and stock options issued or granted by the Company; provided, however, that any
Common Stock received from the Company by the undersigned upon exercise of such
warrants and stock options shall be bound by the terms of this Lock-Up
Agreement.
Notwithstanding anything herein to the contrary, the undersigned may
transfer Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock to a trust where the beneficiaries of the trust
are drawn solely from a group consisting of the undersigned and immediate
family members of the undersigned or by will or intestacy to the undersigned's
immediate family members provided that (i) the trust or the beneficiaries under
the will or by intestacy agrees to enter into a lock-up letter substantially in
the form of this letter and (ii) the undersigned shall not be required to, and
shall not voluntarily, file a report on Form 4 under Section 16(a) of the
Securities Exchange Act of 1934 reporting a reduction in beneficial ownership
of shares of Common Stock during the restricted period referred in the
foregoing sentence. Immediate family member of a person means the spouse,
lineal descendants, father, mother, brother, sister, father-in-law,
mother-in-law, brother-in-law and sister-in-law of such person.
The undersigned understands that the Company and the Initial
Purchasers are relying upon this Lock-Up Agreement in proceeding toward
consummation of the Offering. The undersigned further understands that this
Lock-Up Agreement is irrevocable and shall be binding upon the undersigned's
heirs, legal representatives, successors and assigns.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant
to a Purchase Agreement, the terms of which are subject to negotiation between
the Company and the Initial Purchasers.
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Very truly yours,
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(Name)
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(Address)
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
The opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ to be delivered pursuant to
Section 5(d) of the Purchase Agreement shall be to the effect that:
A. The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
B. The Securities have been duly authorized by the Company and,
when executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in accordance
with the terms of the Purchase Agreement, will be valid and binding obligations
of the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and equitable principles of general applicability, and will be
entitled to the benefits of the Indenture and the Registration Rights Agreement
pursuant to which such Securities are to be issued.
C. The Underlying Securities issuable upon conversion of the
Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the Securities,
will be validly issued, fully paid and non assessable, and the issuance of the
Underlying Securities will not be subject to any preemptive or similar rights.
D. Each of the Indenture and the Registration Rights Agreement
has been duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and equitable principles of general applicability, and except as
rights to indemnification and contribution under the Registration Rights
Agreement may be limited under applicable law.
E. The statements relating to legal matters or documents
included in the Memorandum under the captions "Description of Notes", "Plan of
Distribution," "Transfer Restrictions," and "U.S. Federal Income Tax
Considerations" fairly summarize in all material respects such matters or
documents.
F. Nothing has come to the attention of such counsel to cause
such counsel to believe that (except for the financial statements and financial
schedules and other financial and statistical data, as to which such counsel
need not express any belief) the Memorandum when issued contained, or as of the
date such opinion is delivered contains, any untrue statement of a material
fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
With respect to the matters referred to in the paragraph above, ▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇ may state that their beliefs are based upon their participation
in the preparation of the Memorandum (and any amendments or supplements
thereto) and review and discussion of the contents thereof (including the
review of, but not participation in the preparation of, the incorporated
documents), but are without independent check or verification except as
specified.
G. Based upon the representations, warranties and agreements of
the Company in Sections 1(t), 1(u), 6(f) and 6(g) of the Purchase Agreement and
of the Initial Purchasers in Section 7 of the Purchase Agreement, it is not
necessary in connection with the offer, sale and delivery of the Securities to
the Initial Purchasers under the Purchase Agreement or in connection with the
initial resale of such Securities by the Initial Purchasers in accordance with
Section 7 of the Purchase Agreement to register the Securities under the
Securities Act of 1933 or to qualify the Indenture under the Trust Indenture
Act of 1939, it being understood that no opinion is expressed as to any
subsequent resale of any Security or Underlying Security.
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