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Exhibit 10.2
NOTE PURCHASE AGREEMENT
dated February 21, 2008
among
AZITHROMYCIN ROYALTY SUB LLC,
INSITE VISION INCORPORATED
and
THE PURCHASER NAMED HEREIN
$60,000,000 AZITHROMYCIN PHARMA
SM
SECURED 16% NOTES DUE 2019
Table
of Contents
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Page
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ARTICLE
I
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INTRODUCTORY
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Section
1.1
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Introductory
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1
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ARTICLE
II
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RULES
OF CONSTRUCTION AND DEFINED TERMS
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Section
2.1
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Rules
of Construction and Defined Terms
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1
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ARTICLE
III
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SALE
AND PURCHASE OF ORIGINAL CLASS A NOTES; CLOSING
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Section
3.1
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Sale
and Purchase of Original Class A Notes; Closing
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2
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ARTICLE
IV
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REPRESENTATIONS,
WARRANTIES AND AGREEMENTS OF PURCHASER
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Section
4.1
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Purchase
for Investment and Restrictions on Resales
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3
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Section
4.2
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Purchaser
Status
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4
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Section
4.3
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Source
of Funds
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4
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Section
4.4
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Due
Diligence
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5
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Section
4.5
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Enforceability
of this Note Purchase Agreement
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5
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Section
4.6
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Inspire
and Pfizer
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5
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Section
4.7
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Confidentiality
Agreement
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6
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Section
4.8
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Tax
Matters.
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6
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ARTICLE
V
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REPRESENTATIONS
AND WARRANTIES OF THE ISSUER AND THE PARENT
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Section
5.1
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Disclosure
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7
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Section
5.2
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Enforceability
of this Note Purchase Agreement
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7
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Section
5.3
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Securities
Laws.
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7
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Section
5.4
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Investment
Company Act
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8
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Section
5.5
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Governmental
Authorizations
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8
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Section
5.6
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Compliance
with ERISA
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8
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Section
5.7
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Use
of Proceeds; Margin Regulations
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8
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Section
5.8
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Independent
Consultant’s Forecasts
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9
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Section
5.9
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Other
Representations and Warranties
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9
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ARTICLE
VI
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CONDITIONS
TO CLOSING
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Section
6.1
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Proceedings
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9
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Section
6.2
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Transactional
Opinion
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9
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Section
6.3
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True
Sale and Non-Consolidation Opinions
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9
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Section
6.4
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Note
Purchaser’s Counsel Opinion
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9
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Section
6.5
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Consummation
of Transactions
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10
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Section
6.6
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Certification
as to Private Placement Memorandum
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10
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Section
6.7
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Certification
as to Note Purchase Agreement
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10
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Section
6.8
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No
Actions
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10
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Section
6.9
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Principal
Documents
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10
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Section
6.10
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Authorizations
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11
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Section
6.11
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Offering
of Original Class A Notes
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11
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Section
6.12
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CUSIP
Number
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11
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Section
6.13
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Notice
and Instruction to Inspire
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11
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Section
6.14
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Compliance
with Laws
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11
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Section
6.15
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Filing
of Financing Statements
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12
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ARTICLE
VII
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ADDITIONAL
COVENANTS
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Section
7.1
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DTC
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12
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Section
7.2
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Expenses
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12
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ARTICLE
VIII
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SURVIVAL
OF CERTAIN PROVISIONS
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Section
8.1
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Survival
of Certain Provisions
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12
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ARTICLE
IX
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NOTICES
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Section
9.1
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Notices
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13
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ARTICLE
X
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SUCCESSORS
AND ASSIGNS
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Section
10.1
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Successors
and Assigns
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13
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ARTICLE
XI
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SEVERABILITY
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Section
11.1
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Severability
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13
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ARTICLE
XII
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WAIVER
OF JURY TRIAL
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Section
12.1
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WAIVER
OF JURY TRIAL
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13
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ARTICLE
XIII
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GOVERNING
LAW; CONSENT TO JURISDICTION
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Section
13.1
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Governing
Law; Consent to Jurisdiction.
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14
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ARTICLE
XIV
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COUNTERPARTS
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Section
14.1
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Counterparts
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15
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ARTICLE
XV
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TABLE
OF CONTENTS AND HEADINGS
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Section
15.1
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Table
of Contents and Headings
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15
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ARTICLE
XVI
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TAX
DISCLOSURE
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Section
16.1
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Tax
Disclosure
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15
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ARTICLE
XVII
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MISCELLANEOUS
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Section
17.1
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Limited
Recourse
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16
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Annex
A
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Rules
of Construction and Defined Terms
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Schedule
1
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Purchaser
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NOTE PURCHASE AGREEMENT
February
21, 2008
To
the Purchaser named in
Schedule 1
Ladies
and Gentlemen:
Azithromycin
Royalty Sub LLC, a Delaware limited liability company, and
InSite Vision Incorporated, a Delaware corporation, hereby
covenant and agree with you as follows:
ARTICLE
I
INTRODUCTORY
Section
1.1
Introductory .
The
Issuer proposes,
subject to the terms and conditions stated herein, to issue and
sell to the purchaser named in
Schedule 1 (the
“
Purchaser ”)
and to the Other Note Purchasers the beneficial interests in the
Global Notes evidencing $60,000,000 aggregate principal amount
of
the
Issuer’s Azithromycin PhaRMA
SM Secured
16% Notes due 2019. The Original Class A Notes are to be issued
pursuant to the Indenture.
The
Original Class A Notes will be offered and sold to the
Purchaser and the Other Note Purchasers (collectively, the
“
Note Purchasers ”)
in transactions exempt from the registration requirements of the
Securities Act. The Issuer
has
prepared the Private Placement Memorandum describing, among other
things, the Original Class A Notes and the security pledged
therefor, the Parent’s sale, transfer, conveyance,
assignment, contribution and granting to the Issuer
of
the Purchased Assets and the Parent’s grant of the license
under the Residual License Agreement. As
described in the Private Placement Memorandum, the
Issuer
will
use the net proceeds from the offering of the Original Class A
Notes to fund a portion of the purchase price to obtain the
Purchased Assets, to pay the expenses associated with the issuance
of the Original Class A Notes and to fund the Interest Reserve
Account in the amount of $5,000,000.
ARTICLE
II
RULES OF CONSTRUCTION AND DEFINED TERMS
Section
2.1
Rules of Construction and Defined Terms .
The
rules of construction set forth in
Annex A shall
apply to this Note Purchase Agreement and are hereby incorporated
by reference into this Note Purchase Agreement as if set forth
fully in this Note Purchase Agreement. Capitalized terms used but
not otherwise defined in this Note Purchase Agreement shall have
the respective meanings given to such terms in
Annex A ,
which is hereby incorporated by reference into this Note Purchase
Agreement as if set forth fully in this Note Purchase
Agreement. Not
all terms defined in
Annex A are
used in this Note Purchase Agreement.
ARTICLE
III
SALE AND PURCHASE OF ORIGINAL CLASS A NOTES;
CLOSING
Section
3.1
Sale and Purchase of Original Class A Notes; Closing
.
On the basis of the representations and warranties contained in,
and subject to the terms and conditions of, this Note Purchase
Agreement, the Issuer agrees to issue and sell the Original Class A
Notes to the Purchaser, and the Purchaser agrees to purchase, the
principal amount of Original Class A Notes set forth opposite its
name on
Schedule 1 .
The Purchaser will purchase such principal amount of Original Class
A Notes at a purchase price equal to 100% of the principal amount
thereof (the “
Price ”).
Contemporaneously with entering into this Note Purchase Agreement,
the Issuer is entering into separate Note Purchase Agreements (the
“
Other Agreements ”)
substantially identical to this Note Purchase Agreement with other
note purchasers (the “
Other Note Purchasers ”),
providing for the sale on the Closing Date to each of the Other
Note Purchasers of Original Class A Notes in the principal amount
specified opposite its name in
Schedule 1 to
such Other Agreement, at a purchase price equal to 100% of the
principal amount thereof (the “
Other Prices ”
and, together with the Price, the “
Purchase Price ”).
The Issuer shall not be obligated to deliver, and no Note Purchaser
shall be required to purchase, any of the Original Class A Notes
except upon delivery of and payment for all the Original Class A
Notes to be purchased on the Closing Date.
On
the Closing Date, the Issuer will deliver one or more Global
Notes for the account of DTC evidencing the aggregate
principal amount of Original Class A Notes to be acquired by
all Note Purchasers pursuant to the Note Purchase Agreements.
The Issuer will deliver the Global Notes to DTC against
payment by each such Note Purchaser of its respective portion
of the aggregate Purchase Price for its beneficial interest
therein by wire transfer of immediately available funds to the
Trustee Closing Account. Delivery to each Note Purchaser of
the Original Class A Notes shall be made through the
facilities of DTC on the Closing Date, upon payment therefor
by each such Note Purchaser of its respective portion of the
aggregate Purchase Price by wire transfer of immediately
available funds to
the
Trustee Closing Account. The Issuer and the Parent shall cause
the Trustee to hold all such funds in trust for the Note
Purchasers pending completion of the closing of the
transactions contemplated by this Note Purchase Agreement.
Upon receipt by the Trustee of the aggregate Purchase Price
from all Note Purchasers and the satisfaction of the
conditions to closing set forth in Article VI, the Issuer and
the Parent shall cause the Trustee to disburse the Purchase
Price in accordance with Section 3.3 of the Indenture. If the
aggregate Purchase Price shall not have been received by the
Trustee by 3:30 p.m. (New York City time) on the Closing Date,
or if the closing of the transactions contemplated by the Note
Purchase Agreements shall not otherwise be capable of being
consummated by 3:30 p.m. (New York City time) on the Closing
Date, then each Note Purchaser who has paid its respective
portion of the Purchase Price shall have the right to instruct
the Trustee at or after 3:30 p.m. (New York City time) on the
Closing Date to return, and the Issuer and the Parent shall
cause the Trustee to return, such portion of the Purchase
Price to such Note Purchaser prior to the close of business on
the Closing Date or as soon thereafter as reasonably
practicable.
If
the
Global
Notes shall not be tendered for the benefit of any Note
Purchaser for the account of DTC in accordance with the
foregoing provisions of this Section 3.1, or any of the
conditions specified in Article VI shall not have been
fulfilled to the satisfaction of any Note Purchaser, such Note
Purchaser shall, at its election, be relieved of all
obligations (other than confidentiality obligations) under the
applicable Note Purchase Agreement.
ARTICLE
IV
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
PURCHASER
The
Purchaser agrees and acknowledges that the Issuer, the Parent
and the Placement Agent and their respective counsel may rely
upon the accuracy and performance of the representations,
warranties and agreements of the Purchaser contained in this
Article IV.
Section
4.1
Purchase for Investment and Restrictions on Resales
.
The Purchaser:
(a)
acknowledges
that the Original Class A Notes have not been and will not be
registered under the Securities Act or the securities laws of
any U.S. state or any other jurisdiction and may not be
offered, sold, pledged or otherwise transferred except as set
forth in the Private Placement Memorandum, the Indenture and
the legend regarding transfers on its Original Class A Notes,
in compliance with such securities laws;
(b)
agrees
that, if it should resell or otherwise transfer the Original
Class A Notes, in whole or in part, it will do so only
pursuant to an exemption from, or in a transaction not subject
to, registration under the Securities Act, applicable state or
foreign securities laws, the respective rules and regulations
promulgated thereunder and the provisions of this Note
Purchase Agreement, and
only to a Person whom it reasonably believes, at the time any
buy order for such Original Class A Notes is originated,
is (i)
the Issuer or a subsidiary thereof, (ii) for so long as such
Original Class A Notes are eligible for resale pursuant to
Rule 144A, a QIB that purchases for its own account or for the
account of a QIB, to whom notice is given that the transfer is
being made in reliance on Rule 144A, (iii) an Institutional
Accredited Investor inside the United States, in respect of
which the Purchaser shall reasonably believe that at such time
such entity and each other entity, if any, for whom such
entity may be acting with respect to the Original Class A
Notes has sufficient knowledge and experience in financial and
business matters to be capable of evaluating the merits and
risks of the purchase of the Original Class A Notes and is
able and prepared to bear the economic risk of investing in
and holding the Original Class A Notes, that is purchasing
such Original Class A Notes for its own account or for the
account of such an Institutional Accredited Investor for
investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the
Securities Act or (iv) an Institutional Accredited Investor
outside the United States in an offshore transaction in
compliance with Rule 903 or 904 of Regulation S (if
available), in each case unless consented to by the Issuer and
such offer, sale or other transfer occurs following the Resale
Restriction Termination Date;
(c)
agrees
that it will give to each Person to whom it transfers the
Original Class A Notes, in whole or in part, notice of the
restrictions on transfer of the Original Class A
Notes;
(d)
agrees
that it will cause any Person to whom it intends to transfer
the Original Class A Notes to execute and deliver a resale
confidentiality agreement with the Issuer substantially in the
form attached to the Indenture and agrees not to make
available any confidential information about the Issuer, the
Parent, Inspire or Subject Products, including the Private
Placement Memorandum, to such Person, and the Purchaser
otherwise agrees to comply with the procedures relating to the
execution and delivery of such resale confidentiality
agreement set forth in the Indenture;
(e)
acknowledges
the restrictions and requirements applicable to transfers of
the Original Class A Notes described under the heading
“Transfer Restrictions” in the Private Placement
Memorandum and contained in the Indenture and agrees that it
will only offer or sell the Original Class A Notes in
accordance with such section and the Indenture and only to
Permitted Holders; and
(f)
represents
that it is purchasing the Original Class A Notes for
investment purposes and not with a view to resale or
distribution thereof in contravention of the requirements of
the Securities Act.
Section
4.2
Purchaser Status .
The Purchaser represents and warrants that it is purchasing the
Original Class A Notes for its own account or an account with
respect to which it exercises sole investment discretion and that
it and any such account is (i) a QIB and such purchase meets the
requirements of Rule 144A under the Securities Act, (ii) an
Institutional Accredited Investor, is not acquiring the Original
Class A Notes with a view to any resale or distribution thereof
other than in accordance with the restrictions set forth below, has
sufficient knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks of the
purchase of the Original Class A Notes and is able and prepared to
bear the economic risk of investing in and holding the Original
Class A Notes, (iii) an Institutional Accredited Investor that is
not a U.S. person and has acquired such Original Class A Notes in
an offshore transaction in compliance with Regulation S or (iv) a
person or entity consented to by the Issuer in its sole discretion
where such offer or sale occurs following the Resale Restriction
Termination Date.
Section
4.3
Source of Funds .
The Purchaser represents, warrants and covenants that
either:
(a)
no
Plan Assets have been used to purchase an Original Class A
Note; or
(b)
to
the extent that Plan Assets are used to purchase an Original
Class A Note, one or more statutory or administrative
exemptions applies such that the use of such Plan Assets to
purchase and hold such Original Class A Notes will not
constitute a non-exempt prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the
Code,
In
addition, the Purchaser represents, warrants and covenants
that either:
(i)
no assets of a governmental, church or foreign plan have been
used to purchase an Original Class A Note; or
(ii)
to the extent such assets are used, neither the purchase nor
holding of the Original Class A Notes will constitute or
result in a violation of any Applicable Law that is similar to
the prohibited transaction provisions of Section 406 of ERISA
or Section 4975 of the Code.
Section
4.4
Due Diligence .
The Purchaser acknowledges that (i) it has made, either alone
or together with its advisors, such independent investigation of
the Issuer, the Parent, Inspire, Pfizer and their respective
managements, assets and related matters, and such separate and
independent investigation of the Purchased Assets and related
matters, as the Purchaser deems to be, or such advisors have
advised to be, necessary or advisable in connection with the
purchase of the Original Class A Notes pursuant to the transactions
contemplated by this Note Purchase Agreement, (ii) it and its
advisors have received all information and data that it and such
advisors believe to be necessary in order to reach an informed
decision as to the advisability of the purchase of the Original
Class A Notes pursuant to the transactions contemplated by this
Note Purchase Agreement, (iii) it understands the nature of
the potential risks and potential rewards of the purchase of the
Original Class A Notes, (iv) it is a sophisticated investor
with investment experience and, in the event of
a
default on the Original Class A Notes, any termination of any of
the Principal Documents or termination of the Royalty Payments
under the Inspire License Agreement or any liquidation or winding
up of the Issuer, has the ability to bear complete loss of its
investment, (v) it has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits
and risks of purchasing the Original Class A Notes and can bear the
economic risks of investing in the Original Class A Notes for an
indefinite period of time, (vi) it has received and reviewed the
Private Placement Memorandum and each of the Transaction Documents
and has been furnished by the Parent with an opportunity to review
the Principal Documents (except in the case of the Pfizer License
Agreement, which has been made available by the Parent only in
redacted form) and (vii) it has determined that the rates, prices
or amounts and other terms of the purchase and sale of the Original
Class A Notes reflect those in the relevant market for similar
transactions and it is purchasing the Original Class A Notes with a
full understanding of all of the terms, conditions and risks
thereof (economic and otherwise), and it is capable of assuming and
willing to assume (financially and otherwise) those risks. The
Purchaser acknowledges that it has obtained its own attorneys,
business advisors and tax advisors as to legal, business and tax
advice (or has decided not to obtain such advice) and has not
relied on the Issuer, the Parent or the Placement Agent for any
such advice. Except for (A) the representations, warranties and
covenants made by the Issuer and the Parent in this Note Purchase
Agreement and the other Transaction Documents and (B) the legal
opinions provided to the Trustee or the Note Purchasers in
connection with the transactions contemplated by the Transaction
Documents, the Purchaser is relying on its own investigation and
analysis in entering into the transactions contemplated
hereby.
Section
4.5
Enforceability of this Note Purchase Agreement
.
This Note Purchase Agreement has been duly authorized, executed and
delivered by the Purchaser and constitutes the valid, legally
binding and enforceable obligations of the Purchaser, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general principles of
equity.
Section
4.6
Inspire and Pfizer .
The Purchaser acknowledges and agrees that neither Inspire nor
Pfizer is a party to the transactions to which this Note Purchase
Agreement relates, neither Inspire nor Pfizer has participated in
the preparation of any document related thereto, including the
Private Placement Memorandum, and neither Inspire nor Pfizer makes
any representations or warranties whatsoever with respect to the
transactions contemplated by the Private Placement Memorandum,
including the issuance of the Original Class A Notes by the Issuer,
the value thereof, the value of the rights transferred by the
Parent to the Issuer with respect thereto or the risks associated
therewith.
Section
4.7
Confidentiality Agreement .
The Purchaser acknowledges and agrees that it is bound by the terms
and conditions of the confidentiality agreement referenced
in
Schedule 1 (including,
if the Purchaser is not a party thereto, as if it were a party
thereto), agrees to execute any documents reasonably requested by
the Issuer to evidence such obligation and acknowledges and agrees
that such confidentiality agreement remains in effect and will
survive the execution and delivery of this Note Purchase Agreement
and the closing of the purchase of the Original Class A Notes
pursuant to its terms.
Section
4.8
Tax Matters.
(a)
The
Purchaser represents and warrants that either (i) it is not,
and will not become, a partnership, Subchapter S corporation
or grantor trust for U.S. federal income tax purposes or (ii)
it is a partnership, Subchapter S corporation or grantor trust
for U.S. federal income tax purposes but (A) none of the
direct or indirect beneficial owners of any of the interests
in such holder have allowed or caused, or will allow or cause,
50% or more of the value of such interests to be attributable
to such ownership of Notes or (B) such partnership, Subchapter
S corporation or grantor trust was not formed with a principal
purpose of permitting the Issuer to satisfy the 100-partner
limitation in Treasury Regulation Section 1.7704-1(h)(1)(ii)
(assuming for this purpose that the Or
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