Exhibit 1.1
Form of Underwriting Agreement
[Date]
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
As Representatives of the several Underwriters
c/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Introductory. Neurocrine Biosciences, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 3,000,000 shares (the "Firm
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Shares") of its Common Stock, par value $0.001 per share (the "Common Shares").
In addition, the Company has granted to the Underwriters an option to purchase
up to an additional 450,000 Common Shares (the "Option Shares") as provided in
Section 2. The Firm Shares and, if and to the extent such option is exercised,
the Option Shares are collectively called the "Shares." ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Inc. ("▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. have agreed to act as
representatives of the several Underwriters (in such capacity, the
"Representatives") in connection with the offering and sale of the Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-47252), which contains a form of prospectus, subject to completion, to be
used in connection with the public offering and sale of the Shares. Each such
prospectus, subject to completion, used in connection with such public offering
is called a "preliminary prospectus." Such registration statement, as amended,
including the exhibits and schedules thereto, in the form in which it was
declared effective by the Commission under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (collectively, the
"Securities Act"), including all documents and the financial statements
incorporated or deemed to be incorporated by reference therein and including any
information deemed to be a part thereof at the time of effectiveness pursuant to
Rule 430A under the Securities Act, is called the "Registration Statement." Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the "Rule 462(b) Registration Statement," and from and
after the date and time of filing of the Rule 462(b) Registration Statement the
term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriters to
confirm sales of the Shares, including all documents incorporated or deemed to
be incorporated by reference therein and any information deemed to be a part
thereof at such time pursuant to Rule 430A or 434 under the Securities Act or
the Securities Exchange Act of 1934, as
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amended, and the rules and regulations promulgated thereunder (collectively, the
"Exchange Act") is called the "Prospectus," which term shall be deemed to
include the "electronic Prospectus" provided by the Company for use in
connection with the offering of the Shares as contemplated by Section 3(e) of
this Agreement. All references in this Agreement to the Registration Statement,
the Rule 462(b) Registration Statement, a preliminary prospectus, the
Prospectus, or any amendments or supplements to any of the foregoing, shall
include any copy thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System ("▇▇▇▇▇"). All references in this
Agreement to financial statements and schedules and other information which is
"contained," "included" or "stated" in the Registration Statement or the
Prospectus (and all other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is or is deemed to be incorporated by reference in the Registration Statement or
the Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the Prospectus shall
be deemed to mean and include the filing of any document under the Exchange Act
which is or is deemed to be incorporated by reference in the Registration
Statement or the Prospectus, as the case may be.
The Company hereby confirms its agreement with the Underwriters as follows:
Section 1. Representations and Warranties of the Company.
(a) Compliance with Registration Requirements. The Registration Statement and
any Rule 462(b) Registration Statement have been declared effective by the
Commission under the Securities Act. The Company has complied to the
Commission's satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is in effect
and no proceedings for such purpose have been instituted or are pending or, to
the best knowledge of the Company, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the Prospectus when filed complied in all
material respects with the Securities Act and, if filed by electronic
transmission pursuant to ▇▇▇▇▇ (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Shares. Each
of the Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Each preliminary
prospectus, as of its date, and the Prospectus, as amended or supplemented, as
of its date and at all subsequent times through the 30th day after the date
hereof, did not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or the Prospectus, or any amendments or
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supplements thereto, made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by the
Representatives expressly for use therein. There are no contracts or other
documents required to be described in the Prospectus or to be filed as exhibits
to the Registration Statement which have not been described or filed as
required.
(b) Offering Materials Furnished to Underwriters. The Company has delivered
to the Representatives one complete conformed copy of the Registration Statement
and of each consent and certificate of experts filed as a part thereof, and
conformed copies of the Registration Statement (without exhibits) and
preliminary prospectuses and the Prospectus, as amended or supplemented, in such
quantities and at such places as the Representatives have reasonably requested
for each of the Underwriters.
(c) Distribution of Offering Material By the Company. The Company has not
distributed and will not distribute, prior to the later of the Second Closing
Date (as defined below) and the completion of the Underwriters' distribution of
the Shares, any offering material in connection with the offering and sale of
the Shares other than a preliminary prospectus, the Prospectus or the
Registration Statement.
(d) Exchange Act Compliance. The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material respects
with the requirements of the Exchange Act, and, when read together with the
other information in the Prospectus, at the time the Registration Statement and
any amendments thereto become effective and at the First Closing Date and the
Second Closing Date, as the case may be, will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(e) Exchange Act Reports Filed. The Company has filed all reports required
to be filed pursuant to the Securities Act and the Exchange Act.
(f) Conditions for Use of Form S-3. The Company has satisfied the conditions
for the use of Form S-3, as set forth in the general instructions thereto, with
respect to the Registration Statement.
(g) The Underwriting Agreement. This 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, except as rights to indemnification
hereunder may be limited by applicable law and applicable public policy and
except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(h) Authorization of the Shares. The Shares to be purchased by the
Underwriters from the Company have been duly authorized for issuance and sale
pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
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(i) No Applicable Registration or Other Similar Rights. There are no persons
with registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as have been duly waived.
(j) No Material Adverse Change. Subsequent to the respective dates as of
which information is given in the Prospectus and through the date hereof: (i)
there has been no material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business, operations or prospects,
whether or not arising from transactions in the ordinary course of business, of
the Company and its subsidiary, considered as one entity (any such change or
effect, where the context so requires, is called a "Material Adverse Change" or
a "Material Adverse Effect"); (ii) the Company and its subsidiary, considered as
one entity, have not incurred any material liability or obligation, indirect,
direct or contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of business;
and (iii) there has been no dividend or distribution of any kind declared, paid
or made by the Company or, except for dividends paid to the Company, its
subsidiary on any class of capital stock or repurchase or redemption by the
Company or its subsidiary of any class of capital stock.
(k) Independent Accountants. Ernst & Young LLP, who have expressed their
opinion with respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) and supporting schedules filed
with the Commission and incorporated by reference in the Registration Statement
and in the Prospectus, are independent public or certified public accountants as
required by the Securities Act.
(l) Preparation of the Financial Statements. The financial statements filed
with the Commission and incorporated by reference in the Registration Statement
and in the Prospectus present fairly the consolidated financial position of the
Company and its subsidiary as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. Such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved, except
as may be expressly stated in the related notes thereto. No other financial
statements or supporting schedules are required to be included in the
Registration Statement. The financial data set forth in the Prospectus under
the captions "Summary--Summary Consolidated Financial Data," "Selected
Consolidated Financial Data" and "Capitalization" fairly present the information
set forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement. No pro forma financial
information is required to be included in the Registration Statement pursuant to
Regulation S-X.
(m) Company's Accounting System. The Company and its subsidiary maintain 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 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.
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(n) Subsidiaries of the Company. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other than
Neurocrine Biosciences, Canada (its "subsidiary").
(o) Incorporation and Good Standing of the Company and its Subsidiary. Each
of the Company and its subsidiary has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction in
which it is organized with full corporate power and authority to own its
properties and conduct its business as described in the prospectus, and is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification.
(p) Capitalization of the Subsidiary. All the outstanding shares of capital
stock of Neurocrine Biosciences, Canada have been duly and validly authorized
and issued and are fully paid and nonassessable, and, except as otherwise set
forth in the Prospectus, all outstanding shares of capital stock of Neurocrine
Biosciences, Canada are owned by the Company directly free and clear of any
security interests, claims, liens or encumbrances.
(q) No Prohibition on Subsidiary from Paying Dividends or Making Other
Distributions. Neurocrine Biosciences, Canada is not currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on its capital stock, from repaying to the Company any
loans or advances to it from the Company or from transferring any of its
property or assets to the Company or any other future subsidiary of the Company,
except as described in or contemplated by the Prospectus.
(r) Capitalization and Other Capital Stock Matters. The authorized, issued
and outstanding capital stock of the Company is as set forth in the Prospectus
under the caption "Capitalization" (other than for subsequent issuances, if any,
pursuant to employee benefit plans described in the Prospectus or upon exercise
of outstanding options or warrants described in the Prospectus). The Common
Shares (including the Shares) conform in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding Common Shares have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance with federal and
state securities laws. None of the outstanding Common Shares were issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company, except for such
violations as, individually or in the aggregate, will not have a Material
Adverse Effect. There are no authorized or outstanding options, warrants,
preemptive rights, rights of first refusal or other rights to purchase, or
equity or debt securities convertible into or exchangeable or exercisable for,
any capital stock of the Company or its subsidiary other than those accurately
described in the Prospectus.
(s) Stock Exchange Listing. The Shares have been approved for inclusion in
the Nasdaq National Market, subject only to official notice of issuance.
(t) No Consents, Approvals or Authorizations Required. No consent, approval,
authorization, filing with or order of any court or governmental agency or
regulatory body is required in connection with the transactions contemplated
herein, except such as have been obtained or made under the Securities Act and
such as may
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be required (i) under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Shares by the Underwriters in the manner
contemplated here and in the Prospectus, (ii) by the National Association of
Securities Dealers, Inc. (together with its regulatory subsidiary, NASD
Regulation, Inc., the "NASD") and (iii) by the federal and provincial laws of
Canada.
(u) Non-Contravention of Existing Instruments and Agreements. Neither the
issue and sale of the Shares nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or its subsidiary
pursuant to, (i) the charter or by-laws of the Company or its subsidiary, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or its subsidiary is a party or bound or to
which its or their property is subject or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or its
subsidiary of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company or its
subsidiary or any of its or their properties, except for such instances as would
not, singly or in the aggregate, materially and adversely affect the Company's
performance of this Agreement or result in a Material Adverse Change, except as
otherwise disclosed in the Prospectus
(v) No Defaults or Violations. Neither the Company nor its subsidiary is in
violation or default of (i) any provision of its charter or by-laws, (ii) the
terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is subject
or (iii) any statute, law, rule, regulation, judgment, order or decree of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or such subsidiary or any
of its properties, as applicable, except any such violation or default which
would not, singly or in the aggregate, result in a Material Adverse Change
except as otherwise disclosed in the Prospectus.
(w) No Actions, Suits or Proceedings. No action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator
involving the Company or its subsidiary or its or their property is pending or,
to the best knowledge of the Company, threatened that (i) could reasonably be
expected to have a Material Adverse Effect on the performance of this Agreement
or the consummation of any of the transactions contemplated hereby or (ii) could
reasonably be expected to result in a Material Adverse Effect.
(x) All Necessary Permits, Etc. The Company and its subsidiary possess such
valid and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct their respective businesses, and neither the Company nor its subsidiary
has received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a Material Adverse Change.
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(y) Title to Properties. The Company and its subsidiary have good and
marketable title to all the properties and assets reflected as owned in the
financial statements referred to in Section 1(i) above (or elsewhere in the
Prospectus), in each case free and clear of any security interests, mortgages,
liens, encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company or its subsidiary. The real property, improvements, equipment and
personal property held under lease by the Company or its subsidiary are held
under valid and enforceable leases, with such exceptions as are not material and
do not materially interfere with the use made or proposed to be made of such
real property, improvements, equipment or personal property by the Company or
its subsidiary.
(z) Tax Law Compliance. The Company and its subsidiary have filed all
necessary federal, state and foreign income and franchise tax returns or have
properly requested extensions thereof and have paid all taxes required to be
paid by any of them and, if due and payable, any related or similar assessment,
fine or penalty levied against any of them, except as may be being contested in
good faith and by appropriate proceedings. The Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in Section 1(i) above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company or
its subsidiary has not been finally determined. The Company is not aware of any
tax deficiency that has been or might be asserted or threatened against the
Company that could result in a Material Adverse Change.
(aa) Intellectual Property Rights. Except as otherwise disclosed in the
Prospectus, (i) each of the Company and its subsidiary owns or possesses
adequate rights to use all patents, patent rights or licenses, inventions,
collaborative research agreements, trade secrets, know-how, trademarks, service
marks, trade names and copyrights which are necessary to conduct its businesses
as described in the Registration Statement and Prospectus; (ii) the expiration
of any patents, patent rights, trade secrets, trademarks, service marks, trade
names or copyrights would not result in a Material Adverse Change that is not
otherwise disclosed in the Prospectus; (iii) the Company has not received any
notice of, and has no knowledge of, any infringement of or conflict with
asserted rights of the Company by others with respect to any patent, patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names or copyrights; (iv) the Company has not received any notice of, and has no
knowledge of, any infringement of or conflict with asserted rights of others
with respect to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, might
have a Material Adverse Change; (v) there is no claim pending or, to the
Company's knowledge, threatened, against the Company regarding patents, patent
rights or licenses, inventions, collaborative research, trade secrets, know-how,
trademarks, service marks, trade names or copyrights; and (vi) to the Company's
knowledge after reasonable inquiry, the Company and its subsidiary do not in the
conduct of their business as now or proposed to be conducted as described in the
Prospectus infringe or conflict with any right or patent of any third party, or
any discovery, invention, product or process which is the subject of a patent
application filed by any third party, which such infringement or conflict is
reasonably likely to result in a Material Adverse Change.
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(bb) No Transfer Taxes or Other Fees. There are no transfer taxes or other
similar fees or charges under Federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance and sale by the Company
of the shares.
(cc) Company Not an "Investment Company". The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). The Company is not, and after receipt of
payment for the Shares will not be, an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act and will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(dd) Insurance. Each of the Company and its subsidiary is insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiary against theft, damage, destruction and acts of vandalism,
general liability and Directors and Officers liability. The Company has no
reason to believe that it or its subsidiary will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or appropriate
to conduct its business as now conducted and at a cost that would not result in
a Material Adverse Change. Neither of the Company nor its subsidiary has been
denied any insurance coverage which it has sought or for which it has applied.
(ee) Labor Matters. To the best of Company's knowledge, no labor disturbance
by the employees of the Company or its subsidiary exists or is imminent; and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or any of the companies with which
is has a strategic relationship, as described in the prospectus, which in each
case would reasonably be expected to result in a Material Adverse Change.
(ff) No Price Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
(gg) Lock-Up Agreements. Each officer and director of the company subject to
Section 16 of the Exchange Act have signed or agreed to sign an agreement
substantially in the form attached hereto as Exhibit A (the "Lock-up
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Agreements"). The Company has provided to counsel for the Underwriters a
complete and accurate list of all securityholders of the Company and the number
and type of securities held by each securityholder. The Company has provided to
counsel for the Underwriters true, accurate and complete copies of all of the
Lock-up Agreements presently in effect or effected hereby. The Company hereby
represents and warrants and agrees that during the 90 days following the date of
the Prospectus (the "Lock-Up Period"), the Company will not (i) release any of
such officers or directors from any market stand-off agreements currently
existing or hereafter effected or (ii) consent to the removal of any transfer-
restrictive legend from any certificate representing any Common Shares held by
any of them, in each case without the prior written consent of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
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(hh) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any subsidiary or any other
person required to be described in the Prospectus which have not been described
as required.
(ii) No Unlawful Contributions or Other Payments. Neither the Company nor
its subsidiary nor, to the best of the Company's knowledge, any employee or
agent of the Company or its subsidiary, has made any contribution or other
payment to any official of, or candidate for, any federal, state or foreign
office in violation of any law or of the character required to be disclosed in
the Prospectus.
(jj) Environmental Laws. Except as otherwise disclosed in the Prospectus,
(i) the Company is in compliance with all rules, laws and regulations relating
to the use, treatment, storage and disposal of toxic substances and protection
of health or the environment ("Environmental Laws") which are applicable to its
business, except where the failure to comply would not result in a Material
Adverse Change, (ii) the Company has received no notice from any governmental
authority or third party of an asserted claim under Environmental Laws, which
claim is required to be disclosed in the Registration Statement and the
Prospectus, (iii) the Company is not currently aware that it will be required to
make future material capital expenditures to comply with Environmental Laws and
(iv) no property which is owned, leased or occupied by the Company has been
designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. (S) 9601, et
--
seq.), or otherwise designated as a contaminated site under applicable state or
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local law.
(kk) ERISA Compliance. Except as otherwise disclosed in the Prospectus, the
Company and its subsidiary and any "employee benefit plan" (as defined under the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
and published interpretations thereunder (collectively, "ERISA")) established or
maintained by the Company, its subsidiary or their "ERISA Affiliates" (as
defined below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company or a subsidiary, any member of any
group of organizations described in Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such subsidiary
is a member. No "reportable event" (as defined under ERISA) has occurred or is
reasonably expected to occur with respect to any "employee benefit plan"
established or maintained by the Company, its subsidiary or any of their ERISA
Affiliates. No "employee benefit plan" established or maintained by the
Company, its subsidiary or any of their ERISA Affiliates, if such "employee
benefit plan" were terminated, would have any "amount of unfunded benefit
liabilities" (as defined under ERISA). Neither the Company, its subsidiary nor
any of their ERISA Affiliates has incurred or reasonably expects to incur any
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975 or
4980B of the Code. Each "employee benefit plan" established or maintained by
the Company, its subsidiary or any of their ERISA Affiliates that is intended to
be qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or failure to act, which would cause the loss of
such qualification.
Any certificate signed by an officer of the Company and delivered to
the Representatives or to counsel for the Underwriters shall be deemed to be a
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representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
Section 2. Purchase, Sale and Delivery of the Shares.
(a) The Firm Shares. The Company agrees to issue and sell to the several
Underwriters the Firm Shares upon the terms herein set forth. On the basis of
the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase from the Company the respective number of
Firm Shares set forth opposite their names on Schedule A. The purchase price
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per Firm Share to be paid by the several Underwriters to the Company shall be
$[___] per share.
(b) The First Closing Date. Delivery of the Firm Shares to be purchased by
the Underwriters and payment therefor shall be made by the Company and the
Representatives at 6:00 a.m. San Francisco time, at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, San Francisco, California (or at such other place and time as may be
agreed upon among the Representatives and the Company), (i) on the third (3rd)
full business day following the first day that Shares are traded, (ii) if this
Agreement is executed and delivered after 1:30 P.M., San Francisco time, the
fourth (4th) full business day following the day that this Agreement is executed
and delivered or (iii) at such other time and date not later than seven (7) full
business days following the first day that Shares are traded as the
Representatives and the Company may determine (or at such time and date to which
payment and delivery shall have been postponed pursuant to Section 8 hereof),
such time and date of payment and delivery being herein called the "First
Closing Date"; provided, however, that if the Company has not made available to
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the Representatives copies of the Prospectus within the time provided in Section
2(g) and 3(e) hereof, the Representatives may, in their sole discretion,
postpone the First Closing Date until no later that two (2) full business days
following delivery of copies of the Prospectus to the Representatives.
(c) The Option Shares; the Second Closing Date. In addition, on the basis of
the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up
to an aggregate of 450,000 Option Shares from the Company at the purchase price
per share to be paid by the Underwriters for the Firm Shares. The option
granted hereunder is for use by the Underwriters solely in covering any over-
allotments in connection with the sale and distribution of the Firm Shares. The
option granted hereunder may be exercised at any time upon notice by the
Representatives to the Company, which notice may be given at any time within 30
days from the date of this Agreement. The time and date of delivery of the
Option Shares, if subsequent to the First Closing Date, is called the "Second
Closing Date" and shall be determined by the Representatives and shall not be
earlier than three nor later than five full business days after delivery of such
notice of exercise. If any Option Shares are to be purchased, each Underwriter
agrees, severally and not jointly, to purchase the number of Option Shares
(subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Option Shares to be purchased as the number of Firm Shares set forth
on Schedule A opposite the name of such Underwriter bears to the total
----------
10
number of Firm Shares. The Representatives may cancel the option at any time
prior to its expiration by giving written notice of such cancellation to the
Company.
(d) Public Offering of the Shares. The Representatives hereby advise the
Company that the Underwriters intend to offer for sale to the public, as
described in the Prospectus, their respective portions of the Shares as soon
after this Agreement has been executed and the Registration Statement has been
declared effective as the Representatives, in their sole judgment, have
determined is advisable and practicable.
(e) Payment for the Shares. Payment for the Shares shall be made at the
First Closing Date (and, if applicable, at the Second Closing Date) by wire
transfer in immediately available-funds to the order of the Company.
It is understood that the Representatives have been authorized, for
their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Shares and any Option Shares the Underwriters have agreed to purchase.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually and not as a Representative of the
Underwriters, may (but shall not be obligated to) make payment for any Shares to
be purchased by any Underwriter whose funds shall not have been received by the
Representatives by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall not
relieve such Underwriter from any of its obligations under this Agreement.
(f) Delivery of the Shares. The Company shall deliver, or cause to be
delivered, a credit representing the Firm Shares to an account or accounts at
The Depository Trust Company, as designated by the Representatives, for the
accounts of the Representatives and the several Underwriters at the First
Closing Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. The Company
shall also deliver, or cause to be delivered a credit representing the Option
Shares the Underwriters have agreed to purchase at the First Closing Date (or
the Second Closing Date, as the case may be), to an account or accounts at The
Depository Trust Company as designated by the Representatives for the accounts
of the Representatives and the several Underwriters, against the irrevocable
release of a wire transfer of immediately available funds for the amount of the
purchase price therefor. Time shall be of the essence, and delivery at the time
and place specified in this Agreement is a further condition to the obligations
of the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than 12:00 noon on
the second business day following the date the Shares are released by the
Underwriters for sale to the public, the Company shall deliver or cause to be
delivered copies of the Prospectus in such quantities and at such places as the
Representatives shall reasonably request.
Section 3. Covenants of the Company.
The Company further covenants and agrees with each Underwriter as follows:
(a) Registration Statement Matters. The Company will (i) use its best
efforts to cause the Registration Statement to become effective or, if the
procedure in Rule
11
430A of the Securities Act is followed, to prepare and timely file with the
Commission under Rule 424(b) under the Securities Act a Prospectus in a form
approved by the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Securities Act and (ii) not file any amendment to the Registration Statement
or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Securities Act. If the Company elects to rely on Rule 462(b)
under the Securities Act, the Company shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) under the
Securities Act prior to the time confirmations are sent or given, as specified
by Rule 462(b)(2) under the Securities Act, and shall pay the applicable fees in
accordance with Rule 111 under the Securities Act.
(b) Securities Act Compliance. The Company will advise the Representatives
promptly (i) when the Registration Statement or any post-effective amendment
thereto shall have become effective, (ii) of receipt of any comments from the
Commission, (iii) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
(c) Blue Sky Compliance. The Company will cooperate with the Representatives
and counsel for the Underwriters in endeavoring to qualify the Shares for sale
under the securities laws of such jurisdictions (both national and foreign) as
the Representatives may reasonably have designated in writing and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
--------
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent. The Company will, from time to time, prepare and file such
statements, reports and other documents, as are or may be required to continue
such qualifications in effect for so long a period as the Representatives may
reasonably request for distribution of the Shares.
(d) Amendments and Supplements to the Prospectus and Other Securities Act
Matters. The Company will comply with the Securities Act and the Exchange
Act, and the rules and regulations of the Commission thereunder, so as to permit
the completion of the distribution of the Shares as contemplated in this
Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the Representatives or counsel for the Underwriters, it becomes
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances existing at the time the Prospectus
is delivered to a purchaser, not misleading, or, if it is necessary at any time
to amend or supplement the Prospectus to comply with any law, the Company
promptly will prepare and file with the Commission, and furnish at its own
expense to the Underwriters and to dealers, an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus as
so amended or supplemented
12
will not, in the light of the circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with the law.
(e) Copies of the Prospectus, Electronic Prospectus and any Amendments and
Supplements Thereto. The Company agrees to furnish the Representatives,
without charge, during the period beginning on the date hereof and ending on the
later of the First Closing Date or such date, as in the opinion of counsel for
the Underwriters, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
Period"), as many copies of the Prospectus and any amendments and supplements
thereto as the Representatives may request. The Company shall also cause to be
prepared and delivered to any Underwriter upon request, at the Company's
expense, within one business day from the filing of the Prospectus with the
Commission (and again within one business day after the filing of any amendment
or supplement thereto with the Commission), an "electronic Prospectus" to be
used in connection with the offering and sale of the Common Shares. As used
herein, the term "electronic Prospectus" means a form of Prospectus, and any
amendment or supplement thereto, that meets each of the following conditions:
(i) it shall be encoded in a format, satisfactory to the Representatives, that
may be transmitted electronically over the internet or via other online
distribution to offerees and purchasers of the Common Shares; and (ii) it shall
disclose the same information as the paper Prospectus (or any amendment or
supplement thereto), except to the extent that graphic and image material
contained in the paper Prospectus (or such amendment or supplement) cannot be
presented in such electronic format, in which case such graphic and image
material shall be replaced in the electronic Prospectus with a fair and accurate
narrative description or tabular representation of such material, as
appropriate. The Company hereby consents to distribution of the electronic
Prospectus (including posting of the electronic Prospectus on the internet) by
any of the Underwriters or their affiliates.
(f) Insurance. The Company currently maintains, and shall continue to
maintain through the earlier of the Second Closing Date or the expiration of the
over-allotment option, Directors and Officers liability insurance in the minimum
amount of $10 million which shall apply to the offering contemplated hereby and
the Company shall use good faith efforts to cause ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. to be
added to such policy such that up to $500,000 of its expenses pursuant to
Section 7(a) would be paid directly by such insurer.
(g) Use of Proceeds. The Company shall apply the net proceeds from the sale
of the Shares sold by it in the manner described under the caption "Use of
Proceeds" in the Prospectus.
(h) Transfer Agent. The Company shall engage and maintain, at its expense, a
registrar and transfer agent for the Company Shares.
(i) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering a period of at least
twelve months beginning after the effective date of the Registration Statement
that satisfies the provisions of Section 11(a) of the Securities Act.
(j) Periodic Reporting Obligations. During the Prospectus Delivery Period
the Company shall file, on a timely basis, with the Commission and the Nasdaq
National
13
Market all reports and documents required to be filed under the Exchange Act
within the time periods required by the Exchange Act and the rules of the Nasdaq
National Market.
(k) Agreement Not to Offer or Sell Additional Securities. The Company will
not offer, sell or contract to sell, or otherwise dispose of or enter into any
transaction which is designed to, or could be expected to, result in the
disposition (whether by actual disposition or effective economic disposition due
to cash settlement or otherwise by the Company or any affiliate of the Company
or any person in privity with the Company or any affiliate of the Company)
directly or indirectly, or announce the offering of, any other Common Shares or
any securities convertible into, or exchangeable for, Common Shares; provided,
--------
however, that the Company may (i) issue and sell Common Shares pursuant to any
-------
director or employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the date of the Prospectus and
described in the Prospectus so long as none of those shares may be transferred
and the Company shall enter stop transfer instructions with its transfer agent
and registrar against the transfer of any such Common Shares and (ii) the
Company may issue Common Shares issuable upon the conversion of securities or
the exercise of warrants outstanding at the date of the Prospectus and described
in the Prospectus. These restrictions shall terminate after the close of
trading of the Shares on the final day of the Lock-Up Period.
Section 4. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase and pay for
the Shares as provided herein on the First Closing Date and, with respect to the
Option Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in Section 1
hereof as of the date hereof and as of the First Closing Date as though then
made and, with respect to the Option Shares, as of the Second Closing Date as
though then made, to the timely performance by the Company of its covenants and
other obligations hereunder, and to each of the following additional conditions:
(a) Compliance with Registration Requirements; No Stop Order; No Objection
from the NASD. The Registration Statement shall have become effective prior to
the execution of this Agreement, or at such later date as shall be consented to
in writing by you; and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall have been initiated
or, to the knowledge of the Company or any Underwriter, threatened by the
Commission, and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the satisfaction of Underwriters' Counsel; and the
NASD shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(b) Corporate Proceedings. All corporate proceedings and other legal matters
in connection with this Agreement, the form of Registration Statement and the
Prospectus, and the registration, authorization, issue, sale and delivery of the
Shares, shall have been reasonably satisfactory to Underwriters' Counsel, and
such counsel shall have been furnished with such papers and information as they
may reasonably have requested to enable them to pass upon the matters referred
to in this Section.
(c) No Material Adverse Change. Subsequent to the execution and delivery of
this Agreement and prior to the First Closing Date, or the Second Closing Date,
as the
14
case may be, there shall not have been any Material Adverse Change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiary considered as one enterprise from
that set forth in the Registration Statement or Prospectus that makes it, in
your reasonable judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus.
(d) Opinion of Counsel for the Company. You shall have received on the First
Closing Date, or the Second Closing Date, as the case may be, an opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company, substantially in the form of Exhibit
-------
B attached hereto, dated the First Closing Date, or the Second Closing Date,
-
addressed to the Underwriters and with reproduced copies or signed counterparts
thereof for each of the Underwriters.
Counsel rendering the opinion contained in Exhibit B may rely as to
---------
questions of law not involving the laws of the United States or the States of
California or New York or the General Corporation Law of the State of Delaware
upon opinions of local counsel, and as to questions of fact upon representations
or certificates of officers of the Company and of government officials, in which
case their opinion is to state that they are so relying and that they have no
knowledge of any material misstatement or inaccuracy in any such opinion,
representation or certificate. Copies of any opinion, representation or
certificate so relied upon shall be delivered to you, as Representatives of the
Underwriters, and to Underwriters' Counsel.
(e) Opinion of Internal Counsel for the Company. You shall have received on
the First Closing Date, or the Second Closing Date, as the case may be, an
opinion of ▇▇▇▇▇▇▇▇ Valeur-▇▇▇▇▇▇, internal counsel for the Company,
substantially in the form of Exhibit C attached hereto, dated the First Closing
---------
Date, or the Second Closing Date, addressed to the Underwriters and with
reproduced copies or signed counterparts thereof for each of the Underwriters.
(f) Opinion of Intellectual Property Counsel for the Company. You shall have
received on the First Closing Date, or the Second Closing Date, as the case may
be, an opinion of Seed Intellectual Property Law Group, PLLC, intellectual
property counsel for the Company, substantially in the form of Exhibit D
---------
attached hereto, dated the First Closing Date, or the Second Closing Date,
addressed to the Underwriters and with reproduced copies or signed counterparts
thereof for each of the Underwriters.
(g) Opinion of Counsel for the Underwriters. You shall have received on the
First Closing Date or the Second Closing Date, as the case may be, an opinion of
O'Melveny & ▇▇▇▇▇ LLP, counsel for the Underwriters, in form and substance
reasonably satisfactory to the Representatives, with respect to the sufficiency
of all corporate proceedings and other legal matters relating to this Agreement
and the transactions contemplated hereby as the Representatives may reasonably
require. The Company shall have furnished to such counsel such documents as
they may have reasonably requested for the purpose of enabling them to pass upon
such matters.
(h) Accountants' Comfort Letter. You shall have received on the First
Closing Date and on the Second Closing Date, as the case may be, a letter from
Ernst & Young LLP addressed to the Underwriters, dated the First Closing Date or
the Second Closing Date, as the case may be, confirming that they are
independent certified public
15
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations and based upon the procedures
described in such letter delivered to you concurrently with the execution of
this Agreement (herein called the "Original Letter"), but carried out to a date
not more than four (4) business days prior to the First Closing Date or the
Second Closing Date, as the case may be, (i) confirming, to the extent true,
that the statements and conclusions set forth in the Original Letter are
accurate as of the First Closing Date or the Second Closing Date, as the case
may be, and (ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to reflect any
changes in the facts described in the Original Letter since the date of such
letter, or to reflect the availability of more recent financial statements, data
or information. The letter shall not disclose any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company and its subsidiary considered as one enterprise from that set
forth in the Registration Statement or Prospectus, which, in your sole judgment,
is material and adverse and that makes it, in your sole judgment, impracticable
or inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus. The Original Letter from Ernst & Young LLP shall be addressed
to or for the use of the Underwriters in form and substance satisfactory to the
Underwriters and shall (i) represent, to the extent true, that they are
independent certified public accountants with respect to the Company within the
meaning of the Act and the applicable published Rules and Regulations, (ii)
refer to their opinion with respect to their examination of the consolidated
balance sheet of the Company as of December 31, 1999 and 1998 and related
consolidated statements of operations, shareholders' equity, and cash flows for
the twelve (12) months ended December 31, 1999, 1998 and 1997, incorporated by
reference in the Registration Statement, (iii) state that Ernst & Young LLP has
performed the procedures set out in Statement on Auditing Standards ("SAS") No.
71 for a review of interim financial information and providing the report of
Ernst & Young LLP as described in SAS No. 71 on the financial statements for
each of the quarters in the three quarter period ended September 30, 2000 (the
"Quarterly Financial Statements"), incorporated by reference in the Registration
Statement, (iv) state that in the course of such review, nothing came to their
attention that leads them to believe that any material modifications need to be
made to any of the Quarterly Financial Statements in order for them to be in
compliance with generally accepted accounting principles consistently applied
across the periods presented, and (v) address other matters agreed upon by Ernst
& Young LLP and you. In addition, you shall have received from Ernst & Young LLP
a letter addressed to the Company and made available to you for the use of the
Underwriters stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's consolidated financial statements as
of December 31, 1999, did not disclose any weaknesses in internal controls that
they considered to be material weaknesses.
(i) Officers' Certificate. You shall have received on the First Closing
Date and the Second Closing Date, as the case may be, a certificate of the
Company, dated the First Closing Date or the Second Closing Date, as the case
may be, signed by the Chief Executive Officer and Chief Financial Officer of the
Company, to the effect that, and you shall be satisfied that:
(i) The representations and warranties of the Company in this Agreement
are true and correct, as if made on and as of the First Closing Date or the
Second Closing Date, as the case may be, and the Company has complied
16
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the First Closing Date or the Second
Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or, to the Company's knowledge, threatened under the
Securities Act;
(iii) When the Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate, (a) the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained all material information required to be included therein by
the Securities Act and in all material respects conformed to the requirements
of the Securities Act, (b) the Registration Statement and the Prospectus, and
any amendments or supplements thereto, did not and do not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
(c) since the effective date of the Registration Statement, there has occurred
no event required to be set forth in an amended or supplemented Prospectus
which has not been so set forth; and
(iv) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus and through the date of such
certificate, there has not been (a) any material adverse change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiary considered as one enterprise, (b)
any transaction that is material to the Company and its subsidiary considered
as one enterprise, except transactions entered into in the ordinary course of
business, (c) any obligation, direct or contingent, that is material to the
Company and its subsidiary considered as one enterprise, incurred by the
Company or its subsidiary, except obligations incurred in the ordinary course
of business, (d) any change in the capital stock or outstanding indebtedness
of the Company or its subsidiary that is material to the Company and its
subsidiary considered as one enterprise, (e) any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company or its
subsidiary, or (f) any loss or damage (whether or not insured) to the property
of the Company or its subsidiary which has been sustained or will have been
sustained which has a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and its subsidiary considered as one enterprise.
(j) Lock-Up Agreement from Certain Stockholders of the Company. The Company
shall have obtained and delivered the Lock-Up Agreements to you.
(k) Stock Exchange Listing. The Shares shall have been approved for
inclusion on the Nasdaq National Market, subject only to official notice of
issuance.
(l) Compliance with Prospectus Delivery Requirements. The Company shall have
complied with the provisions of Sections 2(g) and 3(e) hereof with respect to
the furnishing of Prospectuses.
17
(m) Additional Documents. On or before each of the First Closing Date and
the Second Closing Date, as the case may be, the Representatives and counsel for
the Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
If any condition specified in this Section 4 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Option Shares, at any time prior to the
Second Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 5 (Payment of Expenses),
Section 6 (Reimbursement of Underwriters' Expenses), Section 7 (Indemnification
and Contribution) and Section 10 (Representations and Indemnities to Survive
Delivery) shall at all times be effective and shall survive such termination.
Section 5. Payment of Expenses.
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Shares (including all
printing and engraving costs), (ii) all fees and expenses of the registrar and
transfer agent of the Common Shares, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel and
independent public or certified public accountants, (v) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), each preliminary
prospectus and the Prospectus, and all amendments and supplements thereto, and
this Agreement, (vi) all filing fees, attorneys' fees and expenses incurred by
the Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Shares for offer and sale under the state securities or blue sky laws or
the provincial securities laws of Canada or any other country, and, if requested
by the Representatives, preparing and printing a "Blue Sky Survey," an
"International Blue Sky Survey" or other memorandum, and any supplements
thereto, advising the Underwriters of such qualifications, registrations and
exemptions, (vii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD review and
approval of the Underwriters' participation in the offering and distribution of
the Common Shares, (viii) the fees and expenses associated with including the
Shares in the Nasdaq National Market, (ix) all costs and expenses incident to
the travel and accommodation of the Company's employees on the "roadshow," and
(x) all other fees, costs and expenses referred to in Item 13 of Part II of the
Registration Statement. Except as provided in this Section 5, Section 6, and
Section 7 hereof, the Underwriters shall pay their own expenses, including the
fees and disbursements of their counsel.
18
Section 6. Reimbursement of Underwriters' Expenses.
If this Agreement is terminated by the Representatives pursuant to
Section 4 or Section 9, or if the sale to the Underwriters of the Shares on the
First Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or to comply
with any provision hereof, the Company agrees to reimburse the Representatives
and the other Underwriters (or such Underwriters as have terminated this
Agreement with respect to themselves), severally, upon demand for all out-of-
pocket expenses that shall have been reasonably incurred by the Representatives
and the Underwriters in connection with the proposed purchase and the offering
and sale of the Shares, including but not limited to fees and disbursements of
counsel, printing expenses, travel and accommodation expenses, postage,
facsimile and telephone charges.
Section 7. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter, its officers and employees, and each person, if
any, who controls any Underwriter within the meaning of the Securities Act and
the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based (i) upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A under the Securities Act, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(ii) upon any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the Company
contained herein; or (iv) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under law; or (v) any untrue statement or
alleged untrue statement of any material fact contained in any audio or visual
materials provided by the Company or based upon written information furnished by
or on behalf of the Company including, without limitation, slides, videos, films
or tape recordings, used in connection with the marketing of the Shares,
provided that the Company authorizes in writing the use of any such audio or
visual materials or of such written information (and the Company hereby
authorizes in writing the audio-visual information presented to investors on the
so-called "roadshow"); or (vi) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Shares or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action arising
out of or based upon any matter covered by clause (i), (ii), (iii) (iv) or (v)
above, provided that the Company shall not be liable under this clause (vi) to
--------
the extent that a court of competent jurisdiction shall have
19
determined by a final judgment that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its bad faith or willful
misconduct; and to reimburse each Underwriter and each such controlling person
for any and all expenses (including the reasonable fees and disbursements of one
counsel (and, if necessary, one local counsel) chosen by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇) as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
--------
however, that the foregoing indemnity agreement shall not apply to any loss,
-------
claim, damage, liability or expense to the extent, but only to the extent, that
such loss, claim, damage, liability or expense arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Representatives expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto); and provided, further, that with respect to any preliminary
-------- -------
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense. The indemnity agreement
set forth in this Section 7(a) shall be in addition to any liabilities that the
Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, or any
such director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The indemnity
20
agreement set forth in this Section 7(b) shall be in addition to any liabilities
that each Underwriter may otherwise have.
(c) Information Provided by the Underwriters. The Company and each person,
if any, who controls the Company within the meaning of the Securities Act or the
Exchange Act, hereby acknowledges that the only information that the
Underwriters have furnished to the Company expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) are the statements set forth in the Prospectus under the
caption "Underwriting" as follows: (i) in the table in the first paragraph, (ii)
in the third paragraph (regarding the delivery date) and (iii) in the first,
second and third sentences of the subsection titled "Dealers' compensation"; and
the Underwriters confirm that such statements are correct.
(d) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party shall not relieve it from any liability
hereunder to the extent it is not materially prejudiced as a proximate result of
such failure and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it shall
elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
-------- --------
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the reasonable
expenses of more than one separate counsel (together with one local counsel),
approved by the indemnifying party (▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the case of Section
7(b) and Section 8), representing the indemnified parties who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
21
(e) Settlements. The indemnifying party under this Section 7 shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, 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 against any loss, claim, damage,
liability or expense 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 Section 7(d) hereof, 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 60 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, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes (i) an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(f) Contribution. If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law then each indemnifying party shall contribute to such amount paid or payable
by such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand, and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds (before deducting expenses) received by the
Company from the sale of the Shares sold by it in the offering bears to the
total underwriting discounts and commissions received by the Underwriters in
connection with the sale of such Shares, in each case as described in the
Prospectus. The relative fault 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 on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7(f) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by
22
any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 7(f). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 7(f) shall be deemed to include 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
subsection (f), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter and (ii) 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 Underwriters' obligations in this Section 7(f)
to contribute are several in proportion to their respective underwriting
obligations and not joint.
(g) Timing of Any Payments of Indemnification . Any losses, claims, damages,
liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred, but in all cases, no later than forty-five
(45) days of invoice to the indemnifying party.
(h) Survival. The indemnity and contribution agreements contained in this
Section 7 and the representation and warranties set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 7.
(i) Acknowledgements of Parties. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 7 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Securities Act and the Exchange Act.
Section 8. Default of One or More of the Several Underwriters.
If, on the First Closing Date or the Second Closing Date, as the case may
be, any one or more of the several Underwriters shall fail or refuse to purchase
Shares that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Shares set forth opposite their respective names on Schedule A bears to
----------
the aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other
23
proportions as may be specified by the Representatives with the consent of the
non-defaulting Underwriters, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date. If, on the First Closing Date or the Second Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
and the aggregate number of Shares with respect to which such default occurs
exceeds 10% of the aggregate number of Shares to be purchased on such date, and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Shares are not made within 48 hours after such default, this
Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 5, and Section 7 shall at all times be
effective and shall survive such termination. In any such case either the
Representatives or the Company shall have the right to postpone the First
Closing Date or the Second Closing Date, as the case may be, but in no event for
longer than seven days in order that the required changes, if any, to the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
8. Any action taken under this Section 8 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
Section 9. Termination of this Agreement.
This Agreement may be terminated by the Representatives by notice given
to the Company if (a) at any time after the execution and delivery of this
Agreement and prior to the First Closing Date (i) trading or quotation in any of
the Company's securities shall have been suspended or limited by the Commission
or by the Nasdaq Stock Market, or trading in securities generally on either the
Nasdaq Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any of federal, New York,
Delaware or California authorities; (iii) there shall have occurred any outbreak
or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective change in
United States' or international political, financial or economic conditions, as
in the judgment of the Representatives is material and adverse and makes it
impracticable or inadvisable to market the Common Shares in the manner and on
the terms contemplated in the Prospectus or to enforce contracts for the sale of
securities; (iv) in the reasonable judgment of the Representatives there shall
have occurred any Material Adverse Change; or (v) the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as in the judgment of the Representatives may interfere
materially with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured; or (b) in the
case of any of the events specified 9(a)(i)-(v), such event singly or together
with any other event, makes it, in your judgment, impracticable or inadvisable
to market the Common Shares in the manner and on the terms contemplated in the
Prospectus. Any termination pursuant to this Section 9 shall be without
liability on the part of (x) the Company to any Underwriter, except that the
Company shall be obligated to reimburse the expenses of the Representatives and
the Underwriters pursuant to
24
Sections 5 and 6 hereof, (y) any Underwriter to the Company or any person
controlling the Company, or (z) of any party hereto to any other party except
that the provisions of Section 7 shall at all times be effective and shall
survive such termination.
Section 10. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties and
other statements of the Company or any person controlling the company, of its
officers and of the several Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of its or their
partners, officers or directors or any controlling person, as the case may be,
and will survive delivery of and payment for the Shares sold hereunder and any
termination of this Agreement.
Section 11. Notices.
All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
Embarcadero Center West
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Company:
Neurocrine Biosciences, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
25
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 12. Successors.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 9
hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 7, and to their respective
successors, and no other person will have any right or obligation hereunder. The
term "successors" shall not include any purchaser of the Shares as such from any
of the Underwriters merely by reason of such purchase.
Section 13. Partial Unenforceability.
The invalidity or unenforceability of any Section, paragraph or provision
of this Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
Section 14. Section 14. Governing Law Provisions.
(a) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the state of New York applicable to
agreements made and to be performed in such state.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of San Francisco or the courts
of the State of California in each case located in the City and County of San
Francisco (collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party's address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
26
Section 15. General Provisions.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
[The remainder of this page has been intentionally left blank.]
27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
NEUROCRINE BIOSCIENCES, INC.
By:
-------------------------------------
▇▇▇▇ ▇▇▇▇▇
President
The foregoing Underwriting Agreement is hereby confirmed and accepted by the
Representatives as of the date first above written.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
On their behalf and on behalf of each of the several underwriters named in
Schedule A hereto.
----------
By: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
By:
-------------------------------
G. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Managing Director
S-1
SCHEDULE A
Underwriters
------------
Number of Firm
Shares To be
Underwriters Purchased
---------------------------------------------------------------------------- -------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc..................................................... [___]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___]....................................................................... [___]
[___] ...................................................................... [___]
---------------------------------------------------------------------------- ---------------
Total.................................................................... [___]
===============
Schedule A
Exhibit A
Form of Lock-Up Agreement
-------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
As Representatives of the Several Underwriters
c/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Neurocrine Biosciences, Inc. (the "Company")
----------------------------
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
representatives (in such capacity, the "Representatives") of the underwriters.
The undersigned recognizes that the Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you
and the other underwriters are relying on the representations and agreements of
the undersigned contained in this letter in carrying out the Offering and in
entering into underwriting arrangements with the Company with respect to the
Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (collectively, "Securities") now owned or hereafter
acquired directly by such person or with respect to which such person has or
hereafter acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, or in connection with bona fide estate planning, provided the
donee or donees or transferees thereof agree in writing to be bound by this
restriction, (ii) as a distribution to partners or shareholders of such person,
provided that the distributees thereof agree in writing to be bound by the terms
of this restriction, (iii) with respect to sales or purchases of Common Stock
acquired on the open market after the date of this Agreement or (iv) with the
prior written consent of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. The foregoing restrictions
will begin at the opening of the market on the day the Common Stock issued in
the Offering commences trading on the Nasdaq National Market and terminate at
the close of trading on the 90th day after (and including) such date (the "Lock-
Up Period"). The foregoing restriction has been expressly agreed to preclude
the holder of the Securities from engaging in any hedging or other transaction
which is designed to or reasonably expected to lead to or result in a
Disposition of Securities during the Lock-Up Period, even if such Securities
would be
A-1
disposed of by someone other than such holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
included, relates to or derives any significant part of its value from
Securities. 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 shares of Common Stock or Securities held by the undersigned
except in compliance with the foregoing restrictions.
With respect to this Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of 1933, as amended, of
any Common Stock or other Securities owned either of record or beneficially by
the undersigned, including any rights to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and assigns of the
undersigned.
Dated:
-------------------------------------
-------------------------------------------
Printed Name of Holder
By:
---------------------------------------
Signature
-------------------------------------------
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
A-2
Exhibit B
Matters to be Covered in the Opinion of Company Counsel
-------------------------------------------------------
1. The Company is a corporation and is validly existing and in good
standing under the laws of the State of Delaware, with corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus.
2. Based solely on certificates from public officials, we confirm
that the Company is qualified to do business in the State of California and the
State of Oregon.
3. As of the date hereof, the authorized capital stock of the Company
consists of 5,000,000 shares of Preferred Stock, par value $0.001 per share,
and 50,000,000 shares of Common Stock, par value $0.001 per share.
4. The Shares to be issued and sold by the Company pursuant to the
Underwriting Agreement have been duly authorized and, when issued to and paid
for by you and the other Underwriters in accordance with the terms of the
Underwriting Agreement, will be validly issued, fully paid and non-assessable
and free of preemptive rights arising under the Company's Certificate of
Incorporation or the Delaware General Corporation Law.
5. The Company has the corporate power and authority to enter into
the Underwriting Agreement and to issue, sell and deliver to the Underwriters
the Shares to be issued and sold by the Company pursuant to the Underwriting
Agreement.
6. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
7. The Registration Statement has become effective under the
Securities Act and, to our knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued under the Securities Act and no
proceedings therefor have been initiated or threatened by the Commission; and
any required filing of the Prospectus pursuant to Rule 424(b) under the
Securities Act has been made in accordance with Rule 424(b) and 430A under the
Securities Act.
8. The Registration Statement and the Prospectus comply as to form in
all material respects with the requirements for registration statements on Form
S-3 under the Securities Act and the rules and regulations of the Commission
thereunder; it being understood, however, that we express no opinion with
respect to the financial statements, schedules or other financial or statistical
data included or incorporated by reference in, or omitted from, the Registration
Statement or the Prospectus. In passing upon the compliance as to form of the
Registration Statement and the Prospectus, we have assumed that the statements
made and incorporated by reference therein are correct and complete.
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9. The statements set forth in Part II of the Registration Statement
under the heading "Indemnification of Directors and Officers," insofar as such
statements constitute a summary of legal matters, are accurate in all material
respects.
10. The issuance and sale of the Shares by the Company pursuant to
the Underwriting Agreement will not result in the violation by the Company of
(i) its Certificate of Incorporation or Bylaws, (ii) to our knowledge, any
federal or California statute, rule or regulation known to us to be applicable
to the Company or (iii) in the breach of or a default under any of the
agreements listed on Exhibit A attached hereto. No opinion is expressed in
---------
clause (ii) of this paragraph 10 as to the application of Section 548 of the
federal Bankruptcy Code and comparable provisions of state law or of any
antifraud laws, federal or state securities laws, antitrust or trade regulation
laws, the Hatch/Waxman Patent Term Extension Act and the other patent laws of
the United States or the rules and regulations of the U.S. Patent and Trademark
Office, the Federal Food, Drug and Cosmetic Act, the Public Health Service Act,
the Food and Drug Administration Modernization Act, the Orphan Drug Act or the
rules and regulations of the Federal Food and Drug Administration, or any other
federal or California laws pertaining to the regulation of the development,
testing, manufacture or sale of drugs.
11. No consent, approval, authorization or order of, or filing with,
any federal or California court or governmental agency or body is required for
the consummation of the issuance and sale of the Shares by the Company pursuant
to the Underwriting Agreement, except such as have been obtained under the
Securities Act and such as may be required under state securities laws in
connection with the purchase and distribution of such Shares by the
Underwriters. No opinion is expressed in this paragraph 11 as to the
application of Section 548 of the federal Bankruptcy Code and comparable
provisions of state law or of any antifraud laws, federal or state securities
laws, antitrust or trade regulation laws, the Hatch/Waxman Patent Term Extension
Act and the other patent laws of the United States or the rules and regulations
of the U.S. Patent and Trademark Office, the Federal Food, Drug and Cosmetic
Act, the Public Health Service Act, the Food and Drug Administration
Modernization Act, the Orphan Drug Act or the rules and regulations of the
Federal Food and Drug Administration, or any other federal or California laws
pertaining to the regulation of the development, testing, manufacture or sale of
drugs.
12. After giving effect to the Company's sale of the Shares and the
application of the net proceeds therefrom on the date hereof, the Company is not
an "investment company" as such term is defined in the Investment Company Act of
1940, as amended.
In addition, we have participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants for the Company, and your representatives, at which the contents of
the Registration Statement and the Prospectus and related matters were discussed
and, although we are not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained or
incorporated by reference in the Registration Statement and the Prospectus and
have not made any independent check or verification thereof, during the course
of such participation, no facts came to our attention that caused us to believe
that the Registration Statement, at the time it became effective, contained an
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 not misleading,
or that the
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Prospectus (including the Incorporated Documents), as of its date or as of the
date hereof, contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; it being
understood that we express no belief with respect to the financial statements,
schedules and other financial and statistical data included or incorporated by
reference in, or omitted from, the Registration Statement or the Prospectus. We
point out that we have not been retained by the Company to represent the Company
in connection with, and we are not experts regarding, matters under the
Hatch/Waxman Patent Term Extension Act and the other patent laws of the United
States or the rules and regulations of the U.S. Patent and Trademark Office, the
Federal Food, Drug and Cosmetic Act, the Public Health Service Act, the Food and
Drug Administration Modernization Act, the Orphan Drug Act or the rules and
regulations of the Federal Food and Drug Administration, or any other federal or
California laws pertaining to the regulation of the development, testing,
manufacture or sale of drugs or the Company's compliance therewith.
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Exhibit C
Matters to be Covered in the Opinion of Internal Company Counsel
----------------------------------------------------------------
1. To my knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity other than Neurocrine
Biosciences, Canada (the "Subsidiary").
2. To my knowledge, the Shares to be issued by the Company on the
date of such opinion pursuant to the terms of this Agreement, upon issuance and
delivery against payment therefor in accordance with the terms hereof, will not
have been issued in violation of or subject to any co-sale right, right of first
refusal or other similar right identified in a certificate delivered by ▇▇▇▇ ▇.
▇▇▇▇▇▇, Executive Vice President and Chief Financial Officer of the Company.
3. The statements set forth in the Prospectus under the heading
"Business--Government Regulation," insofar as such statements constitute a
summary of legal matters, are accurate in all material respects.
4. To my knowledge, there are no contracts or documents of a
character required to be described in the Registration Statement or Prospectus
(or required to be filed under the Exchange Act, if upon such filing they would
be incorporated by reference therein) or to be filed as exhibits to the
Registration Statement that are not described and filed as required.
5. The issuance and sale of the Shares by the Company pursuant to the
Underwriting Agreement will not result in (i) the violation by the Company of
the Federal Food, Drug and Cosmetic Act, the Public Health Service Act, the Food
and Drug Administration Modernization Act, the Orphan Drug Act or the rules and
regulations of the Federal Food and Drug Administration, or any other federal or
California laws known to me pertaining to the regulation of the development,
testing, manufacture or sale of drugs or (ii) the breach of or a default under
any order, writ or decree of any court or governmental agency having
jurisdiction over the Company or the Subsidiary or over any of their respective
properties or operations.
6. No consent, approval, authorization or order of, or filing with,
any federal or California court or governmental agency or body is required under
the patent laws of the United States or the rules and regulations of the Federal
Food, Drug and Cosmetic Act, the Public Health Service Act, the Food and Drug
Administration Modernization Act, the Orphan Drug Act or the rules and
regulations of the Federal Food and Drug Administration, or any other federal or
California laws pertaining to the regulation of the development, testing,
manufacture or sale of drugs, for the consummation of the issuance and sale of
the Shares by the Company pursuant to the Underwriting Agreement.
7. To my knowledge, there are no legal or governmental proceedings
pending or threatened against the Company or the Subsidiary of a character
required to be disclosed in the Registration Statement or the Prospectus by the
Securities Act, other than those described therein, except for such proceedings
as, if the subject of an
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unfavorable decision, would not individually or in the aggregate result in a
Material Adverse Effect.
8. To my knowledge, except as disclosed in the Prospectus, the
Company is not presently (a) in material violation of its Certificate of
Incorporation or Bylaws or (b) in material breach of any order, writ or decree
of any court or governmental agency or body having jurisdiction over the
Company.
In addition, I have participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants for the Company, and your representatives, at which the contents of
the Registration Statement and the Prospectus and related matters were discussed
and, although I am not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained or
incorporated by reference in the Registration Statement and the Prospectus and
have not made any independent check or verification thereof, during the course
of such participation, no facts came to my attention that caused me to believe
that the Registration Statement, at the time it became effective, contained an
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 not misleading,
or that the Prospectus (including the Incorporated Documents), as of its date or
as of the date hereof, contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; it
being understood that I express no belief with respect to the financial
statements, schedules and other financial and statistical data included or
incorporated by reference in, or omitted from, the Registration Statement or the
Prospectus.
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EXHIBIT D
Matters to be Covered in the Opinion of
Intellectual Property Counsel for the Company
---------------------------------------------
Ladies and Gentlemen:
We represent Neurocrine Biosciences, Inc. (the "Company") only in connection
with patent and other intellectual property matters for which representation has
been requested, and our engagement has been limited to such specific
intellectual property matters as to which we were consulted by the Company.
Such representation has included the preparation of selected United States
patent applications, and the filing of international patent applications
corresponding to certain of these United States applications, as well as the
prosecution of such applications before the United States Patent and Trademark
Office and corresponding foreign governmental patent offices (the
"Representation"). Our response herein is limited solely to those matters as to
which we have been engaged to give substantive attention on behalf of the
Company in the form of legal representation or consultation. The Company has
previously retained other counsel on intellectual property matters, including
through the in-licensing of certain technology, and will periodically retain
other counsel on such matters.
This opinion is given to you pursuant to Section 4(f) of the Underwriting
Agreement dated _______________ (the "Underwriting Agreement"), between the
Company and each of you as representatives of the several underwriters named in
Schedule A to the Underwriting Agreement (the "Underwriters"). The preliminary
prospectus, dated November 8, 2000, delivered to the Securities and Exchange
Commission (the "Commission") for filing in connection with the Company's
Registration Statement on Form S-3 (No. 333-47252) under the Securities Act of
1933, as amended, and the rules and regulations of the Commission promulgated
there under, and the final prospectus dated ______________ are herein
collectively referred to as the "Prospectus."
It should be recognized that opinions of patent counsel rely on certain
determinations of factual issues and determinations of complex issues of law and
technology in an area where many issues have yet to be resolved. Even though
patent counsel renders such opinions, the forums in which such issues may be
raised are not bound by such opinions.
It should be further recognized that we have not been authorized to investigate,
nor have we investigated, any legal matters of concern to the Company not
relevant to the Representation and, therefore, we express no opinion on such
matters. Such matters include those which may have been mentioned to us by the
Company, but which we have not been requested to handle.
Subject to the conditions and qualifications set forth above, it is our opinion
that the statements under the captions "Risk Factors--If we are unable to
protect our intellectual property, our competitors could develop and market
products based on our discoveries, which may reduce demand for our products,"
and "Risk Factors--We may face disputes with third parties regarding the
validity of our patents or our alleged infringement of third
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parties' patents, which could prevent or delay commercialization of our product
candidates" as they specifically relate to the Representation, and under the
caption "Business--Intellectual Property" in the Prospectus, to the extent that
such statements relate solely to and constitute a description or summary of the
legal matters, documents or proceedings relating to the Representation, and to
the extent such legal matters, documents or proceedings have been disclosed to
us during the course of the Representation, are accurate and fairly present and
summarize the matters referred to therein.
In addition, subject to the conditions and qualifications set forth above, it is
our opinion that:
(i) the Company is, to the best of our knowledge, the sole assignee and
owner of each of the United States issued patents and pending patent
applications that we are prosecuting on behalf of the Company as set
forth in Schedule A, and the employees of the Company who are
inventors on such patent applications are under an obligation to
assign all of their rights in such applications to the Company;
(ii) the Company is, to the best of our knowledge, the sole assignee and
owner of each of the foreign issued patents and pending patent
applications that we are prosecuting on behalf of the Company as set
forth in Schedule B, and the employees of the Company who are
inventors on such patent applications are under an obligation to
assign all of their rights in such applications to the Company;
(iii) to the best of our knowledge and after due inquiry, the pending
applications listed in Schedules A and B are being diligently
pursued;
(iv) to the best of our knowledge, we have disclosed or intend to
disclose to the United States Patent and Trademark Office all
pertinent references provided to us by the Company, or which have
been brought to our attention during the course of prosecution, in
compliance with our duty of disclosure;
(v) with the exception of the two pending European oppositions noted in
the Prospectus, we are not aware of any legal or governmental
proceedings pending relating to the patents or applications listed
in Schedules A and B, and to the best of our knowledge no such
proceedings are threatened by governmental authorities or others;
(vi) based solely upon a review of matters which we have been engaged to
provide direct substantive attention, we are not aware of any notice
of infringement received by the Company, and we have no reason to
believe that the Company is infringing or otherwise violating any
valid patent claims of a third party; and
(vii) we are not aware of any infringement by third parties of any of the
Company's patents.
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This opinion letter is furnished to the Underwriters and is solely for their
benefit in connection with their purchase of common stock of the Company. This
opinion letter is not to be used, circulated, quoted or otherwise referred to
for any other purpose, nor may it be used or relied upon by anyone other than to
whom this opinion letter is furnished.
Very truly yours,
Seed Intellectual Property Law Group PLLC
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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