Exhibit 1.1
* Shares
TELIK, INC.
Common Stock
UNDERWRITING AGREEMENT
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__, 2000
▇▇▇▇▇▇ Brothers Inc.
Chase Securities Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
UBS Warburg LLC
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Telik, Inc., a Delaware corporation (the "Company"), proposes to sell *
shares (the "Firm Stock") of the Company's Common Stock, par value $0.01 per
share (the "Common Stock"). In addition, the Company proposes to grant to the
Underwriters named in Schedule 1 hereto (the "Underwriters") an option to
purchase up to * additional shares of the Common Stock on the terms and for the
purposes set forth in Section 3 (the "Option Stock"). The Firm Stock and the
Option Stock, if purchased, are hereinafter collectively called the "Stock."
This is to confirm the agreement concerning the purchase of the Stock from the
Company by the Underwriters.
1. Representations, Warranties and Agreements of the Company. The
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Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 with respect to the Stock has
(i) been prepared by the Company in conformity with the requirements of the
United States Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations (the "Rules and Regulations") of the United
States
Securities and Exchange Commission (the "Commission") thereunder, (ii) been
filed with the Commission under the Securities Act and (iii) become
effective under the Securities Act. Copies of such registration statement
have been delivered by the Company to you as the representatives (the
"Representatives") of the Underwriters. As used in this Agreement,
"Effective Time" means the date and the time as of which such registration
statement, or the most recent post-effective amendment thereto, if any, was
declared effective by the Commission; "Effective Date" means the date of
the Effective Time; "Preliminary Prospectus" means each prospectus included
in such registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the
Commission by the Company with the consent of the Representatives pursuant
to Rule 424(a) of the Rules and Regulations; "Registration Statement" means
such registration statement, as amended at the Effective Time, including
all information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations in accordance with
Section 5 hereof and deemed to be a part of the registration statement as
of the Effective Time pursuant to paragraph (b) of Rule 430A of the Rules
and Regulations, and including any registration statement registering
additional shares of Common Stock filed with the Commission pursuant to
Rule 462(b) of the Rules and Regulations; and "Prospectus" means such final
prospectus, as first filed with the Commission pursuant to paragraph (1) or
(4) of Rule 424(b) of the Rules and Regulations. The Commission has not
issued any order preventing or suspending the use of any Preliminary
Prospectus.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations and do not
and will not, as of the applicable effective date (as to the Registration
Statement and any amendment thereto) and as of the applicable filing date
(as to the Prospectus and any amendment or supplement
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thereto) 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 not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the
Registration Statement or the Prospectus or any further amendments or
supplements to the Registration Statement or Prospectus, in reliance upon
and in conformity with written information furnished to the Company through
the Representatives by or on behalf of any Underwriter specifically for
inclusion therein.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a material adverse
effect on the business, financial condition or results of operations of the
Company, and has all power and authority necessary to own or hold its
properties and to conduct business as described in the Registration
Statement and Prospectus. The Company has no subsidiaries (as defined in
Section 16).
(d) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform to the description thereof contained in the
Prospectus.
(e) The unissued shares of the Stock to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as provided herein,
will be duly and validly issued, fully paid and non-assessable; and the
Stock will conform to the description thereof obtained in the Prospectus.
(f) This Agreement has been duly authorized, executed and delivered by
the Company.
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(g) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of the
property or assets of the Company is subject, nor will such actions result
in any violation of the provisions of the Certificate of Incorporation or
bylaws of the Company or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its properties or assets; and except for the registration
of the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
applicable state securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court
or governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(h) There are no contracts, agreements or understandings between the
Company and any person granting such person the right (other than rights
which have been waived or satisfied), with respect to any securities of the
Company owned by such person, to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement. Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to register or include
securities pursuant to any other registration statement filed by the
Company under the Securities Act.
(i) Except as described in the Prospectus, the Company has not sold or
issued any shares of Common
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Stock during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D or S of,
the Securities Act, other than shares issued pursuant to employee benefit
plans, qualified stock options plans or other employee compensation plans
or pursuant to outstanding options, rights or warrants.
(j) The Company has not sustained, since the date of the latest audited
financial statements included in the Prospectus, any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since such date, there has not been
any material change in the capital stock or long-term debt of the Company,
or any material adverse change in, or any development involving a
prospective material adverse change in, the business, financial condition
or results of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus.
(k) The financial statements (including the related notes and supporting
schedules) filed as part of the Registration Statement and included in the
Prospectus present fairly the financial condition and results of operations
of the Company, at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved.
(l) Ernst & Young LLP, who have certified certain financial statements
of the Company, whose report appears in the Prospectus and who have
delivered the initial letter referred to in Section 8(i) hereof, are
independent public accountants as required by the Securities Act and the
Rules and Regulations.
(m) The Company has good and marketable title to all personal property
owned by it, free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus or such as do not materially affect
the value of such property and do not materially interfere with the use
made and
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proposed to be made of such property by the Company and all real property
and buildings held under lease by the Company are held by them under valid,
subsisting and enforceable leases, with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such
property and buildings by the Company.
(n) The Company carries, or is covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of its business and the
value of its properties and as is customary for companies engaged in
similar businesses in similar industries.
(o) The Company owns or possesses adequate licenses or other rights to
use all patents, patent applications, inventions, trademarks, trade names,
applications for registration of trademarks, service marks, service ▇▇▇▇
applications, copyrights, know-how, manufacturing processes, formulae,
trade secrets, licenses and rights in any thereof and any other intangible
property and assets (herein called the "Proprietary Rights") necessary to
conduct its business in the manner described in the Prospectus, except
where the failure to so own or possess such Proprietary Rights would not,
singularly or in the aggregate, have a material adverse effect on the
financial position, stockholders' equity, results of operations, business
or prospects of the Company. The Company takes security measures to provide
adequate trade secret protection in its non-patented technology. The
Company or its assignor has duly and properly filed with the United States
Patent and Trade Office the pending patent applications referred to in the
Prospectus (the "Patent Applications"). The information contained in the
Registration Statement and Prospectus concerning the Patent Applications
and the Proprietary Rights is accurate in all material respects. Except as
disclosed in the Prospectus, the Company has not received any notice of
infringement or conflict with asserted rights of others with respect to any
Proprietary Rights which could result in any material adverse effect on the
Company, and except as specifically identified and described in the
Prospectus, no action, suit, arbitration, or legal, administrative or other
proceeding, or investigation
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is pending, or, to the knowledge of the Company, threatened, which involves
any Proprietary Rights. Except as disclosed in the Prospectus, the
Proprietary Rights of the Company referred to in the Prospectus do not, to
the knowledge of the Company, infringe or conflict with any right or valid
and enforceable 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, known to the Company which could have a material adverse
effect on the Company. The Company is not subject to any judgment, order,
writ, injunction or decree of any court or any Federal, state, local,
foreign or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, or any arbitrator, nor, except as
described in the Prospectus, has it entered into or is a party to any
contract which restricts or impairs the use of any such Proprietary Rights
in a manner which would have a material adverse effect on the use of any of
the Proprietary Rights. The Company has complied, in all material respects,
with its respective contractual obligations relating to the protection of
the Proprietary Rights used pursuant to licenses. To the knowledge of the
Company, no person is infringing on or violating the Proprietary Rights
owned or used by the Company.
(p) There are no legal or governmental proceedings pending (i) to which
the Company is a party or of which any property or assets of the Company is
the subject and (ii) which, if determined adversely to the Company, are
reasonably likely to have a material adverse effect on the financial
position, stockholders' equity, results of operations, business or
prospects of the Company, and to the knowledge of the Company, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(q) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have
not been described in the Prospectus or filed as exhibits to the
Registration Statement.
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(r) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required
to be described in the Prospectus which is not so described.
(s) No labor disturbance by the employees of the Company exists or, to
the knowledge of the Company, is imminent which would reasonably be
expected to have a material adverse effect on the financial position,
stockholders' equity, results of operations, business or prospects of the
Company.
(t) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
(u) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has
paid all taxes due thereon, and no tax deficiency has been determined
adversely to the Company which has had (nor does the Company have any
knowledge of any tax deficiency which, if determined adversely to the
Company, would reasonably be expected to have) a material adverse effect on
the financial position, stockholders' equity, results of operations,
business or prospects of the Company.
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(v) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities, (ii)
incurred any liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary course of
business or (iv) declared or paid any dividend on its capital stock.
(w) The Company (i) makes and keeps accurate books and records and(ii)
maintains internal accounting controls which provide reasonable assurance
that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability for
its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its
assets is compared with existing assets at reasonable intervals.
(x) The Company is not in violation of its certificate of incorporation
or bylaws, in default in any material respect, and no event has occurred
which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or
condition contained in any material indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is subject
or in violation in any material respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets may
be subject; and the Company has obtained all material licenses, permits,
certificates, franchises or other governmental authorizations or permits
necessary to the ownership of its property or to the conduct of its
business.
(y) Neither the Company nor any director or officer associated with or
acting on behalf of the Company has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful
payment to any foreign or
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domestic government official or employee from corporate funds; violated or
is in violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(z) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company (or, to the
knowledge of the Company, any of its predecessors in interest) at, upon or
from any of the property now or previously owned or leased by the Company
in violation of any applicable law, ordinance, rule, regulation, order,
judgment, decree or permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which would not have,
or could not be reasonably likely to have, singularly or in the aggregate
with all such violations and remedial actions, a material adverse effect on
the general affairs, management, financial position, stockholders' equity,
results of operations, business or prospects of the Company; there has been
no material spill, discharge, leak, emission, injection, escape, dumping or
release of any kind onto such property or into the environment surrounding
such property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or with
respect to which the Company has knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which
would not have or would not be reasonably likely to have, singularly or in
the aggregate with all such spills, discharges, leaks, emissions,
injections, escapes, dumpings and releases, a material adverse effect on
the financial position, stockholders' equity, results of operations,
business or prospects of the Company; and the terms "hazardous wastes,"
"toxic wastes," "hazardous substances" and "medical wastes" shall have the
meanings specified in any applicable local, state and federal laws or
regulations with respect to environmental protection.
(aa) The Company is not, and after giving effect to the offering and
sale of the Stock and the initial
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investment of the proceeds therefrom as contemplated under "Use of
Proceeds" in the Prospectus, will not be an "investment company" within the
meaning of such term under the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission thereunder.
(ab) The Company has obtained an agreement, in form and substance
reasonably satisfactory to the Representatives, of each of its directors
and officers and certain of its stockholders designated by you not to (1)
sell, offer to sell, contract to sell, hypothecate, grant any option to
sell or otherwise dispose of, directly or indirectly, any shares of Common
Stock or securities convertible into or exchangeable for Common Stock or
warrants or other rights to purchase Common Stock, or (2) enter into any
swap or other derivatives transaction that transfers to another, in whole
or in part, any of the economic benefits or risks of ownership of such
shares of Common Stock or securities convertible or exchangeable for Common
Stock or warrants or other rights to purchase Common Stock, in either case
for a period of 180 days after the date of the Prospectus (each such
agreement, a "Lock-Up Agreement").
(ac) Each of the collaboration or strategic alliance agreements
described in the Prospectus (the "Strategic Alliance Agreements") is in
full force and effect and constitutes a valid and binding agreement between
the parties thereto, enforceable in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles, and there has not occurred any default under any
Strategic Alliance Agreement or any event that with the giving of notice or
lapse of time would constitute a default thereunder.
(ad) The Company has applied for the listing of the Stock on the
National Association of Securities Dealers Automated Quotation National
Market System ("NASDAQ").
2. Purchase of the Stock by the Underwriters. On the basis of the
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representations and warranties contained in, and subject to the terms and
conditions of, this Agreement,
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the Company agrees to sell * shares of the Firm Stock to the several
Underwriters, and each of the Underwriters, severally and not jointly, agrees to
purchase the number of shares of the Firm Stock set opposite that Underwriter's
name in Schedule 1 hereto.
In addition, the Company grants to the Underwriters an option to
purchase up to * shares of Option Stock. Such option is granted for the purpose
of covering over-allotments in the sale of Firm Stock and is exercisable as
provided in Section 5 hereof. Shares of Option Stock shall be purchased
severally for the account of the Underwriters in proportion to the number of
shares of Firm Stock set opposite the name of such Underwriters in Schedule 1
hereto. The respective purchase obligations of each Underwriter with respect to
the Option Stock shall be adjusted by the Representatives so that no Underwriter
shall be obligated to purchase Option Stock other than in 100 share amounts. The
price of both the Firm Stock and any Option Stock shall be $_____ per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on any Delivery Date (as hereinafter defined), as the case may be,
except upon payment for all the Stock to be purchased on such Delivery Date as
provided herein.
3. Offering of Stock by the Underwriters. Upon authorization by the
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Representatives of the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and conditions set forth
in the Prospectus.
4. Directed Share Program. It is understood that approximately
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[ ] shares of the Firm Stock ("Directed Shares") will initially be
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reserved by the Underwriters for offer and sale to employees and persons having
business relationships with the Company ("Directed Share Participants") upon the
terms and conditions set forth in the Prospectus and in accordance with the
rules and regulations of the National Association of Securities Dealers, Inc.
Under no circumstances will the Representatives or any Underwriter be liable to
the Company or to any Directed Share Participant for any action taken or omitted
to be taken in good faith in connection with such Directed Share Program. To the
extent that any Directed Shares are not affirmatively reconfirmed for
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purchase by any Directed Share Participant on or immediately after the date of
this Agreement, such Directed Shares may be offered to the public as part of the
public offering contemplated hereby.
The Company agrees to pay all fees and disbursements incurred by the
Underwriters in connection with the Directed Share Program, including counsel
fees and any stamp duties or other taxes incurred by the Underwriters in
connection with the Directed Share Program.
In connection with the offer and sale of the Directed Shares, the
Company agrees, promptly upon a request in writing, to indemnify and hold
harmless the Representatives and the other Underwriters from and against any
loss, claim, damage, expense, liability or action which (i) arises out of, or is
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or with the approval of the Company for
distribution to Directed Share Participants in connection with the Directed
Share Program or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) arises out of the failure of any Directed Share Program
participant to pay for and accept delivery of Directed Shares that the
Participant agreed to purchase or (iii) is otherwise related to the Directed
Share Program, other than losses, claims, damages or liabilities (or expenses
relating thereto) that are finally judicially determined to have resulted
directly from the bad faith or gross negligence of the Representatives.
5. Delivery of and Payment for the Stock. Delivery of and payment for
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the Firm Stock shall be made at the office of ▇▇▇▇▇▇ Godward LLP, Five Palo Alto
Square, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M., New York
City time, on the [fourth] full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Representatives and the Company. This date and time are sometimes
referred to as the "First Delivery Date." On the First Delivery Date, the
Company shall deliver or cause to be delivered certificates representing the
Firm Stock to the Representatives for the account of each Underwriter against
payment to or upon the order of the Company of the purchase price by wire
transfer in immediately available
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funds. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder. Upon delivery, the Firm Stock shall be registered in
such names and in such denominations as the Representatives shall request in
writing not less than two full business days prior to the First Delivery Date.
For the purpose of expediting the checking and packaging of the certificates for
the Firm Stock, the Company shall make the certificates representing the Firm
Stock available for inspection by the Representatives in New York, New York, not
later than 2:00 P.M., New York City time, on the business day prior to the First
Delivery Date.
The option granted in Section 2 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by the Representatives. If the option
is exercised in part, the Underwriters shall purchase on a pro rata basis from
the Company that number of shares of Option Stock offered by the Company
pursuant to Section 2 hereof. Such notice shall set forth the aggregate number
of shares of Option Stock as to which the option is being exercised, the names
in which the shares of Option Stock are to be registered, the denominations in
which the shares of Option Stock are to be issued and the date and time, as
determined by the Representatives, when the shares of Option Stock are to be
delivered; provided, however, that this date and time shall not be earlier than
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the First Delivery Date nor earlier than the second business day after the date
on which the option shall have been exercised nor later than the fifth business
day after the date on which the option shall have been exercised. The date and
time the shares of Option Stock are delivered are sometimes referred to as a
"Second Delivery Date" and the First Delivery Date and any Second Delivery Date
are sometimes each referred to as a "Delivery Date."
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 5 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on such Second Delivery
Date. On such Second Delivery Date, the Company shall deliver or cause to be
delivered the certificates representing the Option Stock to the Representatives
for the account of each Underwriter
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against payment of the purchase price by wire transfer in immediately available
funds to or upon the order of the Company. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each Underwriter hereunder. Upon delivery, the
Option Stock shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Stock, the Company shall make the certificates representing the Option Stock
available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., New York City time, on the business day prior to such Second
Delivery Date.
6. Further Agreements of the Company. The Company agrees:
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(a) To prepare the Prospectus in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Securities
Act; not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted herein; to
advise the Representatives, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with copies
thereof; to advise the Representatives, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending
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the use of any Preliminary Prospectus or the Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed with
the Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case including exhibits
other than this Agreement and the computation of per share earnings) and
(ii) each Preliminary Prospectus, the Prospectus and any amended or
supplemented Prospectus; and, if the delivery of a prospectus is required
at any time after the Effective Time in connection with the offering or
sale of the Stock or any other securities relating thereto and if at such
time any event shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary to amend or supplement the Prospectus in
order to comply with the Securities Act, to notify the Representatives and,
upon their request, to file such amended or supplemented prospectus and to
prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which will
correct such statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
16
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Representatives and counsel for the Underwriters and obtain
the consent of the Representatives to the filing;
(f) As soon as practicable after the Effective Date, but in any event
not later than 18 months after the Effective Date of the Registration
Statement, to make generally available to the Company's security holders
and to deliver to the Representatives an earnings statement of the Company
(which need not be audited) complying with Section 11(a) of the Securities
Act and the Rules and Regulations (including, at the option of the Company,
Rule 158);
(g) For a period of five years following the Effective Date, to furnish
to the Representatives copies of all materials furnished by the Company to
its stockholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange upon which the Common Stock may be listed pursuant to requirements
of or agreements with such exchange or to the Commission pursuant to the
Exchange Act or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering
and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of the Stock;
provided that in connection therewith 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;
(i) For a period of 180 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose
17
of (or enter into any transaction or device which is designed to, or could
be expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the Stock and shares issued
pursuant to employee benefit plans, qualified stock option plans or other
employee compensation plans existing on the date hereof or pursuant to
currently outstanding options, warrants or rights; provided, that each
--------
recipient of any such shares shall execute and deliver a Lock-Up Agreement
to the Company and ▇▇▇▇▇▇ Brothers Inc.), or sell or grant options, rights
or warrants with respect to any shares of Common Stock or securities
convertible into or exchangeable for Common Stock (other than the grant of
options pursuant to option plans existing on the date hereof), or (2) enter
into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of
such shares of Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or
other securities, in cash or otherwise, in each case without the prior
written consent of ▇▇▇▇▇▇ Brothers Inc.;
(j) Prior to the Effective Date, to use its best efforts to complete the
listing of the Stock on NASDAQ, subject only to official notice of issuance
and evidence of satisfactory distribution, prior to the First Delivery
Date;
(k) To take such steps as shall be necessary to ensure that the Company
shall not become an "investment company" within the meaning of such term
under the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder;
(l) to use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner set forth in the Prospectus under
the caption "Use of Proceeds"; and
(m) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) under the Securities Act.
18
7. Expenses. The Company agrees to pay (a) the costs incident to the
--------
registration, authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, all as provided in this Agreement; (d) the costs of producing and
distributing this Agreement, any Agreement among Underwriters, closing
documents, including any compilation thereof and any other related documents in
connection with the offering, purchase, sale and delivery of the Stock; (e) the
filing fees incident to securing any required review by the National Association
of Securities Dealers, Inc. of the terms of sale of the Stock; (f) any
applicable listing or other fees; (g) the fees and expenses of qualifying the
Stock under the securities laws of the several jurisdictions as provided in
Section 6(h) and of preparing, printing and distributing any Blue Sky surveys
and of securing any required review by the National Association of Securities
Dealers, Inc. ("NASD")(including related fees and expenses of counsel to the
Underwriters); (h) all fees and expenses in connection with listing the Stock on
NASDAQ and (i) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement; provided that, except as
provided in this Section 7 and in Section 12, the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Stock which they may sell and the expenses of advertising
any offering of the Stock made by the Underwriters.
8. Conditions of Underwriters' Obligations. The respective obligations of
---------------------------------------
the Underwriters hereunder are subject to the accuracy, when made and on each
Delivery Date, of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 6(a);
19
no stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and any request
of the Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise shall have been
complied with.
(b) No Underwriter shall have discovered and disclosed to the Company
on or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains any untrue
statement of a fact which, in the opinion of the Representatives, is
material or omits to state any fact which, in the opinion of the
Representatives, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Stock, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all material respects to the Representatives,
and the Company shall have furnished to counsel to the Underwriters all
documents and information that they may reasonably request to enable them
to advise the Underwriters as to such matters.
(d) ▇▇▇▇▇▇ Godward LLP shall have furnished to the Representatives
its written opinion, as counsel to the Company, addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would
not have a material adverse
20
effect on the business, financial condition or results of operations
of the Company, and has all corporate power and authority necessary to
own or hold its properties and conduct the business in which it is
engaged; and to such counsel's knowledge the Company has no
subsidiaries;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of
the Company (including the shares of Stock being delivered on such
Delivery Date) have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description thereof
contained in the Prospectus;
(iii) There are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of,
any shares of the Stock pursuant to the Company's Amended and Restated
Certificate of Incorporation (the "Charter"), the Company's bylaws,
any agreement filed as an exhibit to the Registration Statement and
Prospectus or, to such counsel's knowledge, any other agreement to
which the Company is a party;
(iv) To such counsel's knowledge, there are no legal or
governmental proceedings pending or overtly threatened to which the
Company is a party or of which any property or assets of the Company
is the subject which are required to be described in the Prospectus by
the Securities Act or the Rules and Regulations;
(v) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant to the subparagraph
of Rule 424(b) of the Rules and Regulations as of the date specified
in such opinion and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and, to such counsel's knowledge, no proceeding for that
purpose is pending or threatened by the Commission;
21
(vi) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to
such Delivery Date (other than the financial statements, financial
data and related schedules therein, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Securities Act and the Rules and Regulations;
(vii) To such counsel's knowledge, there are no contracts or
other documents that are required to be described in the Prospectus or
filed as exhibits to the Registration Statement by the Securities Act
or by the Rules and Regulations that have not been described or filed
as exhibits to the Registration Statement;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company;
(ix) The issue and sale of the shares of Stock being delivered
on such Delivery Date by the Company and the compliance by the Company
with all of the provisions of this Agreement and the consummation of
the transactions contemplated hereby will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement, or other agreement material to the Company's business
as described in the Registration Statement and Prospectus, or other
instrument known to such counsel to which the Company is a party or by
which the Company is bound or to which any of the property or assets
of the Company is subject, nor will such actions result in any
violation of the provisions of the certificate of incorporation or
bylaws of the Company or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of their properties or
assets (except the securities or Blue Sky laws of the various U.S.
states and the rules of the NASD governing underwriting compensation,
as to which we express no opinion); and, except for the
22
registration of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act, applicable state securities laws and
the rules of the NASD governing underwriting compensation, no consent,
approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the
execution, delivery and performance of this Agreement by the Company
and the consummation of the transactions contemplated hereby;
(x) The Company is not, and after giving effect to the offering
and sale of the Stock and the initial investment of the proceeds
therefrom as contemplated under "Use of Proceeds" in the Prospectus,
will not be an "investment company" within the meaning of such term
under the Investment Company Act of 1940, as amended and the rules and
regulations of the Commission thereunder; and
(xi) There are no contracts, agreements or understandings
between the Company and any person granting such person the right
(other than rights which have been waived or satisfied) to require the
Company to include securities in the securities registered pursuant to
the Registration Statement. Except as described in the Prospectus,
there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to register or include securities pursuant to any other
registration statement filed by the Company under the Securities Act.
In rendering such opinion, such counsel may state that its opinion is limited to
matters governed by the federal laws of the United States of America, the laws
of the State of California and the General Corporation Law of the State of
Delaware and that such counsel is not admitted in the State of Delaware. Such
counsel shall also have furnished to the Representatives a written statement,
addressed to the Underwriters and dated such Delivery Date, in form and
substance satisfactory to the Representatives, to the effect that:
23
"In connection with the preparation of the Registration Statement, we have
participated in conferences with officers and other representatives of the
Company, representatives of the independent public or certified public
accountants for the Company and with representatives of the Underwriters. We
have not independently verified and accordingly are not passing upon and do not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (other than
the statements made in the Prospectus under the captions "Description of Capital
Stock" and "Shares Eligible for Future Sale," insofar as such statements relate
to the Stock and concern legal matters), and any supplements or amendments
thereto. On the basis of the foregoing and in our capacity as counsel to the
Company, nothing has come to our attention which has caused us to believe that
either the Registration Statement or any amendments thereto (except that we
express no opinion or belief as to the financial statements and schedules, and
other financial data and statistical data derived therefrom), at the time the
Registration Statement or such amendments 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 (except that we express no opinion or belief as to the
financial statements and schedules, and other financial data and statistical
data derived therefrom), 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 in order to make the statements therein, in light of the circumstances
in which they were made, not misleading."
(e) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall have furnished to the Representatives a
written opinion, as intellectual property counsel to the Company, addressed to
the Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that it serves as
intellectual property counsel to the Company with respect to the Proprietary
Rights, and that:
Such counsel has carefully read and analyzed the following portions of the
Registration Statement and Prospectus relating to technology-related patent
rights: the disclosure appearing under the caption "Prospectus Summary --
Telik," under the caption "Risk
24
Factors - Our success is dependent on intellectual property rights held by
us and third parties and such rights are difficult and costly to protect"
and under the caption "Business --Patents and Proprietary Information,"
(the "Patent Information"). Such counsel has considered the statements
contained in the Patent Information and, without independent verification
of the accuracy, completeness or fairness of such statements, nothing has
come to such counsel's attention, as of the date of the Prospectus and the
date of such opinion, that leads such counsel to believe that the Patent
Information contains an untrue statement of material fact or omits to state
a material fact necessary to make the statements therein not misleading, in
light of the circumstances in which they are made. As of the date of the
Prospectus and the date of such opinion, such counsel has no reason to
believe that the Patent Information is not in all material respects a fair
and accurate summary of the legal matters, documents and proceedings
relating thereto.
(1) Attached as Schedule A to such opinion is a list of the
Company's U.S. patents and pending U.S. patent applications (the "U.S.
Patent Rights") which, to the best of such counsel's knowledge, are
either owned or co-owned by the Company, as indicated on such Schedule
A. Where the Company is listed on Schedule A to such opinion as the
owner or co-owner of any U.S. Patent Right, either (a) an assignment
from the inventors to the Company has been recorded or is being
recorded in the United States Patent and Trademark Office, or (b) an
assignment from the inventors to an intervening assignee and then to
the Company has been recorded or is being recorded in the United
States Patent and Trademark Office. To the best of such counsel's
knowledge, there are no claims to any ownership interests or liens on
any of the U.S. Patent Rights by any party other than the Company or
the other co-owners.
(2) Attached as Schedule B to such opinion is a list of the
Company's non-U.S. patents and pending non-U.S. patent applications
(the "Non-U.S. Patent Rights") which, to the best of
25
such counsel's knowledge, are either owned or co-owned by the Company,
as indicated on such Schedule B. Where the Company is listed on
Schedule B to such opinion as the owner or co-owner of any Non-U.S.
Patent Right, the named inventors of the Non-U.S. Patent Rights have
either (a) executed an assignment to the Company or the other co-owner
or (b) are under an obligation to execute an assignment to the Company
or the other co-owner. To the best of such counsel's knowledge, there
are no claims to any ownership interests or liens on any of the Non-
U.S. Patent Rights by any party other than the Company or the other
co-owners.
(3) To the best of such counsel's knowledge, for each of the
United States patents and patent applications reflected on Schedule A
to such opinion, the Company has disclosed or intends to disclose to
the United States Patent and Trademark Office all information known
and believed to be material to patentability under the extant 37
C.F.R. (S)1.56.
(4) Such counsel has reviewed portions of certain patent estates,
as set forth in such opinion, and is unaware of any facts that would
lead it to believe that the Company lacks any patent rights or
licenses under such patent estates necessary to conduct the current or
prospective business of the Company as specified in the Registration
Statement and Prospectus.
(5) To the best of such counsel's knowledge, the Company has not
received any claim of infringement of any patents held by others, and
to the best of such counsel's knowledge, there is no pending or
threatened action, suit, proceeding or claim by others that the
Company is infringing a patent.
(6) To the best of such counsel's knowledge, there are no pending
or threatened legal or governmental proceedings relating to the U.S.
Patent Rights, other than proceedings before the United States Patent
and Trademark Office that are carried out during the course of
prosecution.
26
(f) ▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇ shall have furnished to the
Representatives a written opinion, as intellectual property counsel to the
Company, addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect that it
serves as intellectual property counsel to the Company with respect to the
Proprietary Rights, and that:
Such counsel has carefully read and analyzed the following portions of
the Registration Statement and Prospectus relating to composition and matter-
related patents or patent rights: the disclosure appearing under the caption
"Prospectus Summary -- Telik," under the caption "Risk Factors -- Our success is
dependent on intellectual property rights held by us and third parties and such
rights are difficult and costly to protect" and under the caption "Business --
Patents and Proprietary Information," (the "Patent Information"). Such counsel
has considered the statements contained in the Patent Information and, without
independent verification of the accuracy, completeness or fairness of such
statements, nothing has come to such counsel's attention, as of the date of the
Prospectus and the date of such opinion, that leads such counsel to believe that
the Patent Information contains an untrue statement of material fact or omits to
state a material fact necessary to make the statements therein not misleading,
in light of the circumstances in which they are made. As of the date of the
Prospectus and the date of such opinion, such counsel has no reason to believe
that the Patent Information is not in all material respects a fair and accurate
summary of the legal matters, documents and proceedings relating thereto.
(1) Attached as Schedule A to such opinion is a list of the
Company's U.S. patents and pending U.S. patent applications (the "U.S.
Patent Rights") which, to the best of such counsel's knowledge, are
either owned or co-owned by the Company, as indicated on such Schedule
A. Where the Company is listed on Schedule A to such opinion as the
owner or co-owner of any U.S. Patent Right, either (a) an assignment
from the inventors to the Company has been recorded or is being
recorded in the United States Patent and Trademark Office, or (b) an
assignment from the inventors to an intervening assignee and then to
27
the Company has been recorded or is being recorded in the United
States Patent and Trademark Office. To the best of such counsel's
knowledge, there are no claims to any ownership interests or liens on
any of the U.S. Patent Rights by any party other than the Company or
the other co-owners.
(2) Listed on Schedule A to such opinion is also a list of the
Company's non-U.S. patents and pending non-U.S. patent applications
(the "Non-U.S. Patent Rights") which, to the best of such counsel's
knowledge, are either owned or co-owned by the Company, as indicated
on such Schedule B. Where the Company is listed on Schedule A to such
opinion as the owner or co-owner of any Non-U.S. Patent Right, the
named inventors of the Non-U.S. Patent Rights have either (a) executed
an assignment to the Company or the other co-owner, or (b) are under
an obligation to execute an assignment to the Company or the other co-
owner. To the best of such counsel's knowledge, there are no claims to
any ownership interests or liens on any of the Non-U.S. Patent Rights
by any party other than the Company or the other co-owners.
(3) To the best of such counsel's knowledge, for each of the
United States patents and patent applications reflected on Schedule A
to such opinion, the Company has disclosed or intends to disclose to
the United States Patent and Trademark Office all information known
and believed to be material to patentability under the extant 37
C.F.R. (S)1.56.
(4) Such counsel has reviewed portions of certain patent estates,
as set forth in such opinion, and is unaware of any facts that would
lead it to believe that the Company lacks any patent rights or
licenses under such patent estates necessary to conduct the current or
prospective business of the Company as specified in the Registration
Statement and Prospectus.
(5) To the best of such counsel's knowledge, the Company has not
received any claim of infringement of any patents held by others, and
28
to the best of such counsel's knowledge, there is no pending or
threatened action, suit, proceeding or claim by others that the
Company is infringing a patent.
(6) To the best of such counsel's knowledge, there are no pending
or threatened legal or governmental proceedings relating to the U.S.
Patent Rights, other than proceedings before the United States Patent
and Trademark Office that are carried out during the course of
prosecution.
(g) [▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇] shall have furnished to the Representatives a
written opinion, as special regulatory counsel to the Company, addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that it serves as special
regulatory counsel to the Company, and that:
such counsel has carefully read and analyzed the disclosure in the
Registration Statement and the Prospectus appearing under the captions "Risk
Factors - Because regulatory approval must be obtained to market products in the
United States and foreign countries, we cannot predict whether or when we, or
our collaborators, will be permitted to commercialize our product candidates"
and "Business - Regulatory Considerations" (the "Regulatory Information"). Such
counsel has considered the statements contained in the Regulatory Information
and, without independent verification of the accuracy, completeness or fairness
of such statements, nothing has come to such counsel's attention, as of the date
of the Prospectus and the date of such opinion, that leads such counsel to
believe that the Regulatory Information contains an untrue statement of material
fact or omits to state a material fact necessary to make the statements therein
not misleading, in light of the circumstances in which they were made. As of
the date of the Prospectus and the date of such opinion, such counsel has no
reason to believe that the Regulatory Information is not in all material
respects a fair and accurate summary of the legal matters, documents and
proceedings relating thereto.
(h) The Representatives shall have received from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
counsel for the Underwriters, such opinion or opinions, dated such Delivery
Date,
29
with respect to the issuance and sale of the Stock, the Registration
Statement, the Prospectus and other related matters as the Representatives
may reasonably require, and the Company shall have furnished to such
counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(i) At the time of execution of this Agreement, the Representatives
shall have received from Ernst & Young LLP a letter, in form and substance
reasonably satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act and
are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, and (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as of a
date not more than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to
Underwriters in connection with registered public offerings.
(j) With respect to the letter of Ernst & Young LLP referred to in
the preceding paragraph and delivered to the Representatives concurrently
with the execution of this Agreement (the "initial letter"), the Company
shall have furnished to the Representatives a letter (the "bring-down
letter") of such accountants, addressed to the Underwriters and dated such
Delivery Date (i) confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
of the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five
days prior to the date of the bring-down letter),
30
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set forth
in the initial letter.
(k) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery Date; the
Company has complied with all its agreements contained herein; and the
conditions set forth in Sections 8(a) and 8(l) have been fulfilled; and
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (B) since the Effective Date no event has
occurred which should have been set forth in a supplement or amendment
to the Registration Statement or the Prospectus.
(l) The Company shall not have sustained since the date of the latest
audited financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus or (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the Company
or any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity, results of operations or business of the Company,
otherwise than as set forth or contemplated in the Prospectus, the effect
of which, in any such case described in clause
31
(i) or (ii), is, in the judgment of the Representatives, so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or on
NASDAQ shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction,(ii) a banking moratorium shall have been declared by Federal
or state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment
of a majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the Stock
being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(n) NASDAQ shall have approved the Stock for listing, subject only to
official notice of issuance and evidence of satisfactory distribution.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to the Representatives.
9. Indemnification and Contribution.
--------------------------------
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers and employees and each person, if any, who controls any
Underwriter within
32
the meaning of the Securities Act, from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof(including,
but not limited to, any loss, claim, damage, liability or action relating
to purchases and sales of Stock), to which that Underwriter, officer,
employee or controlling person may become subject, under the Securities Act
or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any material or information provided to
investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Stock ("Marketing Materials"), including
any roadshow or investor presentations made to investors by the Company
(whether in person or electronically), (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or in any amendment or supplement thereto, or in any
Blue Sky Application or in any Marketing Materials, any material fact
required to be stated therein or necessary to make the statements therein
not misleading or (iii) 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 Stock 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 matters covered by clause (i) or (ii)
above (provided that the Company shall not be liable under this clause
(iii) to the extent that it is determined in a final judgment by a court of
competent jurisdiction 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 gross negligence or
willful misconduct), and shall reimburse each Underwriter and each such
officer, employee or controlling person promptly upon demand for any legal
or other expenses reasonably incurred by that Underwriter, officer,
employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim,
33
damage, liability or action as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out
of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any such amendment or
supplement, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for
inclusion therein, which information consists solely of the information
specified in Section 9(f). The foregoing indemnity agreement is in addition
to any liability which the Company may otherwise have to any Underwriter or
to any officer, employee or controlling person of that Underwriter.
(b) The Company shall not be liable in any case arising under Section
9(a), with respect to any Preliminary Prospectus if it shall prove by
clear and convincing evidence that, at or prior to written confirmation of
the sale of the Stock, a copy of the Prospectus (or the Prospectus as
amended or supplemented) was not sent or delivered to such person making
the claim, the untrue statement or omission or alleged untrue statement or
omission in the Preliminary Prospectus was corrected in the Prospectus (or
the Prospectus as amended or supplemented), and the failure was not the
result of noncompliance by the Company with Section 6(c) hereof.
(c) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, the Company's directors, officers and employees,
and each person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company or
any such director, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon,(i) any
untrue statement or alleged untrue statement of a material fact contained
(A) in any Preliminary Prospectus, the Registration Statement or
34
the Prospectus or in any amendment or supplement thereto, or (B) in any
Blue Sky Application or (ii)the omission or alleged omission to state in
any Preliminary Prospectus, the Registration Statement or the Prospectus,
or in any amendment or supplement thereto, or in any Blue Sky Application
any material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company through
the Representatives by or on behalf of that Underwriter specifically for
inclusion therein, and shall reimburse the Company and any such director,
officer, employee or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer, employee
or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred. The foregoing indemnity agreement is
in addition to any liability which any Underwriter may otherwise have to
the Company or any such director, officer, employee or controlling person
under applicable law.
(d) Promptly after receipt by an indemnified party under this Section 9
of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from
any liability which it may have under this Section 9 except to the extent
it has been materially prejudiced by such failure and, provided further,
that the failure to notify the indemnifying party shall not relieve it from
any liability which it may have to an indemnified party otherwise than
under this Section 9. If any such claim or action shall be brought against
an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying
35
party to the indemnified party of its election to assume the defense of
such claim or action, the indemnifying party shall not be liable to the
indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that the Representatives shall have the right to employ counsel to
represent jointly the Representatives and those other Underwriters and
their respective officers, employees and controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity
may be sought by the Underwriters against the Company under this Section 9
if, in the reasonable judgment of the Representatives, it is advisable for
the Representatives and those Underwriters, officers, employees and
controlling persons to be jointly represented by separate counsel, and in
that event the fees and expenses of such separate counsel shall be paid by
the Company. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled
with the consent of the indemnifying party or if there be a final judgment
for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss
or liability by reason of such settlement or judgment.
36
(e) If the indemnification provided for in this Section 9 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 9(a) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be 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 Stock or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and the Underwriters on the other with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action 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 with respect to such
offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company, on the one hand, and
the total underwriting discounts and commissions received by the
Underwriters with respect to the shares of the Stock purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the
offering of the shares of the Stock under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative 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 9(e) were to
be determined by pro rata allocation (even if the
37
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 9(e) shall be
deemed to include, for purposes of this Section 9(e), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9(e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Stock underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 9(e)
are several in proportion to their respective underwriting obligations and
not joint.
(f) The Underwriters severally confirm and the Company acknowledges that
the statements with respect to the public offering of the Stock by the
Underwriters set forth on the cover page of, and the concession and
reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and
the Prospectus.
38
10. Defaulting Underwriters. If, on either Delivery Date, any Underwriter
-----------------------
defaults in the performance of its obligations under this Agreement, the
remaining non-defaulting Underwriters shall be obligated to purchase the Stock
which the defaulting Underwriter agreed but failed to purchase on such Delivery
Date in the respective proportions which the number of shares of the Firm Stock
set forth opposite the name of each remaining non-defaulting Underwriter in
Schedule 1 hereto bears to the total number of shares of the Firm Stock set
forth opposite the names of all the remaining non-defaulting Underwriters in
Schedule 1 hereto; provided, however, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Stock on such
Delivery Date if the total number of shares of the Stock which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such date exceeds
9.09% of the total number of shares of the Stock to be purchased on such
Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock which
it agreed to purchase on such Delivery Date pursuant to the terms of Section 2.
If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the remaining Underwriters or other Underwriters
satisfactory to the Representatives do not elect to purchase the shares which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any non-
defaulting Underwriter or the Company, except that the Company will continue to
be liable for the payment of expenses to the extent set forth in Sections 7 and
12. As used in this Agreement, the term "Underwriter" includes, for all purposes
of this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 10, purchases Firm Stock which a
defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for
39
damages caused by its default. If other Underwriters are obligated or agree to
purchase the Stock of a defaulting or withdrawing Underwriter, either the
Representatives or the Company may postpone the Delivery Date for up to seven
full business days in order to effect any changes that in the opinion of counsel
for the Company or counsel for the Underwriters may be necessary in the
Registration Statement, the Prospectus or in any other document or arrangement.
11. Termination. The obligations of the Underwriters hereunder may be
-----------
terminated by the Representatives by notice given to and received by the Company
prior to delivery of and payment for the Firm Stock if, prior to that time, any
of the events described in Sections 8(l) or 8(m) shall have occurred or if the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
12. Reimbursement of Underwriters' Expenses. If the Company shall fail to
---------------------------------------
tender the Stock for delivery to the Underwriters by reason of any failure,
refusal or inability on the part of the Company to perform any agreement on its
part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is not fulfilled,
the Company will reimburse the Underwriters for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) incurred by the
Underwriters in connection with this Agreement and the proposed purchase of the
Stock, and upon demand the Company shall pay the full amount thereof to the
Representative(s). If this Agreement is terminated pursuant to Section 10 by
reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
13. Notices, etc. All statements, requests, notices and agreements
------------
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., Three World Financial
Center, New York, New York 10285, Attention: Syndicate Department (Fax:
▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the case of any notice pursuant to Section
10(f), to the Director of Litigation, Office of the General Counsel,
40
▇▇▇▇▇▇ Brothers Inc., Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇; or
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention:
14. Persons Entitled to Benefit of Agreement. This Agreement shall inure to
----------------------------------------
the benefit of and be binding upon the Underwriters, the Company and their
respective personal representatives and successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of
the Company contained in this Agreement shall also be deemed to be for the
benefit of the person or persons, if any, who control any Underwriter within the
meaning of Section 15 of the Securities Act and (B) the indemnity agreement of
the Underwriters contained in Section 9(c) of this Agreement shall be deemed to
be for the benefit of directors of the Company, officers of the Company who have
signed the Registration statement, employees of the Company and any person
controlling the Company within the meaning of Section 15 of the Securities Act.
Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 14, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
15. Survival. The respective indemnities, representations, warranties and
--------
agreements of the Company and the Underwriters contained in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Stock and shall remain in full force
and effect, regardless of any investigation made by or on behalf of any of them
or any person controlling any of them.
16. Definition of the terms "Business Day" and "Subsidiary." For purposes of
------------------------------------------------------
this Agreement, (a) "business day" means each Monday, Tuesday, Wednesday,
Thursday or Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close and (b)
"subsidiary" has the meaning set forth in Rule 405 of the Rules and Regulations.
41
17. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of New York.
18. Counterparts. This Agreement may be executed in one or more counterparts
------------
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.
19. Headings. The headings herein are inserted for convenience of reference
--------
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
42
If the foregoing correctly sets forth the agreement between the Company and the
Underwriters, please indicate your acceptance in the space provided that purpose
below.
Very truly yours,
Telik, Inc.
By
________________________________
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
CHASE SECURITIES INC.
UBS WARBURG LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By ▇▇▇▇▇▇ BROTHERS INC.
By
__________________________________
Authorized Representative
43
SCHEDULE 1
Number of
Shares of
Underwriters Firm Stock
------------ ---------
▇▇▇▇▇▇ Brothers Inc.
Chase Securities Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
UBS Warburg LLC
Total
*
===========
44