1
2,000,000 SHARES
IDEC PHARMACEUTICALS CORPORATION
COMMON STOCK, $.001 PAR VALUE
UNDERWRITING AGREEMENT
2
March __, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
IDEC Pharmaceuticals Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters"), an aggregate of 2,000,000 shares of the Common
Stock, $.001 par value per share of the Company (the "Firm Shares").
The Company also proposes to issue and sell to the several Underwriters not
more than an additional 300,000 shares of its Common Stock, $.001 par value (the
"Additional Shares") if and to the extent that you, as Managers of the offering,
shall have determined to exercise, on behalf of the Underwriters, the right to
purchase such shares of common stock granted to the Underwriters in Section 2
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "Shares." The shares of Common Stock, $.001 par value, of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the "Common Stock." The Company is successor by
merger to IDEC Pharmaceuticals Corporation, a California corporation (the
"Predecessor"), as a result of a reincorporation transaction that became
effective on June 2, 1997 (the "Reincorporation"). For the purposes of Section 1
hereof, all references to "Company" shall also refer to the Predecessor prior to
the Reincorporation.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "Prospectus."
If the Company files an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "Rule 462 Registration Statement"), then any reference herein to the
term "Registration Statement" shall be deemed to include such Rule 462
Registration Statement, in each case as amended from time to time. Any reference
herein to any Preliminary Prospectus or the Registration Statement shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Form S-3 under the Securities Act, as of the date of such
Preliminary Prospectus, Prospectus or Registration Statement, as the case may
be.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to and agrees with each of the Underwriters that:
3
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the Company's best
knowledge, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this Section l(b) do
not apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and, except to the extent
that the failure to be so qualified or to be in good standing would not have a
material adverse effect on the Company and its subsidiary, IDEC Seiyaku, a
Japanese corporation (the "Subsidiary"), taken as a whole is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification.
(d) The Subsidiary has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or to be
in good standing would not have a material adverse effect on the Company and the
Subsidiary, taken as a whole. All of the issued shares of capital stock of the
Subsidiary have been duly and validly authorized and issued, are fully paid and
non-assessable, and are beneficially owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims.
(e) Neither the Company nor the Subsidiary owns any real properties.
The Company and the Subsidiary have good and marketable title to all personal
property owned by them which is material to their business, taken as a whole, in
each case 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 interfere with the use made and proposed to be made of
such property by the Company and the Subsidiary; and any real property and
2
4
building held under lease by the Company and the Subsidiary 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
real property and buildings by the Company and the Subsidiary in each case
except as described in or contemplated by the Prospectus.
(f) This Agreement has been duly authorized, executed and delivered by
the Company.
(g) The shares of Common Stock outstanding prior to the issuances of
the Shares to be sold by the Company have been duly authorized and are validly
issued, fully paid and non-assessable. Except as set forth in the Prospectus and
other than options to purchase __________ shares of the Company's Common Stock
granted to employees after _______ __, 199_ pursuant to the Company's 1988
Employee Stock Option Plan or the 1993 Non-Employee Directors Stock Option Plan
each as described in the Prospectus, neither the Company nor the Subsidiary has
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. All outstanding
shares of capital stock and options and other rights to acquire capital stock
have been issued in compliance with the registration and qualification
provisions of all applicable securities laws and were not issued in violation of
any preemptive rights, rights of first refusal and other similar rights.
(h) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(i) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(j) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene any
provision of applicable law or the certificate of incorporation or by-laws of
the Company or any agreement or other instrument binding upon the Company or the
Subsidiary that is material to the Company and the Subsidiary, taken as a whole,
or any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or the Subsidiary, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Shares.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and the Subsidiary, taken as a whole, from that set forth in the
Prospectus.
3
5
(l) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company and the
Subsidiary have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business; (ii) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends except
certain net purchases of options issued and shares issued on exercise of options
under the Company's stock option plans in accordance with the terms of such
option plans; and (iii) there has not been any material change in the capital
stock, short-term debt or long-term debt of the Company and its consolidated
subsidiaries, except in each case as described in or contemplated by the
Prospectus.
(m) There are no legal or governmental proceedings pending or
threatened to which the Company or the Subsidiary is a party or to which any of
the properties of the Company or the Subsidiary is subject that are required to
be described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not described or
filed as required.
(n) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 or Rule 462 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder.
(o) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(p) There is no owner of any securities of the Company who has any
right, not effectively satisfied or waived, to require registration of any
shares of capital stock of the Company in connection with the filing of the
Registration Statement or the sale of any shares thereunder.
(q) The Company and the Subsidiary (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect on the
Company and the Subsidiary, taken as a whole.
(r) The Company has conducted a limited review of the effect of
Environmental Laws on the business, operations and properties of the Company and
the
4
6
Subsidiary. On the basis of such review, the Company has reasonably concluded
that any costs and liabilities required for clean-up, closure of properties or
compliance with Environmental Laws would not, singly or in the aggregate, have a
material adverse effect on the Company and the Subsidiary, taken as a whole.
(s) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such securities
with the Shares registered pursuant to the Registration Statement.
(t) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or with
any person or affiliate located in Cuba.
(u) The Company and the Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor the Subsidiary has been refused any material
insurance coverage sought or applied for; and neither the Company nor the
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and the Subsidiary, taken as a whole, except as described in or contemplated by
the Prospectus.
(v) Except as specifically disclosed in the Prospectus, (i) the
Company and the Subsidiary own or possess adequate licenses or other rights to
use all patents, copyrights, trademarks, service marks, trade names, technology
and know-how necessary to conduct their respective businesses in the manner
described in the Prospectus, (ii) neither the Company nor the Subsidiary has
received any notice of infringement or conflict with asserted rights of others
with respect to any patents, copyrights, trademarks, service marks, trade names,
technology or know-how that could reasonably be expected to result in any
material adverse effect upon the Company and the Subsidiary, taken as a whole,
and (iii) the discoveries, inventions, products or processes of the Company and
the Subsidiary referred to in the Prospectus do not, to the best knowledge of
the Company, infringe or conflict with any right or patent of any third party,
or any discovery, invention, product or process that could reasonably be
expected to have a material adverse effect on the Company and the Subsidiary,
taken as a whole.
(w) The Company and the Subsidiary possess all consents, approvals,
orders, certificates, authorizations and permits issued by, and has made all
declarations and filings with, all appropriate federal, state or foreign
governmental and self-regulatory authorities and all courts and other tribunals
necessary to conduct their respective businesses and to own, lease, license and
use their properties in the manner described in the Prospectus, except to the
extent that the failure to obtain or file would not have a material adverse
effect on the Company
5
7
and the Subsidiary, taken as a whole, and neither the Company nor the Subsidiary
has received any notice of proceedings related to the revocation or modification
of any such consent, approval, order, certificate, authorization or permit that,
singly or in the aggregate, could reasonably be expected to result in a material
adverse change in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and the Subsidiary, taken as a whole.
(x) __________ and __________ outstanding shares of the Common Stock
and securities convertible into or exercisable or exchangeable for Common Stock,
respectively, are subject to valid, binding and enforceable agreements
(collectively, the "Lock-Up Agreements") that restrict the holders thereof from
selling, making any short sale of, granting any option for the purchase of, or
otherwise transferring or disposing of, any of such shares of Common Stock, or
any such securities convertible or exercisable or exchangeable for Common Stock,
for a period of 90 days, respectively, after the date of the Prospectus without
the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
(y) As of the date the Registration Statement became effective, the
Common Stock was authorized for quotation on The Nasdaq National Market upon
official notice of issuance.
(z) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares.
(aa) The Company does not own any equity or capital interests in any
corporation, partnership, joint venture, association or other entity, other than
the Subsidiary.
(bb) The Agreement and Plan of Merger (the "Plan of Merger") by and
between the Company and the Predecessor has been duly authorized by all
necessary Board of Directors and stockholder action on part of the Company and
the Predecessor and has been duly executed and delivered by each of the parties
thereto.
(cc) The execution and delivery of the Plan of Merger and the
consummation of the merger contemplated thereby do not contravene any provision
of applicable law or the certificate of incorporation or bylaws of the Company
or the articles of incorporation or bylaws of the Predecessor or any judgment or
decree of any governmental body, agency or court having jurisdiction over the
Predecessor or the Subsidiary, and no consent, approval, authorization or order
of or qualification with any governmental body or agency is required for the
performance by the Company and the Predecessor of their respective obligations
under the Plan of Merger except such as have been obtained or are not material
to the Company; the consummation of the Reincorporation does not contravene, or
result in any breach of, or constitute a default under (or constitute any event
which with notice, lapse of time or both would constitute a breach of or default
under), any provision of any agreement or other instrument binding upon the
Company or the Subsidiary and identified by the Company as material (the
"Material Agreements").
6
8
(dd) The merger contemplated by the Plan of Merger is effective under
the laws of the State of California and the State of Delaware; the Company has
succeeded to all of the rights, privileges, powers and franchises, and is
subject to all of the restrictions, disabilities and duties, of the Predecessor
as provided under Section 259 of the Delaware General Corporation Law; to the
knowledge of such counsel, the Company has succeeded to all of the rights of the
Predecessor with respect to each Material Agreement of the Predecessor, and all
required material consents to the merger and assignments with respect to such
Material Agreements have been obtained; all of the shares of capital stock of
the Company have the same rights, preferences and privileges (except for
differences resulting from applicable law) as described in the Prospectus; all
of the outstanding options of the Predecessor outstanding as of the date set
forth in the Prospectus are outstanding for that number of shares of Common
Stock of the Company as described in the Prospectus, other than options which
have terminated or expired by their terms and not as a result of the
Reincorporation; the issuance of capital stock by the Company in the
Reincorporation was in compliance with all applicable registration and
qualification provisions of state securities or blue sky laws as are identified
therein and was exempt from registration under the Securities Act.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell to
the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company at $_____ a share (the "Purchase Price") the number of Firm Shares set
forth in Schedule I hereto opposite the name of such Underwriter.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, up to 300,000 Additional
Shares at the Purchase Price. If you, on behalf of the Underwriters, elect to
exercise such option, you shall so notify the Company in writing not later than
30 days after the date of this Agreement, which notice shall specify the number
of Additional Shares to be purchased by the Underwriters and the date on which
such shares are to be purchased. Such date may be the same as the Closing Date
(as defined below) but not earlier than the Closing Date nor later than ten
business days after the date of such notice. Additional Shares may be purchased
as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 90 days after the date of the Prospectus, (i) offer, pledge,
lend, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase,
or otherwise transfer or dispose of, directly or indirectly, any shares of
7
9
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, the economic consequences of ownership of the
Common Stock, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise, other than (a) the Shares to be offered hereunder, (b) any shares
of Common Stock sold or issued upon exercise of an option or warrant or the
conversion of a security outstanding on the date hereof described in the
Prospectus or of which the Underwriters have been advised in writing, (c) shares
of Common Stock to be registered pursuant to a Registration Statement on Form
S-8, or (d) the grant of options pursuant to the Company's 1988 Employee Stock
Option Plan or the 1993 Non-Employee Directors Stock Option Plan as to shares
reserved for issuance under such plans as of the Closing, including any shares
subject to outstanding options which become available for future grant under
such plans upon termination of previously issued options. The foregoing sentence
shall not apply to the Shares to be sold hereunder.
3. TERMS OF PUBLIC OFFERING. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
$_____ a share (the "Public Offering Price") and to certain dealers selected by
you at a price that represents a concession not in excess of $_____ a share
under the Public Offering Price, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of $_____ a share, to any
Underwriter or to certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by the
Company shall be made to the Company in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 A.M., New York City
time, on _______ __, 1998, or at such other time on the same or such other date,
not later than _______ __, 1998, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "Closing Date."
Payment for any Additional Shares shall be made to the Company in Federal
or other funds immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several Underwriters at
10:00 A.M., New York City time, on the date specified in the notice described in
Section 2 or on such other date, in any event not later than _______ __, 1998,
as shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
8
10
5. CONDITIONS TO THE UNDERWRITER' OBLIGATIONS. The obligations of the
Company to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 4:30 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any review
for a possible change that does not indicate the direction of the possible
change, in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise, or in
the earnings, business or operations of the Company and the Subsidiary, taken as
a whole, from that set forth in the Prospectus that, in your judgment, is
material and adverse and that makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in clause (a)(i) above and to the effect that
the representations and warranties of the Company contained in this Agreement
are true and correct as of the Closing Date and that the Company has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, outside counsel for the Company,
dated the Closing Date, 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, with full corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement and
Prospectus;
(ii) other than the Subsidiary, the Company has no subsidiaries;
9
11
(iii) the authorized capital stock of the Company conforms as to
legal matters in all material respects to the description thereof contained in
the Registration Statement and Prospectus;
(iv) the outstanding shares of capital stock of the Company have
been duly and validly authorized and issued, and are not subject to any
preemptive or similar rights;
(v) the shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms of this
agreement, will be duly and validly authorized and issued, fully paid and
nonassessable, and will not be subject to any preemptive or similar rights;
(vi) to the best of such counsel's knowledge, after due inquiry,
no holders of securities of the Company have rights against the Company which
have not been waived to the registration of shares of Common Stock or other
securities because of the filing of the Registration Statement by the Company or
the offering contemplated thereby;
(vii) this agreement has been duly authorized, executed and
delivered by the Company;
(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under this agreement will not
contravene any provision of applicable law or the certificate of incorporation
or bylaws of the Company or the Subsidiary, or, to the best of such counsel's
knowledge, any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any of its property or the
Subsidiary or any of its property, or, to the best of such counsel's knowledge,
constitute a breach or default under any Material Agreement, and no consent,
approval, authorization or order of or qualification with any governmental body
or agency is required for the performance by the Company of its obligations
under this agreement, except such as may be required by the securities or blue
sky laws of the various states (on which such counsel expresses no opinion) in
connection with the purchase and distribution of the shares by the Underwriters;
(ix) the statements (a) in the Prospectus under the captions
"Description of Capital Stock" and "Business -- Strategic Alliances" and (b) in
the Registration Statement in Item 15, in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters referred to
therein;
(x) such counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company or the Subsidiary is or
may become a party or to which any of the properties of the Company or any of
the properties of the Subsidiary is or may become subject that is required to be
described in the Registration Statement or the Prospectus and is not so
described, or of any statute, regulation, contract or other document that
10
12
is required to be described in the Registration Statement or the Prospectus or
to be filed as an exhibit to the Registration Statement that is not described or
filed as required; and
(xi) the Registration Statement has become effective under the
Securities Act, and no stop order proceedings suspending the effectiveness of
the Registration Statement have been instituted or threatened or are pending
under the Securities Act and any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the Securities Act has been
made in the manner and within the time period required by such Rule 424(b).
In addition to rendering legal advice and assistance to the Company in the
course of the preparation of the Registration Statement and the Prospectus,
involving, among other things, discussions and inquiries concerning various
legal matters and the review of certain corporate records, documents and
proceedings such counsel also participated in conferences with certain officers
and other representatives of the Company, including its independent public
accountants and with the Underwriters and their counsel at which the contents of
the Registration Statement, the Prospectus (but not including the incorporated
documents) and related matters were discussed and have generally reviewed and
discussed with such persons the content of the incorporated documents. Such
counsel has not, however, except with respect to matters expressly covered by
this opinion, independently checked or verified the accuracy, completeness or
fairness of the information contained in the Registration Statement, the
Prospectus and the incorporated documents.
In addition to the matters set forth above, counsel rendering the foregoing
opinion shall also include a statement to the effect that nothing has come to
the attention of such counsel that causes it to believe that (i) each of the
incorporated documents (except for financial statements) complied as to form
when filed with the Commission in all material respects with the requirements of
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as applicable, and the rules and regulations of the Commission
thereunder; (ii) the Registration Statement and the Prospectus (except for the
financial statements), as of the effective date of the Registration Statement,
complied as to form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations of the Commission
thereunder; and (iii) neither the Registration Statement nor the Prospectus
(except for the financial statements), as of such effective date, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or that (except for the financial statements) the Prospectus, as of the Closing
Date, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) You shall have received on the Closing Date the opinion of Burns,
Doane, Sweeker & ▇▇▇▇▇▇, intellectual property counsel for the Company, dated
the Closing Date, to the effect that:
11
13
(i) to the best of such counsel's knowledge, such counsel is not
aware of any legal actions, claims or proceedings pending or threatened against
the Company alleging that the Company is infringing or otherwise violating any
patents or trade secrets owned by others and to the best of such counsel's
knowledge, the Company has not received any communication in which it is alleged
that the Company is infringing or violating the patent rights of third parties;
(ii) the portions of the Registration Statement entitled "Risk
Factors -- Patents and Proprietary Rights" and "Business -- Patents and
Proprietary Rights" (collectively, the "Intellectual Property Portion") contain
accurate and complete descriptions of the Company's patent applications, issued
and allowed patents, and patents licensed to the Company and fairly summarized
the legal matters, documents and proceedings relating thereto;
(iii) to the best of such counsel's knowledge, at least ____
United States patent has issued to the Company, and that the Company is the
Assignee of record, and that the patent is being maintained by the Company;
(iv) to the best of such counsel's knowledge, at least ____
additional U.S. patent applications have been filed by the Company in the U.S.
Patent and Trademark Office; that those pending patent applications have been
properly prepared as to form and have been assigned to the Company which
Assignments are either recorded in the U.S. Patent and Trademark Office or have
been submitted for recording in the U.S. Patent and Trademark Office; and that
each of these patent applications is being pursued by the Company;
(v) with respect to patent applications that have assignments to
the Company and other entities, the Company has obtained appropriate licenses
from such other entities;
(vi) to the best of such counsel's knowledge, ____ foreign
counterpart patent applications have been filed on behalf of the Company;
(vii) to the extent that the Intellectual Property Portion
contains descriptions which constitute matters of law or legal conclusions,
these descriptions are correct in all material respects and fairly present the
patent situation of the Company;
(viii) to the best of such counsel's knowledge, there are no
legal or governmental proceedings other than patent applications pending,
relating to patent rights of the Company to which the Company is a party and, to
such counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or others;
(ix) although such counsel has not conducted all necessary
freedom of operation opinions, to the best of such counsel's knowledge, all
patents held by third parties, of which such counsel is aware, that could
prevent the Company from manufacturing and selling, in the United States and
abroad, the compositions and methods claimed in the patent applications
described in an exhibit to such counsel's opinion, have been disclosed by such
counsel in the Registration Statement or the Prospectus;
12
14
(x) in addition, although such counsel has not independently
verified the accuracy, completeness or fairness of the statements contained in
the Registration Statement or the Prospectus (except that such counsel has
independently verified the accuracy of the matters contained in subsections
(iii), (iv) and (vi) of this paragraph (d)), nothing has come to such counsel's
attention that leads such counsel to believe that the statements in the
Intellectual Property Portion in (a) the Registration Statement, at the time it
became effective or at the Closing Date, contained or contain an untrue
statement of a material fact or omit or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading as to intellectual property matters, or (b) the Prospectus, as of the
date of the Prospectus or at the Closing Date, contained or contain an untrue
statement of a material fact or omitted or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading as to
intellectual property matters (it being understood that such counsel has not
participated in the negotiation of or reviewed the Company's license agreements
and such counsel has not undertaken any independent investigation as to whether
the Company is infringing any patents or other rights of others or whether the
Company owns or possesses sufficient licenses or other rights to use all patents
or other rights necessary for the conduct of the Company's business).
(e) you shall have received on the Closing Date an opinion of Buc &
▇▇▇▇▇▇▇▇▇, regulatory affairs counsel for the Company, dated the Closing Date,
to the effect that:
(i) the statements in the Prospectus under the captions "Risk
Factors -- Lengthy Regulatory Process; No Assurance of Additional Regulatory
Approvals" and "Business -- Government Regulation," and footnote one to the
table under "Business -- Products and Products Under Development" (the
"Regulatory Portion") insofar as they refer to statements summarizing applicable
provisions of the Federal Food, Drug, and Cosmetic Act (FDCA), as amended Public
Health Service Act (PHSA), and implementing regulations are correct in all
material respects.
(ii) in addition, although such counsel has made no independent
inquiry, nothing has come to such counsel's attention that would lead such
counsel to believe that the statements in the Regulatory Portion of (a) the
Registration Statement, at the time it became effective or at the Closing Date,
contained or contain an untrue statement of a material fact or omit or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (b) the Prospectus, as of the date of the
Prospectus or at the Closing Date, contained or contain an untrue statement of a
material fact or omitted or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(f) You shall have received on the Closing Date an opinion of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel for the
Underwriters, dated the Closing Date, covering the matters referred to in
subparagraphs (v), (vii), (ix) (but only as to the statements in the Prospectus
under "Description of Capital Stock" and "Underwriters"), and the second
paragraph following the enumerated opinions in paragraph (c)
13
15
above (but only as to subparagraphs (ii) and (iii) of the second paragraph
following the enumerated opinions in paragraph (c) above).
With respect to the second paragraph following the enumerated opinions in
paragraph (c) above and paragraph (f) above, ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP may state that
their opinion and belief are based upon their participation in the preparation
of the Registration Statement and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, but are without
independent check or verification, except as specified.
The opinions of Burns, Doane, Sweeker & ▇▇▇▇▇▇ and Buc & ▇▇▇▇▇▇▇▇▇
described in paragraphs (d) and (e) above shall be rendered to the Underwriters
at the request of the Company and shall so state therein.
(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from KPMG
Peat Marwick LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus; provided
that the letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and directors
of the Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the Option Closing Date of such
documents as you may reasonably request with respect to the good standing of the
Company, the due authorization and issuance of the Additional Shares and other
matters related to the issuance of the Additional Shares.
6. COVENANTS OF THE COMPANY. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To furnish to you, without charge, three (3) signed copies (in
original or by facsimile) of the Registration Statement (including exhibits
thereto) and for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to you in New
York City, without charge, prior to 3:00 P.M. New York City time on the business
day next succeeding the date of this Agreement and during the period mentioned
in paragraph (c) below, as many copies of the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
14
16
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to which
you reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus required
to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public offering
of the Shares as in the reasonable opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers (whose names
and addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon request,
either amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the twelve-month
period ending _______ __, 199_ that satisfies the provisions of Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's counsel and
the Company's accountants in connection with the registration and delivery of
the Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 6(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum,
15
17
(iv) all filing fees and disbursements of counsel to the Underwriters incurred
in connection with the review and qualification of the offering of the Shares by
the National Association of Securities Dealers, Inc., (v) all costs and expenses
incident to listing the Shares on Nasdaq National Market, (vi) the cost of
printing certificates representing the Shares, (vii) the costs and charges of
any transfer agent, registrar or depositary, (viii) the costs and expenses of
the Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Shares, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, and (ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise made
in this Section. It is understood, however, that except as provided in this
Section, Section 7 entitled "Indemnity and Contribution", and the last paragraph
of Section 9 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes payable
on resale of any of the Shares by them and any advertising expenses connected
with any offers they may make.
(g) To not release any shares of Common Stock from any restrictions
imposed upon such shares by the Lock-Up Agreements without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
7. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred by any
Underwriter or any such controlling person in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein; provided, however, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter, or any person controlling such Underwriter, from
whom that person asserting any such losses, claims, damages or liabilities
purchased Shares, if a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
16
18
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who sign the Registration Statement and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to paragraph (a) or (b) of this Section 7, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for (i) all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and (ii) the Company, its
directors, its officers who sign the Registration Statement and each person, if
any, who controls the Company within the meaning of either such Section and that
all such fees and expenses shall be reimbursed as they are incurred. In the case
of any such separate firm for the Underwriters and such control persons of the
Underwriters, such firm shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. The indemnifying party shall not be liable
for any
17
19
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 7 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
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 indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other hand in connection with the
offering of the Shares shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Shares (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Shares. The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation
18
20
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) of this Section 7. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
8. TERMINATION. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a) (i) through (iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
9. EFFECTIVENESS: DEFAULTING UNDERWRITERS. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth
19
21
of the aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 9 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter.
If, on the Closing Date, any Underwriter or Underwriters shall fail or
refuse to purchase Firm Shares and the aggregate number of Firm Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Firm Shares to be purchased, and arrangements satisfactory to you and
the Company for the purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter or the Company. In any such case you shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase Additional Shares or (ii) purchase not less
than the number of Additional Shares that such non-defaulting Underwriters would
have been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
10. COUNTERPARTS. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
20
22
12. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
IDEC PHARMACEUTICALS CORPORATION
By:
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman, CEO and President
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.
Acting severally on behalf
of themselves and the
several underwriters named
in Schedule I hereto.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated
By:
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
23
SCHEDULE I
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated..........................................
Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC......................................
---------------
Total Firm Shares 2,000,000
===============
S-1
24
EXHIBIT A
IDEC PHARMACEUTICALS CORPORATION
LOCK-UP LETTER
February __, 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Nationsbanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that you, as representatives (the
"Representatives") of the several underwriters (the "Underwriters"), propose to
enter into an Underwriting Agreement with IDEC Pharmaceuticals Corporation (the
"Company") providing for the public offering (the "Public Offering") by the
several Underwriters, including yourselves, of common stock of the Company (the
"Common Stock").
To induce the Underwriters that may participate in the Public Offering
of the Company's Common Stock to continue their efforts in connection with the
Public Offering, the undersigned hereby agrees that, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Underwriters, it
will not, during the period ending ninety (90) days after the date of the
Prospectus, (1) offer, pledge, lend, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to the sale of any shares to the Underwriters pursuant to the
Underwriting Agreement. In addition, the undersigned agrees that, without the
prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the
Underwriters, it will not, during the period ending ninety (90) days after the
date of the final Prospectus for the Public Offering, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
The undersigned confirms that the agreements of the undersigned are
irrevocable and shall be binding upon the undersigned's legal representatives
successors and assigns. The
E-1
25
undersigned agrees and consents to the entry of stop transfer instructions with
the Company's transfer agent against the transfer of securities of the Company
held by the undersigned except in compliance with the terms and condition of
this Agreement.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
agreement between the Company and the Underwriters.
Very truly yours,
-----------------------------------
(Signature)
-----------------------------------
(Print Name)
Address:
-----------------------------------
-----------------------------------
E-2