UNDERWRITING AGREEMENT
February __, 2000
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Pacific Growth Equities, Inc.
As Representatives of the Several Underwriters
c/o FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
INTRODUCTORY. Abgenix, Inc., a Delaware corporation (the "Company),
proposes to issue and sell to the several underwriters named in SCHEDULE A (the
"Underwriters") an aggregate of 1,800,000 shares of its Common Stock, par value
$0.0001 per share ("Common Shares"); and Cell Genesys, Inc., a stockholder of
the Company (the "Selling Stockholder"), proposes to sell to the Underwriters an
aggregate of 700,000 Common Shares. The 1,800,000 Common Shares to be sold by
the Company and the 700,000 Common Shares to be sold by the Selling Stockholder
are collectively called the "Firm Shares." In addition, the Company has granted
to the Underwriters an option to purchase up to an additional 270,000 Common
Shares and the Selling Stockholder has granted to the Underwriters an option to
purchase up to an additional 105,000 Common Shares, all as provided in Section
2. The additional 270,000 Common Shares to be sold by the Company and the
additional 105,000 Common Shares to be sold by the Selling Stockholder pursuant
to such option are collectively called the "Option Shares." The Firm Shares and,
if and to the extent such option is exercised, the Option Shares are
collectively called the "Shares." FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
("▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated and Pacific Growth Equities, Inc. have agreed to act as
representatives of the several Underwriters (in such capacity, the
"Representatives") in connection with the offering and sale of the Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-95563), which contains a form of prospectus, subject to completion, to be
used in connection with the public offering and sale of the Shares. Each such
prospectus, subject to completion, used in connection with such public offering
is called a "preliminary prospectus" Such registration statement, as amended,
including the financial statements, exhibits and schedules thereto, in the form
in which it was declared effective by the Commission under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"),
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including any information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430A under the Securities Act, is called the
"Registration Statement." Any registration statement filed by the Company
pursuant to Rule 462(b) under the Securities Act is called the "Rule 462(b)
Registration Statement," and from and after the date and time of filing of the
Rule 462(b) Registration Statement the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. Such prospectus, in the form
first used by the Underwriters to confirm sales of the Shares, is called the
"Prospectus." All references in this Agreement to the Registration Statement,
the Rule 462(b) Registration Statement, a preliminary prospectus, the Prospectus
or any amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("▇▇▇▇▇").
The Company and the Selling Stockholder hereby confirm their
respective agreements with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and covenants to each Underwriter as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Registration Statement
and any Rule 462(b) Registration Statement have been declared effective by the
Commission under the Securities Act. The Company has complied to the
Commission's satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is in effect
and no proceedings for such purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to ▇▇▇▇▇ (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Shares. Each
of the Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Each preliminary
prospectus, as of its date, and the Prospectus, as amended or supplemented, as
of its date and at all subsequent times through the 30th day after the date
hereof, did not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The representations and warranties set forth in the two immediately preceding
sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements thereto,
made in reliance upon, and in conformity with, information furnished to the
Company in writing by the Representative expressly for use therein. There are no
contracts or other documents required to be described in the Prospectus or
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to be filed as exhibits to the Registration Statement which have not been
described or filed as required.
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company has
delivered to each Representative one complete conformed copy of the Registration
Statement and of each consent and certificate of experts filed as a part
thereof, and conformed copies of the Registration Statement (without exhibits)
and preliminary prospectuses and the Prospectus, as amended or supplemented, in
such quantities and at such places as the Representatives have reasonably
requested for each of the Underwriters.
(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The Company has not
distributed and will not distribute, prior to the later of the Second Closing
Date (as defined below) and the completion of the Underwriters' distribution of
the Shares, any offering material in connection with the offering and sale of
the Shares other than a preliminary prospectus, the Prospectus or the
Registration Statement.
(d) THE UNDERWRITING AGREEMENT. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, except as rights to indemnification
and contribution hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(e) AUTHORIZATION OF THE SHARES TO BE SOLD BY THE COMPANY. The Shares to
be purchased by the Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) AUTHORIZATION OF THE SHARES TO BE SOLD BY THE SELLING STOCKHOLDER. The
Common Shares to be purchased by the Underwriters from the Selling Stockholder,
when issued, were validly issued, fully paid and nonassessable.
(g) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, other than the Selling Stockholder
with respect to the Shares included in the Registration Statement, and except
for such rights as have been duly waived.
(h) NO MATERIAL ADVERSE CHANGE. Subsequent to the respective dates as of
which information is given in the Prospectus: (i) there has been no material
adverse change, or any development that could reasonably be expected to result
in a material adverse change, in the condition, financial or otherwise, or in
the earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change or effect, where the
context so requires, is called a "Material Adverse Change" or a "Material
Adverse Effect"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct
or contingent, not in the ordinary course of business nor entered into any
material transaction or
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agreement not in the ordinary course of business; and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company or,
except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by the
Company or any of its subsidiaries of any class of capital stock.
(i) INDEPENDENT ACCOUNTANTS. Ernst & Young LLP, who have expressed their
opinion with respect to certain of the financial statements (which term as used
in this Agreement includes the related notes thereto) and supporting schedules
filed with the Commission as a part of the Registration Statement and included
in the Prospectus, are independent public or certified public accountants as
required by the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(j) PREPARATION OF THE FINANCIAL STATEMENTS. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the financial position of the Company and
Xenotech, L.P. a California limited partnership ("Xenotech, L.P.") as of and at
the dates indicated and the results of their operations and cash flows for the
periods specified. The supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. Such
financial statements and supporting schedules have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules are
required to be included in the Registration Statement. The financial data set
forth in the Prospectus under the captions "Summary--Summary Financial Data,"
"Selected Financial Data" and "Capitalization" fairly present the information
set forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement. The pro forma condensed
combined financial statements of the Company and Xenotech L.P. and the related
notes thereto filed with the Commission as a part of the Registration Statement
and included in the Prospectus and the pro forma financial data included under
the captions "Summary--Summary Financial Data" and "Capitalization" and
elsewhere in the Prospectus and in the Registration Statement present fairly the
information contained therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly presented on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein. No other pro forma financial information is
required to be included in the Registration Statement pursuant to Regulation
S-X.
(k) COMPANY'S ACCOUNTING SYSTEM. The Company and each of its subsidiaries
maintain a system of accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
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(l) SUBSIDIARIES OF THE COMPANY. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other than
Xenotech, Inc., a Delaware corporation ("Xenotech, Inc."), and Xenotech, L.P.
(collectively, the "subsidiaries").
(m) INCORPORATION AND GOOD STANDING OF THE COMPANY AND ITS SUBSIDIARIES.
Each of the Company and its subsidiaries has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
organization with full power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus; each of the
Company and its subsidiaries is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified or be in good standing would not have a
Material Adverse Effect. The Company has received no notice of the institution
of any proceeding in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification.
(n) CAPITALIZATION OF THE SUBSIDIARIES. All the outstanding shares of
capital stock of Xenotech, Inc. have been duly and validly authorized and issued
and are fully paid and nonassessable and were not issued in violation of or
subject to any preemptive right, or other similar right; all the partnership
interests in Xenotech, L.P. have been duly and validly authorized and issued and
are fully paid and nonassessable and were not issued in violation of or subject
to any preemptive right, or other similar right. Except as otherwise set forth
in the Prospectus, all outstanding shares of capital stock or partnership
interests, as applicable, of such subsidiaries are owned by the Company either
directly or through wholly owned subsidiaries free and clear of any security
interests, claims, liens or encumbrances. The Company and the subsidiaries have
not entered into any agreement or option to dispose of any interest in the
subsidiaries (other than to other wholly-owned subsidiaries).
(o) NO PROHIBITION ON SUBSIDIARIES FROM PAYING DIVIDENDS OR MAKING OTHER
DISTRIBUTIONS. No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the
Prospectus.
(p) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. The authorized, issued
and outstanding capital stock of the Company is as set forth in the Prospectus
under the caption "Capitalization" (other than for subsequent issuances, if any,
pursuant to employee benefit plans described in the Prospectus or upon exercise
of outstanding options or warrants described in the Prospectus). The Common
Shares (including the Shares) conform in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding Common Shares have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance with federal and
state securities laws. None of the outstanding Common Shares were issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or
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exercisable for, any capital stock of the Company or any of its subsidiaries
other than those described in the Prospectus. The description of the Company's
stock option, stock bonus and other stock plans or arrangements, and the options
or other rights granted thereunder, set forth in the Prospectus accurately and
fairly presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(q) STOCK EXCHANGE LISTING. The Common Shares are registered pursuant to
12(g) of the Exchange Act and are listed on the Nasdaq National Market, and the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Shares under the Exchange Act or
delisting the Common Shares from the Nasdaq National Market, nor has the Company
received any notification that the Commission or the National Association of
Securities Dealers, Inc. (the "NASD") is contemplating terminating such
registration or listing.
(r) NO CONSENTS, APPROVALS OR AUTHORIZATIONS REQUIRED. No consent,
approval, authorization, filing with or order of any court or governmental
agency or regulatory body is required in connection with the issuance and sale
of the Shares to be sold by the Company, except such as have been obtained or
made under the Securities Act and such as may be required (i) under the blue sky
laws of any jurisdiction in connection with the purchase and distribution of the
Shares by the Underwriters in the manner contemplated here and in the
Prospectus, (ii) by the NASD and (iii) by the federal and provincial laws of
Canada.
(s) NON-CONTRAVENTION OF EXISTING INSTRUMENTS AND AGREEMENTS. Neither the
issue and sale of the Shares nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, (i) the charter or by-laws of the Company or of
Xenotech, Inc. or the certificate of limited partnership or the partnership
agreement of Xenotech, L.P., (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or bound or to which its or their property is subject or
(iii) any statute, law, rule, regulation, judgment, order or decree applicable
to the Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its or their
properties.
(t) NO DEFAULTS OR VIOLATIONS. Neither the Company nor any subsidiary is
in violation or default of (i) any provision of its charter or by-laws or
partnership agreement, as applicable, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which it is a party
or bound or to which its property is subject or (iii) any statute, law, rule,
regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary or any of its properties, as
applicable, except any such violation or default which would not, individually
or in the aggregate, result in a Material Adverse Change except as otherwise
disclosed in the Prospectus.
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(u) NO ACTIONS, SUITS OR PROCEEDINGS. Except as otherwise disclosed in the
Prospectus, no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its
subsidiaries or its or their property is pending or, to the knowledge of the
Company, threatened that (i) could reasonably be expected to have a Material
Adverse Effect on the performance of this Agreement or the consummation of any
of the transactions contemplated hereby or (ii) could reasonably be expected to
result in a Material Adverse Change.
(v) ALL NECESSARY PERMITS, ETC. Except as otherwise disclosed in the
Prospectus, the Company and each subsidiary possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies necessary to conduct their respective
businesses, and neither the Company nor any subsidiary has received any notice
of proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
could result in a Material Adverse Change.
(w) TITLE TO PROPERTIES. The Company and each of its subsidiaries has good
and marketable title to all the properties and assets reflected as owned in the
financial statements referred to in Section 1.A(j) above (or elsewhere in the
Prospectus), in each case free and clear of any security interests, mortgages,
liens, encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company or such subsidiary. The real property, improvements, equipment and
personal property held under lease by the Company or any subsidiary are held
under valid and enforceable leases, with such exceptions as are not material and
do not materially interfere with the use made or proposed to be made of such
real property, improvements, equipment or personal property by the Company or
such subsidiary. Except as set forth in the Registration Statement and
Prospectus, the Company owns or leases all such properties as are necessary to
its operations as now conducted or as proposed to be conducted.
(x) OTHER AGREEMENTS. The agreements to which the Company or any of its
subsidiaries is a party described in the Registration Statement and Prospectus
are valid agreements, enforceable by the Company and its subsidiaries (as
applicable), except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and, to the Company's knowledge, the other contracting party or
parties thereto are not in material breach or material default under any of such
agreements.
(y) TAX LAW COMPLIANCE. The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns or have
properly requested extensions thereof and have paid all taxes required to be
paid by any of them and, if due and payable, any related or similar assessment,
fine or penalty levied against any of them except as may be being contested in
good faith and by appropriate proceedings. The Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in Section 1.A(j) above in respect of all federal, state and foreign income
and franchise taxes for all periods as to which the tax liability of the Company
or any of its subsidiaries has not been finally determined. The
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Company is not aware of any tax deficiency that has been or might be asserted or
threatened against the Company that could result in a Material Adverse Change.
(z) INTELLECTUAL PROPERTY RIGHTS. Each of the Company and its subsidiaries
owns or possesses adequate rights to use all patents, patent rights or licenses,
inventions, collaborative research agreements, trade secrets, know-how,
trademarks, service marks, trade names and copyrights which are necessary to
conduct its businesses as described in the Registration Statement and
Prospectus. No patents, patent rights, trade secrets, trademarks, service marks,
trade names or copyrights of the Company and its subsidiaries whose expiration
or termination would have a Material Adverse Effect will expire or terminate
prior to five (5) years from the Closing Date (as hereinafter defined), except
for the potential expiration of certain foreign patents corresponding to United
States Patent Application Serial No. 496,408, filed February 24, 1983, under
which the Company is licensed. The expiration of any patents, patent rights,
trade secrets, trademarks, service marks, trade names or copyrights of the
Company and its subsidiaries would not result in a Material Adverse Change that
is not otherwise disclosed in the Prospectus. The Company has not received any
notice of, and has no knowledge of, any infringement of or conflict with
asserted rights of the Company or its subsidiaries by others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights; and neither the Company nor its subsidiaries
has received any notice of, or has any knowledge of, any infringement of or
conflict with asserted rights of others with respect to any patent, patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names or copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might result in a Material Adverse
Change. Except as disclosed in the Prospectus, there is no claim being made
against the Company or its subsidiaries regarding patents, patent rights or
licenses, inventions, collaborative research, trade secrets, know-how,
trademarks, service marks, trade names or copyrights. The Company and its
subsidiaries do not in the conduct of their business as now or proposed to be
conducted as described in the Prospectus infringe or conflict with any right or
patent of any third party, or any discovery, invention, product or process which
is the subject of a patent application filed by any third party, known to the
Company or any of its subsidiaries, which such infringement or conflict is
reasonably likely to result in a Material Adverse Change.
(aa) YEAR 2000 ISSUES. Except as disclosed in the Prospectus, there are no
year 2000 issues related to the Company, or any of its subsidiaries, that (i)
are of a character required to be described or referred to in the Registration
Statement or Prospectus by the Securities Act which have not been accurately
described in the Registration Statement or Prospectus or (ii) might reasonably
be expected to result in any Material Adverse Change or that might materially
affect their properties, assets or rights.
(bb) NO TRANSFER TAXES OR OTHER FEES. There are no transfer taxes or other
similar fees or charges under Federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance and sale by the Company
of the Shares.
(cc) COMPANY NOT AN "INVESTMENT COMPANY". The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). The Company is not, and after receipt of
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payment for the Shares will not be, an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act and will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(dd) INSURANCE. Each of the Company and its subsidiaries are insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes, general liability and Directors and Officers liability. The Company
has no reason to believe that it or any subsidiary will not be able (i) to renew
its existing insurance coverage as and when such policies expire or (ii) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change. Neither of the Company nor any
subsidiary has been denied any insurance coverage which it has sought or for
which it has applied.
(ee) LABOR MATTERS. To the Company's knowledge, no labor disturbance by the
employees of the Company or any of its subsidiaries exists or is imminent; and
the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, that might be expected to result in
a Material Adverse Change.
(ff) NO PRICE STABILIZATION OR MANIPULATION. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of the Common Shares to facilitate the sale or resale of the Shares.
(gg) LOCK-UP AGREEMENTS. Each executive officer and director of the Company
and the Selling Stockholder has signed an agreement substantially in the form
attached hereto as EXHIBIT A (the "Lock-up Agreements"). The Company has
provided to counsel for the Underwriters true, accurate and complete copies of
all of the Lock-up Agreements presently in effect or effected hereby. The
Company hereby represents and warrants that, during the 90 day period after the
date of the Prospectus, it will not release any of its executive officers,
directors or other stockholders from any Lock-up Agreements currently existing
or hereafter effected without the prior written consent of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
(hh) RELATED PARTY TRANSACTIONS. There are no business relationships or
related-party transactions involving the Company or any subsidiary or any other
person required to be described in the Prospectus which have not been described
as required.
(ii) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. Neither the Company nor
any of its subsidiaries nor, to the Company's knowledge, any employee or agent
of the Company or any subsidiary, has made any contribution or other payment to
any official of, or candidate for, any federal, state or foreign office in
violation of any law or of the character required to be disclosed in the
Prospectus.
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(jj) ENVIRONMENTAL LAWS. (i) The Company is in compliance with all
rules, laws and regulations relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to its business, except where the
failure to comply would not result in a Material Adverse Change, (ii) the
Company has received no notice from any governmental authority or third party
of an asserted claim under Environmental Laws, which claim is required to be
disclosed in the Registration Statement and the Prospectus, (iii) the Company
is not currently aware that it will be required to make future material
capital expenditures to comply with Environmental Laws and (iv) no property
which is owned, leased or occupied by the Company has been designated as a
Superfund site pursuant to the Comprehensive Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601, ET SEQ.), or
otherwise designated as a contaminated site under applicable state or local
law.
(kk) ERISA COMPLIANCE. The Company and its subsidiaries and any "employee
benefit plan" (as defined under the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Company, its
subsidiaries or their "ERISA Affiliates" (as defined below) are in compliance in
all material respects with ERISA. "ERISA Affiliate" means, with respect to the
Company or a subsidiary, any member of any group of organizations described in
Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended,
and the regulations and published interpretations thereunder (the "Code") of
which the Company or such subsidiary is a member. No "reportable event" (as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. No "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Neither the
Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.
Any certificate signed by an officer of the Company and delivered to
the Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER. The Selling
Stockholder represents, warrants and covenants to each Underwriter as follows:
(a) THE UNDERWRITING AGREEMENT. This Agreement has been duly authorized,
executed and delivered by or on behalf of the Selling Stockholder and is a valid
and binding agreement of the Selling Stockholder, enforceable in accordance with
its terms, except as rights to indemnification and contribution hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
bankruptcy,
10
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
(b) THE CUSTODY AGREEMENT AND POWER OF ATTORNEY. Each of the (i) Custody
Agreement signed by the Selling Stockholder and ChaseMellon Shareholder
Services, L.L.C., as custodian (the "Custodian"), relating to the deposit of the
Shares to be sold by the Selling Stockholder (the "Custody Agreement") and (ii)
Power of Attorney appointing the certain individuals named therein as the
Selling Stockholder's attorneys-in-fact (each, an "Attorney-in-Fact") to the
extent set forth therein relating to the transactions contemplated hereby and by
the Prospectus (the "Power of Attorney"), of the Selling Stockholder has been
duly authorized, executed and delivered by the Selling Stockholder and is a
valid and binding agreement of the Selling Stockholder, enforceable in
accordance with its terms, except as rights to indemnification and contribution
thereunder may be limited by applicable law and except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors
or by general equitable principles. The Selling Stockholder agrees that the
Shares to be sold by the Selling Stockholder on deposit with the Custodian is
subject to the interests of the Underwriters, that the arrangements made for
such custody are to that extent irrevocable, and that the obligations of the
Selling Stockholder hereunder shall not be terminated, except as provided in
this Agreement or in the Custody Agreement, by any act of the Selling
Stockholder, by operation of law or by the occurrence of any other event. If any
adverse event should occur to or affecting the Selling Stockholder before the
delivery of the Shares to be sold by the Selling Stockholder hereunder, the
documents evidencing the Shares to be sold by the Selling Stockholder then on
deposit with the Custodian shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such adverse event had not
occurred, regardless of whether or not the Custodian shall have received notice
thereof.
(c) TITLE TO SHARES TO BE SOLD. The Selling Stockholder is the lawful
owner of the Shares to be sold by the Selling Stockholder hereunder and upon
sale and delivery of, and payment for, such Shares, as provided herein, the
Selling Stockholder will convey good and marketable title to such Shares, free
and clear of all liens, encumbrances, equities and claims whatsoever.
(d) ALL AUTHORIZATIONS OBTAINED. The Selling Stockholder has, and on the
First Closing Date and the Second Closing Date (as defined below) will have,
good and valid title to all of the Shares which may be sold by the Selling
Stockholder pursuant to this Agreement on such date and the legal right and
power, and all authorizations and approvals required by law and under its
charter or by-laws, to enter into this Agreement, the Custody Agreement and
Power of Attorney, to sell, transfer and deliver all of the Shares which may be
sold by the Selling Stockholder pursuant to this Agreement and to comply with
its other obligations hereunder and thereunder.
(e) NO FURTHER CONSENTS, AUTHORIZATION OR APPROVALS. No consent, approval,
authorization or order of any court or governmental agency or body is required
for the consummation by the Selling Stockholder of the transactions contemplated
herein, except such as may have been obtained under the Securities Act and such
as may be required under the federal and provincial securities laws of Canada or
the blue sky laws or any jurisdiction in connection with the purchase and
distribution of the Shares by the Underwriters and such other approvals as have
been obtained.
11
(f) NON-CONTRAVENTION. Neither the sale of the Shares being sold by the
Selling Stockholder nor the consummation of any other of the transactions herein
contemplated by the Selling Stockholder or the fulfillment of the terms hereof
by the Selling Stockholder will conflict with, result in a breach or violation
of, or constitute a default under any law or the terms of any indenture or other
agreement or instrument to which the Selling Stockholder is party or bound, any
judgment, order or decree applicable to the Selling Stockholder or any court or
regulatory body, administrative agency, governmental body or arbitrator having
jurisdiction over the Selling Stockholder.
(g) NO REGISTRATION OR OTHER SIMILAR RIGHTS. The Selling Stockholder does
not have any registration or other similar rights to have any equity or debt
securities registered for sale by the Company under the Registration Statement
or included in the offering contemplated by this Agreement, except with respect
to the Shares and except for such rights which have been duly waived.
(h) NO PREEMPTIVE, CO-SALE OR OTHER RIGHTS. The Selling Stockholder does
not have, or has waived prior to the date hereof, any preemptive right, co-sale
right or right of first refusal or other similar right to purchase any of the
Shares that are to be sold by the Company to the Underwriters pursuant to this
Agreement; and the Selling Stockholder does not own any warrants, options or
similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, right, warrants, options or other securities from
the Company, other than those described in the Registration Statement and the
Prospectus.
(i) DISCLOSURE MADE BY THE SELLING STOCKHOLDER IN THE PROSPECTUS. All
information furnished by or on behalf of the Selling Stockholder in writing
expressly for use in the Registration Statement and Prospectus is, and on the
First Closing Date and the Second Closing Date (as defined below) will be, true,
correct, and complete in all material respects, and does not, and on the First
Closing Date and the Second Closing Date will not, contain any untrue statement
of a material fact or omit to state any material fact necessary to make such
information not misleading. The Selling Stockholder confirms as accurate the
number of Company Shares set forth opposite such Selling Stockholder's name in
the Prospectus under the caption "Principal and Selling Stockholders" (both
prior to and after giving effect to the sale of the Shares).
(j) NO PRICE STABILIZATION OR MANIPULATION. The Selling Stockholder has
not taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Shares to facilitate the sale or resale
of the Shares.
(k) NO TRANSFER TAXES OR OTHER FEES. There are no transfer taxes or other
similar fees or charges under Federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the sale by the Selling Stockholder
of the Shares.
(l) DISTRIBUTION OF OFFERING MATERIALS BY THE SELLING STOCKHOLDER. The
Selling Stockholder has not distributed and will not distribute, prior to the
later of the Second Closing Date (as defined below) and the completion of the
Underwriters' distribution of the Shares, any offering material in connection
with the offering and sale of the Shares by the Selling Stockholder other than a
preliminary prospectus, the Prospectus or the Registration Statement.
12
(m) CONFIRMATION OF COMPANY REPRESENTATIONS AND WARRANTIES. An officer of
the Selling Stockholder who is familiar with the Company has reviewed the
Registration Statement and the Prospectus. The Selling Stockholder, without
having made any independent check or verification except as described herein,
(i) has no reason to believe, that the representations and warranties of the
Company contained in Section 1(A) hereof are not true and correct in any
material respect, (ii) has no knowledge of any material fact, condition or
information not disclosed in the Registration Statement or the Prospectus which
has had or may reasonably be expected to result in a Material Adverse Change on
the condition, financial or otherwise, or on the earnings, business, operation
or prospects, whether or not arising from transactions in the ordinary course of
business of the Company and its subsidiaries, considered as one entity, and
(iii) is not prompted to sell the Shares to be sold by the Selling Stockholder
by any information concerning the Company which is not set forth in the
Registration Statement and the Prospectus.
Any certificate signed by or on behalf of the Selling Stockholder and
delivered to the Representative or to counsel for the Underwriters shall be
deemed to be a representation and warranty by the Selling Stockholder to each
Underwriter as to the matters covered thereby.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) THE FIRM SHARES. Upon the terms herein set forth, (i) the Company
agrees to issue and sell to the several Underwriters an aggregate of 1,800,000
Firm Shares and (ii) the Selling Stockholder agrees to sell to the several
Underwriters an aggregate of 700,000 Firm Shares. On the basis of the
representations, warranties and agreements herein contained, and upon the terms
but subject to the conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Stockholder the respective number of Firm Shares set forth opposite their names
on SCHEDULE A. The purchase price per Firm Share to be paid by the several
Underwriters to the Company and the Selling Stockholder shall be $[___] per
Share.
(b) THE FIRST CLOSING DATE. Delivery of the Firm Shares to be purchased by
the Underwriters and payment therefor shall be made by the Company and the
Representative at 6:00 a.m. San Francisco time, at the offices of Cooley Godward
LLP ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such other place as
may be agreed upon among the Representatives and the Company), (i) on the third
(3rd) full business day following the first day that Shares are traded, (ii) if
this Agreement is executed and delivered after 1:30 P.M., San Francisco time,
the fourth (4th) full business day following the day that this Agreement is
executed and delivered or (iii) at such other time and date not later that seven
(7) full business days following the first day that Shares are traded as the
Representatives and the Company may determine (or at such time and date to which
payment and delivery shall have been postponed pursuant to Section 8 hereof),
such time and date of payment and delivery being herein called the "First
Closing Date;" provided, however, that if the Company has not made available to
the Representatives copies of the Prospectus within the time provided in Section
Section 2(g) hereof, the Representatives may, in their sole discretion, postpone
the First Closing Date until no later that two (2) full business days following
delivery of copies of the Prospectus to the Representatives.
13
(c) THE OPTION SHARES; THE SECOND CLOSING DATE. In addition, on the basis
of the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Company and the
Selling Stockholder hereby grant an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 375,000 Option Shares
from the Company and the Selling Stockholder at the purchase price per share to
be paid by the Underwriters for the Firm Shares. The option granted hereunder is
for use by the Underwriters solely in covering any over-allotments in connection
with the sale and distribution of the Firm Shares. The option granted hereunder
may be exercised at any time upon notice by the Representatives to the Company
and the Selling Stockholder, which notice may be given at any time within 30
days from the date of this Agreement. The time and date of delivery of the
Option Shares, if subsequent to the First Closing Date, is called the "Second
Closing Date" and shall be determined by the Representative and shall not be
earlier than three nor later than five full business days after delivery of such
notice of exercise. If any Option Shares are to be purchased, (i) each
Underwriter agrees, severally and not jointly, to purchase the number of Option
Shares (subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Option Shares to be purchased as the number of Firm Shares set forth
on SCHEDULE A opposite the name of such Underwriter bears to the total number of
Firm Shares and (ii) the Company and the Selling Stockholder agree, severally
and not jointly, to sell the number of Option Shares (subject to such
adjustments to eliminate fractional shares as the Representative may determine)
that bears the same proportion to the total number of Option Shares to be sold
as the number of Option Shares to be sold by such entity as set forth in the
paragraph "Introductory" of this Agreement bears to the total number of Option
Shares. The Representatives may cancel the option at any time prior to its
expiration by giving written notice of such cancellation to the Company and the
Selling Stockholder.
(d) PUBLIC OFFERING OF THE SHARES. The Representatives hereby advise the
Company and the Selling Stockholder that the Underwriters intend to offer for
sale to the public, as described in the Prospectus, their respective portions of
the Shares as soon after this Agreement has been executed and the Registration
Statement has been declared effective as the Representatives, in their sole
judgment, have determined is advisable and practicable.
(e) PAYMENT FOR THE SHARES. Payment for the Shares to be sold by the
Company shall be made at the First Closing Date (and, if applicable, at the
Second Closing Date) by wire transfer of immediately available funds to the
order of the Company. Payment for the Shares to be sold by the Selling
Stockholder shall be made at the First Closing Date (and, if applicable, at the
Second Closing Date) by wire transfer of immediately available funds to the
order of the Custodian.
It is understood that the Representatives have been authorized, for
their own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Shares and any Option Shares the Underwriters have agreed to purchase.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually and not as the Representative of the
Underwriters, may (but shall not be obligated to) make payment for any Shares to
be purchased by any Underwriter whose funds shall not have been received by the
Representatives by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but
14
any such payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
The Selling Stockholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Shares to be sold by the Selling Stockholder to the
several Underwriters, or otherwise in connection with the performance of such
Selling Stockholder's obligations hereunder and (ii) the Custodian is authorized
to deduct for such payment any such amounts from the proceeds to such Selling
Stockholder hereunder and to hold such amounts for the account of such Selling
Stockholder with the Custodian under the Custody Agreement.
(f) DELIVERY OF THE SHARES. The Company and the Selling Stockholder shall
deliver, or cause to be delivered a credit representing the Firm Shares to an
account or accounts at The Depository Trust Company as designated by the
Representatives for the accounts of the Representatives and the several
Underwriters at the First Closing Date, against the irrevocable release of a
wire transfer of immediately available funds for the amount of the purchase
price therefor. The Company and the Selling Stockholder shall also deliver, or
cause to be delivered a credit representing the Option Shares to an account or
accounts at The Depository Trust Company as designated by the Representatives
for the accounts of the Representatives and the several Underwriters, at the
First Closing Date or the Second Closing Date, as the case may be, against the
irrevocable release of a wire transfer of immediately available funds for the
amount of the purchase price therefor. Time shall be of the essence, and
delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
(g) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than 12:00 noon
on the second business day following the date the Firm Shares are released by
the Underwriters for sale to the public, the Company shall deliver or cause to
be delivered copies of the Prospectus in such quantities and at such places as
the Representatives shall request.
SECTION 3. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDER.
A. COVENANTS OF THE COMPANY. The Company further covenants and agrees
with each Underwriter as follows:
(a) REGISTRATION STATEMENT MATTERS. The Company will use its best efforts
to cause the Registration Statement to become effective or, if the procedure in
Rule 430A of the Securities Act is followed, to prepare and timely file with the
Commission under Rule 424(b) under the Securities Act a Prospectus in a form
approved by the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Securities Act and (iii) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Securities Act. If the Company elects to rely on Rule 462(b)
under the Securities Act, the Company shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) under the
Securities Act prior to the time
15
confirmations are sent or given, as specified by Rule 462(b)(2) under the
Securities Act, and shall pay the applicable fees in accordance with Rule 111
under the Securities Act.
(b) SECURITIES ACT COMPLIANCE. The Company will advise the Representatives
promptly (i) when the Registration Statement or any post-effective amendment
thereto shall have become effective, (ii) of receipt of any comments from the
Commission, (iii) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
(c) BLUE SKY COMPLIANCE. The Company will cooperate with the
Representatives and counsel for the Underwriters in endeavoring to qualify the
Shares for sale under the securities laws of such jurisdictions (both national
and foreign) as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request for distribution of the Shares.
(d) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES ACT
MATTERS. The Company will comply with the Securities Act and the Exchange Act,
and the rules and regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement
and the Prospectus. If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur as a
result of which, in the judgment of the Company or in the reasonable opinion of
the Representatives or counsel for the Underwriters, it becomes necessary to
amend or supplement the Prospectus in order to make the statements therein, in
light of the circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company promptly will
prepare and file with the Commission, and furnish at its own expense to the
Underwriters and to dealers, an appropriate amendment to the Registration
Statement or supplement to the Prospectus so that the Prospectus as so amended
or supplemented will not, in light of the circumstances when it is so delivered,
be misleading, or so that the Prospectus will comply with the law.
(e) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. The
Company agrees to furnish the Representatives, without charge, during the period
beginning on the date hereof and ending on the later of the First Closing Date
or such date, as in the opinion of counsel for the Underwriters, the Prospectus
is no longer required by law to be delivered in connection with sales by an
Underwriter or dealer (the "Prospectus Delivery Period"), as many copies of the
Prospectus and any amendments and supplements thereto as the Representatives may
reasonably request.
16
(f) INSURANCE. The Company shall (i) obtain Directors and Officers
liability insurance in the minimum amount of $10 million which shall apply to
the offering contemplated hereby and (ii) cause ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to be added
to such policy such that up to $500,000 of its expenses pursuant to Section 7(a)
shall be paid directly by such insurer and (iii) shall cause ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
to be added as an additional insured to such policy in respect of the offering
contemplated hereby.
(g) NOTICE OF SUBSEQUENT EVENTS. If at any time during the ninety (90) day
period after the Registration Statement becomes effective, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which in the Representatives' reasonable opinion the market price of
the Company Shares has been or is likely to be materially affected (regardless
of whether such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus), the Company will, after written notice from the
Representatives advising the Company to the effect set forth above, forthwith
prepare, consult with the Representatives concerning the substance of and
disseminate a press release or other public statement, reasonably satisfactory
to the Representatives, responding to or commenting on such rumor, publication
or event.
(h) USE OF PROCEEDS. The Company shall apply the net proceeds from the
sale of the Shares sold by it in the manner described under the caption "Use of
Proceeds" in the Prospectus.
(i) TRANSFER AGENT. The Company shall maintain, at its expense, a
registrar and transfer agent for the Company Shares.
(j) EARNINGS STATEMENT. As soon as practicable, the Company will make
generally available to its security holders and to the Representative an
earnings statement (which need not be audited) covering a period of at least
twelve-months beginning after the effective date of the Registration Statement
that satisfies the provisions of Section 11(a) of the Securities Act.
(k) PERIODIC REPORTING OBLIGATIONS. During the Prospectus Delivery Period
the Company shall file, on a timely basis, with the Commission and the Nasdaq
National Market all reports and documents required to be filed under the
Exchange Act.
(l) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. The Company will
not, without the prior written consent of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, for a period of 90
days following the date of the Prospectus, offer, sell or contract to sell, or
otherwise dispose of or enter into any transaction which is designed to, or
could be expected to, result in the disposition (whether by actual disposition
or effective economic disposition due to cash settlement or otherwise by the
Company or any affiliate of the Company or any person in privity with the
Company or any affiliate of the Company) directly or indirectly, or announce the
offering of, any other Common Shares or any securities convertible into, or
exchangeable for, Common Shares; provided, however, that the Company may (i)
issue and sell Common Shares pursuant to any director or employee stock option
plan, stock ownership or purchase plan or dividend reinvestment plan of the
Company in effect at the date of the Prospectus and described in the Prospectus
so long as none of those Common Shares issued to executive officers or directors
of the Company may be transferred during the 90 day period from the date that
the Registration Statement is declared effective (the "Lock-Up Period") and the
Company shall enter stop transfer instructions with its transfer agent and
registrar against the transfer of any such
17
Common Shares issued and (ii) issue Common Shares issuable upon the conversion
of securities or the exercise of warrants outstanding at the date of the
Prospectus and described in the Prospectus.
(m) FUTURE REPORTS TO THE REPRESENTATIVES. During the period of two years
hereafter, or such shorter period as the Company shall have securities
registered under Section 12(b) or 12(g) of the Exchange Act, the Company will
furnish to the Representatives (i) as soon as practicable after the end of each
fiscal year, copies of the Annual Report of the Company containing the balance
sheet of the Company as of the close of such fiscal year and statements of
income, stockholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public or certified public
accountants; (ii) as soon as practicable after the filing thereof, copies of
each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Current Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of its capital stock.
B. COVENANTS OF THE SELLING STOCKHOLDER. Each Selling Stockholder further
covenants and agrees with each Underwriter:
(a) DELIVERY OF FORM W-9. To deliver to the Representatives prior to the
First Closing Date a properly completed and executed United States Treasury
Department Form W-9.
(b) NOTIFICATION OF UNTRUE STATEMENTS, ETC. If, at any time prior to the
date on which the distribution of the Shares as contemplated herein and in the
Prospectus has been completed, as determined by the Representatives, the Selling
Stockholder has knowledge of the occurrence of any event as a result of which
the Prospectus or the Registration Statement, in each case as then amended or
supplemented, would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the Selling
Stockholder will promptly notify the Company and the Representatives.
SECTION 4. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase and pay for
the Shares as provided herein on the First Closing Date and, with respect to the
Option Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholder set forth in Sections 1(A) and 1(B) hereof as of the date hereof and
as of the First Closing Date as though then made and, with respect to the Option
Shares, as of the Second Closing Date as though then made, to the timely
performance by the Company and the Selling Stockholder of their respective
covenants and other obligations hereunder, and to each of the following
additional conditions:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER; NO OBJECTION
FROM THE NASD. The Registration Statement shall have become effective prior to
the execution of this Agreement, or at such later date as shall be consented to
in writing by the Representatives; and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that purpose
shall have been initiated or,
18
to the knowledge of the Company, the Selling Stockholder or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of Underwriters'
counsel; and the NASD shall have delivered a letter to the Representatives to
the effect that it has decided to raise no objection, and the NASD shall have
raised no objection, to the fairness and reasonableness of the underwriting
terms and arrangements.
(b) CORPORATE PROCEEDINGS. All corporate proceedings and other legal
matters in connection with this Agreement, the form of Registration Statement
and the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to Underwriters'
counsel, and such counsel shall have been furnished with such papers and
information as they may reasonably have requested to enable them to pass upon
the matters referred to in this Section.
(c) NO MATERIAL ADVERSE CHANGE. Subsequent to the execution and
delivery of this Agreement and prior to the First Closing Date, or the Second
Closing Date, as the case may be, there shall not have been any Material
Adverse Change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise from that set forth in the
Registration Statement or Prospectus, which, in the Representatives' sole
good faith judgment, is material and adverse and that makes it, in the
Representatives' sole good faith judgment, impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Prospectus.
(d) OPINION OF COUNSEL FOR THE COMPANY. The Representatives shall have
received on the First Closing Date, or the Second Closing Date, as the case may
be, an opinion of ▇▇▇▇▇▇ Godward LLP, counsel for the Company, to the effect set
forth in EXHIBIT B attached hereto, dated the First Closing Date, or the Second
Closing Date, as applicable, addressed to the Underwriters and with reproduced
copies or signed counterparts thereof for each of the Underwriters.
Counsel rendering the opinion contained in EXHIBIT B may rely as to
questions of law not involving the laws of the United States or the State of
California or the General Corporate Law of the State of Delaware upon opinions
of local counsel approved by Underwriters' counsel, and as to questions of fact
upon representations or certificates of officers of the Company, officers of the
Selling Stockholder and of government officials, in which case their opinion is
to state that they are so relying and that they have no knowledge of any
material misstatement or inaccuracy in any such opinion, representation or
certificate. Copies of any opinion, representation or certificate so relied upon
shall be delivered to the Representatives and to Underwriters' counsel.
(e) OPINION OF INTELLECTUAL PROPERTY COUNSEL FOR THE COMPANY. The
Representatives shall have received on the First Closing Date, or the Second
Closing Date, as the case may be, an opinion of Fish & Neave, special
intellectual property counsel for the Company, to the effect set forth in
EXHIBIT C attached hereto.
(f) OPINION OF REGULATORY COUNSEL FOR THE COMPANY. The Representatives
shall have received on the First Closing Date, or the Second Closing Date, as
the case may be, an opinion of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C., to the effect set
forth in EXHIBIT D attached hereto.
19
(g) OPINION OF COUNSEL FOR THE UNDERWRITERS. The Representatives shall
have received on the First Closing Date or the Second Closing Date, as the case
may be, an opinion of O'Melveny & ▇▇▇▇▇ LLP, in form and substance satisfactory
to the Representatives, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as the Representatives may reasonably require.
The Company shall have furnished to such counsel such documents as they may have
reasonably requested for the purpose of enabling them to pass upon such matters.
(h) ACCOUNTANTS' COMFORT LETTER. The Representatives shall have received
on the First Closing Date and on the Second Closing Date, as the case may be, a
letter from Ernst & Young LLP addressed to the Underwriters, dated the First
Closing Date or the Second Closing Date, as the case may be, confirming that
they are independent certified public accountants with respect to the Company
and Xenotech, L.P. within the meaning of the Act and the applicable published
Rules and Regulations and based upon the procedures described in such letter
delivered to the Representatives concurrently with the execution of this
Agreement (herein called the "Original Letter"), but carried out to a date not
more than five (5) business days prior to the First Closing Date or the Second
Closing Date, as the case may be, (i) confirming, to the extent true, that the
statements and conclusions set forth in the Original Letter are accurate as of
the First Closing Date or the Second Closing Date, as the case may be, and (ii)
setting forth any revisions and additions to the statements and conclusions set
forth in the Original Letter which are necessary to reflect any changes in the
facts described in the Original Letter since the date of such letter, or to
reflect the availability of more recent financial statements, data or
information. The Original Letter shall not disclose any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company or Xenotech, L.P. from that set forth in the Registration
Statement or Prospectus, which, in the Representatives' sole good faith
judgment, is material and adverse and that makes it, in the Representatives'
sole good faith judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. The Original
Letter from Ernst & Young LLP shall be addressed to or for the use of the
Underwriters, in form and substance reasonably satisfactory to the Underwriters,
and shall (i) represent, to the extent true, that they are independent certified
public accountants with respect to the Company and Xenotech, L.P. within the
meaning of the Act and the applicable published Rules and Regulations, (ii) set
forth their opinion with respect to their examination of the balance sheet of
the Company and Xenotech, L.P. as of December 31, 1998 and related consolidated
statements of operations, stockholders' equity, and cash flows for the twelve
(12) months ended December 31, 1998, (iii) state that Ernst & Young LLP has
performed the procedures set out in Statement on Auditing Standards No. 71 ("SAS
71") for a review of interim financial information and providing the report of
Ernst & Young LLP as described in SAS 71 on the interim financial statements
included in the Registration Statement and the Prospectus (the "Quarterly
Financial Statements"), (iv) state that in the course of such review, nothing
came to their attention that leads them to believe that any material
modifications need to be made to any of the Quarterly Financial Statements in
order for them to be in compliance with generally accepted accounting principles
consistently applied across the periods presented, and address other matters
agreed upon by Ernst & Young LLP and the Representatives. In addition, the
Representatives shall have received from Ernst & Young LLP a letter addressed to
the Company and made available to the Representatives for the use of the
Underwriters stating that their review of the Company's system of internal
accounting controls, to the extent they deemed
20
necessary in establishing the scope of their examination of the Company's
financial statements as of December 31, 1998, did not disclose any weaknesses in
internal controls that they considered to be material weaknesses.
(i) OFFICERS' CERTIFICATE. The Representatives shall have received on the
First Closing Date and the Second Closing Date, as the case may be, a
certificate of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, signed by the Chief Executive Officer and Chief
Financial Officer of the Company, to the effect that, and the Representatives
shall be satisfied that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the First Closing
Date or the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the First Closing Date or
the Second Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, threatened
under the Act;
(iii) When the Registration Statement became effective and at all
times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, contained all material information required to be
included therein by the Securities Act and in all material respects
conformed to the requirements of the Securities Act; the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
did not and does not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and, since the effective date
of the Registration Statement, there has occurred no event required to be
set forth in an amended or supplemented Prospectus which has not been so
set forth; and
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (a)
any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise, (b) any transaction that is
material to the Company and its subsidiaries considered as one enterprise,
except transactions entered into in the ordinary course of business, (c)
any obligation, direct or contingent, that is material to the Company and
its subsidiaries considered as one enterprise, incurred by the Company or
its subsidiaries, except obligations incurred in the ordinary course of
business, (d) any change in the capital stock or outstanding indebtedness
of the Company or any of its subsidiaries that is material to the Company
and its subsidiaries considered as one enterprise, (e) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company or any of its subsidiaries, or (f) any loss or damage (whether or
not insured) to the property of the Company or any of its subsidiaries
which has been sustained or will have been sustained which has a material
21
adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise.
(j) LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF THE COMPANY. The
Company shall have obtained and delivered to the Representatives an agreement
substantially in the form of EXHIBIT A attached hereto from each executive
officer and director of the Company and the Selling Stockholder.
(k) OPINION OF COUNSEL FOR THE SELLING STOCKHOLDER. The Representatives
shall have received on the First Closing Date and the Second Closing Date, as
the case may be, the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional
Corporation, counsel for the Selling Stockholder, to the effect set forth in
EXHIBIT E attached hereto, dated the First Closing Date or the Second Closing
Date, as applicable, addressed to the Underwriters and with reproduced copies or
signed counterparts thereof for each of the Underwriters.
In rendering such opinion, such counsel may rely as to questions of
law not involving the laws of the United States or the State of California or
the General Corporate Law of the State of Delaware upon opinions of local
counsel approved by Underwriters' counsel and as to questions of fact upon
representations or certificates of officers of the Selling Stockholder, and of
governmental officials, in which case their opinion is to state that they are so
relying and that, without independent check or verification, they have no
knowledge of any material misstatement or inaccuracy of any material
misstatement or inaccuracy in any such opinion, representation or certificate so
relied upon shall be delivered to the Representatives and to Underwriters'
counsel.
(l) SELLING STOCKHOLDER'S CERTIFICATE. On each of the First Closing Date
and the Second Closing Date, as the case may be, the Representative shall have
received a written certificate executed by an officer of the Selling Stockholder
dated as of the First Closing Date or the Second Closing Date, as applicable, to
the effect that:
(i) the representations, warranties and covenants of the Selling
Stockholder set forth in Section 1(B) of this Agreement are true and
correct in all material respects with the same force and effect as though
expressly made by the Selling Stockholder on and as of the First Closing
Date or the Second Closing Date, as applicable; and
(ii) the Selling Stockholder has in all material respects complied
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the First Closing Date or the Second
Closing Date, as applicable.
(m) SELLING STOCKHOLDER'S DOCUMENTS. At least one business days prior to
the date hereof, the Company and the Selling Stockholder shall have furnished
for review by the Representatives or Underwriters' counsel copies of the Powers
of Attorney and Custody Agreements executed by the Selling Stockholder and such
further information, certificates and documents as the Representatives may
reasonably request.
(n) STOCK EXCHANGE LISTING. The Shares shall have been approved for
inclusion on the Nasdaq National Market, subject only to official notice of
issuance.
22
(o) COMPLIANCE WITH PROSPECTUS DELIVERY REQUIREMENTS. The Company shall
have complied with the provisions of Sections 2(g) and 3(e) hereof with respect
to the furnishing of Prospectuses.
(p) ADDITIONAL DOCUMENTS. On or before each of the First Closing Date and
the Second Closing Date, as the case may be, the Representatives and counsel for
the Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
If any condition specified in this Section 4 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Stockholder at any time
prior to the closing on the First Closing Date and, with respect to the Option
Shares, at any time on or prior to the closing on the Second Closing Date, which
termination shall be without liability on the part of any party to any other
party, except that Section 5 (Payment of Expenses), Section 6 (Reimbursement of
Underwriters' Expenses), Section 7 (Indemnification and Contribution) and
Section 10 (Representations and Indemnities to Survive Delivery) shall at all
times be effective and shall survive such termination.
SECTION 5. PAYMENT OF EXPENSES.
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including, without limitation, (i)
all expenses incident to the issuance and delivery of the Shares (including all
printing and engraving costs), (ii) all fees and expenses of the registrar and
transfer agent of the Common Shares, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale to the Underwriters
of the Shares to be sold by the Company, (iv) all fees and expenses of the
Company's counsel, independent public or certified public accountants and other
advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Shares for offer and
sale under the state securities or blue sky laws or the provincial securities
laws of Canada or any other country, and, if requested by the Representative,
preparing and printing a "Blue Sky Survey," an "International Blue Sky Survey"
or other memorandum, and any supplements thereto, advising the Underwriters of
such qualifications, registrations and exemptions, (vii) the filing fees
incident to, and the reasonable fees and expenses of counsel for the
Underwriters in connection with, the NASD review and approval of the
Underwriters' participation in the offering and distribution of the Shares,
(viii) the fees and expenses associated with including the Shares on the Nasdaq
National Market, (ix) all costs and expenses of, and incidental to, travel and
accommodation of the Company's employees on the "roadshow" preparations to be
made to prospective investors, and (x) all other fees, costs and expenses
referred
23
to in Item 13 of Part II of the Registration Statement. Except as provided in
this Section 5, Section 6, and Section 7 hereof, the Underwriters shall pay
their own expenses, including the fees and disbursements of their counsel.
The Selling Stockholder further agrees with each Underwriter to pay
(directly or by reimbursement) all fees and expenses incident to the performance
of their obligations under this Agreement which are not otherwise specifically
provided for herein, including, but not limited to, (i) fees and expenses of
counsel and other advisors for such Selling Stockholder, (ii) fees and expenses
of the Custodian and (iii) expenses and taxes incident to the sale and delivery
of the Shares to be sold by such Selling Stockholder to the Underwriters
hereunder (which taxes, if any, may be deducted by the Custodian under the
provisions of Section 2 of this Agreement).
This Section 5 shall not affect or modify any separate, valid
agreement relating to the allocation of payment of expenses between the Company,
on the one hand, and the Selling Stockholder, on the other hand.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES.
If this Agreement is terminated by the Representatives pursuant to
Section 4, Section 7, Section 8, Section 9 or Section 15, or if the sale to the
Underwriters of the Shares on the First Closing Date is not consummated because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse the Representatives and the other Underwriters (or such Underwriters
as have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Representatives and the Underwriters in connection with the proposed
purchase and the offering and sale of the Shares, including, but not limited to,
fees and disbursements of counsel, printing expenses, travel and accommodation
expenses, postage, facsimile and telephone charges.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION OF THE UNDERWRITERS.
(1) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless each Underwriter, its officers and employees, and each person,
if any, who controls any Underwriter within the meaning of the Securities Act
and the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based (i) upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A under the Securities Act, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary
24
to make the statements therein not misleading; or (ii) upon any untrue statement
or alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; or (iii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iv) in whole
or in part upon any failure of the Company to perform its obligations hereunder
or under law; or (v) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials provided by the Company
or based upon written information furnished by or on behalf of the Company,
including, without limitation, slides, videos, films or tape recordings, used in
connection with the marketing of the Shares, including without limitation,
statements communicated to securities analysts employed by the Underwriters; or
(vi) any act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the Shares or the
offering contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based upon any
matter covered by clause (i), (ii), (iii), (iv) or (v) above, provided that the
Company shall not be liable under this clause (vi) to the extent that a court of
competent jurisdiction shall have determined by a final judgment that such loss,
claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its bad faith or willful misconduct; and to reimburse each Underwriter and each
such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇) as such expenses are
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; PROVIDED, HOWEVER, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives expressly for use in
the Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); and PROVIDED, FURTHER, that with respect to
any preliminary prospectus, the foregoing indemnity agreement shall not inure to
the benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense. The indemnity agreement
set forth in this Section 7(a)(1) shall be in addition to any liabilities that
the Company may otherwise have.
(2) INDEMNIFICATION BY THE SELLING STOCKHOLDER. The Selling
Stockholder agrees to indemnify and hold harmless each Underwriter, its officers
and employees, and each person, if any, who controls any Underwriter within the
meaning of the Securities Act and the Exchange Act against any loss, claim,
damage, liability or expense, as incurred, to which such Underwriter or such
controlling person may become subject, under the Securities Act, the Exchange
Act or other federal or state statutory
25
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A under the Securities Act, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; or (iii) in whole or in part upon
any inaccuracy in the representations and warranties of the Selling Stockholder
contained herein; or (iv) in whole or in part upon any failure of the Selling
Stockholder to perform its obligations hereunder or under law; or (v) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Shares or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon any matter
covered by clause (i), (ii), (iii), or (iv) above, provided that the Selling
Stockholder shall not be liable under this clause (v) to the extent that a court
of competent jurisdiction shall have determined by a final judgment that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its bad faith or willful misconduct; and to reimburse each Underwriter and each
such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇) as such expenses are
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; PROVIDED, HOWEVER, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company or the Selling Stockholder by the
Representatives expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
PROVIDED, FURTHER, that with respect to any preliminary prospectus, the
foregoing indemnity agreement shall not inure to the benefit of any Underwriter
from whom the person asserting any loss, claim, damage, liability or expense
purchased Shares, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section 2 and a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage, liability or expense;
and PROVIDED, FURTHER, that the Selling Stockholder's liability shall be limited
as set forth in Section 7(a)(3) below. The indemnity agreement set forth in
this Section 7(a)(1) shall be in addition to any liabilities that the Company
and the Selling Stockholder may otherwise have.
(3) LIMITATION OF SELLING STOCKHOLDER'S LIABILITY. The liability of
the Selling Stockholder under its representations and warranties contained in
Section 1(B) of
26
this agreement and under the indemnity, reimbursement and contribution
agreements contained in Section 7(a)(2) and Section 7(f) of this Agreement shall
be limited to an amount equal to the product obtained by multiplying the number
of Shares sold by the Selling Stockholder pursuant to this Agreement by the
price per share set forth in Section 2(a) of this Agreement. In addition, the
Selling Stockholder shall not be liable under such indemnity, reimbursement and
contribution provisions unless and until (i) the indemnified party has made
written demand on the Company for payment under such sections and (ii) such
demanded sums have gone unpaid for 60 days after the date of receipt by the
Company of such demand or, if during such 60 day period the Company agrees in
writing to pay such demanded sums, such demanded sums have gone unpaid for 60
days after the date of such agreement. A copy of such demand, if an when made to
the Company, shall also be provided to the Selling Stockholder, but the omission
so provide a copy of the demand notice to the Selling Stockholder will not
relieve it from any liability which it may have to any indemnified party to the
extent it is not materially prejudiced as a proximate result of such failure.
(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS, THE
SELLING STOCKHOLDER AND THEIR RESPECTIVE CONTROL PERSONS. Each Underwriter
agrees, severally and not jointly, to indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement, the Selling Stockholder and each person, if any, who controls the
Company or the Selling Stockholder within the meaning of the Securities Act or
the Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer, the Selling
Stockholder or any such controlling person may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter, such consent not to be unreasonably withheld), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company or the
Selling Stockholder by the Representatives expressly for use therein; and to
reimburse the Company, or any such director or officer, the Selling Stockholder,
or any such controlling person for any legal and other expense reasonably
incurred by the Company, or any such director or officer, the Selling
Stockholder or any such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. The indemnity agreement set forth in this Section
7(b) shall be in addition to any liabilities that each Underwriter may otherwise
have.
(c) INFORMATION PROVIDED BY THE UNDERWRITERS. Each of the Company and the
Selling Stockholder and each person, if any, who controls the Company or the
Selling Stockholder within the meaning of the Securities Act or the Exchange Act
hereby acknowledges that the only information that the Underwriters have
furnished to the Company and the Selling Stockholder expressly for use in the
Registration Statement,
27
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) are the statements set forth under the caption "Underwriting" in the
Prospectus (i) in the table following the first paragraph, (ii) and the first
and final sentences of the second paragraph; and the Underwriters confirm that
such statements are correct.
(d) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly after
receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability
hereunder to the extent it is not materially prejudiced as a proximate result of
such failure and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In case any such
action is brought against any indemnified party and such indemnified party seeks
or intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with appropriate local counsel),
approved by the indemnifying party (▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the case of Section
7(b) and Section 8), representing the indemnified parties who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(e) SETTLEMENTS. The indemnifying party under this Section 7 shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the
28
indemnified party for fees and expenses of counsel as contemplated by Section
7(d) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 60 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes (1) an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding and (2) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(f) CONTRIBUTION. If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Sections 7(a) or 7(b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholder, on the
one hand, and the Underwriters, on the other hand, from the offering of the
Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholder, on the one hand,
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholder, on the one hand, and the Underwriter on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
received by the Company and the Selling Stockholder bears to the total
underwriting discounts and commissions received by the Underwriters, 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, 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 the Selling Stockholder, on the one hand, or the Underwriters on the other
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholder and Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 7(f)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7(f). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 7(f) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
29
Notwithstanding the provisions of this subsection (f), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this Section 7(f) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(g) TIMING OF ANY PAYMENTS OF INDEMNIFICATION. Any losses, claims,
damages, liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred, but in all cases, no later than forty-five
(45) days after receipt of invoice to the indemnifying party.
(h) SURVIVAL. The indemnity and contribution agreements contained in this
Section 7 and the representation and warranties of the Company and the Selling
Stockholder set forth in this Agreement shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter, the Company, its
directors or officers, the Selling Stockholder or any persons controlling the
Company or the Selling Stockholder, (ii) acceptance of any Shares and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor to
any Underwriter, or to the Company, its directors or officers, the Selling
Stockholder or any person controlling the Company or the Selling Stockholder,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 7.
(i) ACKNOWLEDGEMENTS OF PARTIES. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 7 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Securities Act and the Exchange Act.
SECTION 8. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.
If, on the First Closing Date or the Second Closing Date, as the case
may be, any one or more of the several Underwriters shall fail or refuse to
purchase Shares that it or they have agreed to purchase hereunder on such date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Shares set forth opposite their respective names on SCHEDULE A bears to
the aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as may be specified by
the Representatives with the consent of the non-defaulting Underwriters, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date. If, on the First Closing Date or the
Second Closing Date, as the case may be, any one or more of the Underwriters
shall fail or refuse to
30
purchase Shares and the aggregate number of Shares with respect to which such
default occurs exceeds 10% of the aggregate number of Shares to be purchased on
such date, and arrangements satisfactory to the Representatives and the Company
for the purchase of such Shares are not made within 48 hours after such default,
this Agreement shall terminate without liability of any party to any other party
(other than an Underwriter who shall have failed, otherwise than for some reason
permitted under this Agreement, to purchase the number of Shares agreed by such
Underwriter to be purchased hereunder, which Underwriter shall remain liable to
the Company, the Selling Stockholder and the other Underwriters for damages, if
any, resulting from such default) except that the provisions of Section 4, and
Section 7 shall at all times be effective and shall survive such termination. In
any such case either the Representatives or the Company shall have the right to
postpone the First Closing Date or the Second Closing Date, as the case may be,
but in no event for longer than seven days in order that the required changes,
if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
8. Any action taken under this Section 8 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 9. TERMINATION OF THIS AGREEMENT.
Prior to the First Closing Date, this Agreement may be terminated by
the Representatives by notice given to the Company and the Selling Stockholder
if at any time after the execution and delivery of this Agreement and prior to
the First Closing Date (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq Stock Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any of federal, New York,
Delaware or California authorities; (iii) there shall have occurred any outbreak
or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective change in
United States' or international political, financial or economic conditions, as
in the good faith judgment of the Representatives is material and adverse and
makes it impracticable or inadvisable to market the Shares in the manner and on
the terms contemplated by the Prospectus or to enforce contracts for the sale of
securities; (iv) in the good faith judgment of the Representatives there shall
have occurred any Material Adverse Change; or (v) the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as in the good faith judgment of the Representatives may
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured. Any
termination pursuant to this Section 9 shall be without liability on the part of
(a) the Company or the Selling Stockholder to any Underwriter, except, in the
event of a termination pursuant to subsection 9(iv) above, that the Company
shall be obligated to reimburse the expenses of the Representatives and the
Underwriters pursuant to Sections 5 and 6 hereof, (b) any Underwriter to the
Company or the Selling Stockholder or any person controlling the Company or the
Selling
31
Stockholder, or (c) of any party hereto to any other party except that the
provisions of Section 7 shall at all times be effective and shall survive such
termination.
SECTION 10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties
and other statements of the Company, of its officers, of the Selling Stockholder
or of any person controlling the Company or the Selling Stockholder and of the
several Underwriters set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Selling Stockholder or the Company or any of its or
their partners, officers or directors or any controlling person, as the case may
be, and will survive delivery of and payment for the Shares sold hereunder and
any termination of this Agreement.
SECTION 11. NOTICES.
All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Company:
Abgenix, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
32
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Selling Stockholder:
Cell Genesys, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 12. SUCCESSORS.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 9
hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 7, and to their respective
successors, and personal representatives, and no other person will have any
right or obligation hereunder. The term "successors" shall not include any
purchaser of the Shares as such from any of the Underwriters merely by reason of
such purchase.
SECTION 13. PARTIAL UNENFORCEABILITY.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
33
SECTION 14. GOVERNING LAW PROVISIONS.
(a) GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the internal laws of the state of New York applicable to
agreements made and to be performed in such state.
(b) CONSENT TO JURISDICTION. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of San Francisco or the courts
of the State of California in each case located in the City and County of San
Francisco (collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party's address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum. Each party not located in the
United States irrevocably appoints CT Corporation System, which currently
maintains a San Francisco office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America, as its agent to receive service of
process or other legal summons for purposes of any such suit, action or
proceeding that may be instituted in any state or federal court in the City and
County of San Francisco.
(c) WAIVER OF IMMUNITY. With respect to any Related Proceeding, each party
irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.
SECTION 15. FAILURE OF THE SELLING STOCKHOLDER TO SELL AND DELIVER COMMON
SHARES.
If the Selling Stockholder shall fail to sell and deliver to the
Underwriters the Shares to be sold and delivered by it at the First Closing Date
or the Second Closing Date pursuant to this Agreement, then the Underwriters may
at their option, by written notice from the Representatives to the Company and
the Selling Stockholder, either (i) purchase the Shares which the Company has
agreed to sell and deliver in accordance with the terms hereof or (ii) the
Company shall be obligated to issue and sell a number of Common Shares to the
Underwriters equal to the number of Shares which the Selling Stockholder agreed
but failed or refused to sell or deliver on such date (in which case the term
"Shares" as used in this Agreement shall be deemed to include such additional
shares issued and sold by the Company). If the Selling Stockholder
34
shall fail to sell and deliver to the Underwriters any of the Shares to be sold
and delivered by the Selling Stockholder pursuant to this Agreement at the First
Closing Date or the Second Closing Date, then the Underwriters shall have the
right, by written notice from the Representatives to the Company and the Selling
Stockholder, to postpone the First Closing Date or the Second Closing Date, as
the case may be, but in no event for longer than seven days in order that the
required changes, if any, to the Registration Statement and the Prospectus or
any other documents or arrangements may be effected.
SECTION 16. GENERAL PROVISIONS.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
[The remainder of this page has been intentionally left blank.]
35
If the foregoing is in accordance with the Representatives'
understanding of our agreement, please sign and return to the Company and the
Custodian the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its
terms.
Very truly yours,
ABGENIX, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
CELL GENESYS, INC.
By:_______________________________
Name:_____________________________
Title: Attorney-In-Fact
The foregoing Underwriting Agreement is hereby confirmed and accepted by the
Representatives as of the date first above written.
FLEETBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
PACIFIC GROWTH EQUITIES, INC.
On their behalf and on behalf of each of the several underwriters named in
Schedule A hereto.
BY FLEETBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
By:_____________________________________
Authorized Signatory
36
SCHEDULE A
UNDERWRITERS
------------
Number of Firm
Shares To be
Underwriters Purchased
---------------------------------------------------------------------------------------- -------------------
FLEETBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC. AND FLEETBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INTERNATIONAL
LIMITED............................................................................... [___]
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ................................... [___]
▇▇▇▇▇▇▇ ▇▇▇▇▇ International .......................................................... [___]
▇▇▇▇▇▇ Brothers Inc. ................................................................. [___]
Pacific Growth Equities, Inc. ........................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
[___] ................................................................................ [___]
---------------------------------------------------------------------------------------- -------------------
Total........................................................................ 2,500,000
===================
Schedule A
SCHEDULE B
SELLING STOCKHOLDER
-------------------
Maximum Number
Number of Firm Shares of Option Shares
Selling Stockholder to be Sold to be Sold
----------------------------------------------------------- ----------------------- ------------------------
Cell Genesys, Inc......................................... 700,000 105,000
----------------------------------------------------------- ----------------------- ------------------------
Total:........................................... 700,000 105,000
======================= ========================
Schedule B
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
-------------------------
ABGENIX, INC.
LOCK-UP AGREEMENT
January 25, 2000
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Pacific Growth Equities, Inc.
As Representatives of Several Underwriters
c/o Fleet Boston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that you, as Representatives of the several
underwriters (the "Underwriters"), propose to enter into an Underwriting
Agreement (the "Underwriting Agreement") with Abgenix, Inc. (the "Company")
providing for a public offering (the "Public Offering") by the Underwriters,
including yourselves, of Common Stock of the Company (the "Common Stock")
pursuant to the Company's Registration Statement on Form S-1 to be filed with
the Securities and Exchange Commission on or about January 27, 2000 (the
"Registration Statement").
In consideration of the Underwriters' agreement to purchase and make the
Public Offering of the Common Stock, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the undersigned hereby
agrees, for a period of 90 days after the effective date of the Registration
Statement (the "Lock-Up Period"), not to offer to sell, contract to sell or
otherwise sell, dispose of, loan, pledge or grant any rights with respect to
(collectively, a "Disposition") any shares of Common Stock, any options or
warrants to purchase any shares of Common Stock or any securities convertible
into or exchangeable for shares of Common Stock (collectively, "Securities"),
now owned or hereafter acquired directly by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition,
otherwise than (i) as a bona fide gift or gifts, provided the donee or donees
thereof agree to be bound by this Lock-Up Agreement, (ii) as a distribution to
limited partners or shareholders of the undersigned, provided that the
distributees thereof agree in writing to be bound by the terms of this Lock-Up
Agreement, (iii) with respect to Securities purchased on the open market after
the date the Registration Statement is declared effective, or (iv) with the
prior written consent of FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. The foregoing
restriction is expressly
A-1
agreed to preclude the holder of the Securities from engaging in any hedging or
other transaction which is designed to or reasonably expected to lead to or
result in a Disposition of Securities during the Lock-Up Period even if such
Securities would be disposed of by someone other than the undersigned. Such
prohibited hedging or other transactions would include without limitation any
short sale (whether or not against the box) or any purchase, sale or grant of
any right (including without limitation any put or call option) with respect to
any Securities or with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from Securities. Notwithstanding the foregoing, this Lock-Up Agreement
does not prohibit the sale of shares of Common Stock by the undersigned to the
Underwriters in the Public Offering.
Furthermore, the undersigned hereby agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of the Securities held by the undersigned except in compliance with
this Lock-Up Agreement. In the event that the Registration Statement shall not
have been declared effective on or before April 30, 2000 this Lock-Up Agreement
shall be of no further force or effect.
Very truly yours,
________________________________________
(signature)
Name:___________________________________
Address:________________________________
________________________________________
Accepted as of the date set forth above:
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇, Pierce, Fenner, & ▇▇▇▇▇ Incorporated
Pacific Growth Equities, Inc.
As Representatives of the Several Underwriters
By: FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
________________________________________
(authorized signatory)
A-2
EXHIBIT B
MATTERS TO BE COVERED IN THE
OPINION OF COMPANY COUNSEL
--------------------------
(i) Each of the Company and Xenotech, Inc. has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Delaware and has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus.
(ii) Xenotech, L.P. is a duly formed and validly existing limited
partnership under the laws of the State of California, with the power under the
California Revised Limited Partnership Act (the "Act") and its partnership
agreement (the "Partnership Agreement") to own, lease and operate its properties
and to conduct its business as described in the Prospectus.
(iii) The Company and each Subsidiary is duly qualified to do business and
is in good standing in each jurisdiction, if any, in which the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
Subsidiaries (as defined below), considered as one entity (a "Material Adverse
Effect"). To such counsel's knowledge, the Company does not own or control,
directly or indirectly, any corporation, association or other entity other than
Xenotech, Inc. and Xenotech, L.P. (each a "Subsidiary").
(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under the caption "Capitalization" as of the
dates stated therein. To such counsel's knowledge, the shares of capital stock
of the Company (other than the Shares to be sold to the Underwriters by the
Selling Stockholder, which are separately addressed below) outstanding prior to
the issuance of the Shares have been duly and validly issued and are fully paid
and nonassessable, and to such counsel's knowledge have not been issued in
violation of or subject to any preemptive right, co-sale right, right of first
refusal or other similar right arising under the Company's certificate of
incorporation or bylaws or Delaware General Corporation Law or in any other
agreement to which the Company is a party, other than such rights as have been
duly waived.
(v) All issued and outstanding shares of capital stock of Xenotech, Inc.
have been duly and validly issued and are fully paid and nonassessable, and have
not been issued in violation of or subject to any preemptive right, co-sale
right, right of first refusal or other similar right arising under its
certificate of incorporation or bylaws or Delaware General Corporation Law or,
to such counsel's knowledge, in any other agreement to which Xenotech, Inc. is a
party, other than such rights as have been duly waived. All of such issued and
outstanding shares are owned by the Company free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest.
B-1
(vi) All issued and outstanding general and limited partnership interests
of Xenotech, L.P. have been duly and validly issued and, in the case of the
limited partnership interests are fully paid and nonassessable, and such general
and limited partnership interests have not been issued in violation of or
subject to any preemptive right, co-sale right, right of first refusal or other
similar right arising under Xenotech, L.P.'s partnership agreement or the
California Uniform Limited Partnership Act or, to such counsel's knowledge, in
any other agreement to which Xenotech, L.P. is a party, other than such rights
as have been duly waived. All of such general partnership interests are owned by
Xenotech, Inc. and all of such limited partnership interests are owned by the
Company, in each case, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than those, if any, created by
the partnership agreement.
(vii) The Firm Shares or the Option Shares, as the case may be, to be
issued by the Company pursuant to the terms of this Agreement have been duly
authorized and, upon issuance and delivery against payment therefor in
accordance with the terms hereof, will be duly and validly issued and fully paid
and nonassessable, and will not have been issued in violation of or subject to
any preemptive right, co-sale right, right of first refusal or other similar
right arising under the Company's certificate of incorporation or bylaws or
Delaware General Corporation Law or, to such counsel's knowledge, in any other
agreement to which the Company is a party, other than such rights as have been
duly waived.
(viii) The Firm Shares or the Option Shares, as the case may be, to be sold
by the Selling Stockholder pursuant to the terms of this Agreement have been
duly and validly issued and are fully paid and nonassessable, and have not been
issued in violation of or subject to any preemptive right, co-sale right, right
of first refusal or other similar right arising under the Company's certificate
of incorporation or bylaws or Delaware General Corporation Law or, to such
counsel's knowledge, in any other agreement to which the Company is a party,
other than such rights as have been duly waived.
(ix) The Company has the corporate power and authority to enter into this
Agreement and to issue, sell and deliver to the Underwriters the Shares to be
issued and sold by it hereunder.
(x) This Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company and, assuming due authorization, execution and delivery by you, is a
valid and binding agreement of the Company, enforceable in accordance with its
terms, except as rights to indemnification hereunder may be limited by
applicable law and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally or by general equitable principles (whether relief
is sought in a proceeding at law or in equity).
(xi) The Registration Statement has become effective under the Act and,
to such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Securities Act.
B-2
(xii) The Registration Statement and the Prospectus, and each amendment or
supplement thereto (other than the financial statements (including supporting
schedules) and financial information and statistical data derived therefrom as
to which such counsel need not express an opinion), as of the effective date of
the Registration Statement, complied as to form in all material respects with
the requirements of the Act and the applicable Rules and Regulations.
(xiii) The information in the Prospectus under the caption "Description of
Capital Stock," to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by such counsel and is a fair summary of such
matters and conclusions; and the forms of certificates evidencing the Common
Stock and filed as exhibits to the Registration Statement comply with Delaware
law.
(xiv) The descriptions in the Registration Statement and the Prospectus of
the charter and bylaws of the Company, as amended to date, and of those statutes
described in the Registration Statement and Prospectus under the caption
"Description of Capital Stock" are accurate in all material respects and fairly
present in all material respects the information required to be presented by the
Act and the applicable Rules and Regulations.
(xv) To such counsel's knowledge, there are no agreements, contracts,
leases or documents to which the Company is a party of a character required to
be described or referred to in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which are not described or
referred to therein or filed as required.
(xvi) The performance of this Agreement and the consummation of the
transactions herein contemplated in connection with the issuance and sale of the
Shares to be sold by the Company (other than performance of the Company's
indemnification obligations hereunder, concerning which no opinion need be
expressed) will not (a) result in any material violation of the Company's
charter or bylaws, as amended to date, or (b) to such counsel's knowledge,
result in a material breach or violation of any of the terms and provisions of,
or constitute a default under, any bond, debenture, note or other evidence of
indebtedness, or any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument filed as exhibits to
the Registration Statement, or any applicable statute, rule or regulation known
to such counsel or, to such counsel's knowledge, any order, writ or decree of
any court, government or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries, or over any of their properties or
operations.
(xvii) No consent, approval, authorization or order of or qualification
with any court, government or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries, or over any of their properties or
operations is necessary in connection with the consummation by the Company of
the transactions herein contemplated in connection with the issuance and sale of
the Shares to be sold by the Company, except (a) such as have been obtained
under the Securities Act, (b) such as may be required under state or other
securities or Blue Sky laws in connection with the purchase and the distribution
of the Shares by the Underwriters, (c) such as may be required by the National
Association of Securities Dealers, Inc. and (d) such as may be required under
the federal or provincial laws of Canada.
B-3
(xviii) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against the Company or any of its subsidiaries
of a character required to be disclosed in the Registration Statement or the
Prospectus by the Act or the Rules and Regulations, other than those described
therein.
(xix) To such counsel's knowledge, neither the Company nor any of its
subsidiaries is currently (a) in material violation of its respective charter or
bylaws, as amended to date, or (b) in material breach of any applicable statute,
rule or regulation known to such counsel or, to such counsel's knowledge, any
order, writ or decree of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries, or over any of their
properties or operations.
(xx) To such counsel's knowledge, except as set forth in the
Registration Statement and Prospectus, no holders of Common Shares or other
securities of the Company have registration rights with respect to securities of
the Company and, except as set forth in the Registration Statement and
Prospectus, all holders of securities of the Company having rights known to such
counsel to registration of such shares of Common Stock or other securities,
because of the filing of the Registration Statement by the Company have, with
respect to the offering contemplated thereby, waived such rights (or such rights
have otherwise been validly waived) or such rights have expired by reason of
lapse of time following notification of the Company's intent to file the
Registration Statement or have included securities in the Registration Statement
pursuant to the exercise of and in full satisfaction of such rights.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel which leads them to believe
that, at the time the Registration Statement became effective and at any time
subsequent thereto up to and including the First Closing Date and on any later
date on which Option Shares are to be purchased, the Registration Statement and
any amendment or supplement thereto (other than the financial statements
(including supporting schedules) and other financial information and statistical
data derived therefrom, as to which such counsel need not express any comment)
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 at the First Closing Date or any later date on which the
Option Shares are to be purchased, as the case may be, the Registration
Statement, the Prospectus or any amendment or supplement thereto (except as
aforesaid) contained any untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
B-4
EXHIBIT C
MATTERS TO BE COVERED IN THE OPINION OF
INTELLECTUAL PROPERTY COUNSEL FOR THE COMPANY
---------------------------------------------
C-1
EXHIBIT D
MATTERS TO BE COVERED IN THE OPINION OF
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C.
------------------------------
D-1
EXHIBIT E
MATTERS TO BE COVERED IN THE
OPINION OF SELLING STOCKHOLDER COUNSEL
--------------------------------------
(i) The Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder.
(ii) The execution and delivery by the Selling Stockholder of, and the
performance by the Selling Stockholder of its obligations under, the
Underwriting Agreement and its Custody Agreement and its Power of Attorney will
not contravene or conflict with, result in a breach of, or constitute a default
under, the charter or by-laws of the Selling Stockholder, or, to such counsel's
knowledge, violate, result in a breach of or constitute a default under the
terms of any other agreement or instrument to which the Selling Stockholder is a
party or by which it is bound, or any judgment, order or decree applicable to
the Selling Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Selling
Stockholder.
(iii) The Selling Stockholder has good and valid title to all of the Common
Shares which may be sold by the Selling Stockholder under the Underwriting
Agreement and has the legal right and power, and all authorization and approvals
required under its charter and by-laws to enter into the Underwriting Agreement
and its Custody Agreement and its Power of Attorney, to sell, transfer and
deliver all of the Common Shares which may be sold by such Selling Stockholder
under the Underwriting Agreement and to comply with its other obligations under
the Underwriting Agreement, its Custody Agreement and its Power of Attorney.
(iv) Each of the Custody Agreement and Power of Attorney of the Selling
Stockholder has been duly authorized, executed and delivered by such Selling
Stockholder and is a valid and binding agreement of such Selling Stockholder,
enforceable in accordance with its terms, except as rights to indemnification
thereunder may be limited by applicable law and except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles.
(v) Assuming that the Underwriters purchase the Shares which are sold by
the Selling Stockholder pursuant to the Underwriting Agreement for value, in
good faith and without notice of any adverse claims, the delivery of such Shares
pursuant to the Underwriting Agreement will pass good and valid title to such
Shares, free and clear of any security interest, mortgage, pledge, lien
encumbrance or other claim known to such counsel.
(vi) To such counsel's knowledge, no consent, approval, authorization or
other order of, or registration or filing with, any court or governmental
authority or agency, is required for the consummation by the Selling Stockholder
of the transactions contemplated in the Underwriting Agreement, except as
required under the Securities Act, applicable state securities or blue sky laws,
and from the National Association of Securities Dealers, Inc.
E-1