EXHIBIT 1.1
9,000,000 Shares
AMERICAN PHARMACEUTICAL PARTNERS, INC.
Common Stock
UNDERWRITING AGREEMENT
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December [ ], 2001
CIBC World Markets Corp.
Banc of America Securities LLC
UBS Warburg LLC
c/o CIBC World Markets Corp.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
American Pharmaceutical Partners, Inc., a Delaware corporation (the
"Company") proposes, subject to the terms and conditions contained herein, to
sell to you and the other underwriters named on Schedule I to this Agreement
(the "Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of 9,000,000 shares (the "Firm Shares") of the
Company's Common Stock, $0.001 par value (the "Common Stock"). The respective
amounts of the Firm Shares to be purchased by each of the several Underwriters
are set forth opposite their names on Schedule I hereto. In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional 1,350,000 shares (the "Option Shares") of Common Stock from it for
the purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are together called the "Shares."
As part of the offering contemplated by this Agreement, the
Representatives have agreed to reserve out of the Firm Shares purchased by them
up to 900,000 shares (the "Directed Shares") for sale to the Company's
directors, officers, employees and other parties associated with the Company
(each, individually a "Participant" and collectively, the "Participants") under
the terms of the friends and family directed sales program (the "Friends and
Family Program"). Shares to be sold pursuant to the Friends and Family Program
shall be sold pursuant to this Agreement at the public offering price. Any
Directed Shares not confirmed for purchase by a Participant by 10:00 a.m. New
York time on the date immediately following the date of this Agreement will be
offered to the public by the Representatives as set forth in the Prospectus (as
such term is hereinafter defined).
1. Sale and Purchase of the Shares.
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On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at a price of $_____ per share (the
"Initial Price"), the number of Firm Shares set forth opposite the
name of such Underwriter under the column "Number of Firm Shares to be
Purchased from the Company" on Schedule I to this Agreement, subject
to adjustment in accordance with Section 11 hereof.
(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option
Shares at the Initial Price. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage (adjusted
by the Representatives to eliminate fractions) of the total number of
Option Shares to be purchased by the Underwriters as such Underwriter
is purchasing of the Firm Shares. Such option may be exercised only to
cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part (but not more
than once) at any time within 30 days after the date of this
Agreement, in such case upon written, facsimile or telegraphic notice,
or verbal or telephonic notice confirmed by written, facsimile or
telegraphic notice, by the Representatives to the Company no later
than 12:00 noon, New York City time, or at least two business days
before the Option Shares Closing Date (as defined below), setting
forth the number of Option Shares to be purchased and the time and
date of such purchase.
2. Delivery and Payment. Payment of the purchase price for, and
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delivery of certificate for, the Firm Shares shall be made at the offices of
CIBC World Markets Corp., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
at 10:00 a.m., New York City time, on the third business day following the date
of this Agreement or at such time on such other date, not later than ten (10)
business days after the date of this Agreement, as shall be agreed upon by the
Company and the Representatives (such time and date of delivery and payment are
called the "Firm Shares Closing Date").
In addition, in the event that any or all of the Option Shares are
purchased by the Underwriters, payment of the purchase price, and delivery of
the certificates, for such Option Shares shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each date of delivery as specified in the notice from the
Representatives to the Company (such time and date of delivery and payment are
called the "Option Shares Closing Date"). The Firm Shares Closing Date and the
Option Shares Closing Date are called, individually, a "Closing Date" and,
together, the "Closing Dates."
Payment shall be made to the Company by wire transfer of immediately
available funds or by certified or official bank check or checks payable in New
York Clearing House (same day) funds drawn to the order of the Company, against
delivery of the
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certificates to the Representatives for the respective accounts of the
Underwriters of certificates for the Shares to be purchased by them.
Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of exercise of the option as described in
Section l(b) and shall be delivered by or on behalf of the Company to the
Representatives through the facilities of the Depository Trust Company ("DTC")
for the account of such Underwriter. The Company will cause the certificates
representing the Shares to be made available for checking and packaging, at such
place as is designated by the Representatives, on the full business day before
the Firm Shares Closing Date (or the Option Shares Closing Date in the case of
the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The
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Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Commission a
Registration Statement (as hereinafter defined) on Form S-1 (No. 333-70900),
including a preliminary prospectus relating to the Shares, and such amendments
thereof as may have been required to the date of this Agreement. Copies of such
Registration Statement (including all amendments thereof) and of the related
Preliminary Prospectus (as hereinafter defined) have heretofore been delivered
by the Company to you. The term "Preliminary Prospectus" means any preliminary
prospectus (as described in Rule 430 of the Rules) included at any time as a
part of the Registration Statement or filed with the Commission by the Company
with the consent of the Representatives pursuant to Rule 424(a) of the Rules.
The term "Registration Statement" as used in this Agreement means the initial
registration statement (including all exhibits, financial schedules and
information deemed to be a part of the Registration Statement through
incorporation by reference or otherwise), as amended at the time and on the date
it becomes effective (the "Effective Date") including the information (if any)
deemed to be part thereof at the time of effectiveness pursuant to Rule 430A of
the Rules. If the Company has filed an abbreviated registration statement to
register additional Shares pursuant to Rule 462(b) under the Rules (the "462(b)
Registration Statement") then any reference herein to the Registration Statement
shall also be deemed to include such 462(b) Registration Statement. The term
"Prospectus" as used in this Agreement means the prospectus in the form included
in the Registration Statement at the time of effectiveness or, if Rule 430A of
the Rules is relied on, the term Prospectus shall also include the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules.
The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company hereby
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represents and warrants to each Underwriter as follows:
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(a) On the Effective Date, the Registration Statement complied,
and on the date of the Prospectus, the date any post-effective
amendment to the Registration Statement becomes effective, the date
any supplement or amendment to the Prospectus is filed with the
Commission and each Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will
comply, in all material respects, with the applicable provisions of
the Securities Act and the Rules and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations
of the Commission thereunder. The Registration Statement did not, as
of the Effective Date, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and
on the Effective Date and the other dates referred to above neither
the Registration Statement nor the Prospectus, nor any amendment
thereof or supplement thereto, will contain any untrue statement of a
material fact or will omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading. When any related preliminary prospectus was first
filed with the Commission (whether filed as part of the Registration
Statement or any amendment thereto or pursuant to Rule 424(a) of the
Rules) and when any amendment thereof or supplement thereto was first
filed with the Commission, such preliminary prospectus as amended or
supplemented complied in all material respects with the applicable
provisions of the Securities Act and the Rules and did not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. If applicable, each Preliminary
Prospectus and the Prospectus delivered to the Underwriters for use in
connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation S-T. If Rule 434
is used, the Company will comply with the requirements of Rule 434 and
the Prospectus shall not be "materially different," as such term is
used in Rule 434, from the Prospectus included in the Registration
Statement at the time it became effective. Notwithstanding the
foregoing, none of the representations and warranties in this
paragraph 4(a) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon, and in
conformity with, information herein or otherwise furnished in writing
by the Representatives on behalf of the several Underwriters for use
in the Registration Statement or the Prospectus. With respect to the
preceding sentence, the Company acknowledges that the only information
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus
is the statements contained in the fourth, eleventh, thirteenth (other
than the last sentence) and sixteenth paragraphs under the caption
"Underwriting" in the Prospectus.
(b) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are threatened
under the Securities Act. Any required filing of the Prospectus and
any supplement
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thereto pursuant to Rule 424(b) of the Rules has been or will be made
in the manner and within the time period required by such Rule 424(b).
(c) The consolidated financial statements of the Company
(including all notes and schedules thereto) included or incorporated
by reference in the Registration Statement and Prospectus present
fairly the financial position, the results of operations, the
statements of cash flows and the statements of stockholders' equity
and the other information purported to be shown therein of the Company
at the respective dates and for the respective periods to which they
apply; and except as expressly stated in the notes to the consolidated
financial statements, such consolidated financial statements and
related schedules and notes have been prepared in conformity with
generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a
fair presentation of the results for such periods have been made. The
summary and selected consolidated financial data included in the
Prospectus present fairly the information shown therein at the
respective dates and for the respective periods specified and have
been presented on a basis consistent with the consolidated financial
statements so set forth in the Prospectus and other financial
information.
(d) Ernst & Young LLP, whose reports are filed with the
Commission as a part of the Registration Statement, are and, during
the periods covered by their reports, were independent public
accountants as required by the Securities Act and the Rules.
(e) The Company and each of its Subsidiaries (as hereinafter
defined) is a corporation duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of
incorporation. The only subsidiaries of the Company are Pharmaceutical
Partners of Canada and ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. (collectively,
"Subsidiaries"). Each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business
conducted by it or location of the assets or properties owned, leased
or licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify would not have a
material adverse effect on the assets or properties, business, results
of operations or financial condition of the Company (a "Material
Adverse Effect"). Except as disclosed in the Prospectus, the Company
does not own or lease any real or personal property outside the United
States of America. The Company and each of its Subsidiaries has all
requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates
and permits of and from all governmental or regulatory bodies or any
other person or entity (collectively, the "Permits"), to own, lease
and license its assets and properties and conduct its business, all of
which are valid and in full force and effect, as described in the
Registration Statement and the Prospectus, except where the lack of
such Permits, individually or in the aggregate, would not have a
Material Adverse Effect. The Company and each of its Subsidiaries has
fulfilled and performed in all material respects all of its material
obligations with respect to such Permits and no event has occurred
that allows, or after notice or lapse of
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time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the Company thereunder.
Except as may be required under the Securities Act and state and
foreign Blue Sky laws, no other Permits are required to enter into,
deliver and perform this Agreement and to issue and sell the Shares.
(f) The Company and each of its Subsidiaries owns or possesses
adequate and enforceable rights to use all material trademarks,
trademark applications, trade names, service marks, copyrights,
copyright applications, licenses, know-how and other similar rights
and proprietary knowledge (collectively, "Intangibles") described in
the Prospectus as being owned by it or necessary for the conduct of
its business. Neither the Company nor any of its Subsidiaries has
received any notice of, or is not aware of, any infringement of or
conflict with asserted rights of others with respect to any
Intangibles.
(g) The Company has provided to counsel for the Representatives
a complete and correct list, dated December 10, 2001, of all patents
owned or in-licensed, including patents owned by American BioScience,
Inc., a California corporation (the "Parent") that protect the
Company's licensed product candidate ABI-007 (the "Owned Patents") by
the Company and its Subsidiaries and all patent applications filed by
or on behalf of the Company and its Subsidiaries (the "Patent
Applications"); all of the Owned Patents and Patent Applications have
been duly registered with, filed in or issued by, as the case may be,
the United States Patent and Trademark Office or other filing offices,
domestic or foreign, to the extent necessary to ensure full protection
under any applicable law or regulation, and such registrations,
filings, issuances and other actions remain in full force and effect;
to the knowledge of the Company, there is no patent or patent
application of any person that conflicts with any Owned Patent, other
than any such conflict that would not have a Material Adverse Effect.
To the Company's knowledge, there are no unpaid maintenance fees
relating to the Owned Patents; and no Owned Patent has lapsed and no
Patent Application been abandoned, in either case, that is material to
the business of the Company and its Subsidiaries as currently
conducted.
(h) The Company has provided to counsel for the Representatives
a complete and correct list, dated December 10, 2001, of all
Abbreviated New Drug Applications filed by or on behalf of the Company
and its Subsidiaries (the "ANDAs"); all of the ANDAs have been duly
filed with the U.S. Food and Drug Administration (the "FDA") and such
filings remain in full force and effect. Other than as described in
the Prospectus, to the Company's knowledge no patent or patent
application of any person conflicts with any of the ANDAs, other than
any such conflict that would not have a Material Adverse Effect.
(i) Except as disclosed in the Prospectus, the Company and each
of its Subsidiaries has good and marketable title to all items of real
property and good and marketable title to all personal property, which
is material to the Company individually or in the aggregate, described
in the Prospectus as being owned by it. Any real property and
buildings described in the Prospectus as being held under
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lease by the Company and each of its Subsidiaries is held by it under
valid, existing and enforceable leases, free and clear of all liens,
encumbrances, claims, security interests and defects, except such as
are described in the Registration Statement and the Prospectus or
would not have a Material Adverse Effect.
(j) Except as disclosed in this Prospectus, there are no
litigation or governmental proceedings to which the Company or its
Subsidiaries or any of their respective affiliates is subject or which
is pending or, to the knowledge of the Company, threatened, against
the Company or any of its Subsidiaries or any of their respective
affiliates, which, individually or in the aggregate, might have a
Material Adverse Effect, adversely affect the consummation of this
Agreement or which is required to be disclosed in the Registration
Statement and the Prospectus that is not so disclosed.
(k) The Company and its Subsidiaries possess adequate
certificates, authorities, licenses, approvals or permits issued by
appropriate governmental agencies or bodies, including without
limitation, the FDA, the Federal Trade Commission (the "FTC"), the
Consumer Product Safety Commission, and the U.S. Environmental
Protection Agency (the "EPA"), necessary to conduct the business now
operated by them, except where the failure to possess the same would
not have a Material Adverse Effect. Neither the Company nor its
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company or any of its
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(l) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described therein, (a) there has not been any material adverse change
with regard to the assets or properties, business, results of
operations or financial condition of the Company; (b) neither the
Company nor its Subsidiaries has sustained any loss or interference
with its assets, businesses or properties (whether owned or leased)
from fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which would
have a Material Adverse Effect; and (c) since the date of the latest
balance sheet included or incorporated by reference in the
Registration Statement and the Prospectus, except as reflected or
disclosed therein, neither the Company nor its Subsidiaries has (i)
issued any securities or incurred any liability or obligation, direct
or contingent, for borrowed money, except such liabilities or
obligations incurred in the ordinary course of business, (ii) entered
into any transaction not in the ordinary course of business or (iii)
declared or paid any dividend or made any distribution on any shares
of its stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its stock.
(m) There is no document, contract or other agreement of a
character required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed as
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required by the Securities Act or Rules. Each description of a
contract, document or other agreement in the Registration Statement
and the Prospectus accurately reflects in all material respects the
terms of the underlying document, contract or agreement. Each
agreement described in the Registration Statement and Prospectus or
listed in the Exhibits to the Registration Statement or incorporated
by reference is in full force and effect and is valid and enforceable
by and against the Company or any of its Subsidiaries, as the case may
be, in accordance with its terms. Neither the Company nor any of its
Subsidiaries, if such Subsidiary is a party, nor to the Company's
knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any
such agreement, and no event has occurred which with notice or lapse
of time or both would constitute such a default, in any such case
which default or event, individually or in the aggregate, would have a
Material Adverse Effect. The rights granted by Parent to the Company
pursuant to the License Agreement do not conflict with or violate any
right of any third party, except such as would not have a Material
Adverse Effect. No default exists, and no event has occurred which
with notice or lapse of time or both would constitute a default, in
the due performance and observance of any term, covenant or condition,
by the Company or any of its Subsidiaries, if the Subsidiary is a
party thereto, of any other agreement or instrument to which the
Company or such Subsidiary is a party or by which the Company, any of
its Subsidiaries or their properties or business may be bound or
affected which default or event, individually or in the aggregate,
would have a Material Adverse Effect.
(n) Neither the Company nor any of its Subsidiaries is in
violation of any term or provision of its charter or by-laws or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation, individually or
in the aggregate, would have a Material Adverse Effect.
(o) Except as disclosed in the Prospectus, neither the
execution, delivery or performance of this Agreement by the Company
nor the consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale by the Company
of the Shares and the consummation of the reincorporation merger of
the Company in Delaware (the "Reincorporation Merger"), the execution,
delivery and performance of the License Agreement dated as of November
20, 2001 (the "License Agreement") between the Company and the Parent,
and the execution, delivery and performance of the Agreement (Payment
Allocation) dated as of July 25, 2001 between the Company and the
Parent (the "Payment Allocation Agreement"), or any other agreement
entered into by the Company in connection with the sale of the Shares,
will give rise to a right to terminate or accelerate the due date of
any payment due under, or conflict with or result in the breach of any
term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or
assets of the Company or any of its Subsidiaries pursuant to the terms
of, any indenture, mortgage, deed of trust or other agreement or
instrument
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to which the Company or any of its Subsidiaries is a party or by which
either the Company or any of its Subsidiaries or any of their
properties or businesses is bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation applicable to the
Company or any of its Subsidiaries or violate any provision of the
charter or by-laws of the Company or any of its Subsidiaries, except
for such consents or waivers which have already been obtained and are
in full force and effect and except where such termination,
acceleration, conflict, breach, default and the like would not have a
Material Adverse Effect.
(p) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus,
except for subsequent issuances pursuant to employee benefit plans
described in the Prospectus or pursuant to the exercise of convertible
securities described in the Prospectus. The certificates evidencing
the Shares are in due and proper legal form and have been duly
authorized for issuance by the Company. All of the issued and
outstanding shares of Common Stock have been duly and validly issued
and are fully paid and nonassessable and were not issued in violation
of any preemptive or other similar right. Except as set forth in the
Prospectus, there are no statutory preemptive or other similar rights
to subscribe for or to purchase or acquire any shares of Common Stock
of the Company or its Subsidiaries or any such rights pursuant to its
certificate of incorporation or by-laws or any agreement or instrument
to or by which the Company or any of its Subsidiaries is a party or
bound. The Shares, when issued and sold pursuant to this Agreement,
will be duly and validly issued, fully paid and nonassessable and none
of them will be issued in violation of any preemptive or other similar
right. Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and there is no commitment, plan or
arrangement to issue, any share of stock of the Company or its
Subsidiaries or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock and the Shares conform
in all material respects to all statements in relation thereto
contained in the Registration Statement and the Prospectus. All
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued, and are fully paid and nonassessable
and are owned directly by the Company or by another wholly-owned
subsidiary of the Company free and clear of any security interests,
liens, encumbrances, equities or claims, other than those described in
the Prospectus.
(q) Except as disclosed in this Prospectus, no holder of any
security of the Company has the right to have any security owned by
such holder included in the Registration Statement or to demand
registration of any security owned by such holder during the period
ending 180 days after the date of this Agreement. Each stockholder who
is the owner of .5% or more of the Company's outstanding capital
stock, director and executive officer of the Company has delivered to
the Representatives such stockholder's enforceable written lock-up
agreement in the form attached to this Agreement ("Lock-Up
Agreement").
(r) All necessary corporate and stockholder action has been
duly and validly taken by the Company and its stockholders to
authorize the execution,
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delivery and performance of this Agreement, the issuance and sale of
the Shares by the Company, the consummation of the Reincorporation
Merger and the execution, delivery and performance of the License
Agreement and the Payment Allocation Agreement. This Agreement has
been duly and validly authorized, executed and delivered by the
Company and constitutes the legal, valid and binding obligations of
the Company enforceable against the Company in accordance with their
respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
(s) Neither the Company nor any of its Subsidiaries is involved
in any labor dispute nor, to the knowledge of the Company, is any such
dispute threatened, which dispute would have a Material Adverse
Effect. The Company is not aware of any threatened or pending
litigation between the Company or its Subsidiaries and any of its
executive officers which, if adversely determined, could have a
Material Adverse Effect.
(t) No transaction has occurred between or among the Company
and any of its officers or directors or five percent stockholders or
any affiliate or affiliates of any such officer or director or five
percent stockholders that is required to be described in and is not
described in the Registration Statement and the Prospectus.
(u) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the sale
or resale of any of the Shares.
(v) Each of the Company and its Subsidiaries has filed all
Federal, state, local and foreign tax returns which are required to be
filed through the date hereof, which returns are true and correct in
all material respects or has received extensions thereof, and has paid
all taxes shown on such returns and all assessments received by it to
the extent that the same are material and have become due. There are
no tax audits or investigations pending, which if adversely determined
would have a Material Adverse Effect; nor are there any material
proposed additional tax assessments against the Company and any of its
Subsidiaries.
(w) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation
("Nasdaq") National Market System, subject to official Notice of
Issuance. A registration statement has been filed on Form 8-A pursuant
to Section 12 of the Exchange Act, which registration statement
complies in all material respects with the Exchange Act.
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(x) The Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock
under the Exchange Act or the quotation of the Common Stock on the
Nasdaq National Market, nor has the Company received any notification
that the Commission or the Nasdaq National Market is contemplating
terminating such registration or quotation.
(y) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results
of operations of, the Company and its Subsidiaries. The Company and
each of its Subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain asset
accountability, (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 the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) The Company and its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the pharmaceutical industry;
all policies of insurance and fidelity or surety bonds insuring the
Company or any of its Subsidiaries or the Company's or its
Subsidiaries' respective businesses, assets, employees, officers and
directors are in full force and effect; the Company and each of its
Subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material
Adverse Effect. Neither the Company nor any Subsidiary has been denied
any insurance coverage which it has sought or for which it has
applied.
(aa) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed
by the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may
be necessary to qualify the Shares for public offering by the
Underwriters under the state securities or Blue Sky laws) has been
obtained or made and is in full force and effect.
(bb) There are no affiliations with the NASD among the Company's
officers, directors or, to the knowledge of the Company, any five
percent or greater stockholder of the Company, except as set forth in
the Registration Statement or otherwise disclosed in writing to the
Representatives.
11
(cc) Except as disclosed in this Prospectus, each of the Company
and its Subsidiaries is in compliance in all material respects with
all rules, laws and regulation 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; (ii) neither the Company nor its Subsidiaries has received
any notice from any governmental authority or third party of an
asserted claim under Environmental Laws; (iii) each of the Company and
its Subsidiaries has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and is in compliance in all material respects with all terms
and conditions of any such permit, license or approval; (iv) to the
Company's knowledge, no facts currently exist that will require the
Company or its Subsidiaries to make future material expenditures to
comply with Environmental Laws or in respect of any past or present
environmental condition; and (v) no property which is or has been
owned, leased or occupied by the Company or its Subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation of Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et. seq. "CERCLA") or otherwise
designated as a contaminated site under applicable state or local law.
Neither the Company nor any of its Subsidiaries has been named as a
"potentially responsible party" under the CERCLA.
(dd) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of proceeds thereof as
described in the Prospectus, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(ee) The Company, its Subsidiaries or any other person associated
with or acting on behalf of the Company or its Subsidiaries including,
without limitation, any director, officer, agent or employee of the
Company or its Subsidiaries has not, directly or indirectly, while
acting on behalf of the Company or its Subsidiaries (i) used any
corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns
from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other
unlawful payment.
(ff) Neither the Company nor any other person associated with or
acting on behalf of the Company including, without limitation, any
director, officer, agent or employee of the Company has offered or
caused the Underwriters to offer any of the Shares to any person
pursuant to the Friends and Family Program with the specific intent to
unlawfully influence (i) a customer or supplier of the Company to
alter the customer's or supplier's level or type of business with the
Company or (ii) a trade journalist or publication to write or publish
favorable information about the Company or its products.
12
5. Conditions of the Underwriters' Obligations. The obligations of
-------------------------------------------
the Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in
accordance with Section 7(a) of this Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be
in effect and no order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for such
purpose shall be pending before or threatened by the Commission, and
any requests for additional information on the part of the Commission
(to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Commission and the Representatives. If the Company has elected to rely
upon Rule 430A, Rule 430A information previously omitted from the
effective Registration Statement pursuant to Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period and the Company shall have provided
evidence satisfactory to the Underwriters of such timely filing, or a
post-effective amendment to the Registration Statement providing such
information shall have been promptly filed and declared effective in
accordance with the requirements of Rule 430A. If the Company has
elected to rely upon Rule 434, a term sheet shall have been
transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period.
(c) The representations and warranties of the Company contained
in this Agreement and in the certificates delivered pursuant to
Section (d) shall be true and correct when made and on and as of each
Closing Date as if made on such date. The Company shall have performed
all covenants and agreements and satisfied all the conditions
contained in this Agreement required to be performed or satisfied by
them at or before such Closing Date.
(d) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such
Closing Date, of the chief executive or chief operating officer and
the chief financial officer or chief accounting officer of the Company
to the effect that (i) the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and this Agreement
and that the representations and warranties of the Company in this
Agreement are true and correct on and as of such Closing Date with the
same effect as if made on such Closing Date and the Company has
performed all covenants and agreements and satisfied all conditions
contained in this Agreement required to be performed or satisfied by
it at or prior to such Closing Date, and (ii) no stop order suspending
the effectiveness of the Registration Statement has been issued and to
the best of their knowledge, no proceedings for that purpose have been
instituted or are pending under the Securities Act.
13
(e) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from
Ernst & Young LLP addressed to the Representatives and dated,
respectively, the date of this Agreement and each such Closing Date,
in form and substance reasonably satisfactory to the Representatives
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus.
(f) The Representatives shall have received on each Closing
Date from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing Date,
and stating in effect that:
(i) Each of the Company and its Subsidiaries has been duly
organized and is validly existing as a corporation in good
standing under the laws of their respective jurisdictions of
incorporation. Each of the Company and its Subsidiaries is duly
qualified to transact business and in good standing as a foreign
corporation in Delaware, California [MoFo to provide].
(ii) Each of the Company and its Subsidiaries has all
requisite corporate power and authority to own, lease and license
its assets and properties and conduct its business as now being
conducted as described in the Registration Statement and the
Prospectus and with respect to the Company to enter into, deliver
and perform its obligations under this Agreement and to issue and
sell the Shares other than those required under the state and
foreign Blue Sky laws.
(iii) The Company has authorized, issued and outstanding
capital stock as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization" as of the dates
stated therein, except for subsequent issuances pursuant to
employee benefit plans described in the Prospectus or pursuant to
the exercise of convertible securities described in the
Prospectus; the certificates evidencing the Shares are in due and
proper legal form and have been duly authorized for issuance by
the Company; all of the outstanding shares of Common Stock of the
Company have been duly and validly authorized and issued and are
fully paid and nonassessable and, to such counsel's knowledge,
none of them was issued in violation of any preemptive or other
similar right. The Shares when issued and sold pursuant to this
Agreement will be duly and validly issued, outstanding, fully
paid and nonassessable and, to such counsel's knowledge, none of
them will have been issued in violation of any preemptive or
other similar right. To such counsel's knowledge, except as
disclosed in the Registration Statement and the Prospectus, there
are no preemptive or other rights to subscribe for or to purchase
or any restriction upon the voting or transfer of any securities
of the Company pursuant to the Company's Certificate of
Incorporation or by-laws or other governing documents or any
agreements or other instruments to which the Company
14
is a party or by which it is bound. To the best of such counsel's
knowledge, except as disclosed in the Registration Statement and
the Prospectus, there is no outstanding option, warrant or other
right calling for the issuance of, and no commitment, plan or
arrangement to issue, any share of stock of the Company or any
security convertible into, exercisable for, or exchangeable for
stock of the Company. The Common Stock and the Shares conform in
all material respects to the descriptions thereof contained in
the Registration Statement and the Prospectus. The issued and
outstanding shares of capital stock of each of the Company's
Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are owned by the Company or by
another wholly owned subsidiary of the Company, free and clear of
any perfected security interest or, to the knowledge of such
counsel, any other security interests, liens, encumbrances,
equities or claims, other than those contained in the
Registration Statement and the Prospectus.
(iv) All necessary corporate and stockholder action has
been duly and validly taken by the Company and its stockholders
to authorize the execution, delivery and performance of this
Agreement and for the consummation of the Reincorporation Merger
and the issuance and sale of the Shares. This Agreement has been
duly and validly authorized, executed and delivered by the
Company.
(v) Neither the execution, delivery and performance of
this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation,
the issuance and sale by the Company of the Shares and the
consummation of the Reincorporation Merger) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with
notice or lapse of time, or both, would constitute a default)
under, or require consent or waiver under, or result in the
execution or imposition of
(vi) any lien, charge, claim, security interest or
encumbrance upon any properties or assets of the Company or any
Subsidiary pursuant to (i) any agreement filed as an Exhibit to
the Registration Statement, (ii) any judgment, decree, order,
statute, rule or regulation, domestic or foreign, of which such
counsel is aware or (iii) any provision of the charter or by-laws
of the Company or any Subsidiary.
(vii) No consent, approval, authorization, license,
registration, qualification or order of any court or governmental
agency or regulatory body is required for the due authorization,
execution, delivery or performance of this Agreement by the
Company or the consummation of the transactions contemplated
hereby or thereby, including the Reincorporation Merger, except
such as have been obtained and such as may be required under
state securities or Blue Sky laws in connection with
15
the purchase and distribution of the Shares by the several Underwriters and by
the NASD.
(viii) Except as disclosed in the Prospectus, to such counsel's knowledge,
there is no litigation or governmental or other proceeding or investigation,
before any court or before or by any public body or board pending or threatened
against, or involving the assets, properties or businesses of, the Company which
is required to be disclosed in the Registration Statement and the Prospectus or
which would have a Material Adverse Effect.
(ix) The statements in the Prospectus under the captions "Description of
Capital Stock," "Material U.S. Federal Tax Considerations for Non-U.S. Holders"
and "Shares Eligible for Future Sale" insofar as such statements constitute a
summary of documents referred to therein or matters of law, are accurate in all
material respects and accurately present the information called for with respect
to such documents and matters. Accurate copies of all contracts and other
documents required to be filed as exhibits to, or described in, the Registration
Statement have been so filed with the Commission or are fairly described in the
Registration Statement, as the case may be.
(x) The Registration Statement, all Preliminary Prospectuses and the
Prospectus and each amendment or supplement thereto (except for the financial
statements and schedules and other financial and statistical data included
therein, as to which such counsel expresses no opinion) comply as to form in all
material respects with the requirements of the Securities Act and the Rules.
(xi) The Registration Statement is effective under the Securities 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 threatened, pending or contemplated. Any required filing
of the Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period required
by such Rule 424(b).
(xii) The Shares have been approved for listing on the Nasdaq Stock
Market's National Market.
(xiii) The capital stock of the Company conforms in all material respects
to the description thereof contained in the Prospectus under the caption
"Description of Capital Stock."
(xiv) The Company is not an "investment company" or an entity controlled by
an "investment company" as such terms are defined in the Investment Company Act
of 1940, as amended.
16
To the extent deemed advisable by such counsel, they may rely as to matters
of fact on certificates of responsible officers of the Company and public
officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the States of New York and California, the General Corporation Law of the State
of Delaware and the Federal laws of the United States; provided that such
counsel shall state that in their opinion the Underwriters and they are
justified in relying on such other opinions. Copies of such certificates and
other opinions shall be furnished to the Representatives and counsel for the
Underwriters.
In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the Representatives and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus (except as specified
in the foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel which lead such counsel to believe that the
Registration Statement at the time it became effective (except with respect to
the financial statements and notes and schedules thereto and other financial
data, as to which such counsel need express no belief) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus as amended or supplemented (except with respect to the
financial statements, notes and schedules thereto and other financial data, as
to which such counsel need make no statement) on the date thereof contained any
untrue statement of a material fact or omitted 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.
(g) The Representatives shall have received on each Closing Date from
▇▇▇▇ ▇▇▇▇▇▇▇, general counsel of the Company, an opinion, addressed to the
Representatives and dated such Closing Date, as set forth in Exhibit A
hereto.
(h) The Representatives shall have received on each Closing Date from
Leydig, ▇▇▇▇ & ▇▇▇▇▇ LLP, patent counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, as set forth
in Exhibit B hereto.
(i) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives, and their
counsel and the Underwriters shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ an
opinion, addressed to the Representatives and dated such Closing Date, with
respect to the Shares, the Registration Statement and the Prospectus, and
such other related matters, as the Representatives may reasonably request,
and the Company shall have furnished to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ such documents as
they may reasonably request for the purpose of enabling them to pass upon
such matters.
17
(j) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section 4(q).
(k) The Company shall have furnished or caused to be furnished to the
Representatives such further certificates or documents as the
Representatives shall have reasonably requested.
6. Covenants of the Company.
------------------------
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and
any amendments thereto, to become effective as promptly as possible. The
Company shall prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the
second business day following the execution and delivery of this Agreement,
or, if applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities Act.
(ii) The Company shall promptly advise the Representatives in writing
(i) when any amendment to the Registration Statement shall have become
effective, (ii) of any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any additional information,
(iii) of the prevention or suspension of the use of any preliminary
prospectus or the Prospectus or of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the institution or threatening of any proceeding for that purpose and (iv)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose. The
Company shall not file any amendment of the Registration Statement or
supplement to the Prospectus or any document incorporated by reference in
the Registration Statement unless the Company has furnished the
Representatives a copy for its review prior to filing and shall not file
any such proposed amendment or supplement to which the Representatives
reasonably object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any event
occurs as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to
18
comply with the Securities Act or the Rules, the Company promptly shall
prepare and file with the Commission, subject to the second sentence of
paragraph (ii) of this Section 6(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall effect such
compliance.
(iv) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not later
than 45 days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective Date occurs
(or 90 days if such 12-month period coincides with the Company's fiscal
year), an earning statement (which need not be audited) of the Company,
covering such 12-month period, which shall satisfy the provisions of
Section 11(a) of the Securities Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including all exhibits thereto and amendments thereof) and to
each other Underwriter a copy of the Registration Statement (without
exhibits thereto) and all amendments thereof and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Securities
Act or the Rules, as many copies of any preliminary prospectus and the
Prospectus and any amendments thereof and supplements thereto as the
Representatives may reasonably request. If applicable, the copies of the
Registration Statement and Prospectus and each amendment and supplement
thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(vi) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale in
connection with the offering under the laws of such jurisdictions as the
Representatives may designate and shall maintain such qualifications in
effect so long as required for the distribution of the Shares; provided,
however, that the Company shall not be required in connection therewith, as
a condition thereof, to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or subject itself
to taxation as doing business in any jurisdiction.
(vii) The Company, during the period when the Prospectus is required
to be delivered under the Securities Act and the Rules or the Exchange Act,
will file all documents required to be filed with the Commission pursuant
to Section 13, 14 or 15 if the Exchange Act within the time periods
required by the Exchange Act and the regulations promulgated thereunder.
19
(viii) Without the prior written consent of CIBC World Markets Corp.,
for a period of 180 days after the date of this Agreement, the Company
shall not issue, sell or register with the Commission (other than on Form
S-8 or on any successor form), or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any securities
convertible into, exercisable for or exchangeable for equity securities of
the Company), except for the issuance of the Shares pursuant to the
Registration Statement and the issuance of shares pursuant to the Company's
existing stock option plan or bonus plan as described in the Registration
Statement and the Prospectus.
(ix) On or before completion of this offering, the Company shall make
all filings required under applicable securities laws and by the Nasdaq
National Market (including any required registration under the Exchange
Act).
(x) Prior to the Closing Date, the Company will issue no press release
or other communications directly or indirectly and hold no press conference
with respect to the Company, the condition, financial or otherwise, or the
earnings, business affairs or business prospects of any of them, or the
offering of the Shares without the prior written consent of the
Representatives unless in the judgment of the Company and its counsel, and
after notification to the Representatives, to the extent possible, such
press release or communication is required by law.
(xi) The Company will apply the net proceeds from the offering of the
Shares in the manner set forth under "Use of Proceeds" in the Prospectus.
(xii) The Company will comply with all applicable securities laws and
other applicable laws, rules and regulations in each foreign jurisdiction
in which the Directed Shares are offered in connection with the Friends and
Family Program.
(xiii) The Company will ensure that the Directed Shares will be
restricted, to the extent required by the NASD or the NASD rules, from
sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of the effectiveness of the Registration
Statement. The Representatives will notify the Company as to which
Participants will need to be so restricted. The Company shall direct the
transfer agent to place stop transfer restrictions upon such securities for
such period of time.
(b) The Company agrees to pay, or reimburse if paid by the Representatives,
whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the public offering
of the Shares and the performance of the obligations of the Company under this
Agreement including those relating to: (i) the preparation,
20
printing, filing and distribution of the Registration Statement including all
exhibits thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statement and the Prospectus and any
document incorporated by reference therein, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the various jurisdictions referred to in Section 7(a)(vi), including the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such registration and qualification and the preparation, printing,
distribution and shipment of preliminary and supplementary Blue Sky memoranda;
(iv) the furnishing (including costs of shipping and mailing) to the
Representatives and to the Underwriters of copies of each preliminary
prospectus, the Prospectus and all amendments or supplements to the Prospectus,
and of the several documents required by this Section to be so furnished, as may
be reasonably requested for use in connection with the offering and sale of the
Shares by the Underwriters or by dealers to whom Shares may be sold; (v) the
filing fees of the NASD in connection with its review of the terms of the public
offering and reasonable fees and disbursements of counsel for the Underwriters
in connection with such review; (vi) inclusion of the Shares for quotation on
the Nasdaq National Market; and (vii) all transfer taxes, if any, with respect
to the sale and delivery of the Shares by the Company to the Underwriters (viii)
payments to counsel for costs incurred by the Underwriters in connection with
the Friends and Family Program and payment of any stamp duties, similar taxes or
duties or other taxes, if any, incurred by the Underwriters in connection with
the Friends and Family Program. Subject to the provisions of Section 10, the
Underwriters agree to pay, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses incident
to the performance of the obligations of the Underwriters under this Agreement
not payable by the Company pursuant to the preceding sentence, including,
without limitation, the fees and disbursements of counsel for the Underwriters.
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act against any and all
losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto, or in any Blue Sky application or other information or other documents
executed by the Company filed in any state or other jurisdiction to qualify any
or all of the Shares under the securities laws thereof (any such application,
document
21
or information being hereinafter referred to as a "Blue Sky Application") or
arise out of or are based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) in whole or in part upon any breach of
the representations and warranties set forth in Section 4 hereof, or (iii) in
whole or in part upon any failure of the Company to perform any of its
obligations hereunder or under law; provided, however, that such indemnity shall
not inure to the benefit of any Underwriter (or any person controlling such
Underwriter) on account of any losses, claims, damages or liabilities arising
from the sale of the Shares to any person by such Underwriter if such untrue
statement or omission or alleged untrue statement or omission was made in such
preliminary prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement thereto, or in any Blue Sky Application in reliance upon
and in conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use therein;
provided, further, that with respect to any untrue statement or omission of
material fact made in any Preliminary Prospectus, the indemnity agreement
contained in this Section 7(a) shall not inure to the benefit of any Underwriter
from whom the person asserting any such loss, claim, damage or liability
purchased the Shares concerned, to the extent that any such loss, claim, damage,
or liability of such Underwriter occurs under the circumstance where it shall be
determined by a court of competent jurisdiction by final and non-appealable
judgment that (i) the Company had previously and timely furnished copies of the
Prospectus to the Representatives, (ii) the untrue statement or omission of a
material fact contained in the Preliminary Prospectus was corrected in the
Prospectus and (iii) such loss, claim, damage or liability results from the fact
that there was not sent or given to such person at or prior to the written
confirmation of the sale of such Shares to such person, a copy of the
Prospectus. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
The Company agrees to indemnify and hold harmless the Representatives and
each person, if any, who controls any Representative within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages, expenses and liabilities (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted) (i) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any material prepared by or
with the consent of the Company for distribution to Participants in connection
with the Friends and Family Program or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) arising
out of or based upon the failure of any Participant to pay for and accept
delivery of Directed Shares otherwise reserved for such Participant pursuant to
the Friends and Family Program, and (iii) related to, arising out of, or in
connection with the Friends and Family Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
the Representatives.
22
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the Company who
signs the Registration Statement, to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, contained in the fourth, eleventh,
thirteenth (other than the last sentence) and sixteenth paragraphs under the
caption "Underwriting"; provided, however, that the obligation of each
Underwriter to indemnify the Company (including any controlling person, director
or officer thereof) shall be limited to the net proceeds received by the Company
from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Section 7(a), 7(b), or 7(d) shall be available to any party who shall fail to
give notice as provided in this Section 7(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was prejudiced by the failure to give such notice but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
it from any liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The indemnified party
shall have the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the indemnified party
shall have been advised by counsel that there may be one or more legal defenses
available to it which are different from or in addition to those available to
the indemnifying party (in which case the indemnifying parties shall not have
the right to direct the defense of such action
23
on behalf of the indemnified party) or (iii) the indemnifying parties shall
not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without its
written consent, which consent shall not be unreasonably withheld or
delayed.
(d) Without limitation of and in addition to its obligations under the
other paragraphs of this Section 7, the Company agrees to indemnify and
hold harmless U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. (the "Independent
Underwriter") and each person who controls the Independent Underwriter
within the meaning of either the Act or the Exchange Act against any and
all losses, claims, damages, Securities or liabilities, joint or several,
to which they or any of them may becomes subject, insofar as such losses,
claims, damages or liabilities (or action in respect thereof) arise out of
or are based upon the Independent Underwriter's acting as a "qualified
independent underwriter" (within the meaning of National Association of
Securities Dealers, Inc. Conduct Rule 2720) in connection with the offering
contemplated by this Agreement, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability is finally judicially determined to have
resulted from gross negligence or bad faith of the Independent Underwriter.
8. Contribution. In order to provide for just and equitable contribution in
------------
circumstances in which the indemnification provided for in Section 7(a), 7(b) or
7(c) is due in accordance with its terms but for any reason is held to be
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a), 7(b) or 7(c), then each indemnifying party shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by any person entitled hereunder
to contribution from any person who may be liable for contribution) to which the
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares or, if such allocation
is not permitted by applicable law or indemnification is not available as a
result of the indemnifying party not having received notice as provided in
Section 8 hereof, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts but before deducting expenses) received by the
Company, as set forth in the table on the cover page of the Prospectus, bear to
(y) the underwriting discounts received by the Underwriters, as set forth in the
table on the cover page of the Prospectus. Benefits received by the Independent
Underwriter in its capacity as "qualified
24
independent underwriter" shall be deemed to be equal to the compensation
received by the Independent Underwriter for acting in such capacity. The
relative fault of the Company or the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact related to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 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. Notwithstanding the provisions of this Section
8, (i) in no case shall any Underwriter (except as may be provided in the
Agreement Among Underwriters) be liable or responsible for any amount in excess
of the underwriting discount applicable to the Shares purchased by such
Underwriter hereunder; (ii) the Independent Underwriter shall not be responsible
for any amount in excess of the compensation received by the Independent
Underwriter for acting as the "qualified independent underwriter," and (iii) the
Company shall be liable and responsible for any amount in excess of such
underwriting discount; provided, however, that 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. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i), (ii)
and (iii) in the immediately preceding sentence of this Section 8. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this
Section, notify such party or parties from whom contribution may be sought, but
the omission so to notify such party or parties from whom contribution may be
sought shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this Section. No party shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its written consent. The
Underwriter's obligations to contribute pursuant to this Section 8 are several
in proportion to their respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with respect to the Shares
-----------
to be purchased on a Closing Date by the Representatives by notifying the
Company in writing at any time
(a) in the absolute discretion of the Representatives at or before any
Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with the
offering; (iii) if there shall be such a material adverse change in
25
general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States is
such as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares; (iv) if trading in the Shares has been
suspended by the Commission or trading generally on the New York Stock
Exchange, Inc., on the American Stock Exchange, Inc. or the Nasdaq National
Market has been suspended or limited, or minimum or maximum ranges for
prices for securities shall have been fixed, or maximum ranges for prices
for securities have been required, by said exchanges or by order of the
Commission, the National Association of Securities Dealers, Inc., or any
other governmental or regulatory authority; or (v) if a banking moratorium
has been declared by any state or Federal authority; or (vi) if, in the
judgment of the Representatives, there has occurred a Material Adverse
Effect, or
(b) at or before any Closing Date, that any of the conditions specified
in Section 5 shall not have been fulfilled when and as required by this
Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that (y) if this Agreement
is terminated by the Representatives or the Underwriters because of any failure,
refusal or inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contemplation of performing their
obligations hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by it under this Agreement, without a
specific reason sufficient hereunder to justify cancellation or termination of
its obligations under this Agreement, shall be relieved of liability to the
Company or to the other Underwriters for damages occasioned by its failure or
refusal.
10. Substitution of Underwriters. If one or more of the Underwriters shall
----------------------------
fail (other than for a specific reason sufficient to justify the cancellation or
termination of this Agreement under Section 10) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase such
Shares on the terms herein set forth in proportion to their respective
obligations hereunder; provided, that in no event shall the maximum number
of Shares that any Underwriter has agreed to purchase pursuant to Section 1
be increased pursuant to this Section 10 by more than one-ninth of such
number of Shares without the written consent of such Underwriter, or
26
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to one additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares upon
the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
five business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(b),
7, 8 and 9. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
11. Miscellaneous. The respective agreements, representations, warranties,
-------------
indemnities and other statements of the Company or its officers, and of the
Underwriters set forth in or made pursuant to this Agreement shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of the officers, directors or controlling
persons referred to in Sections 8 and 9 hereof, and shall survive delivery of
and payment for the Shares. The provisions of Sections 7(b), 8, 9 and 10 shall
survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters,
the Company and their respective successors and assigns, and, to the extent
expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Representatives, c/o CIBC World Markets Corp., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention:________________, with a copy to
___________________ and (b) if to the Company, to its agent for service as such
agent's address appears on the cover page of the Registration Statement with a
copy to ▇▇▇▇▇▇▇ Soon-Shiong.
This Agreement shall be governed by and construed in accordance with
the laws
27
of the State of New York, applicable to agreements made and to be fully
performed therein.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
28
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
American Pharmaceutical Partners, Inc.
By __________________________________
Name:
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
BANC OF AMERICA SECURITIES LLC
UBS WARBURG LLC
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By CIBC WORLD MARKETS CORP.
By__________________________
Name:
Title:
S-1
SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- --------------
CIBC World Markets Corp.
Banc of America Securities LLC
UBS Warburg LLC
_______________
Total
Sch. I