Exhibit 1.1
9,000,000 SHARES
RIGEL PHARMACEUTICALS, INC.
COMMON STOCK ($0.001 PAR VALUE)
UNDERWRITING AGREEMENT
[ ], 2000
___________[ ], 2000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇ Brothers Inc.
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
Rigel Pharmaceuticals, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "UNDERWRITERS") 9,000,000 shares of its Common Stock ($0.001 Par
Value) (the "FIRM SHARES"). The Company also proposes to issue and sell to
the several Underwriters an additional 1,350,000 shares of its Common Stock
(the "ADDITIONAL SHARES"), if and to the extent that you, as Managers of the
offering, shall have determined to exercise, on behalf of the Underwriters,
the right to purchase such shares of common stock granted to the Underwriters
in Section 2 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shares of Common
Stock ($0.001 Par Value) of the Company to be outstanding after giving effect
to the sales contemplated hereby are hereinafter referred to as the "COMMON
STOCK."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to
the Shares. The registration statement as amended at the time it becomes
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), is
hereinafter referred to as the "REGISTRATION STATEMENT;" the prospectus in
the form first used to confirm sales of Shares is hereinafter referred to as
the "PROSPECTUS." If the Company has filed an abbreviated registration
statement to register additional shares of Common Stock pursuant to Rule
462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then
any reference herein to the term "REGISTRATION STATEMENT" shall be deemed to
include such Rule 462 Registration Statement.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") has agreed to
reserve a portion of the Shares to be purchased by it under this Agreement for
sale to the Company's directors, officers, employees and business associates
and other parties related to the Company (collectively, "PARTICIPANTS"), as set
forth in the Prospectus under the heading "Underwriters" (the "DIRECTED SHARE
PROGRAM"). The Shares to be sold by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its affiliates pursuant
to the Directed Share Program are referred to
2
hereinafter as the "DIRECTED SHARES." Any Directed Shares not confirmed for
purchase by any Participants by the end of the business day on which this
Agreement is executed will be offered to the public by the Underwriters as set
forth in the Prospectus.
1. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or to
the Company's knowledge threatened by the Commission.
(b) (i) The Registration Statement, when it became effective,
did not contain and, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and (iii)
the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State
of Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company. The Company does not
have any subsidiaries and does not own the capital stock or have an
equity interest or right in any other entity.
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The authorized, issued and outstanding capital stock of
the Company as of the date indicated is as set forth under the heading
"Capitalization" in the Prospectus, both prior and after giving effect
to the conversion of the Company's preferred stock (par value $0.001
per share) (the "PREFERRED STOCK"), into
3
Common Stock. The securities of the Company have been issued in
compliance, in all material respect, with all federal and state
securities laws. Except as disclosed in the Prospectus, there are no
outstanding options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or rights to subscribe for or to
purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of the Company's
capital stock or any such options, rights, convertible securities or
obligations, other than options issued pursuant to the Company's
employee stock purchase and option plans in the ordinary course of
business and as set forth in the Prospectus. Since June 30, 2000, the
Company has not issued any securities other than the Common Stock of
the Company pursuant to the exercise of previously outstanding and
privately granted options pursuant to the 2000 Equity Incentive Plan
(the "PLAN") and options granted pursuant to the Plan or as disclosed
in the Prospectus.
(f) On the Closing Date (as defined below), the authorized
capital stock of the Company will conform as to legal matters to the
description thereof contained in the Prospectus. The descriptions of
the Company's warrants, stock option and purchase plans and the options
or other rights granted and exercised thereunder set forth in the
Prospectus accurately and fairly describe, in all material respects,
such securities or the information with respect to such plans,
arrangements, options and rights.
(g) The shares of Common Stock and Preferred Stock outstanding
prior to the issuance of the Shares have been duly authorized and are
validly issued, fully paid and non-assessable.
(h) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable.
(i) The Common Stock Purchase Agreement, dated _______, 2000
(the "PURCHASE AGREEMENT") relating to the shares of Common Stock (the
"PLACEMENT SHARES") issuable to Novartis Pharm AG concurrent with the
offering contemplated hereby (the "PRIVATE PLACEMENT") has been duly
authorized, executed and delivered and constitutes a binding agreement,
enforceable against the Company in accordance with its terms. The
Company has received directly, or in escrow, all of the funds necessary
to effect the closing contemplated by the Purchase Agreement. The
Placement Shares have been duly authorized and, when issued and
delivered in accordance with the terms of the Purchase Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of
such Placement Shares will not be subject to any preemptive or similar
rights. The offer and sale of the Placement Shares is in compliance
with applicable state and federal law, and no registration under the
Securities Act is required in connection with such offer and sale.
4
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement and
the Purchase Agreement will not contravene any provision of applicable
law or the certificate of incorporation or by-laws of the Company or
any agreement or other instrument binding upon the Company that is
material to the Company, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company
and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency (including, but not limited to,
any filing under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of
1976 (the "HSR")) is required for the performance by the Company of its
obligations under this Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in connection with
the offer and sale of the Shares or as may be required by the rules and
regulations of the National Association of Securities Dealers, Inc.
(the "NASD").
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement).
(l) There are no legal or governmental proceedings pending or
to the Company's knowledge threatened to which the Company is a party
or to which any of the properties of the Company is subject that are
required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as required.
(m) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(n) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(o) The Company (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to
conduct its business and (iii) is in compliance with all terms and
condi-
5
tions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the
Company.
(p) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company.
(q) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to
require the Company to include such securities with the Shares
registered pursuant to the Registration Statement, except such as have
been validly waived.
(r) Except as described in the Prospectus, the Company (i)
owns or possesses, or can acquire on reasonable terms, all material
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by it in
connection with the business of the Company as currently conducted and
as proposed to be conducted, as described in the Prospectus, (ii) has
not received any notice and has no knowledge of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
affect on the Company, (iii) is not subject to any judgment, order,
writ, injunction or decree of any court or any Federal, state, local,
foreign or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or any arbitrator, or
has entered into or is a party to any contract, which restricts or
impairs the use of any of the foregoing which would have a material
adverse effect on the Company, (iv) has not been the subject of any
claims with respect to the validity or ownership of any of the
foregoing, and (v) is not aware of any prior art that may render any
patent application owned by the Company unpatentable which has not been
disclosed to the United States Patent & Trademark Office and which
could have a material adverse effect on the Company.
(s) No material labor dispute with the employees of the
Company exists, except as described in the Prospectus, or, to the
knowledge of the Company, is imminent; and the Company is not aware of
any existing, threatened or imminent
6
labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could have a material adverse effect
on the Company.
(t) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are prudent and customary in the business in which it is engaged; the
Company has not been refused any insurance coverage sought or applied
for; and the Company has no 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 on the Company, except as described in the
Prospectus.
(u) The Company possesses all certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct its business, except to the extent
that the failure to obtain such certificates, authorizations and
permits would not have a material adverse effect on the Company, and
the Company has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the Company, except as described the Prospectus.
(v) The Company does not hold title to any real property and
has good and marketable title to all personal property owned by it
which is material to the business of the Company free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by the Company; and any real property and buildings
held under lease by the Company and are held by it under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company, in each case except as
described in the Prospectus.
(w) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or
specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(3) access to assets is permitted only in accordance with management's
general or specific authorization; and (4) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(x) The financial statements included in the Prospectus
present fairly the financial position of the Company as of the dates
shown and its results of opera-
7
tions and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally
accepted accounting principles in the United States ("GAAP") applied
on a consistent basis and the schedules included in each Registration
Statement present fairly the information required to be stated
therein; and the assumptions used in preparing the pro forma financial
statements included in each Registration Statement and the Prospectus
provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein,
the related pro forma adjustments give appropriate effect to those
assumptions and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical
financial statement amounts. No financial statements are required to
be included in the Registration Statement that have not been so
included.
(y) Except as disclosed in the Prospectus, all material Tax
returns required to be filed by the Company have been filed and all
such returns are true, complete, and correct in all material respects.
All material Taxes that are due or claimed to be due from the Company
have been paid other than those (i) currently payable without penalty
or interest or (ii) being contested in good faith and by appropriate
proceedings and for which, in the case of both clauses (i) and (ii),
adequate reserves have been established on the books and records of the
Company in accordance with GAAP. To the Company's knowledge, the
accruals and reserves on the books and records of the Company in
respect of any material Tax liability for any taxable period not
finally determined are adequate to meet any assessments of Tax for any
such period. For purposes of this Agreement, the term "TAX" and "TAXES"
shall mean all Federal, state, local, and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties
applicable thereto.
(z) Each agreement described in the Prospectus or filed as an
exhibit to the Registration Statement is in full force and effect and
is valid and enforceable by the Company in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally.
Neither the Company, or 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 that with notice or lapse of time or both would constitute
such a default, in any such case where such default or event would have
material adverse effect on the Company.
(aa) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
(bb) The Registration Statement, the Prospectus and any
preliminary prospectus comply, and any amendments or supplements
thereto will comply,
8
with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or
supplemented, if applicable, are distributed in connection with the
Directed Share Program.
(cc) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency, other than those
obtained, is required in connection with the offering of the Directed
Shares in any jurisdiction where the Directed Shares are being offered.
(dd) The Company has not offered, or caused ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or
its affiliates to offer, Shares to any person pursuant to the Directed
Share Program with the 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.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby
agrees to sell to the several Underwriters, and each Underwriter, upon the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective numbers of Firm Shares set forth in Schedule I
hereto opposite its name at $______ a share (the "PURCHASE PRICE").
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Company agrees
to sell to the Underwriters the Additional Shares, and the Underwriters shall
have a one-time right to purchase, severally and not jointly, up to 1,350,000
Additional Shares at the Purchase Price. If you, on behalf of the Underwriters,
elect to exercise such option, you shall so notify the Company in writing not
later than 30 days after the date of this Agreement, which notice shall specify
the number of Additional Shares to be purchased by the Underwriters and the date
on which such shares are to be purchased. Such date may be the same as the
Closing Date (as defined below) but not earlier than the Closing Date nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the
period ending 180 days after the date of the Prospectus, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or
9
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (a) the Shares to be sold hereunder, (b) the
issuance by the Company of shares of Common Stock upon the exercise of an option
or warrant or the conversion of a security outstanding on the date hereof as
described in the Prospectus, (c) the grant of options to purchase Common Stock
pursuant to the Plan and 2000 Non-Employee Director's Stock Option Plan, (d) the
issuance by the Company of shares of Common Stock pursuant to the 2000 Employee
Stock Purchase Plan or (e) the issuance by the Company of the Placement Shares,
in each case as and to the extent described in the Prospectus.
3. TERMS OF PUBLIC OFFERING. The Company is advised by
you that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after the Registration Statement
and this Agreement have become effective as in your judgment is advisable.
The Company is further advised by you that the Shares are to be offered to
the public initially at $_____________ a share (the "PUBLIC OFFERING PRICE")
and to certain dealers selected by you at a price that represents a
concession not in excess of $______ a share under the Public Offering Price,
and that any Underwriter may allow, and such dealers may reallow, a
concession, not in excess of $_______ a share, to any Underwriter or to
certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Firm Shares
shall be made to the Company in Federal or other funds immediately available
in New York City against delivery of such Firm Shares for the respective
accounts of the several Underwriters at 10:00 a.m., New York City time, on
[ ], 2000, or at such other time on the same or such other date, not
later than [ ], 2000, as shall be designated in writing by you. The time
and date of such payment are hereinafter referred to as the "CLOSING DATE".
Payment for any Additional Shares shall be made to the
Company in Federal or other funds immediately available in New York City
against delivery of such Additional Shares for the respective accounts of the
several Underwriters at 10:00 a.m., New York City time, on the date specified
in the notice described in Section 2 or at such other time on the same or on
such other date, in any event not later than [ ], 2000, as shall be
designated in writing by you. The time and date of such payment are
hereinafter referred to as the "OPTION CLOSING DATE".
Certificates for the Firm Shares and Additional Shares shall
be in definitive form and registered in such names and in such denominations as
you shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with
10
any transfer taxes payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the Purchase Price therefor.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The
obligations of the Company to sell the Shares to the Underwriters and the
several obligations of the Underwriters to purchase and pay for the Shares on
the Closing Date are subject to the condition that the Registration Statement
shall have become effective not later than [_____] (New York City time) on the
date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible
change that does not indicate the direction of the possible
change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings,
business or operations of the Company from that set forth
in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse
and that makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in Section 5(a)(i) above and to
the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date
and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date
an opinion of ▇▇▇▇▇▇ Godward LLP, outside counsel for the Company,
dated the Closing Date, to the effect that:
11
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing under
the laws of the State of Delaware, has the corporate power
and authority to own its property and to conduct its
business as described in the Prospectus and is duly
qualified as a foreign corporation for the transaction of
its business and is in good standing under the laws of the
State of California, and to the best of our knowledge is
not required to qualify as a foreign corporation to do
business in any other jurisdiction in the United States;
(ii) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(iii) the shares of Common Stock and Preferred
Stock outstanding prior to the issuance of the Shares have
been duly authorized and are validly issued, fully paid and
non-assessable;
(iv) The authorized, issued and outstanding
capital stock of the Company as of the date indicated is as
set forth under the heading "Capitalization" in the
Prospectus, both prior and after giving effect to the
conversion of the Preferred Stock into Common Stock. Except
as disclosed in the Prospectus, to such counsel's
knowledge, there are no outstanding options to purchase, or
any preemptive rights or other rights to subscribe for or
to purchase, any securities or obligations convertible
into, or any contacts or rights to subscribe for or to
purchase, any securities or obligations convertible into,
or any contracts or commitments to issue or sell, shares of
the Company's capital stock or any such options, rights,
convertible securities or obligations, other than options
issued pursuant to the Company's employee stock purchase
and option plans in the ordinary course of business and as
set forth in the Prospectus. Since June 30, 2000, the
Company has not issued any securities other than Common
Stock of the Company pursuant to the exercise of previously
outstanding and privately granted options pursuant to the
Plan, options granted pursuant to the Plan and as disclosed
in the Prospectus;
(v) the Shares have been duly authorized and, when
issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and
non-assessable, and to such counsel's knowledge the
issuance of such Shares will not be subject to any
preemptive or similar rights: (A) contained in the
Company's Certificate of Incorporation and Bylaws, (B)
under the Delaware General Corporate Law or (C) under
agreements filed as exhibits to the Registration Statement,
except such as have been validly waived;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
12
(vii) The Purchase Agreement has been duly
authorized, executed and delivered by the Company. The
Placement Shares have been duly authorized and, when issued
and delivered in accordance with the terms of the Purchase
Agreement, will be validly issued, fully paid and
non-assessable. To the knowledge of such counsel, the
issuance of such Placement Shares will not be subject to
any preemptive or similar rights: (A) contained in the
Company's Certificate of Incorporation and Bylaws, (B)
under the Delaware General Corporate Law or (C) under
agreements filed as exhibits to the Registration Statement,
except such as have been validly waived;
(viii) the execution and delivery by the Company
of, and the performance by the Company of its obligations
under, this Agreement and the Purchase Agreement will not
contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or,
to such counsel's knowledge, any agreement or other
instrument binding upon the Company that is material to the
Company and filed as an exhibit to the Registration
Statement or, to such counsel's knowledge, any judgment,
order or decree of any governmental body, agency or court
having jurisdiction over the Company, and no consent,
approval, authorization or order of, or qualification with,
any governmental body or agency (including, but not limited
to, any filing under the HSR) is required for the
performance by the Company of its obligations under this
Agreement, except such as may be required by the securities
or Blue Sky laws of the various states in connection with
the offer and sale of the Shares or as may be required by
the rules and regulations of the NASD;
(ix) the statements (A) in the Prospectus under
the captions "Corporate Collaborations," "Description of
Securities" and "Underwriters" and (B) in the Registration
Statement in Items 14 and 15, in each case insofar as such
statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly
present the information called for with respect to such
legal matters, documents and proceedings and fairly
summarize the matters referred to therein;
(x) There are no contracts, agreements or
understandings known to such counsel between the Company
and any person granting such person the right to require
the Company to file a registration statement under the
Securities Act with respect to any securities of the
Company owned or to be owned by such person or to require
the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other
registration statement filed by the Company under the
Securities Act, except for such rights which have been
waived with respect to the filing of the Registration
Statement;
13
(xi) The Registration Statement was declared
effective under the Securities Act as of the date and time
specified in such opinion, the Rule 462 Registration
Statement (if any) was filed and became effective under the
Securities Act as of the date and time (if determinable)
specified in such opinion, the Prospectus was either filed
pursuant to the subparagraph of Rule 424(b) specified in
such opinion on the date specified therein or was included
in the Registration Statement or the 462 Registration
Statement (as the case may be), and, to the knowledge of
such counsel, no stop order suspending the effectiveness of
a Registration Statement or any part thereof has been
issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the
Securities Act;
(xii) such counsel does not know of any legal or
governmental proceedings pending or threatened to which the
Company is a party or to which any of the properties of the
Company is subject that are required to be described in the
Registration Statement or the Prospectus and are not so
described or of any statutes, regulations, contracts or
other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not
described or filed as required;
(xiii) the Company is not and, after giving effect
to the offering and sale of the Shares and the application
of the proceeds thereof as described in the Prospectus,
will not be required to register as an "investment company"
as such term is defined in the Investment Company Act of
1940, as amended;
(xiv) the Company (A) is in compliance with any
and all applicable Environmental Laws, (B) has received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses and (C) is in compliance with all terms and
conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure
to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such
permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company;
(xv) such counsel is of the opinion that the
Registration Statement and Prospectus (except for financial
statements and schedules and other financial and
statistical data included therein as to which such counsel
need not express any opinion) comply as to form in all
material respects with the Securities Act and the
applicable rules and regulations of the Commission
thereunder; and
(xvi) such counsel shall also have furnished a
written statement to the effect that (A) no information has
come to the attention of such
14
counsel that has caused such counsel to believe that
(except for financial statements and schedules and other
financial and statistical data derived therefrom as to
which such counsel need not express any belief) the
Registration Statement and the prospectus included therein
at the time the Registration Statement became effective
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 and (B) no information has come to the attention
of such counsel that has caused such counsel to believe
that (except for financial statements and schedules and
other financial and statistical data derived therefrom as
to which such counsel need not express any belief) the
Prospectus contains any untrue statement of a material fact
or omits 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.
(d) The Underwriters shall have received on the Closing Date
an opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP counsel for the
Underwriters, dated the Closing Date, covering the matters referred to
in Sections 5(c)(v), 5(c)(vi), 5(c)(ix) (BUT ONLY as to the statements
in the Prospectus under "Description of Securities" and
"Underwriters"), 5(c)(xv) and 5(c)(xvi) above.
With respect to Section 5(c)(xvi) above, ▇▇▇▇▇▇ Godward LLP
and Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, may state that their
opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification,
except as specified.
The opinion of ▇▇▇▇▇▇ Godward LLP described in Section 5(c)
above shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(e) The Underwriters shall have received on the Closing Date
an opinion of Flehr ▇▇▇▇▇▇▇ Test ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, patent
counsel for the Company, dated the Closing Date, to the effect that:
Such counsel are familiar with the technology used by the Company in
its business and the manner of its use thereof and have read the
Registration Statement and the Prospectus, including particularly the
portions of the Registration Statement and the Prospectus referring to
patents, trade secrets, trademarks, service marks or other proprietary
information or materials and:
(i) To the best of our knowledge, the information in
the Prospectus under "Risk Factors -- Our success is dependent
on intellectual property rights held by us and third parties
and our interest in such rights is complex and uncertain. If
a dispute arises regarding the infringement or
15
misappropriation of the proprietary rights of others, such
dispute could be costly and result in delays in our
research and development activities,"
"Business--Intellectual Property," to the extent that it
constitutes matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been
reviewed by us and is correct in all material respects and
fairly and correctly presents the information called for
with respect thereto;
(ii) To the best of our knowledge, there are no
pending or threatened legal or governmental proceedings,
nor allegations on the part of any person of infringement,
relating to patent rights, trade secrets, trademarks,
service marks, copyrights or other proprietary information
or know-how of the Company and no such proceedings are
threatened or contemplated;
(iii) To the best of our knowledge, the Company's
United States and foreign patents (the "Patents")
[listed on Schedules ____ hereto] are valid and enforceable
and are entitled to a statutory presumption of validity and
of ownership by the assignee. To the best of our knowledge,
there are no asserted or unasserted claims of any persons
relating to the scope or ownership of any of the Patents or
any of the Company's patent applications, whether United
States or foreign "Applications"), [listed on Schedules
_______ hereto], there are no liens which have been filed
against any of the Patents or the Applications, there are
no material defects of form in the preparation or filing of
the Applications, the Applications are being diligently
prosecuted and none of the Applications have been finally
rejected or abandoned. The Company is listed on the records
of the United States Patent and Trademark Office ("PTO") or
appropriate foreign patent offices as the sole assignee of
record thereof;
(iv) Nothing has come to our attention that leads
us to believe that any of the Applications will not
eventuate in issued patents, or that any patents issued in
respect of any such Applications will not be valid or will
not afford the Company the patent protection described by
the claims therein;
(v) To the best our knowledge, all pertinent art
references known to the Company or its counsel during the
prosecution of the Patents and the Applications were
disclosed to the PTO and, to the best of our knowledge,
neither such counsel nor the Company made any
misrepresentation to, or concealed any material fact from,
the PTO during such prosecution;
(vi) To the best of our knowledge, the Company
takes security measures adequate to assert trade secret
protection in its non-patented technology;
(vii) Nothing has come to our attention that leads
us to believe
16
that, with respect to patents, trade secrets or other
proprietary information or know-how owned or used by the
Company which is the subject of the foregoing opinions, the
Registration Statement, at the time it became effective,
contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or
that the Prospectus, as of its date or at any Closing Date,
included or includes an untrue statement of a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(f) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from Ernst & Young LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
PROVIDED that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof.
(g) The "lock-up" agreements, each substantially in the form
of Exhibit A hereto, between you and each securityholder, officer and
director of the Company relating to sales and certain other
dispositions of shares of Common Stock or certain other securities, has
been executed and delivered to you on or before the date hereof, shall
be in full force and effect on the Closing Date.
(h) The Company shall have completed the sale of the Placement
Shares pursuant to the Purchase Agreement in accordance with the terms
of such Purchase Agreement as in effect on the date hereof, without
modification, amendment or waiver.
The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the delivery to you on the Option
Closing Date of such documents as you may reasonably request with respect to
the good standing of the Company, the due authorization and issuance of the
Additional Shares and other matters related to the issuance of the Additional
Shares.
6. COVENANTS OF THE COMPANY. In further consideration of
the agreements of the Underwriters herein contained, the Company covenants with
each Underwriter as follows:
(a) To furnish to you, without charge, 5 signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City,
without charge, prior to 10:00 a.m. New York City time on the business
day next succeeding the date of this Agreement and
17
during the period mentioned in Section 6(c) below, as many copies of
the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company)
to which Shares may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements
to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances
when the Prospectus is delivered to a purchaser, be misleading or so
that the Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement
covering the twelve-month period ending [ ], 2001 that
satisfies the provisions of Section 11(a) of the Securities Act and
the rules and regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments
and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof
to the Underwriters and dealers, in the quantities hereinabove
18
specified, (ii) all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters, including any transfer or
other taxes payable thereon, (iii) the cost of printing or producing
any Blue Sky or Legal Investment memorandum in connection with the
offer and sale of the Shares under state securities laws and all
expenses in connection with the qualification of the Shares for offer
and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and disbursements
of counsel for the Underwriters in connection with such qualification
and in connection with the Blue Sky or Legal Investment memorandum (not
to exceed $25,000 not including applicable filing fees), (iv) all
filing fees and the reasonable fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification
of the offering of the Shares by the National Association of Securities
Dealers, Inc., (v) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A
relating to the Common Stock and all costs and expenses incident to
listing the Shares on the Nasdaq National Market, (vi) the cost of
printing certificates representing the Shares, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the Company relating to investor presentations on
any "road show" undertaken in connection with the marketing of the
offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and
any such consultants, and, if approved by the Company, the cost of any
aircraft chartered in connection with the road show, and (ix) all other
costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
Section, Section 7 entitled "Indemnity and Contribution," and the last
paragraph of Section 10 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel,
stock transfer taxes payable on resale of any of the Shares by them and
any advertising expenses connected with any offers they may make.
(g) To place stop transfer orders on any Directed Shares that
have been sold to Participants subject to the three month restriction
on sale, transfer, assignment, pledge or hypothecation imposed by NASD
Regulation, Inc. under its Interpretative Material 2110-1 on
free-riding and withholding to the extent necessary to ensure
compliance with the three month restrictions, provided that ▇▇▇▇▇▇
▇▇▇▇▇▇▇ shall have notified the Company as to which Participants, if
any, will need to be so restricted.
(h) To comply with all applicable securities and other
applicable laws, rules and regulations in each jurisdiction in which
the Directed Shares are offered in connection with the Directed Share
Program.
7. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to
indem-
19
nify and hold harmless each Underwriter and each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein; PROVIDED, HOWEVER, that
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 6(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 7(a) or 7(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such
20
indemnified party unless (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel or (ii) the named
parties to any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in the case of parties indemnified
pursuant to Section 7(a), and by the Company, in the case of parties indemnified
pursuant to Section 7(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section
7(a) or 7(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause 7(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
7(d)(i) above but also the relative fault of the Company on the one hand and of
the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent
21
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would
not be just or equitable if contribution pursuant to this Section 7 were
determined by PRO RATA allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 7(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in
this Section 7 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in
this Section 7 and the representations, warranties and other statements of
the Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of
and payment for any of the Shares.
8. DIRECTED SHARE PROGRAM INDEMNIFICATION. (a) The Company
agrees to indemnify and hold harmless ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its affiliates and each
person, if any, who controls ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or its affiliates within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ENTITY" or "▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ENTITIES," as the case may be), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) (i) caused
by 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 Directed Share Program, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
caused by the failure of any Participant to pay for and accept delivery of
Directed Shares that the Participant has agreed to purchase; or (iii) related
to, arising out of, or in connection with the Directed
22
Share 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities.
(b) In case any proceeding (including any governmental
investigation) shall be instituted involving any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity in
respect of which indemnity may be sought pursuant to Section 8 (a), the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entity seeking indemnity shall promptly notify the Company in writing
and the Company, upon request of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity, shall retain counsel
reasonably satisfactory to the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity to represent the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entity and any other the Company may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity unless (i) the Company shall have agreed
to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the Company and the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Company shall not, in respect of the legal expenses of the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entities in connection with any proceeding or related proceedings the
same jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities. Any
such firm for the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities shall be designated in writing by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Company agrees to
indemnify the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities from and against any loss or liability by
reason of such settlement or judgment. The Company shall not, without the prior
written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, effect any settlement of any pending or
threatened proceeding in respect of which any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity is or could
have been a party and indemnity could have been sought hereunder by such ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entity, unless such settlement includes an unconditional release of the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities from all liability on claims that are the subject matter
of such proceeding.
(c) To the extent the indemnification provided for in Section
8(a) is unavailable to a ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then the Company, in
lieu of indemnifying the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity thereunder, shall contribute to
the amount paid or payable by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity as a result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities on the other hand from the offering of the Directed
Shares or (ii) if the allocation provided by clause 8(c)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 8(c)(i) above but also the
relative fault of the Company on the one hand and of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities
on the other hand in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the
23
Company on the one hand and of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities on the other hand in
connection with the offering of the Directed Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Directed Shares (before deducting expenses) and the total underwriting discounts
and commissions received by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities for the Directed Shares,
bear to the aggregate Public Offering Price of the Shares. If the loss, claim,
damage or liability is caused by an untrue or alleged untrue statement of a
material fact, the relative fault of the Company on the one hand and the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entities on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement or the omission or
alleged omission relates to information supplied by the Company or by the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entities and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(d) The Company and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities agree that it
would not be just or equitable if contribution pursuant to this Section 8 were
determined by PRO RATA allocation (even if the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
Section 8(c). The amount paid or payable by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 8, no
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity shall be required to contribute any amount in excess of
the amount by which the total price at which the Directed Shares distributed to
the public were offered to the public exceeds the amount of any damages that
such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity at law
or in equity.
(e) The indemnity and contribution provisions contained in
this Section 8 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity or the Company, its officers or directors or
any person controlling the Company and (iii) acceptance of and payment for any
of the Directed Shares.
9. PRIVATE PLACEMENT INDEMNIFICATION. (a) The Company
agrees to indemnify and hold harmless each ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity from and
against any losses, claims, damages or liabilities (or actions in respect
thereof) relating to, arising out of or in connection with the Private
Placement. The Company will reimburse the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity for all expenses
(including, without limitation, fees and disbursements of counsel) reasonably
incurred by such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity in connection with investigating,
preparing or defending any such action or claim, whether or not in connection
with pending or threatened litigation to which the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity is a
party, in
24
each case, as such expenses are incurred or paid. However, the Company will not
be responsible for any 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities. The Company also
agrees that no ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to the Company for or in connection
with the Private Placement, except for any such liability for losses, claims,
damages or liabilities incurred by the Company that are finally judicially
determined to have resulted from the bad faith or gross negligence of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entities.
(b) In case any proceeding (including any governmental
investigation) shall be instituted involving any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity in
respect of which indemnity may be sought pursuant to Section 9 (a), the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entity seeking indemnity shall promptly notify the Company in writing
and the Company, upon request of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity, shall retain counsel
reasonably satisfactory to the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity to represent the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entity and any others the Company may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity unless (i) the Company and the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entity shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the Company and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the Company
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) for all such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Entities, and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities,
such firm shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. The Company shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Company agrees to indemnify the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities from
and against any loss or liability by reason of such settlement or judgment. The
Company shall not, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, effect
any settlement of any pending or threatened proceeding in respect of which any
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity is or could have been a party and indemnity could have
been sought hereunder by such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity, unless such settlement
includes an unconditional release of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities from all
liability on claims that are the subject matter of such proceeding.
(c) The Company acknowledges and agrees than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is
not acting as a placement agent or otherwise on behalf of the Company in the
Private Placement and is receiving no fees or expenses in connection therewith.
10. TERMINATION. This Agreement shall be subject to
termination by notice given by you to the Company, if (a) after the execution
and delivery of this
25
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
11. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date or the Option Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares that it has or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to
the aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; PROVIDED that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 10 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased, and arrangements satisfactory
to you and the Company for the purchase of such Firm Shares are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been
26
obligated to purchase in the absence of such default. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
12. COUNTERPARTS. This Agreement may be signed in two or
more counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.
14. HEADINGS. The headings of the sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed a part of this Agreement.
27
Very truly yours,
RIGEL PHARMACEUTICALS, INC.
By:
--------------------------------
Name:
Title:
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇ Brothers Inc.
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule I hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By:
--------------------------------
Name:
Title:
28
SCHEDULE I
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇ Brothers Inc.
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
[NAMES OF OTHER UNDERWRITERS]
Total ........ ===============
EXHIBIT A
[FORM OF LOCK-UP LETTER]
_____________, 2000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇ Brothers, Inc.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") proposes to enter into an Underwriting
Agreement (the "Underwriting Agreement") with Rigel Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), providing for the public offering (the
"Public Offering") by the several Underwriters (the "Underwriters"), of
[ ] shares (the "Shares") of the common stock, par value $0.001, of the
Company (the "Common Stock").
To induce the Underwriters that may participate in the Public
Offering to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 180 days after the date of the final
prospectus relating to the Public Offering (the "Prospectus"), (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (a) the sale of any Shares to the Underwriters pursuant to the Underwriting
Agreement, (b) transactions relating to shares of Common Stock (other than
shares acquired in the directed share program) or other securities acquired in
open market transactions after the completion of the Public Offering, (c) a bona
fide gift or gifts, provided that upon any such transfer, (i) the transferee
shall sign a letter identical to this letter agreement agreeing not to sell,
grant any option to purchase, or otherwise transfer or dispose of any such
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock for the remainder of the above-referenced 180-day
period, and (ii) no filing by any party (donor, donee, transferor or transferee)
under Section 16(a) of the Securities Exchange Act of 1934, as amended, shall be
required or shall be made voluntarily in connection with such transfer or
distribution (other than a filing on a Form 5 made after the expiration of the
180-day period referred to above), or (d) transfers or distributions of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock to limited partners or shareholders of the undersigned or to a
member of the undersigned's immediate family or to a trust of which the
undersigned or an immediate family member is the beneficiary (a "Transferee")
provided that upon any such transfer, (i) the Transferee shall sign a letter
identical to this letter agreement agreeing not to sell, grant any option to
purchase, or otherwise transfer or dispose of any such Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock for
the remainder of the above-referenced 180-day period, and (ii) no filing by any
party (donor, donee, transferor or transferee) under Section 16(a) of the
Securities Exchange Act of 1934, as amended, shall be required or shall be made
voluntarily in connection with such transfer or distribution (other than a
filing on a Form 5 made after the expiration of the 180-day period referred to
above). In addition, the undersigned agrees that, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 180 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the undersigned's shares of Common
Stock except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the
Underwriters are relying upon this Lock-Up Agreement in proceeding toward
consummation of the Public Offering. The undersigned further understands that
this Lock-Up Agreement is irrevocable and shall be binding upon the
undersigned's heirs, legal representatives, successors and assigns. This Lock-Up
Agreement shall terminate and be of no further force or effect if the Company's
registration statement on Form S-1, with respect to the Public Offering, is not
declared effective by the Securities and Exchange Commission on or before
February 28, 2001.
Whether or not the Public Offering actually occurs depends on
a number of factors, including market conditions. Any Public Offering will only
be made pursuant to the Underwriting Agreement, the terms of which are subject
to negotiation between the Company and the Underwriters.
Very truly yours,
(Name)
(Address)