Exhibit 1.1
3,330,000 Shares of Common Stock
Collateral Therapeutics, Inc.
UNDERWRITING AGREEMENT
----------------------
[Date]
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
VECTOR SECURITIES INTERNATIONAL, INC.
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Collateral Therapeutics, Inc., a corporation organized and existing
under the laws of Delaware (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of 3,330,000 shares (the
"Firm Shares") of its common stock, par value $0.001 per share (the "Common
Stock"), and, for the sole purpose of covering over-allotments in connection
with the sale of the Firm Shares, at the option of the Underwriters, up to an
additional 499,500 shares (the "Additional Shares") of Common Stock. The Firm
Shares and any Additional Shares purchased by the Underwriters are referred to
herein as the "Shares." The Shares are more fully described in the Registration
Statement referred to below.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations of
the Commission thereunder (the "Regulations") a registration statement, and may
have filed an amendment or amendments thereto, on Form S-1 (No. 333-51029), for
the registration of the Shares under the Act. All of the Shares have been duly
registered
under the Act pursuant to the initial registration statement, or if an
abbreviated registration statement has been, or is proposed to be, filed
pursuant to Rule 462(b) of the Regulations (the "Rule 462 Registration
Statement"), all of the Shares have been or will be, on the date of this
Agreement, duly registered under the Act pursuant to the initial registration
statement and the Rule 462 Registration Statement. Such registration statement,
including the prospectus, financial statements and schedules, exhibits and all
other documents filed as a part thereof, as amended at the time of effectiveness
of the registration statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A
or Rule 434 of the Regulations, is herein called the "Registration Statement"
and the prospectus, in the form first filed with the Commission pursuant to Rule
424(b) of the Regulations or filed as part of the Registration Statement at the
time of effectiveness if no Rule 424(b) or Rule 434 filing is required, is
herein called the "Prospectus". If the Company has filed or proposes to file a
Rule 462 Registration Statement, then any reference herein to the term
"Registration Statement" shall include such Rule 462 Registration Statement.
The term "preliminary prospectus" as used herein means a preliminary prospectus
as described in Rule 430 of the Regulations.
(b) At the time of the effectiveness of the Registration
Statement or the effectiveness of any post-effective amendment to the
Registration Statement, when the Prospectus is first filed with the Commission
pursuant to Rule 424(b) or Rule 434 of the Regulations, when any supplement to
or amendment of the Prospectus is filed with the Commission and at the Closing
Date and the Additional Closing Date, if any (as hereinafter respectively
defined), the Registration Statement and the Prospectus and any amendments
thereof and supplements thereto complied or will comply in all material respects
with the applicable provisions of the Act and the Regulations and does not or
will not contain an untrue statement of a material fact and does not or will not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein (i) in the case of the Registration
Statement, not misleading and (ii) in the case of the Prospectus, in light of
the circumstances under which they were made, not misleading. When any related
preliminary prospectus was first filed with the Commission (whether filed as
part of the registration statement for the registration of the Shares or any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the Act and
the Regulations and did not contain an untrue statement of a material fact and
did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. No representation and warranty is
made in this subsection (b), however, with respect to any information contained
in or omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in
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writing to the Company by or on behalf of any Underwriter through you as herein
stated expressly for use in connection with the preparation thereof. If Rule
434 is used, the Company will comply with the requirements of Rule 434.
(c) Ernst & Young, LLP, who have certified the financial
statements and supporting schedules included in the Registration Statement, are
independent public accountants as required by the Act and the Regulations.
(d) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except
as set forth in the Registration Statement and the Prospectus, there has been
no material adverse change in the business, prospects (as of the date of this
Agreement), properties, operations, condition (financial or other) or results
of operations of the Company ("Material Adverse Change"), whether or not
arising from transactions in the ordinary course of business, and since the
date of the latest balance sheet presented in the Registration Statement and
the Prospectus, the Company has not incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company, except
for liabilities or obligations which are reflected in the Registration
Statement and the Prospectus.
(e) This Agreement and the transactions contemplated herein
have been duly and validly authorized by the Company, and this Agreement has
been duly and validly executed and delivered by the Company and is
enforceable against the Company in accordance with its terms, except as
rights to indemnity may be limited by federal or state securities laws
relating thereto and except as enforcement (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights and remedies generally and (ii) is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or law).
(f) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (i) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company pursuant to, any agreement, instrument, franchise,
license or permit to which the Company is a party or by which it or any of
its properties or assets may be bound, which breach, default, lien, charge or
encumbrance could result in a Material Adverse Effect (as that term is
hereinafter defined) or (ii) violate or conflict with any provision of the
certificate of incorporation or the by-laws of the Company or any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets. No consent, approval,
authorization, order, registration, filing, qualification, license or permit
of or with any court or any public, governmental or regulatory agency or body
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having jurisdiction over the Company or any of its properties or assets is
required for the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, including the issuance,
sale and delivery of the Shares to be issued, sold and delivered by the
Company hereunder, except the registration under the Act of the Shares and
such consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state
securities or Blue Sky laws or foreign equivalents of such regulations or
statutes, where applicable, in connection with the purchase and distribution
of the Shares by the Underwriters.
(g) Upon the sale of the Firm Shares on the Closing Date:
(i) the only shares of capital stock of the Company issued and
outstanding (other than the Shares) will be 8,292,573 shares of Common
Stock;
(ii) all such outstanding shares of Common Stock will be duly and
validly authorized and issued, fully paid and nonassessable and are not
issued in violation of or subject to any preemptive right; and
(iii) except for options to purchase shares of Common Stock, all of
which are accurately described in the Registration Statement and the
Prospectus, there are not outstanding (nor is there any agreement to issue)
any options, warrants, subscriptions or other rights to acquire, or
securities convertible into or exercisable for, any shares of capital stock
of the Company.
The Shares to be delivered on the Closing Date have been duly and validly
authorized and, when delivered by the Company in accordance with this Agreement,
will be duly and validly issued, fully paid and nonassessable and will not have
been issued in violation of or subject to any preemptive right. The Company
had, at March 31, 1998, an authorized and outstanding capitalization as set
forth in the section of the Registration Statement and the Prospectus entitled
"Capitalization" (after giving effect to the assumptions set forth in the first
paragraph of such section). As of the Closing Date, the capital stock of the
Company conforms to the description thereof contained in the Registration
Statement and the Prospectus.
(h) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of its jurisdiction
of incorporation. The Company is duly qualified to transact business and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of its properties or conduct of its business makes such qualification
necessary, except where the failure to so qualify would have a material
adverse effect (considered individually or when aggregated with other such
instances) on the business, prospects (as of the date of this Agreement),
properties, operations, condition (financial or other) or results of
operations of the Company (a "Material Adverse Effect"). The
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Company has all requisite power and authority and, except as described in the
Registration Statement and Prospectus, all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses and permits
of and from all public, regulatory or governmental agencies and bodies, to
own, lease and operate its properties and conduct its business as now being
conducted and as described in the Registration Statement and the Prospectus,
and no such consent, approval, authorization, order, registration,
qualification, license or permit contains a materially burdensome restriction
not adequately disclosed in the Registration Statement and the Prospectus.
The Company is in compliance with all applicable laws, orders, rules,
regulations, ordinances and directives, except where the failure to be in
compliance could not have a Material Adverse Effect. The Company does not
have any subsidiaries as defined in Rule 405 of the Regulations. The Company
does not presently own or control, directly or indirectly, any interest in
any other corporation, association or other business entity.
(i) The Company is not in violation of any provision of its
certificate of incorporation or of its by-laws or in breach of, or in default
under (nor has any event occurred that with notice, lapse of time, or both,
would constitute a breach of, or default under), except where such breach or
default would not have a Material Adverse Effect, any provision of any
agreement, instrument, franchise, license or permit to which the Company is a
party or by which any of its properties or assets may be bound or effected or
any judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over
the Company or any of its properties or assets.
(j) Except as described in the Registration Statement and the
Prospectus, there is no litigation, arbitration, proceeding, investigation or
claim to which the Company is a party or to which any property or assets of the
Company is subject or which is pending or, to the knowledge of the Company,
threatened or contemplated against the Company which might result in any
Material Adverse Effect or any development involving a Material Adverse Effect
or which is required to be disclosed in the Registration Statement and the
Prospectus.
(k) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares or a violation of Regulation M under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(l) The financial statements, including the notes thereto, and
supporting schedules included in the Registration Statement and the Prospectus
present fairly the financial position of the Company as of the dates indicated
and the results of its operations for the periods specified; said financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent
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basis; and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein.
(m) Except as described in the Registration Statement and the
Prospectus and except for rights that have been effectively waived in writing
(complete and accurate copies of which have been provided to the Underwriters
prior to the date of this Agreement), which waivers are in full force and
effect, no holder of securities of the Company has any rights to cause the
Company to issue to it, or register pursuant to the Act, any securities of the
Company because of the filing of the Registration Statement, in connection with
the sale of the Shares contemplated hereby or otherwise, nor does any holder of
securities of the Company have preemptive rights or other rights to purchase any
of the Shares.
(n) The Company is not, and upon consummation of the
transactions contemplated hereby and the application of the proceeds therefrom
as described in the Prospectus will not be, subject to registration as an
"investment company" under the Investment Company Act of 1940.
(o) The Common Stock of the Company, including the Shares,
have been approved for quotation on the National Association of Securities
Dealers Automated Quotation National Market System.
(p) The Company owns or possesses valid and enforceable
licenses or other rights to use all inventions, patents, patent applications,
trademarks, service marks, trade names, copyrights, technology, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) proprietary techniques
(including processes and substances) and other intellectual property rights used
in, or necessary to conduct, the business now conducted by the Company or
presently contemplated to be conducted as described in the Registration
Statement and the Prospectus ("Intellectual Property"); other than as described
in the Registration Statement and the Prospectus: (i) there are no third
parties who have any rights in the Intellectual Property that could preclude the
Company from conducting its business as currently conducted or as presently
contemplated to be conducted as described in the Registration Statement and the
Prospectus; (ii) there are no pending or, to the Company's knowledge, threatened
actions, suits, proceedings, investigations or claims by others challenging the
rights of the Company or (if the Intellectual Property is licensed) the licensor
thereof in any Intellectual Property owned or licensed to the Company; (iii) the
Company and (if the Intellectual Property is licensed) to the Company's
knowledge the licensor thereof has not infringed, or received any notice of
infringement of or conflict with, any rights of others with respect to the
Intellectual Property; and (iv) there is, to the knowledge of the Company, no
dispute between it or any licensor with respect to any Intellectual Property.
True and correct copies of all licenses and other agreements between the Company
and any third party relating to the Intellectual Property, and all amendments
and supplements thereto, have been provided to the Underwriters.
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(q) The Company has timely filed all federal, state and
foreign income and franchise tax returns and reports required to be filed and
has paid all
taxes shown thereon as due, and there is no tax deficiency that has been or, to
the Company's knowledge, might be asserted against the Company that might have a
Material Adverse Effect; and all tax liabilities are adequately provided for on
the books of the Company.
(r) The Company maintains insurance with insurers of
recognized financial responsibility of the types and in the amounts (i)
generally deemed adequate for its business and consistent with insurance
coverage maintained by similar companies in similar businesses and (ii) required
under any of the Company's agreements, licenses or other contracts, all of which
insurance is in full force and effect; the Company has no reason to believe that
it will not be able to renew its existing insurance as and when such coverage
expires or to obtain similar insurance adequate and customary for its business
and sufficient to satisfy any requirements of its contracts at a cost that would
not have a Material Adverse Effect.
(s) Except where it would not have a Material Adverse
Effect, (i) the Company is not in violation of any federal, state, local or
foreign laws, regulations, rules, ordinances, orders or directives relating
to pollution or (in connection therewith) protection of human health and
safety, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release
or threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"); (ii) to the
Company's knowledge, no material expenditures are or will be required to
comply with the Environmental Laws, and the Company holds all material
permits and licenses required to conduct its business thereunder; (iii) to
the Company's knowledge, all properties and assets leased or owned,
including, without limitation, all structures, contents, soil, subsoil and
groundwater, do not contain Hazardous Materials; and (iv) to the Company's
knowledge, the Company has no liability or obligation, whether to any
governmental authority or to any other person or entity, for damages, claims,
penalties, forfeitures or otherwise, as a consequence of the generation,
transportation or disposal of any Hazardous Materials or otherwise under the
Environmental Laws.
(t) As of the date of this Agreement and except as described
in the Registration Statement and the Prospectus, the Company is not required to
file or obtain any registration, application, license, request for exemption,
permit or other regulatory authorization with the U.S. Food and Drug
Administration (the "FDA") or any state or local regulatory body in order to
conduct its business as described in the Registration Statement and Prospectus.
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(u) The human clinical trials, animal studies and other
preclinical tests conducted by or on behalf of the Company that are described
in the Registration Statements and the Prospectus (the "Company Studies"),
have been and will continue to be conducted in accordance with experimental
protocols, procedures and controls generally used by qualified experts in
preclinical or clinical trials; the descriptions of the results of such
Company Studies contained in the Registration Statements and Prospectus are
accurate and complete in all material respects, and the Company has no
knowledge of any other trials, studies or tests, the results of which
reasonably call into question the results described or referred to in the
Registration Statements and Prospectus.
(v) Except as disclosed in the Registration Statement and the
Prospectus, the Company has good and marketable title to all properties (real
and personal) owned by the Company, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any kind
except such as do not, singly or in the aggregate, materially affect the value
of such property and do not materially interfere with the use made and proposed
to be made of such property by the Company; and all properties held under lease
or license by the Company are held under valid, subsisting and enforceable
leases or licenses.
(w) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general and specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorizations, 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.
(x) No material labor dispute with the employees of the
Company is pending, or, to the Company's knowledge, is imminent; and the Company
is not aware of any existing, threatened or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors that
could result in any Material Adverse Effect.
(y) There are no contracts or other documents which are
required to be described in the Registration Statement and the Prospectus or
filed as exhibits to the Registration Statement by the Act or by the Regulations
which have not been described in the Registration Statement and the Prospectus
or filed as exhibits to the Registration Statement.
(z) No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers, stockholders,
customers or
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suppliers of the Company on the other hand, which is required to be described
in the Registration Statement and the Prospectus that is not so described.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price per share of $_______, the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the office of ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, Suite 1300, ▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or
at such other place as shall be agreed upon by you and the Company, at 10:00
A.M. on the third or fourth business day (as permitted under Rule 15c6-1
under the Exchange Act) (unless postponed in accordance with the provisions
of Section 9 hereof) following the date of the effectiveness of the
Registration Statement (or, if the Company has elected to rely upon Rule 430A
of the Regulations, the third or fourth business day (as permitted under Rule
15c6-1 under the Exchange Act) after the determination of the initial public
offering price of the Shares), or such other time not later than ten business
days after such date as shall be agreed upon by you and the Company (such
time and date of payment and delivery being herein called the "Closing
Date"). Payment shall be made to the Company by wire transfer of immediately
available funds, against delivery to you for the respective accounts of the
Underwriters of certificates for the Firm Shares to be purchased by them.
Certificates for the Firm Shares shall be registered in such name or names
and in such authorized denominations as you may request in writing at least
two full business days prior to the Closing Date. The Company will permit
you to examine and package such certificates for delivery at least one full
business day prior to the Closing Date.
(c) In addition, the Company hereby grants to the Underwriters
the option to purchase up to 499,500 Additional Shares at the same purchase
price per share to be paid by the Underwriters to the Company for the Firm
Shares as set forth in this Section 2, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option may
be exercised at any time, in whole or in part, on or before the thirtieth day
following the date of the Prospectus, by written notice by you to the Company.
Such notice shall set forth the aggregate number of Additional Shares as to
which the option is being exercised and the date and time, as reasonably
determined by you, when the Additional Shares are to be delivered (such date and
time being herein sometimes referred to as the "Additional Closing Date");
PROVIDED, HOWEVER, that the Additional Closing Date shall not be earlier than
the
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Closing Date or earlier than the second full business day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Certificates for the Additional Shares shall be
registered in such name or names and in such authorized denominations as you
may request in writing at least two full business days prior to the
Additional Closing Date. The Company will permit you to examine and package
such certificates for delivery at least one full business day prior to the
Additional Closing Date.
(d) The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same ratio to the aggregate
number of Additional Shares being purchased as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 9 hereof) bears to the 3,330,000 Firm Shares
being purchased from the Company, subject, however, to such adjustments to
eliminate any fractional shares as you in your sole discretion shall make.
(e) Payment for the Additional Shares shall be made by wire
transfer of immedidately available funds at the offices of ▇▇▇▇▇▇▇, Phleger &
▇▇▇▇▇▇▇▇ LLP, Suite 1300, ▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other
location as may be mutually acceptable, upon delivery of the certificates for
the Additional Shares to you for the respective accounts of the Underwriters.
3. OFFERING. Upon your authorization of the release of the Firm
Shares, the Underwriters propose to offer the Shares for sale to the public upon
the terms set forth in the Prospectus.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the Underwriters that:
(a) If the Registration Statement has not yet been declared
effective the Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
possible, and if Rule 430A is used or the filing of the Prospectus is otherwise
required under Rule 424(b) or Rule 434, the Company will file the Prospectus
(properly completed if Rule 430A has been used) pursuant to Rule 424(b) or
Rule 434 within the prescribed time period and will provide evidence
satisfactory to you of such timely filing. If the Company elects to rely on
Rule 434, the Company will prepare and file a term sheet that complies with the
requirements of Rule 434.
The Company will notify you immediately (and, if requested by
you, will confirm such notice in writing) (i) when the Registration Statement
and any amendments thereto become effective, (ii) of any request by the
Commission for any amendment of or supplement to the Registration Statement or
the Prospectus or for
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any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor and (v) of the receipt of any comments from the
Commission. If the Commission shall propose or enter a stop order at any
time, the Company will make every reasonable effort to prevent the issuance
of any such stop order and, if issued, to obtain the lifting of such order as
soon as possible. The Company will not file any amendment to the
Registration Statement or any amendment of or supplement to the Prospectus
(including the prospectus required to be filed pursuant to Rule 424(b) or
Rule 434) that differs from the prospectus on file at the time of the
effectiveness of the Registration Statement before or after the effective
date of the Registration Statement to which you shall reasonably object in
writing after being timely furnished in advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would, in the judgment
of the Underwriters or the Company, include an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
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 at any
time to amend or supplement the Prospectus or Registration Statement to comply
with the Act or the Regulations, the Company will notify you promptly and
prepare and file with the Commission an appropriate amendment or supplement (in
form and substance reasonably satisfactory to you) which will correct such
statement or omission and will use its best efforts to have any amendment to the
Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you three signed
copies of the Registration Statement, as initially filed with the Commission,
and all amendments thereto (including exhibits) and will maintain in the
Company's files manually signed copies of such documents for at least five years
from the date of filing. The Company will promptly deliver to each of the
Underwriters such number of copies of any preliminary prospectus, the
Prospectus, the Registration Statement, and all amendments of and supplements to
such documents, if any, as you may reasonably request.
(d) The Company will endeavor in good faith, in cooperation
with you, at or prior to the time of effectiveness of the Registration
Statement, to qualify the Shares for offering and sale under the securities laws
relating to the offering or sale of the Shares of such jurisdictions as you may
designate and to maintain such qualification in effect for so long as required
for the distribution thereof; except that in no event shall the Company be
obligated in connection therewith to qualify as a foreign corporation or to
execute a general consent to service
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of process. The Company will promptly advise you of the receipt by the
Company of any notification with respect to suspension of the qualification
of the Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose and will use every reasonable effort to
obtain the withdrawal of any order of suspension as soon as possible.
(e) The Company will make generally available (within the
meaning of Section 11(a) of the Act) to its security holders and to you as soon
as practicable, but not later than 45 days after the end of its fiscal quarter
in which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 180 days from the effective date
of the Registration Statement, (i) the Company will not, without the prior
written consent of Bear, ▇▇▇▇▇▇▇ & Co. Inc., issue, sell, offer or contract
to sell, grant any option, warrant or other right to purchase or otherwise
sell or dispose of (or announce any offer of sale, contract of sale, sale,
grant of any option, warrant or other right to purchase or other sale or
disposition of), directly or indirectly, any shares of Common Stock (or any
securities convertible into, exercisable for or exchangeable for shares of
Common Stock), except for the issuance by the Company of shares of Common
Stock pursuant to the 1998 Employee Stock Purchase Plan or pursuant to the
exercise of options outstanding under the 1998 Stock Incentive Plan at the
time of the closing of the sale of the Firm Shares on the Closing Date
(provided that the Company shall only so issue shares during such 180 days to
persons who are not, at the time of the closing of the sale of the Firm
Shares on the Closing Date, officers or directors of the Company or
stockholders having beneficial ownership of a least 1% of the outstanding
Common Stock of the Company), and (ii) the Company will obtain the
undertaking of each of its officers and directors and all of its stockholders
having beneficial ownership at least 1% of the outstanding Common Stock of
the Company, as of the time of the closing of the sale of the Firm Shares
hereunder on the Closing Date, not to engage in any of the aforementioned
transactions on their own behalf, other than the Company's sale of Shares
hereunder.
(g) During a period of three years from the effective date of
the Registration Statement, the Company will furnish to you and, upon request,
to each of the other Underwriters (i) copies of any reports or other
communications that the Company shall send to its stockholders or shall from
time to time publish or publicly disseminate, (ii) copies of all reports,
financial statements and proxy or information statements filed by the Company
with the Commission or any national securities exchange or automated quotation
system, and (iii) such other information as you may reasonably request regarding
the Company, subject to the provisions of any written agreement that, in the
opinion of outside counsel to the Company, prohibit the Company from furnishing
such information under any circumstances including,
12
without limitation, an agreement by you to be subject to the provisions of
such written agreement.
(h) The Company will apply the proceeds from the sale of the
Shares as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares
to be included in the National Association of Securities Dealers Automated
Quotation National Market System.
(j) The Company will file with the Commission in its periodic
reports pursuant to Section 13 or 15 of the Exchange Act such information as may
be required pursuant to Rule 463 of the Regulations.
(k) The Company, during the period when the Prospectus is
required to be delivered under the Act or the Exchange Act, will file all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the Exchange Act within the time periods required by the Exchange Act and
the rules and regulations thereunder.
5. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is
terminated, the Company hereby agrees to pay all costs and expenses incident
to the performance of the obligations of the Company hereunder, including
those in connection with (i) preparing, printing, duplicating, filing and
distributing the Registration Statement, as originally filed and all
amendments thereof (including all exhibits thereto), any preliminary
prospectus, the Prospectus and any amendments or supplements thereto
(including, without limitation, fees and expenses of the Company's
accountants and counsel), the underwriting documents (including this
Agreement, the Master Agreement Among Underwriters and the Master Selling
Agreement) and all other documents related to the public offering of the
Shares (including those supplied to the Underwriters in quantities as
hereinabove stated), (ii) the issuance, transfer and delivery of the Shares
to the Underwriters, including any transfer or other taxes payable thereon,
(iii) the qualification of the Shares under state or foreign securities or
Blue Sky laws or regulations, including the costs of printing and mailing a
preliminary and final "Blue Sky Survey" and the fees of counsel for the
Underwriters and such counsel's disbursements in relation thereto, (iv)
quotation of the Shares on the National Association of Securities Dealers
Automated Quotation National Market System, (v) filing fees of the Commission
and the National Association of Securities Dealers, Inc., (vi) the cost of
printing certificates representing the Shares and (vii) the cost and charges
of any transfer agent or registrar for the Shares.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties
13
of the Company herein contained, as of the date hereof and as of the Closing
Date (for purposes of this Section 6 "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if
different, for the Additional Shares), to the absence from any certificates,
opinions, written statements or letters furnished to you or to Coudert
Brothers ("Underwriters' Counsel") pursuant to this Section 6 of any
misstatement or omission, to the performance by the Company of its
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective
not later than, if pricing pursuant to Rule 430A, 5:30 P.M., New York time,
on the date of this Agreement, if pricing pursuant to a pricing amendment,
12:00 Noon, New York time, on the date an amendment to the Registration
Statement containing the public offering price has been filed with the
Commission, or at such later time and date as shall have been consented to in
writing by you; if the Company shall have elected to rely upon Rule 430A or
Rule 434 of the Regulations, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 4(a) hereof; and,
at or prior to the Closing Date, no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof shall
have been issued and no proceedings therefor shall have been initiated or
threatened by the Commission.
(b) At each Closing Date you shall have received the
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, dated
the date of such Closing Date addressed to the Underwriters and in form and
substance satisfactory to Underwriters' Counsel, to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. The Company is duly qualified and in
good standing as a foreign corporation in each jurisdiction in which
the nature of its properties or the conduct of its business makes such
qualification necessary, except for those failures to be so qualified
or in good standing which will not in the aggregate have a material
adverse effect on the Company. The Company has all requisite
corporate authority to own, lease and operate its properties and
conduct its business as now being conducted and as described in the
Registration Statement and the Prospectus. To such counsel's knowledge,
the Company does not have any subsidiaries as defined in Rule 405 of the
Regulations.
(ii) Upon the sale of Shares on such Closing Date,
a. all outstanding shares of Common Stock
outstanding immediately prior to the issuance of such Shares are
14
duly and validly authorized and issued, are non-assessable and were issued
free of any preemptive rights arising under the Certificate of
Incorporation of the Company or the Delaware General Corporation Law; and
b. to such counsel's knowledge, except for
options to purchase shares of Common Stock described in the Registration
Statement and the Prospectus, there are not outstanding (nor is there any
agreement to issue) any options, warrants, or other rights to acquire, or
securities convertible into or exercisable for, any shares of capital
stock of the Company.
The Shares to be delivered on such Closing Date have been duly and
validly authorized and, when issued and delivered by the Company to the
Underwriters against payment therefor in accordance with this Agreement,
will be duly and validly issued, fully paid and nonassessable and will
have been issued free of (A) any preemptive rights arising under the
Second Restated Certificate of Incorporation of the Company (which is
the currently effective certificate of incorporation of the Company) or
the Delaware General Corporation Law or (B) to such counsel's knowledge,
similar rights that entitle or will entitle any person to acquire any
shares of capital stock of the Company upon the issuance and sale of the
Shares by the Company. The Company has, at March 31, 1998, an
authorized and outstanding equity capitalization as set forth in the
section of the Registration Statement and the Prospectus entitled
"Capitalization" (after giving effect to the assumptions set forth in the
first paragraph of such section). The statements set forth in the
sections of the Registration Statement and Prospectus entitled
"Description of Capital Stock", insofar as such statements purport to
describe the capital stock of the Company, provide for a fair Summary
section.
(iii) The Shares have been approved (upon issuance as
contemplated by the Underwriting Agreement) for quotation in the Nasdaq
National Market System.
(iv) This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(v) To such counsel's knowledge, there is no litigation,
arbitration, proceeding, investigation or claim pending or threatened
against, or to which the properties or assets of the Company are
subject, which is of a character required to be disclosed in the
15
Registration Statement and the Prospectus or any amendment thereof or
supplement thereto which has not been properly disclosed therein.
(vi) To such counsels' knowledge, all agreements, instruments,
franchises, licenses or permits required to be described in the
Registration Statement and the Prospectus or required to be filed as
exhibits to the Registration Statement have been so described and so
filed. The execution, delivery, and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby do not and will not (A) to such counsel's knowledge,
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company pursuant to, any agreement, instrument, franchise, license or
permit which is described in the Registration Statement and the Prospectus
or which is filed as an exhibit to the Registration Statement and to
which the Company is a party or by which it or any of its properties or
assets may be bound, which breach, default, lien, charge or incumbrance
(individually or if aggregated with other such breaches, defaults,
liens, charges, encumbrances) is material to the business, properties,
operations, condition (financial or otherwise) or results of operations
of the Company, or (B) violate or conflict with any provision of the
Second Restated Certificate of Incorporation or the Amended and Restated
By-laws of the Company (which are the currently effective By-laws of the
Company) or other organizational documents, or, to the knowledge of such
counsel, any judgment, decree, or order, or any statute, rule or
regulation (not including any state securities or Blue Sky laws or
regulations or, if applicable, any foreign securities laws or regulations)
of any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its properties or assets.
No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental, or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets is required for the
execution, delivery and performance of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby,
including the issuance, sale and delivery of the Shares to be issued,
sold and delivered by the Company hereby, except for (1) such as may be
required under state securities or Blue Sky laws or regulations (or
foreign securities laws or regulations, if applicable) in connection
with the purchase and distribution of the Shares by the Underwriters (as
to which such counsel need express no opinion) and (2) such as have been
made or obtained under the Act.
16
(vii) The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto (other than the financial
statements and notes and schedules thereto and other financial and
statistical data derived therefrom, as to which no opinion need be
rendered) comply as to form in all material respects with the
requirements of the Act and the Regulations.
(viii) The Registration Statement is effective under the Act,
and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereof has been issued and no proceedings therefor are
pending before or contemplated by the Commission and all filings
required by Rule 424(a) and Rule 424(b) of the Regulations have been
made.
In addition, such opinion shall contain a statement that (A) such
counsel has participated in conferences with certain officers and
representatives of the Company, the independent public accountants, the
Underwriters and the Underwriters' counsel at which the contents of the
Registration Statement and the Prospectus and related matters were discussed
(provided, however, that such opinion may also indicate that, notwithstanding
the foregoing, such counsel has not necessarily checked or verified the
accuracy, completeness or fairness of, and is not passing upon or assuming
responsibility for, each particular item of information contained in the
Registration Statement and the Prospectus, and is not acting in an expert
capacity on patent, FDA, or health care regulatory issues) and (B) after
giving effect to such participation in such conferences no facts have come to
the attention of such counsel which would lead such counsel to believe that
the Registration Statement at the time it became effective (including the
information deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) or Rule 434, if applicable), or any
amendment thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact or omitted to
state any 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 any amendment thereof or supplement thereto made prior to the Closing
Date as of the date of such amendment or supplement) and as of the Closing
Date contained or contains an untrue statement of a material fact or omitted
or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel
need express no belief or opinion with respect to the financial statements,
including the notes and schedules thereto and other financial and statistical
data derived therefrom).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and
17
to the extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries. The opinion
of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and, in their opinion,
you and they are justified in relying thereon.
(c) At the Closing Date, you shall have received the opinion
of Lyon & Lyon, patent counsel for the Company, dated the Closing Date addressed
to the Underwriters and in the form and substance satisfactory to the
Underwriters' Counsel, to the effect that:
(i) The statements contained in the material under the
captions "Risk Factors -- Uncertainty of Patent Protection; Dependence
on Proprietary Technology"; "Risk Factors -- Reliance on Collaborative
Relationships"; "Business -- Collaborative and Licensing
Arrangements"; and "Business -- Patents and Proprietary Rights" of the
Prospectus and Registration Statement (the "Reviewed Portions") to
such counsel's knowledge after Investigation (as defined herein) are
accurate statements regarding the matters set forth therein.
(ii) To such counsel's knowledge after Investigation, there
are no pending adverse legal, governmental or administrative agency
proceedings relating to the Patent Applications (as that term is defined
in a letter of even date herewith among the Company and you) and to such
counsel's knowledge after Investigation, no such proceedings are threatened
or contemplated by such agencies or others.
(iii) To such counsel's knowledge after Investigation, there
are no documents or related litigation of a character required to be
filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus relating to
the Patent Applications which are not filed or described.
(iv) To such counsel's knowledge after Investigation, the
Company is the licensee of, or is listed in the records of the
appropriate Patent Office(s) as the owner of record of, the Patent
Applications, and the licensor of Patent Applications to the Company
have the right to license such subject matter to the Company. The
Company owns no issued patents. To such counsel's knowledge after
18
Investigation, for inventions that are the subject of a Patent
Application owned by the Company, the Company has the right to obtain,
and has obtained, an assignment of all right, title, and interest from
all named inventors.
(v) To such counsel's knowledge after Investigation, the
Patent Applications have been prepared and are being pursued by the
Company or its licensor. To such counsel's knowledge after
Investigation, such counsel understands that other than as stated in
the above-referenced portions of the Registration Statement and
Prospectus, no other entity or individual has any rights or claims in
the Patent Applications or any patent sought to be issued therefrom,
other than the licensor or assignors of these applications.
(vi) To such counsel's knowledge, it is the Company's reasonable
belief that it is not violating any existing proprietary rights of
others and it is the Company's reasonable belief that no such existing
rights will materially affect its ability to develop and commercialize
technology within the Patent Applications as described in the
Registration Statement and Prospectus; and,
(vii) To such counsel's knowledge, it is the Company's belief that
it owns or has the rights necessary to develop and commercialize technology
within the Patent Applications as described in the Registration Statement
and Prospectus.
(viii) In addition, such opinion shall also contain a statement that
as of the Closing Date, nothing has come to such counsel's attention that
causes such counsel to believe that the statements made regarding the
Patent Applications or agreements of the Company under the captions "Risk
Factors -- Uncertainty of Patent Protection; Dependence on Proprietary
Technology"; "Risk Factors -- Reliance on Collaborative Relationships";
"Business -- Collaborative and Licensing Arrangements"; and "Business --
Patents and Proprietary Rights" in the Registration Statement and
Prospectus contain any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
In such opinion, the term "Investigation" shall mean (i) review of the
agreements referred to in the Reviewed Portions of the Registration Statement
and Prospectus, (ii) review of the file histories of the Patent Applications,
(iii) review of documents related to the chain of title of the Patent
Applications, and (iv) review of files of the Company, of such counsel and (to
the extent permitted by the licensor) of the licensor of the Company pertaining
to items (i) through (iii) above.
19
(d) All proceedings taken in connection with the sale of the
Firm Shares and the Additional Shares as herein contemplated shall be
satisfactory in form and substance to you and to Underwriters' Counsel, and the
Underwriters shall have received from said Underwriters' Counsel a favorable
opinion, dated as of the Closing Date with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other related
matters as you may reasonably require, and the Company shall have furnished to
Underwriters' Counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(e) At the Closing Date you shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of the
Company, dated the Closing Date to the effect that (i) the condition set
forth in subsection (a) of this Section 6 has been satisfied, (ii) as of the
date hereof and as of the Closing Date the representations and warranties of
the Company set forth in Section 1 hereof are true and correct, (iii) as of
the Closing Date the obligations of the Company to be performed hereunder on
or prior thereto have been duly performed and (iv) subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, the Company has not sustained any loss or
interference with its business or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding, and there has not been
any Material Adverse Change, or any development involving a Material Adverse
Effect, except in each case as described in or contemplated by the Prospectus.
(f) At the time this Agreement is executed and at the Closing
Date, you shall have received a letter from Ernst & Young LLP, independent
public accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in form
and substance satisfactory to you, to the effect that: (i) they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the Regulations and stating that the answer to Item 10 of the
Registration Statement is correct insofar as it relates to them; (ii) stating
that, in their opinion, the financial statements and schedules of the Company
included in the Registration Statement and the Prospectus and covered by their
opinion therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the applicable published rules and
regulations of the Commission thereunder; (iii) on the basis of procedures
consisting of a reading of the latest available unaudited interim financial
statements of the Company, a reading of the minutes of meetings and consents of
the stockholders and boards of directors of the Company and the committees of
such boards subsequent to December 31, 1997, inquiries of officers and other
employees of the Company who have responsibility for financial and accounting
matters of the Company with respect to transactions and events subsequent to
December 31, 1997 and other specified procedures and inquiries to a date not
more than five days prior to the date of such letter (provided that the letter
delivered on the Closing Date shall use
20
a "cut-off" date not earlier than the date hereof); nothing has come to their
attention that would cause them to believe that: (A) the unaudited financial
statements and schedules of the Company presented in the Registration
Statement and the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
applicable published rules and regulations of the Commission thereunder or
that such unaudited financial statements are not fairly presented in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included in the Registration Statement and the Prospectus; (B) with respect
to the period subsequent to December 31, 1997 there were, as of the date of
the most recent available monthly financial statements of the Company, if
any, and as of a specified date not more than five days prior to the date of
such letter (provided that the letter delivered on the Closing Date shall use
a "cut-off" date not earlier than the date hereof), any changes in the
capital stock or long-term indebtedness of the Company or any decrease in the
current assets or shareholders' equity of the Company, in each case as
compared with the amounts shown in the most recent balance sheet presented in
the Registration Statement and the Prospectus, except for changes or
decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in such letter; or (C) that
during the period from April 1, 1998 to the date of the most recent available
monthly financial statements of the Company, if any, and to a specified date
not more than five days prior to the date of such letter (provided that the
letter delivered on the Closing Date shall use a "cut-off" date not earlier
than the date hereof), there was any decrease, as compared with the
corresponding period in the prior fiscal year, in revenues under
collaborative research and development agreement with a related party, or
increase in net loss, except for decreases or increases, as the case may be,
which the Registration Statement and the Prospectus disclose have occurred or
may occur or which are set forth in such letter; and (iv) stating that they
have compared specific dollar amounts, numbers of shares, percentages of
revenues and earnings, and other financial information pertaining to the
Company set forth in the Registration Statement and the Prospectus, which
have been specified by you prior to the date of this Agreement, to the extent
that such amounts, numbers, percentages, and information may be derived from
the general accounting and financial records of the Company or from schedules
furnished by the Company, and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries, and other appropriate
procedures specified by you set forth in such letter, and found them to be in
agreement.
(g) Prior to the Closing Date the Company shall have furnished
to you such further information, certificates and documents as you may
reasonably request.
(h) You shall have received from each person who is a director
or officer of the Company or stockholder beneficially owning at least 1% of the
outstanding Common Stock of the Company, as of the time of the closing of the
sale
21
of the Firm Shares hereunder at the Closing Date, an agreement to the effect
that such person will not, without the prior written consent of Bear, ▇▇▇▇▇▇▇
& Co. Inc. on behalf of the Underwriters, during the period commencing on the
effective date of the Registration Statement and ending 180 days thereafter,
(1) offer for sale, contract to sell, sell, pledge, hypothecate, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for shares of
Common Stock, whether such shares or any such securities were then owned by
such person or thereafter acquired or with respect to which the undersigned
had or thereafter acquired the power of disposition, (2) enter into any swap
or other agreement, arrangement or transaction that transfers to another, in
whole or in part, directly or indirectly, any of the economic consequences of
ownership of shares of Common Stock or securities convertible into or
exercisable or exchangeable for shares of Common Stock, whether any such
transaction is to be settled by delivery of shares of Common Stock or other
securities, in cash or otherwise or (3) 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 for or shares exchangeable for
shares of common stock.
(i) At the Closing Date, the Shares shall have been quoted
on the National Association of Securities Dealers Automated Quotation National
Market System.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
cancelled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company in writing, or by
telephone, telex or telegraph, confirmed in writing.
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 Act or Section 20(a) of the Exchange Act, against
any and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become
22
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Shares, as originally filed or any filed amendment
thereof, or any related preliminary prospectus or the Prospectus, or in any
supplement thereto or amendment thereof, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that the Company will not be liable in any such case to
the extent but only to the extent that any such loss, liability, claim,
damage or expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through you expressly for use
therein. This indemnity agreement will be in addition to any liability which
the Company may otherwise have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Shares, as originally filed or any filed
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through you
expressly for use therein; PROVIDED, HOWEVER, that in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount and commission applicable to the Shares purchased by such
Underwriter hereunder. This indemnity will be in addition to any liability
which any Underwriter may otherwise have including under this Agreement. The
Company acknowledges that the statements set forth in the last paragraph of the
cover page and in the third,
23
sixth and eleventh paragraphs and the list of Underwriters and the number of
shares listed opposite their respective names in the first paragraph under the
caption "Underwriting" in the Prospectus constitute the only information
furnished in writing by or on behalf of any Underwriter expressly for use in
the registration statement relating to the Shares, as originally filed or in
any filed amendment thereof, any related preliminary prospectus or the
Prospectus or in any amendment thereof or supplement thereto, as the case may
be.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7, except to the extent (but
only to the extent) such failure prejudices the rights of such indemnifying
party). In case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified
party or parties unless (i) the employment of such counsel shall have been
authorized in writing by one of the indemnifying parties in connection with
the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything
in this subsection to the contrary notwithstanding, an indemnifying party
shall not be liable for any settlement of any claim or action effected
without its written consent; PROVIDED, HOWEVER, that such consent was not
unreasonably withheld.
8. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of
24
losses, claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the
Underwriters, who may also be liable for contribution, including persons who
control the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, officers of the Company who signed the
Registration Statement and directors of the Company) as incurred to which the
Company and one or more of the Underwriters may be subject, in such
proportions as is appropriate to reflect the relative benefits received by
the Company and the Underwriters 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 7 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 and the Underwriters 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 and commissions but before deducting
expenses) received by the Company and (y) the underwriting discounts and
commissions received by the Underwriters, respectively, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
of the Company and of the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the 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 be liable or responsible for
any amount in excess of the underwriting discount and commission applicable
to the Shares purchased by such Underwriter hereunder, and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding the provisions
of this Section 8 and the preceding sentence, 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. For purposes of
this Section 8, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the 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 Section 15 of the Act or
Section 20(a) of the Exchange Act, each officer of the Company who shall
25
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) and (ii) 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, notify each party or parties
from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise. No party shall be liable for contribution with
respect to any action or claim settled without its consent; PROVIDED,
HOWEVER, that such consent was not unreasonably withheld.
9. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its
or their obligation to purchase Firm Shares or Additional Shares hereunder,
and if the Firm Shares or Additional Shares with respect to which such
default relates do not (after giving effect to arrangements, if any, made by
you pursuant to subsection (b) below) exceed in the aggregate 10% of the
number of Firm Shares or Additional Shares, the Firm Shares or Additional
Shares to which the default relates shall be purchased by the non-defaulting
Underwriters in proportion to the respective proportions which the numbers of
Firm Shares set forth opposite their respective names in Schedule I hereto
bear to the aggregate number of Firm Shares set forth opposite the names of
the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of
the Firm Shares or Additional Shares, as the case may be, you may in your
discretion arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within five calendar days
after such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Sections 5, 7(a) and 8 hereof) or the Underwriters, but nothing
in this Agreement shall relieve a defaulting Underwriter or Underwriters of its
or their liability, if any, to the other Underwriters and the Company for
damages occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to
which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
you or the Company shall have the right to postpone the Closing Date or
Additional Closing Date, as the
26
case may be, for a period, not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and
the Company agrees to file promptly any amendment or supplement to the
Registration Statement or the Prospectus which, in the opinion of
Underwriters' Counsel, may thereby be made necessary or advisable. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 9 with like effect as if it had originally been a party to
this Agreement with respect to such Firm Shares and Additional Shares.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All
representations and warranties, covenants and agreements of the Underwriters
and the Company contained in this Agreement, including the agreements
contained in Section 5, the indemnity agreements contained in Section 7 and
the contribution agreements contained in Section 8, shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Underwriter or any controlling person thereof or by or on
behalf of the Company, any of its officers and directors or any controlling
person thereof, and shall survive delivery of and payment for the Shares to
and by the Underwriters. The representations contained in Section 1 and the
agreements contained in Sections 5, 7, 8 and 11(d) hereof shall survive the
termination of this Agreement, including termination pursuant to Section 9 or
11 hereof.
11. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective upon the later of
when (i) you and the Company shall have received notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. If either the initial public offering price or the purchase price
per Share has not been agreed upon prior to 5:00 P.M., New York time, on the
fifth full business day after the Registration Statement shall have become
effective, this Agreement shall thereupon terminate without liability to the
Company or the Underwriters except as herein expressly provided. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company by
notifying you or by you by notifying the Company. Notwithstanding the
foregoing, the provisions of this Section 11 and of Sections 1, 5, 7 and 8
hereof shall at all times be in full force and effect.
(b) You shall have the right to terminate this Agreement at
any time prior to the Closing Date or the obligations of the Underwriters to
purchase the Additional Shares at any time prior to the Additional Closing Date,
as the case may be, if (A) any domestic or international event or act or
occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the market for the Company's securities or securities
in general; or (B) if trading on the New York or American Stock Exchanges or on
NASDAQ shall have been suspended, or minimum or maximum prices for trading shall
have been fixed, or maximum
27
ranges for prices for securities shall have been required, on the New York or
American Stock Exchanges or on NASDAQ by the New York or American Stock
Exchanges or NASDAQ or by order of the Commission or any other governmental
authority having jurisdiction; or (C) if a banking moratorium has been
declared by a state or federal authority or if any new restriction materially
adversely affecting the distribution of the Firm Shares or the Additional
Shares, as the case may be, shall have become effective; (D) (i) if the
United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a
national emergency or war by the United States or (ii) if there shall have
been such change in political, financial or economic conditions if the effect
of any such event in (i) or (ii) in your judgment makes it impracticable or
inadvisable to proceed with the offering, sale and delivery of the Firm
Shares or the Additional Shares, as the case may be, on the terms
contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all
out-of-pocket expenses (including the fees and expenses of their counsel)
incurred by the Underwriters in connection herewith.
12. NOTICES. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to
any Underwriter, shall be mailed, delivered, or telexed or telegraphed and
confirmed in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Equity Syndicate; if sent to the
Company, shall be mailed, delivered, or telegraphed and confirmed in writing
to the Company, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
13. PARTIES. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Sections 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
28
14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
15. 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.
16. 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.
29
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
COLLATERAL THERAPEUTICS, INC.
By
--------------------------
Name:
Title:
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
VECTOR SECURITIES INTERNATIONAL, INC.
BY BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By:
----------------------------------------
Name:
Title:
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
30
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
------------------- ----------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
Vector Securities International, Inc.
Total. . . . . . . . . . . . . . 3,330,000
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