THE IMMUNE RESPONSE CORPORATION
UNDERWRITING AGREEMENT
As of August 7, 2000
FIRST SECURITY XXX XXXXXX INC.
GRUNTAL & CO., L.L.C
C/o First Security Xxx Xxxxxx Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
The Immune Response Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell severally to First Security Xxx Xxxxxx, Inc. and
Gruntal & Co. LLC, (the "Underwriters") an aggregate of 2,400,000 shares, (as
described in the "Base Prospectus" (defined below)) (the "Firm Shares") of
the Company's Common Stock, $0.0025 par value per share (the "Common Stock").
The Company also proposes to grant to the Underwriters an option to purchase
up to 360,000 additional shares of Common Stock (the "Option Shares") for the
sole purpose of covering over-allotments, if any, in connection with the sale
of the Firm Shares. The Firm Shares and any Option Shares are referred to
below as the "Shares."
The Company has filed, in accordance with the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations thereunder (the
"Rules and Regulations"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-83195),
including a base prospectus, relating to 4,000,000 shares of Common Stock
(including the Shares) and the offering thereof from time to time in
accordance with Rule 415 under the Securities Act, which incorporates by
reference documents which the Company has filed or will file in accordance
with the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations thereunder (the "Exchange Act Rules and
Regulations"). As used in this Agreement, "Base Prospectus" means the
prospectus included in the Registration Statement when it became effective
under the Securities Act on August 20, 1999 and as it may have been amended
subsequent to that date to the date hereof. The Company has furnished to you,
for use by you and dealers, copies of a preliminary prospectus supplement or
preliminary prospectus supplements relating to the Shares, including the Base
Prospectus and all documents incorporated by reference in the Base Prospectus
(collectively, the "Preliminary Prospectus Supplement/Prospectus"). As used
below in this Agreement: (i) registration statement (File No. 333-83195), as
in effect at the time of execution of this Agreement, including the Base
Prospectus and all documents incorporated by reference in the Base
Prospectus, is referred to as the "Registration Statement"; (ii) the final
prospectus supplement relating to the Shares, including the Base Prospectus
and all documents incorporated in the Base Prospectus by reference, in the
form first filed by the Company with the Commission pursuant to Rule 424(b)
under the Securities Act, is referred to below as the "Prospectus Supplement/
Prospectus"; and (iii) except where otherwise stated, references to any
specific Rule or Rules refers to Rules that are part of the Rules and
Regulations.
The Company agrees with the several Underwriters as set forth below.
1. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter as follows:
(a) The Company meets and has satisfied the requirements for use of Form
S-3 under the Securities Act. The Company has prepared and filed the
Registration Statement with the Commission on Form S-3, for registration
under the Securities Act of the offering and sale of the Shares. The
Registration Statement has been declared effective by the Commission. The
Company has filed the Preliminary Prospectus Supplement/Prospectus with the
Commission in accordance with Rule 424(b). The Company will next file with
the Commission, in accordance with Rules 430A and 424(b) under the Securities
Act, the Prospectus Supplement/Prospectus.
(b) The Preliminary Prospectus Supplement/Prospectus filed pursuant to
Rule 424(b) complied in all material respects with the Securities Act, the
Rules and Regulations, the Exchange Act and the Exchange Act Rules and
Regulations. When the Registration Statement became effective and at all
times subsequent thereto up to the "Time of Purchase" (defined below) and, if
applicable, the "Additional Time of Purchase" (defined below), the
Registration Statement and the Prospectus Supplement/Prospectus, and any
supplements or amendments either of them, complied and will comply in all
material respects with the Securities Act, the Rules and Regulations, the
Exchange Act and the Exchange Act Rules and Regulations, and each of the
Registration Statement and the Prospectus Supplement/Prospectus at all such
times did not and will not contain an 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, in light of the circumstances under which they
were made, not misleading; provided that the Company makes no representation
or warranty with respect to any statement contained in the Prospectus
Supplement/Prospectus in reliance upon and in conformity with information
concerning the Underwriters and furnished in writing by or on behalf of
either Underwriter through you to the Company expressly for use in, and set
forth in, the section of the Prospectus Supplement/Prospectus entitled
"Underwriting"; the documents incorporated by reference in the Base
Prospectus, at the time they were filed with the Commission (or, if an
amendment with respect to any of them was filed, when it was so filed),
complied in all material respects with the requirements of the Exchange Act
and the Exchange Act Rules and Regulations and, without limitation and except
to the extent, if any, they are modified or superseded by the Registration
Statement or the Prospectus Supplement/Prospectus, did not and do not contain
an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and
the Company has complied and, until completion of the offering of the Shares
will continue to comply, with its obligations under the Exchange Act and the
Exchange Act Rules and Regulations.
(c) No order suspending the effectiveness of the Registration Statement
or preventing or suspending the use of any Preliminary Prospectus
Supplement/Prospectus or the Prospectus Supplement/Prospectus has been issued
and no proceedings for that purpose are pending or, to the knowledge of the
Company, threatened or contemplated by the Commission; no stop order
suspending the sale of the Shares in any jurisdiction has been issued and no
proceedings for that purpose are pending or, to the knowledge of the Company,
threatened or contemplated; and any request of the Commission for additional
information, whether to be included in the Registration
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Statement, any Preliminary Prospectus Supplement/Prospectus or the Prospectus
Supplement/Prospectus or otherwise, has been complied with.
(d) Each of the Company and its subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, has the power (corporate and other) and
authority to own or lease its properties and conduct its business as
described in the Registration Statement and the Prospectus
Supplement/Prospectus (or, if the Prospectus Supplement/Prospectus is not in
existence, the most recent Preliminary Prospectus Supplement/Prospectus) and
as is currently being conducted by it and is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which the character
of the property owned or leased or the nature of the business transacted by
it makes qualification necessary (except where the failure to be so qualified
would not have a material adverse effect on the business, results of
operations, condition (financial or other) or prospects of the Company and
its subsidiary considered as a whole). The Company owns all of the
outstanding capital stock of its subsidiary free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest. Each of
the Company and its subsidiary has and is operating in compliance in all
material respects with all authorizations, licenses, certificates, consents,
orders and permits from federal, state, local and other governmental or
regulatory authorities that are material to the conduct of its business, all
of which are valid and in full force and effect. The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than the subsidiary listed in Exhibit 21.1 to the Company's Annual
Report on Form 10-K filed with the Commission and incorporated by reference
into the Registration Statement].
(e) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus Supplement/Prospectus (or, if the
Prospectus Supplement/Prospectus is not in existence, the most recent
Preliminary Prospectus Supplement/Prospectus), there has not been any
material loss or interference with the business of the Company from fire,
explosion, flood, earthquake, riot or other civil disturbance or other
calamity, whether or not covered by insurance, or from any court or
governmental action, order or decree, or any changes in the capital stock or
long-term debt of the Company, or any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company, or any material
change, or a development known to the Company that might cause or result in a
material change, in or affecting the business, results of operations,
condition (financial or other) or prospects of the Company or its subsidiary,
whether or not arising from transactions in the ordinary course of business,
in each case other than as may be set forth in the Registration Statement and
the Prospectus Supplement/Prospectus (or, if the Prospectus
Supplement/Prospectus is not in existence, the most recent Preliminary
Prospectus Supplement/Prospectus), and since each such date, the Company has
not entered into any material transaction not described in the Registration
Statement and the Prospectus Supplement/Prospectus (or, if the Prospectus
Supplement/Prospectus is not in existence, the most recent Preliminary
Prospectus Supplement/Prospectus).
(f) There is no agreement, contract, license, lease or other document
required to be described in the Registration Statement or the Prospectus
Supplement/Prospectus (or, if the Prospectus Supplement/Prospectus is not in
existence, the most recent Preliminary Prospectus Supplement/Prospectus) or
to be filed as an exhibit to the Registration Statement which is not
described or filed as required. All contracts described in the Prospectus
Supplement/Prospectus (or, if the Prospectus Supplement/Prospectus is not in
existence, the most recent Preliminary
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Prospectus Supplement/Prospectus), if any, are in full force and effect, and
neither the Company nor, to the knowledge of the Company, any other parties,
is in material breach of or default under any such contract.
(g) The authorized and outstanding capital stock of the Company is set
forth in the Prospectus Supplement/Prospectus (or, if the Prospectus
Supplement/Prospectus is not in existence, the most recent Preliminary
Prospectus Supplement/Prospectus), and the description of the Common Stock
therein conforms with and accurately describes the rights set forth in the
instruments defining the Common Stock. The Shares to be issued and sold by
the Company are duly authorized and, when issued and delivered in accordance
with the terms of this Agreement and against payment therefor, will be
validly issued, fully paid and non-assessable. The issuance of the Shares by
the Company is not subject to any preemptive or similar rights.
(h) The capitalization of the Company as of March 31, 2000 is as set
forth under the column entitled "March 31, 2000 - Actual" in the section of
the Prospectus Supplement/Prospectus (or, if the Prospectus
Supplement/Prospectus is not in existence, the Preliminary Prospectus
Supplement/Prospectus) entitled "Capitalization." All of the outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, have been issued in compliance
with all applicable federal and state securities laws and were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities. The description of the Company's stock option and
other stock plans or arrangements, and the options or other rights granted or
exercised thereunder, set forth in the Prospectus Supplement/Prospectus (or,
if the Prospectus Supplement/Prospectus is not in existence, in the most
recent Preliminary Prospectus Supplement/Prospectus), accurately and fairly
present the information required to be shown with respect to such plans,
arrangements, options and rights. Other than this Agreement, outstanding
options to purchase Common Stock and additional options to purchase Common
Stock issued after the date of this Agreement pursuant to existing stock
option plans, outstanding securities convertible into Common Stock, in each
case as described in the Prospectus Supplement/Prospectus (or, if the
Prospectus Supplement/Prospectus is not in existence, the most recent
Preliminary Prospectus Supplement/Prospectus), there are no options, warrants
or other rights outstanding to subscribe for or purchase any shares or any
securities convertible into or exchangeable for any capital stock of the
Company. There are no preemptive rights applicable to any shares of capital
stock of the Company. There are no restrictions upon the voting or transfer
of any of the Shares pursuant to the Company's Certificate of Incorporation,
as amended, bylaws or other governing documents or any agreement to which the
Company is a party or by which it may be bound. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated
by this Agreement gives rise to any rights, other than those which have been
waived, for or relating to the registration of any securities of or issued by
the Company.
(i) The Company has power (corporate and other) to enter into and
perform its obligations under this Agreement and to issue, sell and deliver
the Shares to be delivered by it pursuant hereto. This Agreement has been
duly authorized, executed and delivered by the Company and constitute the
valid and binding agreement of the Company, and each is enforceable against
the Company in accordance with its terms except insofar as enforceability may
be affected by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally or by general equitable
considerations and except insofar as the
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indemnification and contribution provisions of Section 7 of this Agreement
may be affected by public policy concerns.
(j) The Company is not, nor with the giving of notice or lapse of time
or both would it be, in violation of or in default under, nor will the
execution or delivery of this Agreement or the completion of the transactions
contemplated by this Agreement result in a violation of or constitute a
breach of or a default (including without limitation with the giving of
notice, the passage of time or both) under, the Certificate of Incorporation,
as amended, bylaws or other governing documents of the Company or any
evidence of indebtedness, contract, license, joint venture or other agreement
or instrument of any type whatsoever to which the Company or its subsidiary
is a party or by which its or any of their properties is bound. The Company
has not incurred any liability, direct or indirect, for any finders' or
similar fees payable on behalf of the Company or the Underwriters in
connection with the transactions contemplated by this Agreement. The
performance by the Company of its obligations under this Agreement will not
violate any law, ordinance, rule or regulation (provided that no
representation or warranty is made with respect to the effect, if any, of
public policy concerns on the indemnification and contribution provisions of
Section 7 of this Agreement or any order, writ, injunction, judgment or
decree of any governmental agency or body or of any court or result in the
creation or imposition of any lien, charge, claim, encumbrance or right of
any third party of any type or description on any property of the Company or
its subsidiary. No consent, approval, authorization or order of any court,
governmental agency or body (except as has been obtained), financial
institution or any other person is required for the completion of the
transactions contemplated by this Agreement.
(k) Each of the Company and its subsidiary owns, or has valid rights to
use, all items of real and personal property which are material to the
business of the Company and its subsidiary considered as a whole, free and
clear, except as described in the Registration Statement and the Prospectus
Supplement/Prospectus (or, if the Prospectus Supplement/Prospectus is not in
existence, the most recent Preliminary Prospectus Supplement/Prospectus), of
all liens, charges, claims, encumbrances and rights of third parties of any
type or description that might materially interfere with the business,
results of operations, condition (financial or other) or prospects of the
Company and its subsidiary considered as a whole.
(l) The Company owns or possesses adequate rights to use all patents,
patent rights, inventions, trade secrets, know-how, trademarks, service
marks, tradenames and copyrights which are necessary for the conduct of its
business. Except as set forth in the Prospectus Supplement/Prospectus (or, if
the Prospectus Supplement/Prospectus is not in existence, the most recent
Preliminary Prospectus Supplement/Prospectus), the Company has not received
any notice of infringement of or conflict with asserted rights of others with
respect to any patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, tradenames or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
might have a material adverse effect on the business, results of operations,
condition (financial or other) or prospects of the Company.
(m) Except as set forth in the Prospectus Supplement/Prospectus (or, if
the Prospectus Supplement/Prospectus is not in existence, the most recent
Preliminary Prospectus Supplement/Prospectus), there is no litigation or
governmental proceeding to which the Company or its subsidiary is a party or
to which any property of the Company or its subsidiary is
5
subject which is pending or, to the best knowledge of the Company, threatened
or contemplated against the Company or its property that (i) might have a
material effect on, or might result in any material adverse change in, the
business, results of operations, condition (financial or other) or prospects
of the Company, (ii) might prevent completion of the transactions
contemplated by this Agreement or (iii) is required to be disclosed in the
Registration Statement or Prospectus Supplement/ Prospectus (or, if the
Prospectus Supplement/Prospectus is not in existence, the most recent
Preliminary Prospectus Supplement/Prospectus) and is not so disclosed.
(n) The Company is not in violation of any law, order, ordinance, rule
or regulation, or any order, writ, injunction, judgment or decree of any
governmental agency or body or of any court, to which it or its properties
(whether owned or leased) may be subject, which violation might have a
material adverse effect on the business, results of operations, condition
(financial or other) or prospects of the Company.
(o) The Company has not taken and will not take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
might reasonably be expected to cause or result in, under the Exchange Act,
the Exchange Act Rules and Regulations or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares. No bid or purchase by the Company and, to the
best knowledge of the Company, no bid or purchase that could be attributed to
the Company (as a result of bids or purchases by an "affiliated purchaser"
within the meaning of Regulation M under the Exchange Act) for or of the
Common Stock, any securities of the same class or series as the Common Stock
or any securities convertible into or exchangeable for or that represent any
right to acquire the Common Stock is now pending or in progress or will have
commenced at any time prior to the completion of the distribution of the
Shares.
(p) Xxxxxx Xxxxxxxx LLP, whose report appears in the Registration
Statement and the Prospectus Supplement/Prospectus (or, if the Prospectus
Supplement/Prospectus is not in existence, the most recent Preliminary
Prospectus Supplement/Prospectus) is, and during the periods covered by that
report were, independent accountants as required by the Securities Act and
the Rules and Regulations. The financial statements and schedules included in
the Registration Statement, each Preliminary Prospectus Supplement/
Prospectus and the Prospectus Supplement/Prospectus present fairly (or, if
the Prospectus Supplement/Prospectus has not been filed with the Commission,
as to the Prospectus Supplement/Prospectus, will present fairly) the
financial condition, results of operations, changes in stockholders' equity
(deficit) and cash flows of the Company at the dates and for the periods
indicated, and each of those financial statements and schedules present
fairly the information required to be stated therein. Such financial
statements and schedules have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods presented, except as may be stated therein. The selected and summary
financial and statistical data included in the Registration Statement and the
Prospectus Supplement/Prospectus present fairly (or, if the Prospectus
Supplement/Prospectus has not been filed with the Commission, as to the
Prospectus Supplement/Prospectus, will present fairly) the information shown
therein and have been compiled on a basis consistent with the audited
financial statements presented therein. No other financial statements or
schedules are required to be included in the Registration Statement, the Base
Prospectus, the Preliminary Prospectus Supplement/Prospectus or the
Prospectus Supplement/Prospectus.
6
(q) The books, records and accounts of the Company accurately and fairly
reflect, in reasonable detail, the transactions in and dispositions of the
assets of the Company and its subsidiary. The systems of internal accounting
controls maintained by the Company and its subsidiary are sufficient to
provide reasonable assurances that: (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary (x) to permit preparation of financial
statements in conformity with generally accepted accounting principles and
(y) to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(r) The Company has delivered to First Security Xxx Xxxxxx Inc the
written agreement of each of its officers and directors (each a "Material
Holder") to the effect that each Material Holder will not, for a period of 90
days following the date of this Agreement, without the prior written consent
of First Security Xxx Xxxxxx Inc., offer, sell or otherwise dispose of any
Common Stock owned by him or her or any interest therein, except for bona
fide gifts and transfers of Common Stock to immediate family members or to a
trust for his or her benefit or the benefit of an immediate family member.
(s) No labor disturbance by the employees of the Company or its
subsidiary exists, is imminent or, to the knowledge of the Company, is
contemplated or threatened. The Company is not aware of an existing, imminent
or threatened labor disturbance by employees of any principal suppliers,
manufacturers, contractors or others that might be expected to result in any
material change in the business, results of operations, condition (financial
or other) or prospects of the Company. No collective bargaining agreement
exists with any of the Company's employees or those of its subsidiary and, to
the best knowledge of the Company, no such agreement is imminent.
(t) Each of the Company and its subsidiary has filed all federal, state,
local and foreign tax returns which are required to be filed or has requested
extensions thereof and has paid all taxes, including withholding taxes,
penalties and interest, assessments, fees and other charges to the extent
that those taxes have become due and payable. No tax assessment or deficiency
has been made or proposed against the Company nor has the Company received
any notice of any proposed tax assessment or deficiency.
(u) Except as set forth in the Prospectus Supplement/Prospectus (or, if
the Prospectus Supplement/Prospectus is not in existence, the most recent
Preliminary Prospectus Supplement/Prospectus), there are no outstanding
loans, advances or guaranties of indebtedness by the Company to or for the
benefit of any of (i) its "affiliates", as that term is defined in the Rules
and Regulations, or (ii) any of the members of the families of any of them.
(v) The Company has not, directly or indirectly, at any time: (i) made
any contributions to any candidate for political office, or failed to
disclose fully any such contribution, in violation of law; (ii) made any
payment to any local, state, federal or foreign governmental officer or
official or other person charged with similar public or quasi-public duties,
other than payments required or allowed by all applicable laws; or (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended.
7
(w) Neither the Company nor its subsidiary has any liability, absolute
or contingent, which would have a material adverse effect on the business,
results of operations, condition (financial or other) or prospects of the
Company, relating to: (i) public health or safety; (ii) worker health or
safety; (iii) product defect or warranty; or (iv) pollution, damage to or
protection of the environment, including, without limitation, relating to
damage to natural resources, emissions, discharges, releases or threatened
releases of hazardous materials into the environment (including, further
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or otherwise relating to the manufacture, processing, use,
treatment, storage, generation, disposal, transport or handling of any
hazardous materials. As used in this Section 2(w), "hazardous material"
includes lead, lead oxide, sulfuric acid, solvents, adhesives and other
chemical substances, wastes, pollutants, contaminants and hazardous or toxic
substances, constituents, materials or wastes, in each case whether solid,
gaseous or liquid in nature.
(x) The Company has not distributed and will not distribute prior to the
Time of Purchase and the Additional Time of Purchase, as the case may be, any
prospectus, prospectus supplement or other offering material in connection
with the offering and sale of the Shares other than the Preliminary
Prospectus Supplement/Prospectus, the Prospectus Supplement/Prospectus, the
Registration Statement and any other material which may be permitted by the
Securities Act and the Rules and Regulations.
(y) The Common Stock is traded on and, subject to official notice of
issuance, the Shares have been approved for inclusion for quotation on the
Nasdaq National Market.
(z) The Company is not now, and intends to conduct its affairs in the
future in such a manner so that it will not become, an investment company
within the meaning of the Investment Company Act of 1940, as amended.
2. Purchase, Sale and Delivery of Shares.
(a) On the basis of the representations, warranties, covenants and
agreements of the Company contained in this Agreement and subject to the
terms and conditions set forth in this Agreement, the Company agrees to sell
to the several Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company, at a purchase price of $5.64
per share (the "purchase price per share"), the number of Firm Shares set
forth opposite its name on Schedule I hereto.
(b) The Company hereby grants to the several Underwriters an option to
purchase from the Company, severally and not jointly, all or any portion of
the Option Shares at the same purchase price per share as the Underwriters
are to pay for the Firm Shares. This option may be exercised only to cover
over-allotments in the sale of the Firm Shares by the Underwriters and may be
exercised in whole or in part at any time on or before the 30th day after the
date of the Prospectus Supplement/Prospectus upon written, telecopied or
telegraphic notice by First Security Xxx Xxxxxx, Inc. setting forth the
aggregate number of Option Shares as to which the several Underwriters are
exercising the option and the settlement date. The Option Shares shall be
purchased severally, and not jointly, by each Underwriter, if purchased at
all, in the same proportion that the number of Firm Shares set forth opposite
the name of the Underwriter in Schedule I to this Agreement bears to the
total number of Firm Shares to be purchased by the
8
Underwriters under Section 2(a) above, subject to such adjustments as First
Security Xxx Xxxxxx, Inc. may in its discretion make to eliminate any
fractional shares. Delivery of certificates for the Option Shares, and
payment therefor, shall be made as provided in Sections 2(c) and 2(d) below.
(c) Delivery of the Firm Shares and, if the option granted by the
Company in Section 2(b) above has been exercised not later than 6:30 a.m.,
San Francisco time, on the second business day preceding the Time of
Purchase, the Option Shares is to be made at the office of Xxxxxxxxxxx &
Xxxxxxxx LLP at 6:30 a.m., California time, on August 11, 2000, at such time
on such other day, not later than seven full business days after that date,
as is agreed to in writing by the Company and the Underwriters, or as
provided in Section 8 of this Agreement. The date and hour of delivery
payment for the Firm Shares is referred to in this Agreement as the "Time of
Purchase". As used in this Agreement, "business day" means a day on which the
Nasdaq National Market is open for trading and on which banks in New York and
California are open for business and not permitted by law or executive order
to be closed.
(d) If the option granted by the Company in Section 2(b) above is
exercised after 6:30 a.m., San Francisco time, on the second business day
preceding the Time of Purchase, delivery of the Option Shares and payment
therefor is to be made at the office of First Security Xxx Xxxxxx Inc.,
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, at
6:30 a.m., San Francisco time, on the date specified by First Security Xxx
Xxxxxx, Inc., which shall be four or fewer business days after the exercise
of the option, but not in excess of the period of time specified in the Rules
and Regulations (such date and time, the "Additional Time of Purchase").
(e) Payment of the purchase price for the Shares by the several
Underwriters is to be made by certified or official bank check or checks or
by Federal Funds wire transfer drawn in next-day funds, payable to the order
of the Company. Such payment shall be made upon delivery of certificates for
the Shares to you for the respective accounts of the several Underwriters.
Certificates for the Shares to be delivered to you must be registered in such
name or names and shall be in such denominations as the Underwriters may
request no later than the second business day before the Time of Purchase, in
the case of Firm Shares, and at least one business day prior to the purchase
of the Option Shares, in the case of the Option Shares. Such certificates
will be made available to the Underwriters for inspection, checking and
packaging at such location as First Security Xxx Xxxxxx, Inc. may request,
not less than one full business day prior to the Time of Purchase or, in the
case of the Option Shares, by 3:00 p.m., New York time, on the first business
day preceding the Additional Date of Purchase.
(f) It is understood that the several Underwriters propose to offer the
Shares for sale to the public as soon as First Security Xxx Xxxxxx, Inc.
deems it advisable to do so. The Firm Shares are to be initially offered to
the public at the public offering price set forth (or to be set forth) in the
Prospectus Supplement/Prospectus. First Security Xxx Xxxxxx, Inc. may from
time to time thereafter change the public offering price and other selling
terms.
3. Certain Additional Agreements of the Company. The Company covenants
and agrees with the several Underwriters as set forth below:
(a) The Company will file the Prospectus Supplement/Prospectus, properly
completed (and in form and substance reasonably satisfactory to the
Underwriters) pursuant to Rule 424(b)
9
within the time period prescribed and in any event prior to the Time of
Purchase and will provide evidence satisfactory to the Underwriters of that
timely filing. The Company will not file the Prospectus
Supplement/Prospectus, any amended Prospectus Supplement/Prospectus, any
amendment (including post-effective amendments) to the Registration Statement
or any supplement to the Prospectus Supplement/Prospectus without (i)
advising the Underwriters of and, a reasonable time prior to the proposed
filing of the amendment or supplement, furnishing the Underwriters with
copies thereof and (ii) obtaining the prior consent of the Underwriters to
that filing. The Company will prepare and file with the Commission, promptly
upon the request of the Underwriters, any amendment to the Registration
Statement or amendment or supplement to the Prospectus Supplement/Prospectus
that may be necessary or advisable in connection with the distribution of the
Shares by the Underwriters and use every reasonable efforts to cause any such
amendment to become effective as promptly as possible.
(b) The Company will promptly advise the Underwriters (i) when any
post-effective amendment to the Registration Statement becomes effective,
(ii) of any request by the Commission for any amendment of or supplement to
the Registration Statement or the Prospectus Supplement/Prospectus or for any
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (iv) of the
receipt by the Company of any notification with respect to the suspension of
the registration, qualification or exemption from registration or
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order or suspension and, if
issued, to obtain the withdrawal thereof as soon as possible.
(c) Until the Time of Purchase and, if applicable, the Additional Time
of Purchase has occurred, the Company will (i) provide to you, two business
days before the filing thereof, a copy of each document the Company intends
to file or files with the Commission that would be incorporated in the Base
Prospectus, (ii) consult with you concerning each such document and (iii) not
file any such document to which you reasonably object.
(d) The Company will (i) on or before the Time of Purchase, deliver to
the Underwriters and their counsel a signed copy of the Registration
Statement as originally filed and, promptly upon the filing thereof, a signed
copy of each post-effective amendment, if any, to the Registration Statement
(together with, in each case, all exhibits thereto unless and to the extent
previously furnished to each of you and your counsel) and all documents filed
by the Company with the Commission under the Exchange Act and deemed to be
incorporated by reference in the Base Prospectus, (ii) as promptly as
possible deliver to each of the Underwriters, at such office or offices as
they may designate, as many copies of the Prospectus Supplement/Prospectus as
they may reasonably request and (iii) thereafter from time to time during the
period in which a prospectus is required by law to be delivered by an
Underwriter or a dealer, likewise send to the Underwriters as many additional
copies of the Prospectus Supplement/Prospectus and as many copies of any
supplement to the Prospectus Supplement/Prospectus and of any amended
Prospectus Supplement/Prospectus, filed by the Company with the Commission,
as the Underwriters may reasonably request for the purposes contemplated by
the Securities Act.
(e) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or a dealer any event occurs as a
result of which it is necessary to
10
supplement or amend the Prospectus Supplement/Prospectus in order to make the
Prospectus Supplement/Prospectus not misleading or so that the Prospectus
Supplement/Prospectus will not omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case at the
time the Prospectus Supplement/Prospectus is delivered to a purchaser of the
Shares, or if it is necessary to amend or to supplement the Prospectus
Supplement/Prospectus to comply with the Securities Act, the Rules and
Regulations, the Exchange Act or the Exchange Act Rules and Regulations, the
Company will forthwith prepare and file with the Commission a supplement to
the Prospectus Supplement/Prospectus or an amended Prospectus
Supplement/Prospectus so that the Prospectus Supplement/Prospectus as so
supplemented or amended will not contain any 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 light of the circumstances under
which they were made, not misleading and so that it then will otherwise
comply with the Securities Act, the Rules and Regulations, the Exchange Act
and the Exchange Act Rules and Regulations. If, after the public offering of
the Shares by the Underwriters and during such period, the Underwriters
propose to vary the terms of offering thereof by reason of changes in general
market conditions or otherwise, you will advise the Company in writing of the
proposed variation and if, in the opinion either of counsel for the Company
or counsel for the Underwriters, such proposed variation requires that the
Prospectus Supplement/ Prospectus be supplemented or amended, the Company
will forthwith prepare and file with the Commission a supplement to the
Prospectus Supplement/Prospectus or an amended Prospectus
Supplement/Prospectus setting forth that variation. The Company authorizes
the Underwriters and all dealers to whom any of the Shares may be sold by the
Underwriters to use the Prospectus Supplement/ Prospectus, as from time to
time so amended or supplemented and for the period when a prospectus is
required to be delivered, in connection with the sale of the Shares in
accordance with the applicable provisions of the Securities Act and the Rules
and Regulations.
(f) The Company will cooperate with the Underwriters and their counsel
in the qualification or registration of the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Underwriters may
designate and, if applicable, in connection with exemptions from such
qualification or registration and, during the period in which a Prospectus
Supplement/Prospectus is required by law to be delivered by an Underwriter or
a dealer, in keeping those qualifications, registrations and exemptions in
effect; provided that the Company is not obligated to file any general
consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction in which it is not so qualified. The Company
will, from time to time, prepare and file such statements, reports and other
documents as are or may be required to continue such qualifications,
registrations and exemptions in effect for so long a period as you may
reasonably request for the distribution of the Shares.
(g) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to each Underwriter who may so
request in writing copies of (i) all periodic and special reports furnished
by it to its stockholders, (ii) all information, documents and reports filed
by it with the Commission, the Nasdaq National Market, any securities
exchange or the National Association of Securities Dealers, Inc., (iii) all
press releases and material news items or articles in respect of the Company,
its products or affairs released or prepared by the Company (other than
promotional and marketing materials disseminated solely to customers and
potential customers of the Company in the ordinary course of business) and
(iv)
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any additional information concerning the Company or its business which the
Underwriters reasonably requests.
(h) As soon as practicable, but not later than the 45th day following
the end of the fiscal quarter first ending after the first anniversary of the
Effective Date, the Company will make generally available to its securities
holders and furnish to the Underwriters an earning statement or statements in
accordance with Section 11(a) of the Securities Act and Rule 158.
(i) Without the prior written consent of First Security Xxx Xxxxxx Inc.,
the Company will not, directly or indirectly, offer, sell, grant options to
purchase or otherwise dispose of any shares of its equity securities for 90
days following the date of this Agreement, except that no consent is required
(i) for the sale of the Shares to be sold to the Underwriters pursuant to
this Agreement, (ii) with respect to securities issued in connection with any
acquisitions, (iii) for grant and exercises of stock options under stock
option plans existing at the date of this Agreement or options that are
exercisable after that 90-day period, (iv) issuances of Common Stock on
exercise of warrants and conversion of convertible securities, in each case
as are outstanding at the date of this Agreement, and (v) issuances of Common
Stock under the Company's employee compensation plans in existence at the
date of this Agreement.
(j) The Company will apply the net proceeds from the offering received
by it in the manner set forth under the caption "Use of Proceeds" in the
Prospectus Supplement/ Prospectus.
(k) As long as the Common Stock is publicly held, the Company will use
its best efforts to, and at all times for a period of at least five years
after the date of this Agreement, unless such securities are then listed on a
national securities exchange, cause the Common Stock (including the Shares)
to be included for quotation on the Nasdaq National Market, and the Company
will comply with all registration, filing, reporting and other requirements
of the Exchange Act and the Nasdaq National Market (or, if applicable, such
national securities exchange) which may from time to time be applicable to
the Company.
(l) The Company will timely, and in any event prior to the Time of
Purchase, file this Agreement with the Commission with a Report on Form 8-K.
4. Fees and Expenses.
(a) The Company will pay and bear all costs and expenses in connection
with: the preparation, printing and filing of the Registration Statement
(including financial statements, schedules and exhibits), Preliminary
Prospectus Supplement/Prospectus and the Prospectus Supplement/Prospectus,
any drafts of each of them and any amendments or supplements to any of them;
the duplication or, if applicable, printing (including all drafts thereof) of
this Agreement, the Agreement Among Underwriters, any Selected Dealer
Agreements, any Preliminary Blue Sky Survey or Memorandum and any
Supplemental Blue Sky Survey or Memorandum, the Underwriters' Questionnaire
and the Power of Attorney and the duplication and printing (including of
drafts thereof) of any other underwriting documents and material (including
but not limited to marketing memoranda and other marketing material) in
connection with the offering, purchase, sale and delivery of the Shares; the
issuance and delivery of the Shares under this Agreement to the several
Underwriters, including all expenses, taxes, duties,
12
fees and commissions on the purchase and sale of the Shares and Nasdaq
National Market brokerage and transaction levies with respect to the purchase
and, if applicable, incident to the sale and delivery of the Shares by the
Company to the several Underwriters and by the several Underwriters to the
initial purchasers thereof; the cost of printing all stock certificates; the
Transfer Agents' and Registrars' fees; the fees and disbursements of counsel
for the Company; all fees and other charges of the Company's independent
public accountants; the cost of furnishing to the Underwriters copies of the
Registration Statement (including appropriate exhibits), Preliminary
Prospectus Supplement/Prospectus and the Prospectus Supplement/Prospectus,
the agreements and other documents and instruments referred to above and any
amendments or supplements to any of the foregoing; NASD filing fees and the
cost of qualifying or registering the Shares (or obtaining exemptions from
qualification or registration) under the securities or Blue Sky laws of such
jurisdictions as you designate (including filing fees and the fees and
costs/charges of Underwriters' counsel in connection with such state
securities or Blue Sky qualifications, registrations and exemptions); all
fees and expenses in with qualification of the Shares for inclusion for
quotation on the Nasdaq National Market; advertising and road-show expenses
(other than those of the Underwriters); and all other expenses incurred by
the Company in connection with the performance of its obligations under this
Agreement. In addition to its other obligations under this Section 4(a), the
Company shall at the Time of Purchase pay to First Security Xxx Xxxxxx Inc.,
individually and not in its capacity as an Underwriter, a non-accountable
expense allowance equal to one percent (1%) of the initial public offering
price of the Shares sold pursuant to this Agreement at the Time of Purchase
(including any Option Shares sold at the Time of Purchase). If the option
granted by the Company in Section 2(b) above is exercised after 6:30 a.m.,
San Francisco time, on the second business day preceding the Time of
Purchase, the Company shall at the Additional Time of Purchase pay to First
Security Xxx Xxxxxx Inc., individually and not in its capacity as an
Underwriter, a non-accountable expense allowance equal to one percent (1%) of
the initial public offering price of the Option Shares sold pursuant to this
Agreement at the Additional Time of Purchase.
(b) In addition to the Company's obligations under Section 7(a) of this
Agreement, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or, based upon any
loss, claim, damage or liability referred to in Section 7(a) of this
Agreement, the Company must reimburse or advance to or for the benefit of
each of the Underwriters, on a monthly basis (or more often, if requested),
for all legal and other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety
and enforceability of the Company's obligation to reimburse or advance for
the benefit of the Underwriters for such expenses or the possibility that
such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any portion, or all, of any such
interim reimbursement payments or advances are so held to have been improper,
the Underwriters receiving the same must severally, and not jointly, promptly
return such amounts to the Company together with interest at the prime rate
(or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by Bank of America, NT&SA, San
Francisco, California (the "Prime Rate"), compounded monthly, but not in
excess of the maximum rate permitted by applicable law. Any such interim
reimbursement payments or advances that are not made to or for the
Underwriters within ten days of a request for reimbursement or for an advance
will bear interest at the Prime Rate, but not in excess of the maximum rate
permitted by applicable law, from the date of such request until the date
paid.
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(c) In addition to its obligations under Section 7(b) of this Agreement,
each Underwriter severally and in proportion to its obligation to purchase
Firm Shares as set forth on Schedule I hereto, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any loss, claim, damage or liability referred to
in Section 7(b) of this Agreement, must reimburse or advance to or for the
benefit of the Company, on a monthly basis (or more often, if requested), for
its proportion share (as so determined) of all legal and other expenses
incurred by the Company in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety
or enforceability of the Underwriters' obligation to reimburse or advance for
the benefit of the Company for such expenses and the possibility that such
payments or advances might later be held to have been improper by a court of
competent jurisdiction. To the extent that any portion, or all, of any such
interim reimbursement payments or advances are so held to have been improper,
the Company must promptly return such amounts to each Underwriter in question
together with interest at the Prime Rate, but not in excess of the maximum
rate permitted by applicable law. Any such interim reimbursement payments or
advances that are not made to the Company within ten days of a request for
reimbursement or for an advance will bear interest at the Prime Rate, but not
in excess of the maximum rate permitted by applicable law, from the date of
such request until the date paid.
(d) Any controversy arising out of the operation of the interim
reimbursement and advance arrangements set forth in Sections 4(b) and 4(c)
above, including the amounts of any requested reimbursement payments or
advance, the method of determining such amounts and the basis on which such
amounts are to be apportioned among the indemnifying parties, will be settled
by arbitration conducted under the provisions of the Constitution and Rules
of the Board of Governors of the New York Stock Exchange, Inc. or pursuant to
the Code of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or a written notice
of intention to arbitrate, therein electing the arbitration tribunal. If the
party demanding arbitration does not make a designation of an arbitration
tribunal in the demand or notice, then the party responding to the demand or
notice is authorized to do so. Any such arbitration will be limited to the
interpretation and obligations of the parties under the interim reimbursement
and advance provisions contained in Sections 4(b) and 4(c) above and will not
resolve the ultimate propriety or enforceability of the obligation to
indemnify for or contribute to expenses that is created by the provisions of
Section 7 of this Agreement.
(e) If the sale of the Shares provided for herein is not completed
because any condition to the obligations of the Underwriters set forth in
Section 5 of this Agreement is not satisfied, because of any termination
pursuant to Section 8 of this Agreement, by the Company under Section 6 of
this Agreement or because of any refusal, inability or failure on the part of
the Company to perform any covenant or agreement set forth in this Agreement
or to comply with any provision of this Agreement other than by reason of a
default by any of the Underwriters, the Company must reimburse the several
Underwriters immediately upon, and in any event within two business days of,
demand for all out-of-pocket expenses (including fees and costs/charges of
counsel) that have been incurred by any or all of them in connection with
investigating, preparing to market or marketing the Shares, including without
limitation in connection with the Preliminary Prospectus
Supplement/Prospectus and the Prospectus Supplement/Prospectus, or otherwise
in connection with or related to this Agreement up to a maximum of $100,000.
Any
14
amount payable by Company under this Section 4(e) that is not paid when due
will bear interest at the Prime Rate, but not in excess of the maximum amount
permitted by law, until paid.
5. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase and pay for the Shares is subject, in the sole
discretion of the Underwriters, to the accuracy as of the date of execution
of this Agreement, the Time of Purchase and the Additional Time of Purchase,
as the case may be, of the representations and warranties of the Company set
forth in this Agreement, the accuracy of the statements of the Company and
its officers made in any certificate delivered pursuant to this Agreement,
the performance by the Company of all of its obligations to be performed
under this Agreement at or prior to the Time of Purchase or the Additional
Time of Purchase, as the case may be, the satisfaction of all conditions to
be satisfied or performed by the Company at or prior to the applicable date
and the following additional conditions:
(a) If a post-effective amendment to the Registration Statement is
required to be filed pursuant to Rule 430A under the Securities Act, that
post-effective amendment must have been filed and, not later than 5:00 p.m.,
New York time, on the date of this Agreement or at such later date and time
as you may approve in writing, the Company must have provided evidence
satisfactory to the Underwriters of the filing and the effectiveness of that
amendment, and at the Time of Purchase and, if applicable, the Additional
Time of Purchase, if filing of the Prospectus Supplement/Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the Prospectus
Supplement/Prospectus, and any supplement thereto, will be filed in the
manner and within the time period required by Rule 424(b) and prior to the
Time of Purchase or Additional Time of Purchase, as the case may be; no stop
order suspending the effectiveness of the Registration Statement or any
qualification, registration or exemption from qualification or registration
for the sale of the Shares in any jurisdiction may have been issued and no
proceedings for that purpose may have been instituted or threatened; and any
request for additional information on the part of the Commission must have
been complied with to the reasonable satisfaction of the Underwriters and
their counsel.
(b) You must have received from Xxxxxxxxxxx & Xxxxxxxx LLP, counsel for
the Underwriters, an opinion, dated the day of the Time of Purchase, with
respect to the issuance and sale of the Shares and such other related matters
as the Underwriters reasonably require, and the Company must have furnished
such counsel with all documents it requests for the purpose of enabling them
to pass upon those matters.
(c) You must have received at the Time of Purchase and the Additional
Time of Purchase, as the case may be, the opinion of Pillsbury Madison &
Sutro LLP, counsel for the Company, addressed to the Underwriters and dated
the day of the Time of Purchase or of the Additional Time of Purchase, as
applicable, with reproduced copies or signed counterparts thereof for each of
the Underwriters, covering the matters set forth in Annex A to this Agreement
and in form and substance satisfactory to you.
(d) You must have received at the Time of Purchase and the Additional
Time of Purchase, as the case may be, the opinion of Lahive & Xxxxxxxxx LLP,
patent counsel for the Company with respect to Gene Therapy, and Xxxxxxxx &
Xxxxxx LLP, patent counsel for the Company with respect to all other patent
matters, addressed to the Underwriters and dated the day of the Time of
Purchase or of the Additional Time of Purchase, as applicable, with
15
reproduced copies or signed counterparts thereof for each of the
Underwriters, covering the matters set forth in Annex B to this Agreement and
in form and substance satisfactory to you.
(e) You must have received at the Time of Purchase and the Additional
Time of Purchase, as the case may be, the opinion of Xxxxx & Xxxxxxx LLP,
regulatory counsel for the Company, addressed to the Underwriters and dated
the day of the Time of Purchase or of the Additional Time of Purchase, as
applicable, with reproduced copies or signed counterparts thereof for each of
the Underwriters, covering the matters set forth in Annex C to this Agreement
and in form and substance satisfactory to you.
(f) You must be satisfied in your sole judgment that there has not been
any material change in the market for securities in general or in political,
financial or economic conditions as to render it impracticable in your sole
judgment to make a public offering of the Shares, or a material adverse
change in market levels for securities in general (or those of companies in
particular) or financial or economic conditions which render it inadvisable
to proceed.
(g) You must have received at the Time of Purchase and the Additional
Time of Purchase, as the case may be, a certificate, dated the day of the
Time of Purchase or of the Additional Time of Purchase, as the case may be,
and signed by the Chief Executive Officer and the Chief Financial Officer of
the Company stating that:
(i) the representations and warranties of the Company set forth in
Section 1 of this Agreement are true and correct with the same force and
effect as if made at and as of the Time of Purchase or the Additional
Time of Purchase, as applicable, and the Company has complied with all
the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Time of Purchase and the
Additional Time of Purchase, as applicable;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of such persons,
threatened under the Securities Act; and
(iii) each person signing the certificate has carefully examined
the Registration Statement in the form in which it originally became
effective and the Prospectus Supplement/Prospectus and any supplements
or amendments to any of them and, as of the date of this Agreement,
(A) the statements made in the Registration Statement, the
Preliminary Prospectus Supplement/Prospectus and the Prospectus
Supplement/Prospectus were true and correct in all material respects
and neither the Registration Statement nor the Prospectus
Supplement/Prospectus contained a misstatement of a material fact or
omitted 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, (B) since the
date of this Agreement, no event has occurred that should have been set
forth in an amendment to the Registration Statement or a supplement or
amendment to the Preliminary Prospectus Supplement/Prospectus or the
Prospectus Supplement/ Prospectus that has not been set forth in such an
amendment or supplement, (C) since the respective dates as of which
information is given in the Registration Statement in the form in which
it originally became effective, the Base Prospectus and the Prospectus
Supplement/ Prospectus, there
16
has not been any material change or any development involving a
prospective material change in or affecting the business, results of
operations, condition (financial or other) or prospects of the Company,
whether or not arising from transactions in the ordinary course of
business, and, since such dates, the Company has not entered into any
material transaction not referred to in the Registration Statement in
the form in which it originally became effective, the Base Prospectus or
the Prospectus Supplement/ Prospectus, (D) there are not any pending or,
to the knowledge of each person tsigning the certificate, threatened
legal proceedings to which the Company is a party or of which property
of the Company is subject which is material and which is not disclosed
in the Prospectus Supplement/Prospectus and (E) there are not any
license agreements, contracts, leases or other documents that are
required to be filed as exhibits to the Registration Statement that have
not been filed as required.
(h) You must have received from Xxxxxx Xxxxxxxx LLP a letter or letters,
addressed to the Underwriters and dated the Time of Purchase and the
Additional Time of Purchase, as applicable, confirming that they are
independent accountants with respect to the Company within the meaning of the
Securities Act and the applicable published Rules and Regulations thereunder
and, based upon the procedures described in their letter, referred to below,
delivered to you concurrently with the execution of this Agreement (the
"Original Letter"), but carried out to a date not more than five business
days prior to the Time of Purchase and the Additional Time of Purchase, as
applicable, (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the day of
the Time of Purchase or of the Additional Time of Purchase, as the case may
be, (ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter that are necessary to reflect
any changes in the facts described in the Original Letter since the date of
the Original Letter or to reflect the availability of more recent financial
statements, data or information and (iii) if prior to the Time of Purchase or
the Additional Time of Purchase, as applicable, the documents incorporated in
the Base Prospectus include financial statements of the Company for the
quarter ended March 31, 2000 or other financial data not so incorporated at
the date of the Prospectus Supplement/Prospectus (or, if the Prospectus
Supplement/Prospectus is not in existence at the date of this Agreement, the
most recent Preliminary Prospectus Supplement/Prospectus), a letter
reasonably satisfactory to you in form and content with respect to (x) such
financial statements, with the procedures provided in Statement of Auditing
Standards No. 71 having been performed, and (y) such other financial data
with procedures with respect thereto acceptable to you having been performed.
Such letters must not disclose any change, or any development involving a
prospective change, in or affecting the business, results of operations, or
condition (financial or other) or prospects of the Company which, in your
sole judgment, makes it impractical or inadvisable to proceed with the public
offering of the Shares or the purchase of the Option Shares as contemplated
by the Prospectus Supplement/Prospectus (or, if the Prospectus
Supplement/Prospectus is not in existence, the most recent Preliminary
Prospectus Supplement/Prospectus).
(i) Prior to the Time of Purchase, the Shares must have been approved
for inclusion for quotation on the Nasdaq National Market subject to official
notice of issuance.
(j) On or prior to the Time of Purchase, you must have received from all
Material Holders executed agreements covering the matters described in
Section 1(r) of this Agreement.
17
(k) The Company must have furnished to you such further certificates and
documents as you reasonably request (including certificates of officers of
the Company), as to the accuracy of the representations and warranties of the
Company set forth in this Agreement, the performance by the Company of its
obligations under this Agreement and the other conditions concurrent and
precedent to the obligations of the Underwriters under this Agreement.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement will be in compliance with the provisions of
this Agreement only if they are reasonably satisfactory to the Underwriters
and their counsel. The Company must furnish you with such number of conformed
copies of such opinions, certificates, letters and documents as you
reasonably request.
If any of the conditions specified in this Section 5 have not been
fulfilled in all material respects when and as provided in this Agreement,
time being of the essence, or if any of the opinions and certificates
mentioned above or elsewhere in this Agreement are not in all material
respects reasonably satisfactory in form and substance to the Underwriters
and their counsel, this Agreement and all obligations of the Underwriters
hereunder may be canceled by the Underwriters at, or at any time prior to,
the Time of Purchase or, with respect to the Option Shares, the Additional
Time of Purchase, as the case may be. Notice of such cancellation must be
given to the Company in writing or by telephone, telecopy or telegraph
confirmed in writing. Any such termination shall be without liability of the
Company to the Underwriters (except as provided in Section 4 or Section 7 of
this Agreement) and without liability of the Underwriters to the Company
(except to the extent provided in Section 7 of this Agreement).
6. Conditions of the Obligation of the Company. The obligations of the
Company to sell and deliver the Shares required to be delivered as and when
specified in this Agreement are subject to the condition that, at the Time of
Purchase or, with respect to the Option Shares, the Additional Date of
Purchase, no stop order suspending the effectiveness of the Registration
Statement is in effect and no proceedings therefor are pending or threatened
by the Commission.
7. Indemnification and Contribution.
(a) The Company must indemnify and hold harmless each Underwriter and
each person (including each partner or officer thereof) who controls any
Underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages or liabilities, joint or several,
to which such indemnified persons or any of them may become subject under the
Securities Act, the Rules and Regulations, the Exchange Act, the Exchange Act
Rules and Regulations or other federal or state statute, law or regulation,
at common law or otherwise, specifically including but not limited to losses,
claims, damages or liabilities (or actions in respect thereof) related to
negligence on the part of any Underwriter, and the Company agrees to
reimburse each such Underwriter and controlling person for any legal or other
expenses (including, except as otherwise provided below, settlement expenses
and fees and costs/charges of counsel) incurred by the respective indemnified
persons in connection with defending against any such losses, claims, damages
or liabilities or in connection with any investigation or inquiry of, or
other proceeding that may be brought against, such respective indemnified
persons, in each case insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon, in whole or
in part, (i) any breach of any representation, warranty, covenant or
agreement of the Company in this Agreement, (ii) any untrue statement or
alleged untrue
18
statement of a material fact contained in the Registration Statement
(including in the Base Prospectus and the documents incorporated or to be
incorporated by reference therein) or any post-effective amendment thereto,
or the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, (iii) any
untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Prospectus Supplement/Prospectus or the Prospectus
Supplement/Prospectus, including in the documents incorporate to be
incorporated in the Base Prospectus (in each case as amended or as
supplemented if the Company has filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a 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 (iv) any untrue statement or alleged untrue
statement of a material fact contained in any application or other document,
or any amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify or register the Shares under the securities
or Blue Sky laws thereof or to obtain an exemption from such qualification or
registration or filed with the Commission (except to the extent covered by
clause (ii) and (iii) of this sentence) or any securities association, the
Nasdaq National Market or any securities exchange, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided that (A) the indemnity
agreements of the Company contained in this Section 7(a) will not apply to
any such losses, claims, damages, liabilities or expenses if such statement
or omission was made in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Underwriters
specifically for use in the Registration Statement, the Preliminary
Prospectus Supplement/Prospectus or the Prospectus Supplement/Prospectus or
any such amendment thereof or supplement thereto and (B) the indemnity
agreement contained in this Section 7(a) with respect to any Preliminary
Prospectus Supplement/Prospectus will not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Shares that are the subject thereof (or
to the benefit of any person controlling such Underwriter) if the Company
demonstrates that at or prior to the written confirmation of the sale of such
Shares a copy of the Prospectus Supplement/Prospectus (or the Prospectus
Supplement/ Prospectus as amended or supplemented) (excluding the documents
incorporated therein by reference) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus Supplement/Prospectus was corrected in the Prospectus
Supplement/Prospectus (or the Prospectus Supplement/Prospectus as amended or
supplemented), unless the failure is the result of noncompliance by the
Company with Section 3 of this Agreement. The indemnity agreements of the
Company contained in this Section 7(a) and the representations and warranties
of the Company contained in Section 1 of this Agreement will remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any person indemnified by this Section 7(a) and will survive the
delivery of and payment for the Shares. This indemnity agreement is in
addition to any liabilities which the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify and
hold harmless the Company, each of its officers who signed the Registration
Statement, each of its directors, each other Underwriter and each person
(including each partner or officer thereof) who controls the Company or any
such other Underwriter within the meaning of Section 15 of the Securities
19
Act from and against any and all losses, claims, damages or liabilities,
joint or several, to which such indemnified persons or any of them may become
subject under the Securities Act, the Rules and Regulations, the Exchange
Act, the Exchange Act Rules and Regulations or other federal or state
statute, law or regulation or at common law or otherwise and to reimburse
each of them any legal or other expenses (including, except as otherwise
provided below, settlement expenses and fees and costs/charges of counsel)
incurred by the respective indemnified persons in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding that may be brought
against, the respective indemnified persons, in each case arising out of or
based upon (i) any breach of any representation, warranty, covenant or
agreement of the indemnifying Underwriter in this Agreement, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Base Prospectus) or any post-effective
amendment thereto, or the omission or alleged omission to state therein a
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 (iii) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus
Supplement/Prospectus or the Prospectus Supplement/Prospectus (as amended or
as supplemented if the Company has filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a 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, but in each case under clauses (ii) and (iii)
above, as the case may be, only if such statement or omission was made in
reliance upon and in conformity with information furnished in writing by or
on behalf of such indemnifying Underwriter specifically for use in the
Registration Statement, any Preliminary Prospectus Supplement/Prospectus or
the Prospectus Supplement/Prospectus or any such amendment thereof or
supplement thereto. The Company acknowledges and agrees that the information
set forth in the last paragraph on the cover of the Preliminary Prospectus
Supplement/Prospectus and in the table under the caption "Underwriting"
listing the Underwriters and the number of Firm Shares to be purchased by
each, the paragraph following that table, and the final paragraph under the
caption "Underwriting" in the Prospectus Supplement/ Prospectus (or, if the
Prospectus Supplement/ Prospectus is not in existence, to be included therein
if identical to the comparable information in the Preliminary Prospectus
Supplement/Prospectus except for changes approved by the Underwriters)
constitute the only information furnished by the Underwriters to the Company
for inclusion in any Preliminary Prospectus Supplement/Prospectus, the
Prospectus Supplement/Prospectus or the Registration Statement. The indemnity
agreement of each Underwriter contained in this Section 7(b) will remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any person indemnified by this Section 7(b) and will
survive the delivery of and payment for the Shares. This indemnity agreement
shall be in addition to any liabilities which each Underwriter may otherwise
have.
(c) Each person indemnified by Sections 7(a) and 7(b) above agrees, upon
the service of a summons or other initial legal process upon it in any action
or suit instituted against it or upon its receipt of written notification of
the commencement of any investigation or inquiry of, or proceeding against,
it in respect of which indemnity may be sought and if a claim in respect
thereunder is to be made against the indemnifying persons under this
Section 7, to promptly give written notice (the "Notice") of the service or
notification to the person from whom indemnification may be sought under this
Agreement. No indemnification under Sections 7(a) or 7(b) above or,
contribution under Section 7(e) below, will be available to any person who
fails to
20
so give the Notice if the person to whom the Notice was not given was unaware
of the action suit, investigation, inquiry or proceeding to which the Notice
would have related, but only to the extent that person demonstrates it was
materially prejudiced by the failure to receive the Notice, and the omission
so to notify the indemnifying person will not relieve it or any other person
from any liability which either may have to the indemnified person or persons
other than under Sections 7(a), 7(b) or 7(e).
(d) Any indemnifying person will be entitled at its own expense to
participate in the defense of any action, suit or proceeding against, or
investigation or inquiry of, an indemnified person. Any indemnifying person
will be entitled, if it so elects within a reasonable time after receipt of
the Notice by giving written notice (the "Notice of Defense") to the
indemnified person, to assume (alone or in conjunction with any other
indemnifying person or persons) the entire defense of the action, suit,
investigation, inquiry or proceeding, in which event the defense will be
conducted, at the expense of the indemnifying person or persons, by counsel
chosen by such indemnifying person or persons and reasonably satisfactory to
the indemnified person or persons; provided that if the indemnified person or
persons reasonably determine that there may be a conflict between the
positions of the indemnifying person or persons and the indemnified person or
persons in conducting the defense of the action, suit, investigation, inquiry
or proceeding or that there may be legal defenses or rights available to the
indemnified person or persons different from or in addition to those
available to the indemnifying person or persons, then separate counsel for
and selected by the indemnified person or persons will be entitled to conduct
the defense of the indemnified person or persons at the expense of the
indemnifying person or persons; and provided further that the indemnifying
person or persons will not be liable for the fees and expenses of more than
one separate counsel, reasonably approved by the indemnifying person or
persons, for all of the indemnified persons, plus, if applicable, local
counsel in each jurisdiction. In addition, in any event, the indemnified
person or persons will be entitled to have counsel selected by such
indemnified person or persons participate in, but not conduct, the defense.
If, within a reasonable time after receipt of the Notice, an indemnifying
person gives a Notice of Defense and, unless separate counsel is to be chosen
by the indemnified person or persons as provided above or the counsel chosen
by the indemnifying person or persons is not reasonably satisfactory to the
indemnified person or persons, the indemnifying person or persons will not be
liable under Sections 7(a) above through this Section 7(d) for any legal
expenses subsequently incurred by the indemnified person or persons in
connection with the defense of the action, suit, investigation, inquiry or
proceeding, except that (A) the indemnifying persons or person must bear and
pay the legal and other expenses incurred in connection with the conduct of
the defense as referred to in the "provided" clause in the preceding sentence
and (B) the indemnifying person or persons must bear and pay such other
expenses as it or they have authorized to be incurred by the indemnified
person or persons. If, within a reasonable time after receipt of the Notice,
no Notice of Defense has been given, the indemnifying person or persons will
be responsible for any legal or other expenses incurred by the indemnified
person or persons in connection with the defense of the action, suit,
investigation, inquiry or proceeding.
(e) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section
7 but is judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right to appeal) that such indemnification may not be
enforced in the case notwithstanding that this Section 7 provides for
indemnification in that case,
21
indemnifying person must contribute to the amount paid or payable by such
indemnified person as a result of the losses, claims, damages, liabilities
and expenses referred to in Section 7(a) or 7(b) above (i) in such proportion
as is appropriate to reflect the relative benefits received by each
indemnifying person from the offering of the Shares or (ii) if the allocation
provided by clause (i) of this sentence is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in that clause (i) but also the relative fault of each
person in connection with the statements, omissions or other matters that
resulted in the losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Underwriters will be deemed to be in the same respective
proportions as the total proceeds from the offering of the Shares, net of the
underwriting discounts, received by the Company and the total underwriting
discount retained by the Underwriters bear to the aggregate public offering
price of the Shares. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by a party and the party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7(e) were to be 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 into
account the considerations referred to in the first paragraph of this Section
7(e). The amount paid by an indemnified person as a result of the losses,
claims, damages or liabilities, referred to in the first sentence of this
Section 7(e) will be deemed to include any legal or other expenses reasonably
incurred by that indemnified person in connection with investigating,
preparing to defend or defending against any action or claim which is the
subject of this Section 7(e). Notwithstanding the provisions of this Section
7(e), no Underwriter will be required to contribute any amount in excess of
the underwriting discount applicable to the Shares purchased by that
Underwriter. For purposes of this Section 7(e), each person who controls an
Underwriter within the meaning of the Securities Act will have the same
rights to contribution as the Underwriter, and each person who controls the
Company within the meaning of the Securities Act, each officer of the Company
who signed the Registration Statement and each director of the Company will
have the same rights to contribution as the Company, subject in each case to
the immediately preceding sentence and the immediately following two
sentences. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute in this
Section 7(e) are several in proportion to their respective underwriting
obligations and not joint.
(f) The Company may not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought under this Section 7
(whether or not the Underwriter or any person who controls such Underwriter
within the meaning of Section 15 of the Securities Act is a party to such
claim, action, suit or proceeding), unless the settlement, compromise or
consent includes an unconditional release of each the Underwriter and each
such controlling person from all liability arising out of the claim, action,
suit or proceeding.
22
(g) No Underwriter may, without the consent of the Company, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Company is a party to such claim, action, suit or proceeding), which consent
shall not be unreasonably withheld, unless such settlement, compromise or
consent includes an unconditional release of the Company, each of its
officers who signed the Registration Statement, each of its directors and
each person who controls the Company within the meaning of Section 15 of the
Securities Act from all liability arising out of such claim, action, suit or
proceeding.
(h) The parties to this Agreement acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding this Agreement including, without limitation, Sections
4(b) and 4(c) of this Agreement and this Section 7 and that they are fully
informed regarding all such provisions. They further acknowledge that
Sections 4(b) and 4(c) and this Section 7 fairly allocate the risks in light
of the ability of the parties to investigate the Company and its business in
order to assure that adequate disclosure is made in the Registration
Statement, the Preliminary Prospectus Supplement/Prospectus and the
Prospectus Supplement/Prospectus as required by the Securities Act, the Rules
and Regulations, the Exchange Act and the Exchange Act Rules and Regulations.
The parties are aware that federal or state policy, as interpreted by the
courts in certain jurisdictions, may be contrary to certain provisions of
Sections 4(b) and 4(c) and this Section 7 and, to the extent permitted by
law, the parties hereby expressly waive and relinquish any right or ability
to assert that public policy as a defense to a claim under Sections 4(b) or
4(c) or this Section 7 and further agree not to attempt to assert any such
defense.
(i) As used in this Agreement, the word "persons" includes individuals
and entities and the word "it" includes individuals (including without
limitation corporations, partnerships and limited liability companies).
(j) If any payment required to be made under this Section 7 is not made
within two business days after demand, the amount due will bear interest at
the Prime Rate, compounded monthly, but not in excess of the maximum rate
permitted by applicable law.
8. Effective Date of Agreement and Termination. This Agreement will
become effective upon execution and delivery by you and the Company. This
Agreement may be terminated by you in your absolute discretion by giving
written notice to the Company at any time on or prior to the Time of Purchase
or, with respect to the purchase of the Option Shares, on or prior to the
Additional Time of Purchase, as the case may be, if prior to such time any of
the following has occurred or, in your opinion, is likely to occur: (i) after
the respective dates as of which information is given in the Registration
Statement and the Prospectus Supplement/Prospectus (or, if the Prospectus
Supplement/Prospectus is not in existence, the most recent Preliminary
Prospectus Supplement/Prospectus), any material adverse change or development
involving a prospective material adverse change in or affecting particularly
the business, results of operations, condition (financial or other), or
prospects of the Company, whether or not arising in the ordinary course of
business, occurs which would, in your sole judgment, make the offering or the
delivery of the Shares impracticable or inadvisable; (ii) if, on or after the
date of this Agreement, there has been (x) the engagement in hostilities or
an escalation of major hostilities by the United States or the declaration of
war or a national emergency by the United States or (y)
23
any outbreak of hostilities or other national or international calamity or
crisis or change in economic or political conditions, if the effect of such
outbreak, calamity, crisis or change in economic or political conditions
referred to in this clause (ii)(y) on the financial markets of the United
States would, in your sole judgment, make the offering or delivery of the
Shares impracticable or inadvisable; (iii) if there has been a suspension of
trading in securities generally or a material adverse decline in value of
securities generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market or limitations on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such exchange or system; (iv) if there has been the enactment, publication,
decree or other promulgation of any federal or state statute, regulation,
rule or order of, or commencement of any proceeding or investigation by, any
court, legislative body, agency or other governmental authority which in your
sole judgment materially and adversely affects or may materially and
adversely affect the business, results of operations, condition (financial or
other) or prospects of the Company; (v) if there has been the declaration of
a banking moratorium by federal, New York or California state authorities;
(vi) if there has been any action by any federal, state or local government
or agency in respect of its monetary or fiscal affairs which in your sole
judgment has a material adverse effect on the securities markets in the
United States or makes the offering or delivery of the shares impractical or
inadvisable; or (vii) existing international monetary conditions have
undergone a material change which, in your sole judgment, makes the offering
or delivery of the Shares impracticable or inadvisable. If this Agreement is
terminated pursuant to this Section 8, there will be no liability of the
Company to the Underwriters (except pursuant to Section 4 and Section 7 of
this Agreement) and no liability of the Underwriters to the Company (except
to the extent provided in Section 7 of this Agreement).
9. Notices. Except as may otherwise be provided this Agreement, all
communications under this Agreement are to be in writing and mailed,
telecopied or telegraphed or delivered if to (i) the Underwriters, to First
Security Xxx Xxxxxx Inc., 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Syndicate Manager (telecopier: (000) 000-0000)
and (ii) the Company, to it at 0000 Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000
Attention: President (telecopier: (000)000-0000). All notices given by
telecopy or telegraph are to be promptly confirmed by letter.
10. Persons Entitled to the Benefit of this Agreement. This Agreement
will inure to the benefit of (i) the Company and the several Underwriters,
(ii) with respect to Sections 4 and 7 of this Agreement, the several persons
(in addition to the Company and the several Underwriters) indemnified under
Sections 4 and 7 and (iii) in each case their respective personal
representatives, successors and assigns. Nothing in this Agreement is
intended or may be construed to give to any other person any legal or
equitable remedy or claim under or in respect of this Agreement. The term
"successors and assigns" as herein used does not include any purchaser, as
such, of any of the Shares from the several Underwriters.
11. General. Notwithstanding any provision of this Agreement to the
contrary, the reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties, covenants
and agreements in this Agreement will remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation
made by or on behalf of any Underwriter, any controlling person thereof, the
Company or the respective directors or officers of each of them and
(c) delivery and payment for the Shares under
24
this Agreement; provided that if this Agreement is terminated prior to the
Time of Purchase, Sections 3, (g), (h), (i), (j), and (k) of this Agreement
will be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of
which will constitute an original, but all of which together will constitute
one and the same instrument, and may be delivered by facsimile transmission
of signature and, if applicable, other pages.
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS, AND NOT THE LAWS PERTAINING TO CHOICE OR CONFLICT OF LAWS, OF
THE STATE OF CALIFORNIA.
THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ANY PRIOR WRITTEN OR ORAL
AND ANY CONTEMPORANEOUS ORAL AGREEMENTS AND ALL NEGOTIATIONS WITH RESPECT
THERETO.
12. Authority of First Security Xxx Xxxxxx, Inc.. In connection with
this Agreement, the First Security Xxx Xxxxxx, Inc. will act for and on
behalf of the Underwriters, and any action taken under this Agreement by will
be binding on the Underwriters.
25
If the foregoing correctly sets forth your understanding, please so
indicate by signing in the space provided below for that purpose, whereupon
this letter will constitute a binding agreement among the Company and the
several Underwriters.
Very truly yours,
THE IMMUNE RESPONSE CORPORATION
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------------
---------------------------------------------------
Its Vice President Finance, CFO & Treasurer
----------------------------------------------
Confirmed as of the date first above.
FIRST SECURITY XXX XXXXXX INC.
By: /s/ Xxxx Xxxxxx
---------------------------------------------------
---------------------------------------------------
Its Senior Vice President-Corp. Finance
----------------------------------------------
GRUNTAL & CO., L.L.C.
By: /s/ Xxxxx X. Xxxx
---------------------------------------------------
---------------------------------------------------
Its Senior Managing Director
----------------------------------------------
SCHEDULE I
UNDERWRITERS
UNDERWRITERS NUMBER OF
------------ SHARES
---------
First Security Xxx Xxxxxx.................................... 1,200,000
Gruntal & Co., L.L.C......................................... 1,200,000
---------
Total................................................... 2,400,000
---------
---------
I-1
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR THE COMPANY
(i) Each of the Company and its subsidiary, I.R.C., Inc., a Delaware
corporation, ("Subsidiary") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction
of its incorporation;
(ii) Each of the Company and its subsidiary has the corporate power to own,
lease and operate its properties and to conduct its business as described in
the Prospectus Supplement/Prospectus. All issued and outstanding shares of
capital stock of the Subsidiary has been duly authorized and validly issued
and are fully paid and nonassessable, and, to such counsel's knowledge, have
not been issued in violation of or subject to any preemptive right, co-sale
right, registration right, right of first refusal or other similar right and,
to such counsel's knowledge, are owned by the Company free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest.
(iii) Each of the Company and its Subsidiary is duly qualified to do business
as a foreign corporation and is in good standing in all jurisdictions in the
United States, if any, in which the ownership or leasing of its properties or
the conduct of its business requires such qualification, except where the
failure so to qualify would not have a material adverse effect on the
business, results of operations, condition (financial or other) or prospects
of the Company;
(iv) The authorized, issued and outstanding capital stock of the Company is
as set forth in the Prospectus Supplement/Prospectus as of the dates stated
therein; the issued and outstanding shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
nonassessable;
(v) The Shares, upon issuance and delivery against payment therefor in
accordance with the Agreement, will be duly authorized, validly issued, fully
paid and nonassessable and, to such counsel's knowledge, have not been issued
in violation of or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar right;
(vi) The Company has corporate power and authority to enter into the
Agreement and to issue, sell and deliver to the Underwriters the Shares to be
sold by it;
(vii) The Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company;
(viii) The Registration Statement has become effective under the Securities
Act and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the Securities Act;
(ix) The Registration Statement and the Prospectus Supplement/Prospectus, and
each amendment thereof or supplement thereto (other than the financial
statements and schedules and related notes included therein, as to which such
counsel need express no opinion), as of the effective date of the
Registration Statement and the date of the Prospectus Supplement/Prospectus,
complied as to
1
form in all material respects with the requirements of the Securities Act,
the Rules and Regulations, the Exchange Act and the Exchange Act Rules and
Regulations;
(x) The terms and provisions of the capital stock of the Company conform in
all material respects to the description thereof contained in the
Registration Statement and Prospectus Supplement/Prospectus; the information
in the Prospectus Supplement/Prospectus under the captions "Description of
Capital Stock" to the extent they constitute matters of law or legal
conclusions, has been reviewed by such counsel and is correct and the forms
of certificates evidencing the Common Stock complies with Delaware law;
(xi) The description in the Registration Statement and the Prospectus
Supplement/Prospectus of the Certificate of Incorporation, as amended, and
Bylaws of the Company and contracts, in the form known to such counsel, are
accurate in all material respects and fairly present in all material respects
the information required to be presented by the Securities Act, the Rules and
Regulations, the Exchange Act and the Exchange Act Rules and Regulations;
(xii) The description in the Registration Statement and the Prospectus
Supplement/Prospectus under the headings "Description of Capital Stock" and
"Risk Factors - Our certificate of incorporation and bylaws include
provisions that could discourage potential takeover attempts and make
attempts by stockholders to change management more difficult", insofar as
such statements constitute a summary of documents referred to therein or
matters of law, accurately and fairly summarize in all material respects the
information called for with respect to such documents;
(xiii) To the knowledge of such counsel, there are no agreements, contracts,
licenses, leases or documents of a character required to be described or
referred to in the Registration Statement or Prospectus Supplement/Prospectus
or to be filed as an exhibit to the Registration Statement that are not
described or referred to therein and filed as required;
(xiv) The performance by the Company of its obligations under the Agreement
and the completion of the transactions contemplated by each of them will not
violate or result in the breach of or a default under (including without
limitation with the giving of notice, the passage of time or otherwise) the
Company's Certificate of Incorporation, as amended, Bylaws or other governing
documents to such counsel's knowledge or any evidence of indebtedness,
contract, license, joint venture or other agreement or instrument known to
such counsel to which the Company is a party or by which it or any of its
properties are bound, any law, ordinance, rule or regulation or, to the
knowledge of such counsel, any order, writ, injunction, judgment or decree of
any governmental agency or body or of any court having jurisdiction over the
Company or any of its properties; provided that no opinion need be rendered
concerning state securities or Blue Sky laws;
(xv) No authorization, approval or consent of any governmental authority or
agency is necessary in connection with the completion of the transactions
contemplated by the Agreement, except such as have been obtained under the
Securities Act, or as may be required under state securities or Blue Sky laws
in connection with the purchase and the distribution of the Shares by the
Underwriters;
2
(xvi) To the knowledge of such counsel, there are no legal or governmental
proceedings pending or threatened against the Company of a character which
are required to be disclosed in the Registration Statement or the Prospectus
Supplement/Prospectus by the Securities Act, the Rules and Regulations, the
Exchange Act or the Exchange Act Rules and Regulations, other than those
described therein;
(xvii) To such counsel's knowledge, neither the Company nor its Subsidiary is
presently (a) in material violation of its respective charter or Bylaws, or
(b) in material breach of any applicable statute, rule or regulation known to
such counsel or, to such counsel's knowledge, any order, writ or decree of
any court or governmental agency or body having jurisdiction over the Company
or its Subsidiary, or over any of their properties or operations which would
have a material adverse effect on the Company;
(xvii) To the knowledge of such counsel, no holders of securities issued by
the Company has registration rights, other than those that have been waived,
with respect to the Registration Statement or the offering and sale of the
Shares being made pursuant to the Registration Statement and the Prospectus
Supplement/Prospectus except as set forth in the Preliminary Prospectus
Supplement/Prospectus;
(xix) To the knowledge of such counsel, there have been no amendment or
modifications to the Company's Rights Agreement, dated February 26, 1992 (the
"Rights Agreement"), other than Amendment No. 1 dated as of April 17, 1997;
In addition, such counsel shall state that such counsel has in connection
with the preparation of the Registration Statement, and the Prospectus
Supplement/Prospectus, participated in discussions with officers and
representatives of the Company and with its independent public accountants.
Such counsel has not independently verified and, accordingly does not render
any opinion upon, the accuracy, completeness or fairness of the Registration
Statement and the Prospectus Supplement/Prospectus (except to the extent
provided in paragraph (ix), paragraph (x), paragraph (xi) and paragraph
(xii)). Subject to the foregoing, no facts have come to such counsel's
attention that have caused it to believe that, as of its effective date, the
Registration Statement contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that, as of its date or the
date hereof, the Prospectus Supplement/Prospectus contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that such counsel need not express any view as to the
financial statements and schedules, related notes, other financial data and
statistical data derived therefrom included in, or incorporated by reference
into, the Registration Statement and the Prospectus Supplement/Prospectus or
as to regulatory matters pertaining to the United States Food and Drug
Administration or patent matters.
Counsel rendering the foregoing opinion may rely as to questions of law not
involving the laws of the United States or the State of California on
opinions of local counsel (provided that such counsel states that they
believe they and the Underwriters are justified in relying thereon), and, as
to questions of fact, upon representations or certificates of officers of the
Company and government officials, in which case their opinion must to state
that they are so relying thereon and that they have no knowledge of any
material misstatement or inaccuracy in such opinions,
3
representations or certificate. Copies of any opinion, representation or
certificate so relied upon shall be delivered to you, as Representative of
the Underwriters, and to Underwriters' counsel.
4
ANNEX B
MATTERS TO BE COVERED IN THE OPINION OF
PATENT COUNSEL FOR THE COMPANY
(i) Such counsel has no knowledge of any facts which would form a
basis for a belief that any of the patents and patent applications in the
Patent Schedule owned or licensed by the Company are unenforceable or
invalid, or would be unenforceable or invalid if issued as patents. Such
counsel is not aware of any material defects of form in the preparation or
filing of the patents and patent applications in the Patent Schedule. To the
knowledge of such counsel, there are no claims of third parties to any
ownership interest or lien with respect to any of the Company's patents and
patent applications listed in the Patent schedule. To the knowledge of such,
none of the patents or patent applications in the Patent schedule have lapsed
or been abandoned. The patent applications in the Patent Schedule are being
diligently pursued by the Company.
(ii) Such counsel knows of no pending or threatened action, suit,
proceeding or claim by others that the Company is infringing or otherwise
violating any patents, copyrights or trade secrets.
(iii) Such counsel knows of no pending or threatened actions, suits,
proceedings or claim by others challenging the validity or scope of the
patents and patent applications in the Patent Schedule.
(iv) Although such counsel has not directly confirmed with each
country's patent office records except the U.S., to the knowledge of such
counsel the Company is or will be identified in the records of the U.S.
Patent and Trademark Office as the holder of record of the U.S. patents and
patent applications listed in the Patent Schedule, except for those patents
and patent application exclusively licensed to the Company noted on the
Patent Schedule; to the knowledge of such counsel, the Company is or will be
similarly listed in the records of corresponding foreign agencies with
respect to the foreign counterparts of the foregoing as listed in the Patent
Schedule, except for those patents and patent application exclusively
licensed to the Company noted on the Patent Schedule.
(v) To the knowledge of such counsel, the Company is not infringing
or otherwise violating any valid and enforceable patents or other proprietary
rights of others by conducting its [gene therapy] business as described in
the Registration Statement and the Prospectus Supplement/Prospectus, except
as described in the Registration Statement and the Prospectus
Supplement/Prospectus. To the knowledge of such counsel, there are also no
infringements by others of any of the Company's patents, trade secrets,
know-how or other proprietary rights.
(vi) The statements under the captions "Risk Factor - Our
patents and proprietary technology may not provide us with any benefit and
the patents and proprietary technology of others may prevent us from
commercializing products" and "Business - Patents" (collectively, the
"Intellectual Property Portion") in the Registration Statement and the
Prospectus Supplement/Prospectus of the patents, applications, or the
Company's rights and obligations as a licensee of the licenses referred to
therein are in all material respects accurate summaries and
fairly summarize in all material respects the legal matters, documents and
proceedings relating to such patents, patent applications and licenses
described therein.
(vii) Except as set forth herein, although such counsel has not
verified the accuracy or completeness of the statements contained in the
Intellectual Property Portion of the Registration Statement and the
Prospectus Supplement, nothing has come to such counsel's attention that
would form a basis for a belief that the Intellectual Property Portion of the
Registration Statement (as of its effective date) and the Prospectus
Supplement/Prospectus (as of its date and the date hereof) contained or
contains any untrue statement of a material fact, or omitted or omits to
state any material fact necessary to make the statements made therein not
misleading.
2
ANNEX C
MATTERS TO BE COVERED IN THE OPINION OF
REGULATORY COUNSEL FOR THE COMPANY
Based upon, subject to and limited by the foregoing, such counsel is of
the opinion that the statements in the Prospectus Supplement under the
captions "Risk Factors -The lengthy product approval process and uncertainty
of government regulatory requirements may delay or prevent us from
commercializing products" and "Business - Government Regulation," and in the
Prospectus under the caption "Risk Factors - The Lengthy Product Approval
Process and Uncertainty of Government Regulatory Requirements May Delay or
Prevent Us From Commercializing Products, " insofar as such statements
purport to summarize applicable provisions of the FDC Act and the PHS Act,
and the regulations promulgated thereunder, are accurate summaries in all
material respects of the provisions purported to be summarized under such
captions in the Prospectus Supplement and Prospectus (the "Opinion").
During the course of preparation of the Prospectus and Prospectus
Supplement, such counsel has participated in certain discussions with certain
officers and employees of the Company as to the FDA regulatory matters dealt
with under the captions "Risk Factors - The lengthy product approval process
and uncertainty of government regulatory requirements may delay or prevent us
from commercializing products" and "Business - Government Regulation" in the
Prospectus Supplement and under the caption "Risk Factors - The Lengthy
Product Approval Process and Uncertainty of Government Regulatory
Requirements May Delay or Prevent Us From Commercializing Products" in the
Prospectus. While such counsel has not undertaken to determine
independently, and such counsel does not assume any responsibility for, the
accuracy (except as stated in the Opinion), completeness, or fairness of the
statements under the above-referenced captions in the Prospectus and
Prospectus Supplement, such counsel may state on the basis of these
discussions and its activities as special FDA regulatory counsel to the
Company in connection with its review of the statements contained in such
captioned sections that no facts have come to such counsel's attention that
causes it to believe that the statements in the Registration Statement as of
its effective date and in the Prospectus and Prospectus Supplement, as of
their respective dates, under such captioned sections, insofar as such
statements relate to FDA regulatory matters, contained or contains an untrue
statement of a material fact or omitted or omits to state a 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.
3
