6,325,000 Shares
Common Stock
($0.001 Par Value)
UNDERWRITING AGREEMENT
March ___, 2000
UNDERWRITING AGREEMENT
March ___, 2000
WARBURG DILLON READ LLC
CHASE SECURITIES INC.
PRUDENTIAL SECURITIES INCORPORATED
as Managing Underwriters
c/o Warburg Dillon Read LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
InterMune Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule A
annexed hereto (the "Underwriters") an aggregate of 5,500,000 shares (the "Firm
Shares") of Common Stock, $0.001 par value (the "Common Stock"), of the Company.
In addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters the option to purchase from the Company up
to an additional 825,000 shares of Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the "Shares." The Shares are described in the Prospectus, which
is referred to below.
The Company has filed, in accordance with the provisions of
the Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the "Act"), with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (File No. 333-96029),
including a prospectus, relating to the Shares. The Company has furnished to
you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses (each thereof being herein called a "Preliminary
Prospectus") relating to the Shares. Except where the context otherwise
requires, the registration statement, as amended when it becomes effective,
including all documents filed as a part thereof and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 424(b) under the Act and deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A under the Act and also including
any registration statement filed pursuant to Rule 462(b) under the Act, is
herein called the Registration Statement, and the prospectus in the form filed
by the Company with the Commission pursuant to Rule 424(b) under the Act on or
before the second business day after the date hereof (or such earlier time as
may be required under the Act) or, if no such filing is required, the form of
final prospectus included in the Registration Statement at the time it became
effective, is herein called the Prospectus.
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to sell to the respective
Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase from the Company the respective number of Firm Shares (subject to such
adjustment as you may determine to avoid fractional shares) which bears the same
proportion to the number of Firm Shares to be sold by the Company as the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule A
annexed hereto bears to the total number of Firm Shares to be sold by the
Company, in each case at a purchase price of $[____] per Share. The Company is
advised by you that the Underwriters intend (i) to make a public offering of
their respective portions of the Firm Shares as soon after the effective date of
the Registration Statement as in your judgment is advisable and (ii) initially
to offer the Firm Shares upon the terms set forth in the Prospectus. You may
from time to time increase or decrease the public offering price after the
initial public offering to such extent as you may determine.
In addition, the Company hereby grants to the several
Underwriters the option to purchase, and upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Underwriters shall have the right to purchase, severally and not jointly, from
the Company, ratably in accordance with the number of Firm Shares to be
purchased by each of them (subject to such adjustment as you shall determine to
avoid fractional shares), all or a portion of the Additional Shares as may be
necessary to cover over-allotments made in connection with the offering of the
Firm Shares, at the same purchase price per share to be paid by the Underwriters
to the Company for the Firm Shares. This option may be exercised by you on
behalf of the several Underwriters at any time (but not more than once) on or
before the thirtieth day following the date hereof, by written notice to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the date and time when the
Additional Shares are to be delivered (such date and time being herein referred
to as the additional time of purchase); PROVIDED, HOWEVER, that the additional
time of purchase shall not be earlier than the time of purchase (as defined
below) nor earlier than the second business day 1 after the date on which the
option shall have been exercised nor later than the tenth business day after the
date on which the option shall have been exercised. The number of Additional
Shares to be sold to each Underwriter shall be the number which bears the same
proportion to the aggregate number of Additional Shares being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto bears to the total number of Firm Shares (subject, in each
case, to such adjustment as you may determine to eliminate fractional shares).
2. PAYMENT AND DELIVERY. Payment of the purchase price for the
Firm Shares shall be made to the Company by Federal Funds wire transfer, against
delivery of the certificates for the Firm Shares to you through the facilities
of the Depository Trust Company (the "DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on March ___, 2000 (unless another time shall be agreed to by
-------------------------------
(1) As used herein "business day" shall mean a day on which the New York
Stock Exchange is open for trading.
2
you and the Company or unless postponed in accordance with the provisions of
Section 10 hereof). The time at which such payment and delivery are actually
made is hereinafter sometimes called the time of purchase. Certificates for the
Firm Shares shall be delivered to you in definitive form in such names and in
such denominations as you shall specify no later than the second business day
preceding the time of purchase. For the purpose of expediting the checking of
the certificates for the Firm Shares by you, the Company agrees to make such
certificates available to you for such purpose at least one full business day
preceding the time of purchase.
Payment of the purchase price for the Additional Shares shall
be made at the additional time of purchase in the same manner and at the same
office as the payment for the Firm Shares. Certificates for the Additional
Shares shall be delivered to you in definitive form in such names and in such
denominations as you shall specify no later than the second business day
preceding the additional time of purchase. For the purpose of expediting the
checking of the certificates for the Additional Shares by you, the Company
agrees to make such certificates available to you for such purpose at least one
full business day preceding the additional time of purchase.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters that:
(a) the Company has not received, and has no notice
of, any order of the Commission preventing or suspending the use of any
Preliminary Prospectus, or instituting proceedings for that purpose, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act when the Registration Statement becomes
effective, the Registration Statement and the Prospectus will fully comply in
all material respects with the provisions of the Act, and the Registration
Statement 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 not misleading, and the Prospectus 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; any statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed; PROVIDED, HOWEVER, that
the Company makes no warranty or representation with respect to any statement
contained in the Registration Statement or the Prospectus in reliance upon and
in conformity with information concerning the Underwriters and furnished in
writing by or on behalf of any Underwriter through you to the Company expressly
for use in the Registration Statement or the Prospectus; and the Company has not
distributed any offering material in connection with the offering or sale of the
Shares other than the Registration Statement, the Preliminary Prospectus, the
Prospectus or any other materials, if any, permitted by the Act;
(b) as of the date of this Agreement, the Company has
an authorized capitalization as set forth under the heading entitled "Actual" in
the section of the Registration Statement and the Prospectus entitled
"Capitalization" and, as of the time of purchase and the additional time of
purchase, as the case may be, the Company shall have an authorized
capitalization as set forth under the heading entitled "As Adjusted" in the
section of the
3
Registration Statement and the Prospectus entitled "Capitalization"; all of the
issued and outstanding shares of capital stock of the Company, including the
Common Stock, Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock, have been duly and validly authorized and issued and are fully
paid and non-assessable, have been issued in compliance with all federal and
state securities laws and were not issued in violation of any preemptive right,
resale right, right of first refusal or similar right;
(c) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with full power and authority to own, lease and operate its
properties and conduct its business as described in the Registration Statement;
(d) the Company is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the business, properties, financial condition or results of
operation of the Company (a "Material Adverse Effect"). The Company has no
subsidiaries (as defined in the Rules and Regulations). The Company does not
own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity; complete and
correct copies of the certificate of incorporation and of the by-laws (or other
equivalent corporate governance documents) of the Company and all amendments
thereto have been delivered to you, and except as set forth in the exhibits to
the Registration Statement no changes therein will be made subsequent to the
date hereof and prior to the time of purchase or, if later, the additional time
of purchase.
(e) the Company is duly qualified or licensed by and
is in good standing in each jurisdiction in which it conducts its business and
in which the failure, individually or in the aggregate, to be so licensed or
qualified could have a Material Adverse Effect; and the Company is in compliance
in all material respects with the laws, orders, rules, regulations and
directives issued or administered by such jurisdictions;
(f) the Company is not in breach of, or in default
under (nor has any event occurred which with notice, lapse of time, or both
would result in any breach of, or constitute a default under), its certificate
of incorporation or by-laws or equivalent corporate governance documents, as the
case may be, or in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust, bank
loan or credit agreement or other evidence of indebtedness, or any lease,
contract or other agreement or instrument to which the Company is a party or by
which it or any of its property is bound, and the execution, delivery and
performance of this Agreement, the issuance and sale of the Shares and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any breach of or constitute a default under (nor constitute any event
which with notice, lapse of time, or both would result in any breach of, or
constitute a default under), any provisions of the charter or by-laws, of the
Company or under any provision of any license, indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of
4
indebtedness, or any lease, contract or other agreement or instrument to which
the Company is a party or by which it or its property may be bound or affected,
or under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company;
(g) this Agreement has been duly authorized, executed
and delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms;
(h) the capital stock of the Company, including the
Shares, conforms in all material respects to the description thereof contained
in the Registration Statement and Prospectus and the certificates for the Shares
are in due and proper form and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
(i) the Shares have been duly and validly authorized
and, when issued and delivered against payment therefor as provided herein, will
be duly and validly issued and fully paid and non-assessable;
(j) no approval, authorization, consent or order of
or filing with any national, state or local governmental or regulatory
commission, board, body, authority or agency is required in connection with the
issuance and sale of the Shares or the consummation by the Company of the
transaction as contemplated hereby other than registration of the Shares under
the Act and any necessary qualification under the securities or blue sky laws of
the various jurisdictions in which the Shares are being offered by the
Underwriters or under the rules and regulations of the National Association of
Securities Dealers, Inc. (the "NASD");
(k) no person has the right, contractual or
otherwise, to cause the Company to issue to it, or register pursuant to the Act,
any shares of capital stock of the Company upon the issue and sale of the Shares
to the Underwriters hereunder, nor does any person have preemptive rights,
co-sale rights, rights of first refusal or other rights to purchase any of the
Shares other than those that have been expressly waived prior to the dates
hereof;
(l) Ernst & Young LLP, whose reports on the financial
statements of the Company are filed with the Commission as part of the
Registration Statement and Prospectus, are independent certified public
accountants as required by the Act;
(m) the Company has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local or foreign law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons, in order to conduct its business; the Company is not in violation of,
or in default under, any such license, authorization, consent or approval or any
federal, state, local or foreign law, regulation or rule or any decree, order or
judgment applicable to the Company the effect of which could have a Material
Adverse Effect;
(n) all legal or governmental proceedings, contracts,
leases or documents of a character required to be described in the Registration
Statement or the Prospectus
5
or to be filed as an exhibit to the Registration Statement have been so
described or filed as required;
(o) there are no actions, suits, claims,
investigations or proceedings pending or threatened to which the Company or any
of its officers is a party or of which any of its properties is subject at law
or in equity, or before or by any federal, state, local or foreign governmental
or regulatory commission, board, body, authority or agency which could result in
a judgment, decree or order having a Material Adverse Effect or prevent
consummation of the transaction contemplated hereby;
(p) the audited and unaudited financial statements
included in the Registration Statement and the Prospectus present fairly the
financial position of the Company as of the dates indicated and the results of
operations and cash flows of the Company for the periods specified; the
supporting schedules included in the Registration Statement present fairly the
information required to be stated therein; such financial statements and
supporting schedules have been prepared in conformity with U.S. generally
accepted accounting principles applied on a consistent basis during the periods
involved; no other financial statements or supporting schedules are required to
be included in the Registration Statement; the financial data set forth in the
Prospectus under the captions "Prospectus Summary -- Summary financial data",
"Capitalization", "Selected financial data" and "Management's discussion and
analysis of financial condition and results of operations" fairly present the
information set forth therein on a basis consistent with that of the audited and
unaudited financial statements contained in the Registration Statement;
(q) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been (i) any material adverse change, or any development which, in the
Company's reasonable judgment, is likely to cause a material adverse change, in
the business, properties or assets described or referred to in the Registration
Statement, or the results of operations, condition (financial or otherwise),
business or operations of the Company, (ii) any transaction which is material to
the Company, except transactions in the ordinary course of business, (iii) any
obligation, direct or contingent, which is material to the Company, incurred by
the Company, except obligations incurred in the ordinary course of business,
(iv) any change in the capital stock or outstanding indebtedness of the Company
or (v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company. The Company does not have any material contingent
obligation which is not disclosed in the Registration Statement.
(r) the Company has obtained the agreement of each of
its directors and officers and certain of its other stockholders not to sell,
offer to sell, contract to sell, hypothecate grant any option to sell or
otherwise dispose of, directly or indirectly, any shares of Common Stock or
securities convertible into or exchangeable for Common Stock or warrants or
other rights to purchase Common Stock for a period of 180 days after the date of
the Prospectus;
(s) the Company is not and, after giving effect to
the offering and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment
6
company," as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act");
(t) except as described in the Registration Statement
and Prospectus, the Company owns, or has obtained valid and enforceable licenses
for, or other rights to use, the inventions, patent applications, patents,
trademarks (both registered and unregistered), tradenames, copyrights and trade
secrets described in the Registration Statement and Prospectus as being owned or
licensed by it, which the Company reasonably believes are necessary for the
conduct of its business (collectively, "Intellectual Property") and which the
failure to own, license or have such rights could have a Material Adverse
Effect. Except as described in the Registration Statement and Prospectus, (i)
the Company believes that there are no third parties who have or will be able to
establish their rights to any Intellectual Property, except for the ownership
rights of the owners of the Intellectual Property which is licensed to the
Company; (ii) to the Company's knowledge there is no infringement by third
parties of any Intellectual Property; (iii) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's rights in or to any Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for any such
claim; (iv) there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; (v) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others that
the Company infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others, and the Company is unaware
of any facts which would form a reasonable basis for any such claim; (vi) to the
Company's knowledge there is no patent or patent application which contains
claims that interfere with the issued or pending claims of any of the
Intellectual Property which could have a Material Adverse Effect; and (vii)
there is no prior art of which the Company is aware that may render any patent
application owned by the Company of the Intellectual Property unpatentable which
has not been disclosed to the U.S. Patent and Trademark Office which could have
a Material Adverse Effect;
(u) the Company has filed with the U.S. Food and Drug
Administration (the "FDA"), and all applicable foreign, state and local
regulatory bodies for and received approval of all registrations, applications,
licenses, requests for exemptions, permits and other regulatory authorizations
necessary to conduct the Company's business as it is described in the
Registration Statement and Prospectus; the Company is in compliance in all
material respects with all such registrations, applications, licenses, requests
for exemptions, permits and other regulatory authorizations, and all applicable
FDA, foreign, state and local rules, regulations, guidelines and policies,
including, but not limited to, applicable FDA, foreign, state and local rules,
regulations and policies relating to good manufacturing practice ("GMP") and
good laboratory practice ("GLP"); the Company has no reason to believe that any
party granting any such registration, application, license, request for
exemption, permit or other authorization is considering limiting, suspending or
revoking the same and knows of no basis for any such limitation, suspension or
revocation;
7
(v) the human clinical trials, animal studies and
other preclinical tests conducted by the Company or in which the Company has
participated that are described in the Registration Statement and Prospectus or
the results of which are referred to in the Registration Statement or
Prospectus, and such studies and tests conducted on behalf of the Company, were
and, if still pending, are being conducted in all material respects in
accordance with experimental protocols, procedures and controls generally used
by qualified experts in the preclinical or clinical study of new drugs or
diagnostics as applied to comparable products to those being developed by the
Company; the descriptions of the results of such studies, test and trials
contained in the Registration Statement and Prospectus are accurate and complete
in all material respects, and except as set forth in the Registration Statement
and Prospectus, the Company has no knowledge of any other trials, studies or
tests, the results of which the Company believes reasonably call into question
the clinical trial results described or referred to in the Registration
Statement and Prospectus when viewed in the context in which such results are
described and the clinical state of development; and the Company has not
received any notices or correspondence from the FDA or any other domestic or
foreign governmental agency requiring the termination, suspension or
modification (other than such modifications as are normal in the regulations,
any such modifications which are material have been disclosed to you) of any
animal studies, preclinical tests or clinical trials conducted by or on behalf
of the Company or in which the Company has participated that are described in
the Registration Statement or Prospectus or the results of which are referred to
in the Registration Statement or Prospectus.
(w) the Company has good and marketable title to all
the properties and assets reflected as owned in the financial statements
referred to in Section 3(p) above (or elsewhere in the Prospectus), in each case
free and clear of any security interests, mortgages, liens, encumbrances,
equities, claims and other defects, except such as do not materially and
adversely affect the value of such property and do not materially interfere with
the use made or proposed to be made of such property by the Company. The real
property, improvements, equipment and personal property held under lease by the
Company are held under valid and enforceable leases, with such exceptions as are
not material to the Company, and the Company does not have any notice of any
claim of any sort that has been asserted by anyone adverse to the rights of the
Company under any of the leases or subleases referred to above, or affecting or
questioning the rights of the Company to the continued possession of the leased
or subleased premises under any such lease or sublease, except for such notices
or claims as would not reasonably be expected to have a Material Adverse Effect;
(x) the Company has filed all necessary federal,
state and foreign income and franchise tax returns and has paid all taxes
required to be paid by it and, if due and payable, any related or similar
assessment, fine or penalty levied against it. The Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in Section 3(p) above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company has
not been finally determined;
(y) the Company is insured by recognized, financially
sound and reputable institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and
customary for its business including, but not limited
8
to, policies covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and earthquakes. The
Company has no reason to believe that it will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or appropriate
to conduct its business as now conducted and at a cost that would not have a
Material Adverse Effect. The Company has not been denied any insurance coverage
which it has sought or for which it has applied;
(z) the Company has not taken and will not take,
directly or indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares;
(aa) there are no business relationships or
related-party transactions involving the Company or any other person required to
be described in the Prospectus which have not been described as required;
(bb) neither the Company nor, to the best of the
Company's knowledge, any employee or agent of the Company, has made any
contribution or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law or of the character required to
be disclosed in the Prospectus;
(cc) the Company maintains a system of accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles as
applied in the United States and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences;
(dd) except as would not, individually or in the
aggregate, have a Material Adverse Effect: (i) the Company is not in violation
of any federal, state, local or foreign law or regulation relating to pollution
or protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, "Hazardous Materials"), or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), which violation includes, but is not limited to, noncompliance with any
permits or other governmental authorizations required for the operation of the
business of the Company under applicable Environmental Laws, or noncompliance
with the terms and conditions thereof, nor has the Company received any written
communication, whether from a governmental authority, citizens group, employee
or otherwise, that alleges that the Company is in violation of any Environmental
Law; (ii) there is no claim, action or cause of action filed with a court or
governmental authority, no
9
investigation with respect to which the Company has received written notice, and
no written notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs, natural
resources damages, property damages, personal injuries, attorneys' fees or
penalties arising out of, based on or resulting from the presence, or release
into the environment, of any Hazardous Materials at any location owned, leased
or operated by the Company, now or in the past (collectively, "Environmental
Claims"), pending or, to the best of the Company's knowledge, threatened against
the Company or any person or entity whose liability for any Environmental Claim
the Company has retained or assumed either contractually or by operation of law;
(iii) the Company has all permits, authorizations and approvals required under
any applicable Environmental Laws and is in compliance with their requirements;
and (iv) to the best of the Company's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal of
any Hazardous Materials, that reasonably could result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against
the Company or against any person or entity whose liability for any
Environmental Claim the Company has retained or assumed either contractually or
by operation of law;
(ee) the Company and any "employee benefit plan" (as
defined under the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder (collectively,
"ERISA")) established or maintained by the Company or its "ERISA Affiliates" (as
defined below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company, any member of any group of
organizations described in Sections 414(b),(c),(m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company is a member. No
"reportable event" (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any "employee benefit plan" established or
maintained by the Company or any of its ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company or any of its ERISA Affiliates,
if such "employee benefit plan" were terminated, would have any "amount of
unfunded benefit liabilities" (as defined under ERISA). Neither the Company nor
any of its ERISA Affiliates has incurred or reasonably expects to incur any
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975 or
4980B of the Code. Each "employee benefit plan" established or maintained by the
Company or any of its ERISA Affiliates that is intended to be qualified under
Section 401(a) of the Code is so qualified and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualification;
(ff) all disclosure regarding year 2000 compliance
that is required to be described under the Act (including disclosures required
by Staff Legal Bulletin No. 5) has been included in the Prospectus; and the
Company will not incur significant operating expenses or costs to ensure that
its information systems will be year 2000 compliant, other than as disclosed in
the Prospectus; and
10
(gg) the Shares have been approved for listing on the
National Association of Securities Dealers Automated Quotation National Market
System ("NASDAQ"), subject only to official notice of issuance.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Intentionally Omitted.
5. CERTAIN COVENANTS OF THE COMPANY. The Company hereby
agrees:
(a) to furnish such information as may be required
and otherwise to cooperate in qualifying the Shares for offering and sale under
the securities or blue sky laws of such states as you may designate and to
maintain such qualifications in effect so long as required for the distribution
of the Shares; PROVIDED that the Company shall not be required to qualify as a
foreign corporation or to consent to the service of process under the laws of
any such state (except service of process with respect to the offering and sale
of the Shares); and to promptly advise you of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose;
(b) to make available to the Underwriters in New York
City, as soon as practicable after the Registration Statement becomes effective,
and thereafter from time to time to furnish to the Underwriters, as many copies
of the Prospectus (or of the Prospectus as amended or supplemented if the
Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) as the Underwriters may request
for the purposes contemplated by the Act; in case any Underwriter is required to
deliver a prospectus within the nine-month period referred to in Section
10(a)(3) of the Act in connection with the sale of the Shares, the Company will
prepare promptly upon request, but at the expense of such Underwriter, such
amendment or amendments to the Registration Statement and such prospectuses as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act;
(c) to advise you promptly and (if requested by you)
to confirm such advice in writing, (i) when the Registration Statement has
become effective and when any post-effective amendment thereto becomes effective
and (ii) if Rule 430A under the Act is used, when the Prospectus is filed with
the Commission pursuant to Rule 424(b) under the Act (which the Company agrees
to file in a timely manner under such Rules);
(d) to advise you promptly, confirming such advice in
writing, of any request by the Commission for amendments or supplements to the
Registration Statement or Prospectus or for additional information with respect
thereto, or of notice of institution of proceedings for, or the entry of a stop
order suspending the effectiveness of the Registration Statement and, if the
Commission should enter a stop order suspending the effectiveness of the
Registration Statement, to make every reasonable effort to obtain the lifting or
removal of such order as soon as possible; to advise you promptly of any
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which you shall object in writing;
11
(e) to file promptly all reports and any definitive
proxy or information statement required to be filed by the Company with the
Commission in order to comply with the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (collectively, the "Exchange
Act"), subsequent to the date of the Prospectus and for so long as the delivery
of a prospectus is required in connection with the offering or sale of the
shares, and to promptly notify you of such filing;
(f) if necessary or appropriate, to file a
registration statement pursuant to Rule 462(b) under the Act;
(g) to furnish to you and, upon request, to each of
the other Underwriters for a period of five years from the date of this
Agreement (i) copies of any reports or other communications which the Company
shall send to its stockholders or shall from time to time publish or publicly
disseminate, (ii) copies of all annual, quarterly and current reports filed with
the Commission on Forms 10-K, 10-Q and 8-K, or such other similar form as may be
designated by the Commission, (iii) copies of documents or reports filed with
any national securities exchange or over-the-counter market on which any class
of securities of the Company is listed, and (iv) such other information as you
may reasonably request regarding the Company, in each case as soon as such
communications, documents or information becomes available;
(h) to advise the Underwriters promptly of the
happening of any event known to the Company within the time during which a
Prospectus relating to the Shares is required to be delivered under the Act
which, in the judgment of the Company, would require the making of any change in
the Prospectus then being used so that the Prospectus would not include an
untrue statement of material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
are made, not misleading, and, during such time, to prepare and furnish, at the
Company's expense, to the Underwriters promptly such amendments or supplements
to such Prospectus as may be necessary to reflect any such change and to furnish
you a copy of such proposed amendment or supplement before filing any such
amendment or supplement with the Commission;
(i) to make generally available to its security
holders, and to deliver to you, an earnings statement of the Company (which will
satisfy the provisions of Section 11(a) of the Act) covering a period of at
least twelve months beginning after the effective date of the Registration
Statement (as defined in Rule 158(c) of the Act) as soon as is reasonably
practicable after the termination of such twelve-month period but not later than
the forty-fifth (45th) day following the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the registration
statement;
(j) to furnish to its shareholders as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, shareholders' equity and of cash flow of
the Company for such fiscal year, accompanied by a copy of the certificate or
report thereon of nationally recognized independent certified public
accountants);
12
(k) to furnish to you four (4) signed copies of the
Registration Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto) and sufficient conformed
copies of the foregoing (other than exhibits) for distribution of a copy to each
of the other Underwriters;
(l) to furnish to you as early as practicable prior
to the time of purchase and the additional time of purchase, as the case may be,
but not later than two business days prior thereto, a copy of the latest
available unaudited interim financial statements, if any, of the Company which
have been read by the Company's independent certified public accountants, as
stated in their letter to be furnished pursuant to Section 8(c) hereof;
(m) to apply the net proceeds from the sale of the
Shares in the manner set forth under the caption "Use of Proceeds" in the
Prospectus;
(n) to furnish to you, before filing with the
Commission subsequent to the effective date of the Registration Statement and
during the period referred to in paragraph (f) above, a copy of any document
proposed to be filed pursuant to Section 13, 14 or 15(d) of the Exchange Act;
(o) not to sell, offer or agree to sell, contract to
sell, grant any option to sell or otherwise dispose of, directly or indirectly,
any shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock or warrants or other rights to purchase Common
Stock or any other Securities of the Company that are substantially similar to
Common Stock or permit the registration under the Act of any shares of Common
Stock, except for the registration of the Shares and the sales to the
Underwriters pursuant to this Agreement and except for issuances of Common Stock
upon the exercise of outstanding options, warrants and debentures, for a period
of one hundred eighty (180) days after the date hereof, without the prior
written consent of the Warburg Dillon Read LLC ("WDR"); and
(p) to cause the Shares to be listed for quotation on
the NASDAQ National Market.
6. FEES AND EXPENSES. The Company will pay all expenses, fees
and taxes (other than any transfer taxes and fees and disbursements of counsel
for the Underwriters except as set forth under Section 7 hereof or (iii) or (iv)
below) in connection with (i) the preparation and filing of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and any amendments or
supplements thereto, and the printing and furnishing of copies of each thereof
to the Underwriters and to dealers (including costs of mailing and shipment),
(ii) the issuance, sale and delivery of the Shares by the Company, (iii) the
word processing and/or printing of this Agreement, any Agreement Among
Underwriters, any dealer agreements, any Statements of Information, and the
reproduction and/or printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state laws and the
determination of their eligibility for investment under state law as aforesaid
(including the legal fees and filing fees and other disbursements of counsel to
the Underwriters) and the printing and furnishing of copies of any blue sky
surveys or legal investment surveys to the Underwriters and to dealers, (v) any
listing of
13
the Shares on any securities exchange or qualification of the Shares for
quotation on NASDAQ and any registration thereof under the Exchange Act, (vi)
the filing for review of the public offering of the Shares by the NASD, and
(vii) the performance of the Company's other obligations hereunder.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Shares are
not delivered for any reason other than the termination of this Agreement
pursuant to the second paragraph of Section 9 hereof or the default by one or
more of the Underwriters in its or their respective obligations hereunder, the
Company shall, in addition to paying the amounts described in Section 6 hereof,
reimburse the Underwriters for all of their out-of-pocket expenses, including
the fees and disbursements of their counsel.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties on the part of the Company on the date hereof and
at the time of purchase (and the several obligations of the Underwriters at the
additional time of purchase are subject to the accuracy of the representations
and warranties on the part of the Company on the date hereof and at the time of
purchase (unless previously waived) and at the additional time of purchase, as
the case may be), the performance by the Company of its obligations hereunder
and to the following additional conditions precedent:
(a) The Company shall furnish to you at the time of purchase
and at the additional time of purchase, as the case may be, an opinion of Xxxxxx
Godward LLP, counsel for the Company, addressed to the Underwriters, and dated
the time of purchase or the additional time of purchase, as the case may be,
with reproduced copies for each of the other Underwriters in the form attached
hereto as EXHIBIT A, with any changes to be reasonably satisfactory to Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C. ("Mintz Xxxxx"), counsel for the
Underwriters, stating that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and the Prospectus, to execute and deliver this
Agreement and to issue, sell and deliver the Shares as herein
contemplated;
(ii) the Company is duly qualified or licensed to do business
in the State of California, and to the best of such counsel's knowledge
in each other jurisdiction of the United States, if any, in which it
conducts its business and in which the failure, individually or in the
aggregate, to be so licensed or qualified could have a Material Adverse
Effect and, to the best of such counsel's knowledge, is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have Material Adverse Effect;
14
(iii) this Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company;
(iv) the Shares have been duly authorized and, when issued and
delivered to and paid for by the Underwriters, will be duly and validly
issued and will be fully paid and non-assessable;
(v) the Company has an authorized capitalization as set forth
under the caption "Capitalization" in the Registration Statement and
the Prospectus; the outstanding shares of capital stock of the Company
have been duly and validly authorized and issued, and are fully paid,
nonassessable and free of statutory and contractual preemptive rights;
the Shares when issued will be free of statutory and contractual
preemptive rights, resale rights, rights of first refusal and similar
rights, and the certificates for the Shares are in due and proper form
under the Delaware General Corporation Law, and the holders of the
Shares will not be subject to personal liability by reason of being
such holders;
(vi) such counsel has reviewed the Company's corporate records
and, to the best of such counsel's knowledge, the Company does not own
or control, directly or indirectly, any corporation, association or
other entity;
(vii) the capital stock of the Company, including the Shares,
conforms to the description thereof contained in the Registration
Statement and Prospectus;
(viii) the Company is eligible to use a registration statement
on Form S-1 to register the Shares;
(ix) the Registration Statement and the Prospectus (except as
to the financial statements and schedules and other financial and
statistical data contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects with the
requirements of the Act;
(x) the Registration Statement has become effective under the
Act and, to the best of such counsel's knowledge, no stop order
proceedings with respect thereto are pending or threatened under the
Act and any required filing of the Prospectus and any supplement
thereto pursuant to Rule 424 under the Act has been made in the manner
and within the time period required by such Rule 424;
(xi) no approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares and consummation by the
Company of the transaction as contemplated hereby other than
registration of the Shares under the Act (except such counsel need
express no opinion as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters or as to compliance of the
terms of the underwriting arrangement with the conduct rules of the
NASD);
15
(xii) the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not conflict with, or
result in any breach of, or constitute a default under (nor constitute
any event which with notice, lapse of time, or both, would result in
any breach of or constitute a default under), any provisions of the
certificate of incorporation or by-laws or other equivalent corporate
governance documents, as the case may be, of the Company or under any
provision of any license, indenture, mortgage, lease, deed of trust,
bank loan, credit agreement or other evidence of indebtedness or other
material agreement to which the Company is a party or by which its
properties may be bound or affected (collectively, the "Material
Agreements"), all of which Material Agreements are filed as exhibits to
the Registration Statement;
(xiii) the Company is not in violation of its certificate of
incorporation or by-laws or other equivalent corporate governance
documents, as the case may be, and to the best of such counsel's
knowledge, the Company has not received any notice of any breach of or
default under any license, indenture, mortgage, lease, deed of trust,
bank loan or any other agreement or instrument to which the Company is
a party or by which its properties may be bound or affected or of any
violation under any federal, state, local or foreign law, regulation or
rule or any decree, judgment or order applicable to the Company;
(xiv) to the best of such counsel's knowledge, there are no
contracts, licenses, agreements, leases or documents of a character
which are required to be filed as exhibits to the Registration
Statement or to be summarized or described in the Prospectus which have
not been so filed, summarized or described and the summaries thereof
and references thereto are correct in all material respects;
(xv) to the best of such counsel's knowledge, there are no
actions, suits, claims, investigations or proceedings pending or
overtly threatened to which the Company is subject or of which any of
its properties, is subject at law or in equity or before or by any
federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency which are required to be described in
the Prospectus but are not so described;
(xvi) the statements (i) in the Prospectus under the captions
"Risk factors -- Anti-takeover provisions in our charter documents and
under Delaware corporate law may make an acquisition of us, which may
be beneficial to our stockholders, more difficult", "Management --
Stock plans", "Management -- Limitation of liability of directors and
indemnification matters", "Description of capital stock", "Related
party transactions", "Shares eligible for future sale" and
"Underwriting" and (ii) in Item 14 of the Registration Statement,
insofar as such statements constitute matters of law, summaries of
legal matters, provisions of the Company's certificate of incorporation
or by-laws or other equivalent corporate governance documents,
documents or legal proceedings, or
16
legal conclusions, has been reviewed by such counsel and fairly present
and summarize, in all material respects, the matters referred to
therein;
(xvii) except as disclosed in the Prospectus under the
captions "Registration rights" and "Shares eligible for future sale",
to the best of such counsel's knowledge, there are no persons with
registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or
included in the offering contemplated by the Underwriting Agreement,
except for such rights as have been duly waived;
(xviii) the Shares have been approved for listing on the
Nasdaq National Market, subject only to official notice of issuance;
and
(xix) such counsel have participated in conferences with
officers and other representatives of the Company, representatives of
the independent public accountants of the Company and representatives
of the Underwriters at which the contents of the Registration Statement
and Prospectus were discussed and, although such counsel is not passing
upon and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement
or Prospectus (except as and to the extent stated in subparagraphs (v),
(vii) and (xvi) above), on the basis of the foregoing nothing has come
to the attention of such counsel that causes them to believe that the
Registration Statement or any amendment thereto at the time such
Registration Statement or amendment became effective contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus or any supplement
thereto at the date of such Prospectus or such supplement, and at all
times up to and including the time of purchase or additional time of
purchase, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to
the financial statements and schedules and other financial and
statistical data included in the Registration Statement or Prospectus).
(b) The Company shall furnish to you at the time of purchase
and at the additional time of purchase, as the case may be, an opinion of
Xxxxxxxxx & Associates, LLP, intellectual property counsel for the Company,
addressed to the Underwriters, and dated the time of purchase or the additional
time of purchase, as the case may be, with reproduced copies for each of the
other Underwriters, substantially in the form attached hereto as EXHIBIT B and
satisfactory to Xxxxx Xxxxx, counsel for the Underwriters.
(c) The Company shall furnish to you at the time of purchase
and at the additional time of purchase, as the case may be, an opinion of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, regulatory counsel for the
Company, addressed to the Underwriters, and dated the time of purchase or the
additional time of purchase, as the case may
17
be, with reproduced copies for each of the other Underwriters, substantially in
the form attached hereto as EXHIBIT C and satisfactory to Xxxxx Xxxxx, counsel
for the Underwriters.
(d) You shall have received from Ernst & Young LLP, letters
dated, respectively, the date of this Agreement and the time of purchase and
additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the forms
heretofore approved by WDR.
(e) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the favorable opinion of Xxxxx
Xxxxx, counsel for the Underwriters, dated the time of purchase or the
additional time of purchase, as the case may be, as to the matters referred to
in subparagraphs (vii) (with respect to the Shares only), (viii) and (ix) of
paragraph (a) of this Section 8.
In addition, such counsel shall state that such counsel
have participated in conferences with officers and other representatives of the
Company, counsel for the Company, representatives of the independent public
accountants of the Company and representatives of the Underwriters at which the
contents of the Registration Statement and Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as to matters
referred to with respect to the Shares under subparagraph (vii) of paragraph (a)
of this Section 8), on the basis of the foregoing (relying as to materiality to
a large extent upon the opinions of officers and other representatives of the
Company), no facts have come to the attention of such counsel which lead them to
believe that the Registration Statement or any amendment thereto at the time
such Registration Statement or amendment became effective contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus as of its date or any supplement thereto as of its date
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no comment with respect to the
financial statements and schedules and other financial and statistical data
included in the Registration Statement or Prospectus).
(f) No amendment or supplement to the Registration Statement
or Prospectus shall be filed prior to the time the Registration Statement
becomes effective to which you object in writing.
(g) The Registration Statement shall become effective, or if
Rule 430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act, at or before 5:00 P.M., New
York City time, on the date of this Agreement, unless a later time (but not
later than 5:00 P.M., New York City time, on the second full business day after
the date of this Agreement) shall be agreed to by the Company and you in writing
or by telephone, confirmed in writing; PROVIDED, HOWEVER, that the Company and
you and any group of
18
Underwriters, including you, who have agreed hereunder to purchase in the
aggregate at least 50% of the Firm Shares may from time to time agree on a later
date.
(h) Prior to the time of purchase or the additional time of
purchase, as the case may be, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under the Act
or proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the
Registration Statement and all amendments thereto, or modifications thereof, if
any, shall 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 not misleading; and (iii) the Prospectus and all amendments or
supplements thereto, or modifications thereof, if any, shall 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 the light of
the circumstances under which they are made, not misleading.
(i) Between the time of execution of this Agreement and the
time of purchase or the additional time of purchase, as the case may be, (i) no
material and unfavorable change, financial or otherwise (other than as referred
to in the Registration Statement and Prospectus), in the business, condition or
prospects of the Company shall occur or become known and (ii) no transaction
which is material and unfavorable to the Company shall have been entered into by
the Company.
(j) The Company will, at the time of purchase or additional
time of purchase, as the case may be, deliver to you a certificate of two of its
executive officers to the effect that the representations and warranties of the
Company as set forth in this Agreement are true and correct as of each such
date, that the Company shall perform such of its obligations under this
Agreement as are to be performed at or before the time of purchase and at or
before the additional time of purchase, as the case may be and the conditions
set forth in paragraphs (h) and (i) of this Section 8 have been met.
(k) You shall have received signed letters, dated the date of
this Agreement, from each of the directors and officers of the Company and
certain of its other stockholders to the effect that such persons shall not
sell, offer or agree to sell, contract to sell, grant any option to sell or
otherwise dispose of, directly or indirectly, any shares of Common Stock of the
Company or securities convertible into or exchangeable or exercisable for Common
Stock or warrants or other rights to purchase Common Stock for a period of 180
days after the date of the Prospectus without WDR's prior written consent.
(l) The Company shall have furnished to you such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus as of the time of purchase and
the additional time of purchase, as the case may be, as you may reasonably
request.
(m) The Shares shall have been approved for listing for
quotation on the NASDAQ National Market, subject only to notice of issuance at
or prior to the time of purchase or the additional time of purchase, as the case
may be.
19
9. EFFECTIVE DATE OF AGREEMENT; TERMINATION. This Agreement
shall become effective (i) if Rule 430A under the Act is not used, when you
shall have received notification of the effectiveness of the Registration
Statement, or (ii) if Rule 430A under the Act is used, when the parties hereto
have executed and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of you or any group of
Underwriters (which may include you) which has agreed to purchase in the
aggregate at least 50% of the Firm Shares, if, since the time of execution of
this Agreement or the respective dates as of which information is given in the
Registration Statement and Prospectus, there has been any material adverse and
unfavorable change, financial or otherwise (other than as referred to in the
Registration Statement and Prospectus), in the operations, business, condition
or prospects of the Company which would, in your judgment or in the judgment of
such group of Underwriters, make it impracticable to market the Shares, or, if,
at any time prior to the time of purchase or, with respect to the purchase of
any Additional Shares, the additional time of purchase, as the case may be,
trading in securities on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market shall have been suspended or limitations
or minimum prices shall have been established on the New York Stock Exchange,
the American Stock Exchange or the NASDAQ National Market or if a banking
moratorium shall have been declared either by the United States or New York
State authorities, or if the United States shall have declared war in accordance
with its constitutional processes or there shall have occurred any material
outbreak or escalation of hostilities or other national or international
calamity or crisis of such magnitude in its effect on the financial markets of
the United States as, in your judgment or in the judgment of such group of
Underwriters, to make it impracticable to market the Shares.
If you or any group of Underwriters elects to terminate this
Agreement as provided in this Section 9, the Company and each other Underwriter
shall be notified promptly by letter or telegram.
If the sale to the Underwriters of the Shares, as contemplated
by this Agreement, is not carried out by the Underwriters for any reason
permitted under this Agreement or if such sale is not carried out because the
Company shall be unable to comply with any of the terms of this Agreement, the
Company shall not be under any obligation or liability under this Agreement
(except to the extent provided in Sections 6, 7 and 11 hereof), and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 11 hereof) or to one another
hereunder.
10. INCREASE IN UNDERWRITERS' COMMITMENTS. Subject to Sections
8 and 9, if any Underwriter shall default in its obligation to take up and pay
for the Firm Shares to be purchased by it hereunder (otherwise than for reasons
sufficient to justify the termination of this Agreement under the provisions of
Section 9 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to take up and pay for does not exceed
10% of the total number of Firm Shares, the non-defaulting Underwriters shall
take up and pay for (in addition to the number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as
20
hereinafter provided. Such Shares shall be taken up and paid for by such
non-defaulting Underwriter or Underwriters in such amount or amounts as you may
designate with the consent of each Underwriter so designated or, in the event no
such designation is made, such Shares shall be taken up and paid for by all
non-defaulting Underwriters pro rata in proportion to the aggregate number of
Firm Shares set opposite the names of such non-defaulting Underwriters in
Schedule A.
Without relieving any defaulting Underwriter from its
obligations hereunder, the Company agrees with the non-defaulting Underwriters
that they will not sell any Firm Shares hereunder unless all of the Firm Shares
are purchased by the Underwriters (or by substituted Underwriters selected by
you with the approval of the Company or selected by the Company with your
approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this agreement shall refer to
and include any Underwriter substituted under this Section 10 with like effect
as if such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting
Underwriter or Underwriters agreed to purchase exceeds 10% of the total number
of Shares which all Underwriters agreed to purchase hereunder, and if neither
the non-defaulting Underwriters nor the Company shall make arrangements within
the five business day period stated above for the purchase of all the Shares
which the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter and
without any liability on the part of any non-defaulting Underwriter to the
Company. Nothing in this paragraph, and no action taken hereunder, shall relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
11. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify, defend and hold
harmless each Underwriter, its partners, directors and officers, and any person
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing persons from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
any such Underwriter or any such person may incur under the Act, the Exchange
Act, the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term Prospectus for
the purpose of
21
this Section 11 being deemed to include any Preliminary Prospectus, the
Prospectus and the Prospectus as amended or supplemented by the Company), or
arises out of or is based upon any omission or alleged omission to state a
material fact required to be stated in either such Registration Statement or
Prospectus or necessary to make the statements made therein not misleading,
except insofar as any such loss, damage, expense, liability or claim arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information furnished in
writing by or on behalf of any Underwriter through you to the Company expressly
for use with reference to such Underwriter in such Registration Statement or
such Prospectus or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information required
to be stated in either such Registration Statement or Prospectus or necessary to
make such information not misleading.
If any action, suit or proceeding (together, a "Proceeding")
is brought against an Underwriter or any such person in respect of which
indemnity may be sought against the Company pursuant to the foregoing paragraph,
such Underwriter or such person shall promptly notify the Company in writing of
the institution of such Proceeding and the Company shall assume the defense of
such Proceeding, including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all fees and expenses; PROVIDED, HOWEVER,
that the omission to so notify the Company shall not relieve the Company from
any liability which the Company may have to any Underwriter or any such person
or otherwise. Such Underwriter or such controlling person shall have the right
to employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such Underwriter or of such person
unless the employment of such counsel shall have been authorized in writing by
the Company in connection with the defense of such Proceeding or the Company
shall not have, within a reasonable period of time in light of the circumstances
employed counsel to have charge of the defense of such Proceeding or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from, additional to or in
conflict with those available to the Company (in which case the Company shall
not have the right to direct the defense of such Proceeding on behalf of the
indemnified party or parties), in any of which events such fees and expenses
shall be borne by the Company and paid as incurred (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). The Company shall not
be liable for any settlement of any such Proceeding effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such person from
and against any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written
22
consent of the indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such Proceeding and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify,
defend and hold harmless the Company, its directors and officers, and any person
who controls the Company or within the meaning of Section 15 of the Act, or
Section 20 of the Exchange Act from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which,
jointly or severally, the Company or any such person may incur under the Act,
the Exchange Act, or common law or otherwise, insofar as such loss, damage,
expense, liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in and in conformity
with information furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use with reference to such Underwriter
in the Registration Statement (or in the Registration Statement as amended by or
on behalf of any post-effective amendment thereof by the Company) or in a
Prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with such information required to be
stated in such Registration Statement or Prospectus or necessary to make such
information not misleading.
If any Proceeding is brought against the Company or any such
person in respect of which indemnity may be sought against any Underwriter
pursuant to the foregoing paragraph, the Company or such person shall promptly
notify such Underwriter in writing of the institution of such Proceeding and
such Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses, PROVIDED, HOWEVER, that the omission to so
notify such Underwriter shall not relieve such Underwriter, from any liability
which such Underwriter may have to the Company, or any such person or otherwise.
The Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense of such
Proceeding or such Underwriter shall not have employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the right to direct
the defense of such Proceeding on behalf of the indemnified party or parties,
but such Underwriter may employ counsel and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be borne by
such Underwriter and paid as incurred (it being understood, however, that such
Underwriter shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). No Underwriter shall be liable for
any settlement of any such Proceeding effected without the written consent of
such
23
Underwriter but if settled with the written consent of such Underwriter, such
Underwriter agrees to indemnify and hold harmless the Company and any such
person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of this
paragraph, then the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 business days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request prior
to the date of such settlement and (iii) such indemnified party shall have given
the indemnifying party at least 30 days' prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened Proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such Proceeding.
(c) If the indemnification provided for in this
Section 11 is unavailable to an indemnified party under subsections (a) and (b)
of this Section 11 in respect of any losses, damage, expenses, liabilities or
claims referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses, liabilities or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportion as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, bear to the aggregate
public offering price of the Shares. The relative fault of the Company on the
one hand and of the Underwriters on the other shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, damages, expenses, liabilities and claims referred to in this subsection
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating, preparing to defend or
defending any claim or Proceeding.
(d) The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 11 were
determined by pro rata allocation
24
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in subsection (c) above. Notwithstanding the
provisions of this Section 11, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by such Underwriter and distributed to the public were offered to
the public exceeds the amount of any damage which such Underwriter has otherwise
been required to pay by reason of such untrue statement or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 11 are several in proportion to their respective underwriting
commitments and not joint.
(e) The indemnity and contribution agreements
contained in this Section 11 and the covenants, warranties and representations
of the Company contained in this Agreement shall remain in full force and effect
regardless of any partners, investigation made by or on behalf of any
Underwriter, its directors and officers or any person (including each partner,
officer or director of such person) who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on
behalf of the Company, its directors or officers, or any person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the
issuance and delivery of the Shares. The Company and each Underwriter agree
promptly to notify each other of any commencement of any Proceeding against it
and, in the case of the Company, against any of the Company's officers or
directors in connection with the issuance and sale of the Shares, or in
connection with the Registration Statement or Prospectus.
12. NOTICES. Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if delivered or
sent to Warburg Dillon Read LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000-0000,
Attention: Syndicate Department, and if to the Company, shall be sufficient in
all respects if delivered or sent to the Company at the offices of the Company
at 0000 Xxxx Xxxxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, Attention: Chief
Executive Officer.
13. GOVERNING LAW; CONSTRUCTION. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
14. SUBMISSION TO JURISDICTION. Except as set forth below, no
Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York or in
the United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and the
Company consents to the jurisdiction of such courts and personal service with
respect thereto. The Company hereby consents to personal jurisdiction, service
and venue in any court in which any Claim arising out of or in any way relating
to this Agreement is brought by
25
any third party against Warburg Dillon Read LLC or any indemnified party. Each
of Warburg Dillon Read LLC and the Company (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and affiliates)
waives all right to trial by jury in any action, proceeding or counterclaim
(whether based upon contract, tort or otherwise) in any way arising out of or
relating to this Agreement. The Company agrees that a final judgment in any such
action, proceeding or counterclaim brought in any such court shall be conclusive
and binding upon the Company and may be enforced in any other courts in the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
15. PARTIES AT INTEREST. The Agreement herein set forth has
been and is made solely for the benefit of the Underwriters and the Company,
and, to the extent provided in Section 11 hereof, the controlling persons,
directors and officers referred to in such Section, and their respective
successors, assigns, heirs, pursuant representatives and executors and
administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters) shall
acquire or have any right under or by virtue of this Agreement.
16. COUNTERPARTS. This Agreement may be signed by the parties
in one or more counterparts which together shall constitute one and the same
agreement among the parties.
17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Underwriters and the Company and their successors and assigns and any
successor or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
18. MISCELLANEOUS. Warburg Dillon Read LLC, an indirect,
wholly owned subsidiary of __________, is not a bank and is separate from any
affiliated bank, including any U.S. branch or agency of Warburg Dillon Read LLC.
Because Warburg Dillon Read LLC is a separately incorporated entity, it is
solely responsible for its own contractual obligations and commitments,
including obligations with respect to sales and purchases of securities.
Securities sold, offered or recommended by Warburg Dillon Read LLC are not
deposits, are not insured by the Federal Deposit Insurance Corporation, are not
guaranteed by a branch or agency, and are not otherwise an obligation or
responsibility of a branch or agency.
19. A lending affiliate of Warburg Dillon Read LLC may have
lending relationships with issuers of securities underwritten or privately
placed by Warburg Dillon Read LLC. To the extent required under the securities
laws, prospectuses and other disclosure documents for securities underwritten or
privately placed by Warburg Dillon Read LLC will disclose the existence of any
such lending relationships and whether the proceeds of the issue will be used to
repay debts owed to affiliates of Warburg Dillon Read LLC.
26
If the foregoing correctly sets forth the understanding among
the Company and the Underwriters, please so indicate in the space provided below
for the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
INTERMUNE PHARMACEUTICALS, INC.
By:
--------------------------------------
W. Xxxxx Xxxxxxxx, M.D.
Chief Executive Officer
Accepted and agreed to as of the date first above written, on behalf of
themselves and the other several Underwriters named in Schedule A
WARBURG DILLON READ LLC
CHASE SECURITIES INC.
PRUDENTIAL SECURITIES INCORPORATED
By: WARBURG DILLON READ LLC
By:
-------------------------
Title:
By:
-------------------------
Title:
27
SCHEDULE A
Number of
Underwriter Shares
----------- ------
WARBURG DILLON READ LLC
CHASE SECURITIES INC.
PRUDENTIAL SECURITIES INCORPORATED
----------
Total........................
==========
EXHIBIT A
FORM OF OPINION OF CORPORATE COUNSEL FOR THE COMPANY
The final opinion in draft form should be attached as EXHIBIT A at the
time this Agreement is executed pursuant to Section 8(a) of the Underwriting
Agreement.
EXHIBIT B
FORM OF OPINION OF INTELLECTUAL PROPERTY COUNSEL FOR THE COMPANY
The final opinion in draft form should be attached as EXHIBIT B at the
time this Agreement is executed pursuant to Section 8(b) of the Underwriting
Agreement.
2.
EXHIBIT C
FORM OF OPINION OF REGULATORY COUNSEL FOR THE COMPANY
The final opinion in draft form should be attached as EXHIBIT C at the
time this Agreement is executed pursuant to Section 8(c) of the Underwriting
Agreement.
3.
