3,500,000 Shares
NPS PHARMACEUTICALS, INC.
Common Stock
UNDERWRITING AGREEMENT
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________________ , 2000
CIBC World Markets Corp.
Prudential Securities Incorporated
Xxxxxxxxx Xxxxxxxx, Inc.
c/o CIBC World Markets Corp.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
NPS Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions contained in this agreement (the
"Agreement"), to sell to you and the other underwriters named on Schedule I to
this Agreement (the "Underwriters"), for whom you are acting as Representatives
(the "Representatives"), an aggregate of 3,500,000 shares (the "Firm Shares") of
the Company's Common Stock, $0.001 par value (the "Common Stock"). The
respective amounts of the Firm Shares to be purchased by each of the several
Underwriters are set forth opposite their names on Schedule I hereto. In
addition, the Company proposes, subject to the terms and conditions contained
herein, to grant to the Underwriters an option to purchase up to an additional
525,000 shares (the "Option Shares") of Common Stock from it for the purpose of
covering over-allotments in connection with the sale of the Firm Shares. The
Firm Shares and the Option Shares are together called the "Shares."
1. Sale and Purchase of the Shares.
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On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at a price of $_____ per share (the "Initial Price"), the number of
Firm Shares set forth opposite the name of such Underwriter under the column
"Number of Firm Shares to be Purchased from the Company" on Schedule I to this
Agreement, subject to adjustment in accordance with Section 11 hereof.
(b) The Company grants to the several Underwriters an option to purchase,
severally and not jointly, all or any part of the Option Shares at the Initial
Price. The number of Option Shares to be purchased by each Underwriter shall be
the same percentage (adjusted by the Representatives to eliminate fractions) of
the total number of Option Shares to be purchased by the Underwriters as such
Underwriter is purchasing of the Firm Shares. Such option may be exercised only
to cover over-allotments in the sales of the Firm Shares by the Underwriters
and may be exercised in whole or in part at any time on or before 12:00 noon,
New York City time, on the business day before the Firm Shares Closing Date (as
defined below), and from time to time thereafter within 30 days after the date
of this Agreement, in each case upon written, facsimile or telegraphic notice,
or verbal or telephonic notice confirmed by written, facsimile or telegraphic
notice, by the Representatives to the Company no later than 12:00 noon, New
York City time, on the business day before the Firm Shares Closing Date or at
least two business days before the Option Shares Closing Date (as defined
below), as the case may be, setting forth the number of Option Shares to be
purchased and the time and date (if other than the Firm Shares Closing Date) of
such purchase.
2. Delivery and Payment. Delivery by the Company of the Firm Shares
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to the Representatives for the respective accounts of the Underwriters, and
payment of the purchase price in immediately available funds by wire transfer or
by certified or official bank check or checks payable in New York Clearing House
(same day) funds drawn to the order of the Company for the shares purchased from
the Company, against delivery of the respective certificates therefor to the
Representatives, shall take place at the offices of CIBC World Markets Corp.,
Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York
City time, on the third
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business day following the date of this Agreement, or at
such time on such other date, not later than 10 business days after the date of
this Agreement, as shall be agreed upon by the Company and the Representatives
(such time and date of delivery and payment are called the "Firm Shares Closing
Date").
In the event the option with respect to the Option Shares is exercised
in whole or in part on one or more occasions, delivery by the Company of the
Option Shares to the Representatives for the respective accounts of the
Underwriters and payment of the purchase price thereof in immediately available
funds by wire transfer or by certified or official bank check or checks payable
in New York Clearing House (same day) funds drawn to the order of the Company
shall take place at the offices of CIBC World Markets Corp. specified above at
the time and on the date (which may be the same date as, but in no event shall
be earlier than, the Firm Shares Closing Date) specified in the notice referred
to in Section 1(b) (such time and date of delivery and payment are called the
"Option Shares Closing Date"). The Firm Shares Closing Date and the Option
Shares Closing Date are called, individually, a "Closing Date" and, together,
the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names and
shall be in such denominations as the Representatives shall request at least two
full business days before the Firm Shares Closing Date or, in the case of Option
Shares, on the day of notice of exercise of the option as described in Section
l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The
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Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Securities and
Exchange Commission (the "Commission") a Registration Statement (as hereinafter
defined) on Form S-3 (No. 333-45274), including a preliminary prospectus
relating to the Shares, and such amendments thereof as may have been required to
the date of this Agreement. Copies of such Registration Statement (including
all amendments thereof) and of the related Preliminary Prospectus (as
hereinafter defined) have heretofore been delivered by the Company to you. The
term "Preliminary Prospectus" means any preliminary prospectus (as described in
Rule 430 of the Rules), including any documents incorporated by reference
therein, included at any time as a part of the Registration Statement or filed
with the Commission by the Company with the consent of the Representatives
pursuant
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to Rule 424(a) of the Rules. The term "Registration Statement" as used
in this Agreement means the initial registration statement (including all
exhibits, financial schedules and information deemed to be a part of the
Registration Statement through incorporation by reference or otherwise), as
amended at the time and on the date it becomes effective (the "Effective Date")
including the information (if any) deemed to be part thereof at the time of
effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant to
Rule 462(b) under the Rules (the "462(b) Registration Statement") then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement at the time of effectiveness or, if Rule 430A of the Rules is relied
on, the term Prospectus shall also include the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules, in each case, including any
documents incorporated by reference therein.
The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company hereby
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represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement complied, and on
the date of the Prospectus, the date any post-effective amendment to the
Registration Statement becomes effective, the date any supplement or amend
ment to the Prospectus is filed with the Commission and each Closing Date, the
Registration Statement and the Prospectus (and any amendment thereof or
supplement thereto) will comply, in all material respects, with the applicable
provisions of the Securities Act and the Rules and the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the published rules and
regulations of the Commission thereunder. The Registration Statement did not
and will not, as of the Effective Date and as of the other dates referred to
in this Section 4(a), contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading. The Prospectus (and any
amendment thereof or supplement thereto) will not, at the date of the
Prospectus, at the date of any such amendments or supplements thereto or at
any Closing Date, contain any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. When any related Preliminary Prospectus was first
filed with the Commission (whether filed as part of the Registration Statement
or any amendment thereto or pursuant to Rule 424(a) of the Rules) and when any
amendment thereof
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or supplement thereto was first filed with the Commission, such Preliminary
Prospectus as amended or supplemented complied in all material respects with
the applicable provisions of the Securities Act and the Rules and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If applicable, each Preliminary Prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation S-
T. If Rule 434 is used, the Company will comply with the requirements of Rule
434 and the Prospectus shall not be "materially different," as such term is
used in Rule 434, from the Prospectus included in the Registration Statement
at the time it became effective. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 4(a) shall apply to
statements in, or omissions from, the Registration Statement or the Prospectus
made in reliance upon, and in conformity with, information herein or otherwise
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus. With
respect to the preceding sentence, the Company acknowledges that the only
information furnished in writing by the Representatives on behalf of the
several Underwriters for use in the Registration Statement or the Prospectus
are the statements contained under the caption "Underwriting" in the
Prospectus.
(b) The Registration Statement is effective under the Securities Act
and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the Prospectus
has been issued and no proceedings for that purpose have been instituted or
are threatened under the Securities Act. Any required filing of the Prospectus
and any supplement thereto pursuant to Rule 424(b) of the Rules has been or
will be made in the manner and within the time period required by such Rule
424(b).
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(c) The documents incorporated by reference in the Registration
Statement and the Prospectus, at the time they were filed with the Commission,
complied in all material respects with the requirements of the Exchange Act
and, when read together and with the other information in the Registration
Statement and the Prospectus, do not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The financial statements of the Company (including all notes and
schedules thereto) included or incorporated by reference in the Registration
Statement and Prospectus present fairly the financial position, the results of
operations, the statements of cash flows and the statements of stockholders'
equity and the other information purported to be shown therein of the Company
at the respective dates and for the respective periods to which they apply;
and such financial statements and related schedules and notes have been
prepared in conformity with United States generally accepted accounting
principles, consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of the results for such periods
have been made. The summary and selected financial data included in the
Prospectus present fairly the information shown therein as at the respective
dates and for the respective periods specified and the summary and selected
financial data have been presented on a basis consistent with the consolidated
financial statements so set forth in the Prospectus and other financial
information.
(e) KPMG LLP, whose reports are filed with the Commission as a part of
the Registration Statement, are and, during the periods covered by their
reports, were independent public accountants as required by the Securities Act
and the Rules.
(f) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the state or other jurisdiction of its
incorporation. Each of the Subsidiaries (as hereinafter defined) is a
corporation duly organized and validly existing under the laws of the state or
other jurisdiction of its incorporation. Except as disclosed in the
Registration Statement, the Company does not control, directly or indirectly,
any corporation, partnership, joint venture, association or other business
organization. The Company and each such subsidiary or other entity controlled
directly or indirectly by the Company and disclosed in the Registration
Statement
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(collectively, "Subsidiaries") is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
the business conducted by it or location of the assets or properties owned,
leased or licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify would not have a material
adverse effect on the assets or properties, business, prospects, results of
operations or financial condition of the Company (a "Material Adverse
Effect"). Except as disclosed in the Registration Statement, neither the
Company nor any of its Subsidiaries owns, leases or licenses any asset or
property or conducts any business outside the United States of America. The
Company and each of its Subsidiaries has all requisite corporate power and
authority, and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or regulatory
bodies or any other person or entity (collectively, the "Permits"), to own,
lease and license its assets and properties and conduct its business, all of
which are valid and in full force and effect, as described in the Registration
Statement and the Prospectus, except where the lack of such Permits, individu
ally or in the aggregate, would not have a Material Adverse Effect. The
Company and each of its Subsidiaries has fulfilled and performed in all
material respects all of its material obligations with respect to such Permits
and no event has occurred that allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be required
under the Securities Act and state and foreign Blue Sky laws, no other Permits
are required to enter into, deliver and perform this Agreement and to issue
and sell the Shares.
(g) (i) The Company and its Subsidiaries own or have obtained valid
licenses, options or rights for the material inventions, patent applications,
patents, trademarks (both registered and unregistered), trade names,
copyrights and trade secrets necessary for the conduct of the Company's and
its Subsidiar ies' respective businesses as currently conducted and as the
Registration Statement and the Prospectus indicate the Company and its
Subsidiaries contemplate conducting in all material respects (collectively,
the "Intellectual Property"); (ii) neither the Company nor any of its
Subsidiaries has received notice of any third parties who have any ownership
rights to any Intellectual Property that is owned by, or has been licensed to,
the Company or its Subsidiaries for the product indications described in the
Registration Statement or the Prospectus that would preclude the Company or
its Subsidiaries from conducting their respective businesses as currently
conducted and as the Registration Statement indicates the Company and its
Subsidiaries contemplate
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conducting in all material respects; (iii) to the Company's knowledge there
are currently no sales of any products that would constitute an infringement
by third parties of any material Intellectual Property owned, licensed or
optioned by the Company or its Subsidiaries; (iv) there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the rights of the Company or its Subsidiaries in or to any
material Intellectual Property owned, licensed or optioned by the Company or
its Subsidiaries; (v) 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 material Intellectual Property owned, licensed or
optioned by the Company or its Subsidiaries; and (vi) there is no pending or,
to the Company's knowledge, threatened action, suit, proceeding or claim by
others that the Company or its Subsidiaries infringe or otherwise violate any
patent, trademark, copyright, trade secret or other proprietary right of
others as would reasonably be expected to result in a Material Adverse Effect.
(h) The Company and each of its Subsidiaries has good and marketable
title in fee simple to all items of real property and good and marketable
title to all personal property described in the Prospectus as being owned by
it. Any real property and buildings described in the Prospectus as being held
under lease by the Company and each of its Subsidiaries is held by it under
valid, existing and enforceable leases, free and clear of all liens,
encumbrances, claims, security interests and defects, except such as are
described in the Registration Statement and the Prospectus or would not have a
Material Adverse Effect.
(i) There are no litigation or governmental proceedings to which the
Company or any of its Subsidiaries is subject or which is pending or, to the
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries, which, individually or in the aggregate, if adversely decided
might have a Material Adverse Effect, affect the consummation of this
Agreement or which is required to be disclosed in the Registration Statement
and the Prospectus that is not so disclosed.
(j) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as described
therein, (a) there has not been any material adverse change or any development
involving a prospective material adverse change in or affecting the assets or
properties, business, results of operations or financial condition of the
Company;
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(b) neither the Company nor any of its Subsidiaries has sustained any loss
or interference with its assets, businesses or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which would have
a Material Adverse Effect; and (c) since the date of the latest balance
sheet included in the Registration Statement and the Prospectus, except as
reflected therein, neither the Company nor any of its Subsidiaries has (i)
issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except such liabilities or obligations
incurred in the ordinary course of business, (ii) entered into any
transaction not in the ordinary course of business or (iii) declared or
paid any dividend or made any distribution on any shares of its stock or
redeemed for cash, purchased or otherwise acquired or agreed to redeem for
cash, purchase or otherwise acquire any shares of its stock. The Company
does not have any material contingent obligations which are not disclosed
in the Registration Statement.
(k) There is no document, contract or other agreement of a character
required to be described in the Registration Statement or Prospectus or to
be filed as an exhibit to the Registration Statement which is not described
or filed as required by the Securities Act or Rules. Each description of a
contract, document or other agreement in the Registration Statement and the
Prospectus fairly reflects in all respects the material terms of the
underlying document, contract or agreement. Each agreement described in
the Registration Statement and Prospectus or listed in the Exhibits to the
Registration Statement or incorporated by reference is in full force and
effect and is valid and enforceable by and against the Company or the
Subsidiary, as the case may be, in accordance with its terms. Neither the
Company nor the Subsidiary, if the Subsidiary is a party, nor to the
Company's knowledge, any other party, is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or
both would constitute such a default, in any such case which default or
event, individually or in the aggregate, would have a Material Adverse
Effect. No default exists, and no event has occurred which with notice or
lapse of time or both would constitute a default, in the due performance
and observance of any term, covenant or condition, by the Company or the
Subsidiary, if the Subsidiary is a party thereto, of any other agreement or
instrument to which the Company or the Subsidiary is a party or by which
its or their properties or business may
9
be bound or affected which default or event, individually or in the
aggregate, would have a Material Adverse Effect.
(l) Neither the Company nor any of its Subsidiaries is in violation of
any term or provision of its charter or bylaws or of any franchise,
license, permit, judgment, decree, order, statute, rule or regulation,
where the conse quences of such violation, individually or in the
aggregate, would have a Material Adverse Effect.
(m) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company
of the Shares) will give rise to a right to terminate or accelerate the due
date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or assets
of the Company or any of its Subsidiaries pursuant to the terms of, any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of their respective properties or
businesses is bound, or any franchise, license, permit, judgment, decree,
order, statute, rule or regulation applicable to the Company or any of its
Subsidiaries or violate any provision of the charter or bylaws of the
Company or any of its Subsidiaries, except for such consents or waivers
which have already been obtained and are in full force and effect.
(n) The Company has authorized, issued and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the issued
and outstanding shares of Common Stock have been duly and validly issued
and are fully paid and nonassessable. Except as disclosed in the
Registration Statement and the Prospectus with respect to the exchangeable
shares of NPS Allelix Corp. (the "Exchangeable Shares"), there are no
statutory preemptive or other similar rights to subscribe for or to
purchase or acquire any shares of Common Stock of the Company or any of its
Subsidiaries or any such rights pursuant to its Certificate of
Incorporation or bylaws or any agreement or instrument to or by which the
Company or any of its Subsidiaries is a party or bound. The Shares,
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when issued and sold pursuant to this Agreement, will be duly and validly
issued, fully paid and nonassessable and none of them will be issued in
violation of any preemptive or other similar right. Except as disclosed in
the Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and there is no
commitment, plan or arrange ment to issue, any share of stock of the
Company or its any of its Subsidiaries or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock and the
Shares conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus. All
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued, and are fully paid and nonassessable and,
except as described in the Registration Statement and the Prospectus with
respect to the Exchangeable Shares, are owned directly by the Company or by
another wholly-owned subsidiary of the Company free and clear of any
security interests, liens, encumbrances, equities or claims, other than
those described in the Prospectus.
(o) Except for rights disclosed in the Registration Statement and
Prospectus, no holder of any security of the Company has the right to have
any security owned by such holder included in the Registration Statement or
to demand registration of any security owned by such holder during the
period ending 90 days after the date of this Agreement. Each director and
executive officer of the Company has delivered to the Representatives, in
form and substance acceptable to the Representatives, his enforceable
written lock-up agreement substantially in the form attached to this
Agreement ("Lock-Up Agreement").
(p) All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of this
Agreement and the issuance and sale of the Shares by the Company. This
Agreement has been duly and validly authorized, executed and delivered by
the Company and constitutes and will constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(q) Neither the Company nor any of its Subsidiaries is involved in any
labor dispute nor, to the knowledge of the Company, is any such dispute
11
threatened, which dispute would have a Material Adverse Effect. The Company
is not aware of any existing or imminent labor disturbance by the employees
of any of its principal suppliers or contractors which would have a
Material Adverse Effect. The Company is not aware of any threatened or
pending litigation between the Company or any of its Subsidiaries and any
of their respective executive officers which, if adversely determined,
could have a Material Adverse Effect and has no reason to believe that such
executive officers will not remain in the employment of the Company or the
Subsidiaries, as appropriate.
(r) No transaction has occurred between or among the Company and any
of its officers or directors or five percent shareholders or any affiliate
or affiliates of any such officer or director or five percent shareholders
that is required to be described in and is not described in the
Registration Statement and the Prospectus.
(s) Neither the Company, nor to its knowledge, any of its officers,
directors or affiliates has taken, or will take, directly or indirectly,
any action designed to or which might reasonably be expected to cause or
result in, or which has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of any of the Shares.
(t) The Company and its Subsidiaries have filed all Federal, state,
local and foreign tax returns which are required to be filed through the
date hereof, which returns are true and correct in all material respects,
or have received extensions thereof, and have paid all taxes shown on such
returns and all assessments received by them to the extent that the same
are material and have become due. There are no tax audits or investigations
pending, which if adversely determined, would have a Material Adverse
Effect; nor are there any material proposed additional tax assessments
against the Company and any of its Subsidiaries.
(u) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act. The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market System, subject to official Notice of Issuance. A
registration statement has been filed on Form 8-A pursuant to Section 12 of
the Exchange Act, which registration statement complies in all material
respects with the
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Exchange Act. The Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under
the Exchange Act or the quotation of the Common Stock on the Nasdaq
National Market, nor has the Company received any notification that the
Commission or the Nasdaq National Market is contemplating terminating such
registration or quotation.
(v) The books, records and accounts of the Company and its Subsidiaries
accurately and fairly reflect, in reasonable detail, the transactions in,
and dispositions of, the assets of, and the results of operations of, the
Company and its Subsidiaries. The Company and each of its Subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with United States generally accepted accounting principles and
to maintain asset accountability, (iii) access to assets is permitted only
in accordance with management's general or specific authorization and (iv)
the recorded account ability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect
to any differences.
(w) The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged
or propose to engage after giving effect to the transactions described in
the Prospectus including but not limited to, insurance covering clinical
trial liability, product liability and real or personal property owned or
leased against theft, damage, destruction, act of vandalism and all other
risks customarily insured against; all policies of insurance and fidelity
or surety bonds insuring the Company or any of its Subsidiaries or the
Company's or its Subsidiaries' respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and each
of its Subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and neither the Company nor any
Subsidiary of the Company has reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse
Effect. Neither the Company nor any Subsidiary has been denied any
insurance coverage which it has sought or for which it has applied.
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(x) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD" ) or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws) has been obtained or made and
is in full force and effect.
(y) There are no affiliations with the NASD among the Company's
officers, directors or, to the best of the knowledge of the Company, any
five percent or greater stockholder of the Company, except as set forth in
the Registration Statement or otherwise disclosed in writing to the
Representa tives.
(z) (i) Each of the Company and its Subsidiaries is in compliance in
all material respects with all published rules, laws, ordinances, codes,
policies, rules of common law and regulations and any published judicial or
administra tive interpretation thereof relating to the use, treatment,
storage and disposal of toxic substances and protection of health or the
environment ("Environmental Laws") which are applicable to its business;
(ii) neither the Company nor any of its Subsidiaries has received any
notice from any governmental authority or third party of an asserted claim
under Environmental Laws; (iii) each of the Company and its Subsidiaries
has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and is in compliance
with all terms and conditions of any such permit, license or approval; (iv)
to the Company's knowledge, no facts currently exist that will require the
Company or its Subsidiaries to make future material capital expenditures to
comply with Environmental Laws; and (v) no property which is or has been
owned, leased or occupied by the Company or its Subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive Environ mental
Response, Compensation of Liability Act of 1980, as amended (42 U.S.C.
Section 9601, et. seq.) ("CERCLA") or otherwise designated as a
contaminated site under applicable state or local law. Neither the Company
nor any of its Subsidiaries has been named as a "potentially responsible
party" under CERCLA.
14
(aa) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its Subsidiaries, in the course of which the
Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or
in the aggregate, have a Material Adverse Effect.
(bb) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of proceeds thereof as described in
the Prospectus, will not be an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act").
(cc) The Company, its Subsidiaries or any other person associated with
or acting on behalf of the Company or its Subsidiaries including, without
limitation, any director, officer, agent or employee of the Company or its
Subsidiaries has not, directly or indirectly, while acting on behalf of the
Company or its Subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (iii) violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
other unlawful payment.
(dd) The Company has not distributed and, prior to the later of (i)
the Closing Date and (ii) the completion of the distribution of the
Securities, will not distribute any offering material in connection with
the offering and sale of the Securities other than the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or other materials, if
any, permitted by the Securities Act.
5. [RESERVED].
15
6. Conditions of the Underwriters' Obligations. The obligations of
-------------------------------------------
the Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become effective
shall have been received by the Representatives and the Prospectus shall
have been timely filed with the Commission in accordance with Section 7(a)
of this Agreement.
(b) No order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Commission and the Representatives. If the Company has
elected to rely upon Rule 430A, Rule 430A information previously omitted
from the effective Registration Statement pursuant to Rule 430A shall have
been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period and the Company shall have provided
evidence satisfactory to the Underwriters of such timely filing, or a post-
effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule
430A. If the Company has elected to rely upon Rule 434, a term sheet shall
have been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 6(d)
shall be true and correct when made and on and as of each Closing Date as
if made on such date. The Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by it at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that (i)
the signers of such
16
certificate have carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and warranties
of the Company in this Agreement are true and correct on and as of such
Closing Date with the same effect as if made on such Closing Date and the
Company has performed all covenants and agreements and satisfied all
conditions contained in this Agreement required to be performed or
satisfied by it at or prior to such Closing Date, and (ii) no stop order
suspending the effectiveness of the Registration Statement has been issued
and to the best of their knowledge, no proceedings for that purpose have
been instituted or are pending under the Securities Act.
(e) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from KPMG
LLP addressed to the Representatives and dated, respectively, the date of
this Agreement and each such Closing Date, in form and substance reasonably
satisfactory to the Representatives, confirming that they are independent
accountants within the meaning of the Securities Act and the Rules, that
the response to Item 10 of the Registration Statement is correct insofar as
it relates to them and stating in effect that:
(i) In their opinion the audited financial statements
incorporated by reference in the Registration Statement and the
Prospectus and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act and the Rules;
(ii) On the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings "Summary
Consolidated Financial Data" and "Selected Consolidated Financial
Data," carrying out certain procedures (but not an examination in
accordance with United States generally accepted auditing standards)
which would not necessarily reveal matters of significance with
respect to the comments set forth in such letter, a reading of the
minutes of the meetings of the stockholders and directors of the
Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company as
to transactions and events subsequent to the date of the latest
audited financial statements, except as disclosed in the Registration
Statement and the Prospectus, nothing came to their attention which
caused them to believe that:
17
(A) the amounts in "Summary Consolidated Financial
Data," and "Selected Consolidated Financial Data" included
in the Registration Statement and the Prospectus do not
agree with the corresponding amounts in the audited and
unaudited financial statements from which such amounts
were derived; or
(B) with respect to the Company, there were, at a
specified date not more than three business days prior to
the date of the letter, any changes in capital stock,
increases in long-term debt or any decreases in
consolidated net current assets or stockholders' equity of
the Company, as compared with the amounts shown on the
Company's audited balance sheet for the fiscal year ended
December 31, 1999 and the six months ended June 30, 1999
(unaudited) included in the Registration Statement;
(iii) They have performed certain other procedures as may be
permitted under United States generally acceptable auditing standards
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company) set forth in the
Registration Statement and the Prospectus and reasonably specified by
the Representatives agrees with the accounting records of the Company;
and
(iv) Based upon the procedures set forth in clauses (ii) and
(iii) above and a reading of the amounts included in the Registration
Statement under the headings "Summary Consolidated Financial Data" and
"Selected Consolidated Financial Data" included in the Registration
Statement and Prospectus and a reading of the financial statements
from which certain of such data were derived, nothing has come to
their attention that gives them reason to believe that the "Summary
Consolidated Financial Data" and "Selected Consolidated Financial
Data" included in the Registration Statement and Prospectus do not
comply as to the form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules or that
the information set forth therein is not fairly stated in relation to
the financial statements included in the Registration Statement or
Prospectus from which certain of such data were derived are not in
conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial
statements included in the Registration Statement and Prospectus.
18
References to the Registration Statement and the Prospectus in this
paragraph (e) are to such documents as amended and supplemented at the date
of the letter.
(g) The Representatives shall have received on each Closing Date from
Xxxxxxx Xxxxx & Xxxxxxx, counsel for the Company, an opinion, addressed to
the Representatives and dated such Closing Date, and stating in effect
that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the state
or other jurisdiction of its incorporation. Each of the Subsidiaries
has been duly organized and is validly existing as a corporation under
the laws of the state or other jurisdiction of its incorporation. Each
of the Company and its Subsidiaries is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the
character or location of its assets or properties (owned, leased or
licensed) or the nature of its businesses makes such qualification
necessary, except for such jurisdic tions where the failure to so
qualify, individually or in the aggregate, would not have a Material
Adverse Effect.
(ii) The Company has all requisite corporate power and
authority, and each of the Subsidiaries has all requisite corporate
power and capacity, to own, lease and license its assets and
properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus and with
respect to the Company to enter into, deliver and perform this
Agreement and to issue and sell the Shares other than those required
under the state and foreign Blue Sky laws.
(iii) The Company has authorized and issued capital stock as
set forth in the Registration Statement and the Prospectus under the
caption "Capitalization"; the certificates evidencing the Shares are
in due and proper legal form and have been duly authorized for
issuance by the Company. The Shares when issued and sold pursuant to
this Agreement will be duly and validly issued, outstanding, fully
paid and nonassessable and none of them will have been issued in
violation of any preemptive or other similar right. To the best of
such counsel's knowledge, except as disclosed in the Registration
Statement and the Prospectus, there are no preemptive or other rights
to subscribe for or to
19
purchase or any restriction upon the voting or transfer of any
securities of the Company pursuant to the Company's Certificate of
Incorporation or by-laws or other governing documents or any
agreements or other instruments to which the Company is a party or by
which it is bound. To the best of such counsel's knowledge, except as
disclosed in the Registration Statement and the Prospectus, there is
no outstanding option, warrant or other right calling for the issuance
of, and no commitment, plan or arrangement to issue, any share of
stock of the Company or any security convertible into, exercisable
for, or exchange able for stock of the Company. The Common Stock and
the Shares conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.
The issued and outstand ing shares of capital stock of each of the
Company's Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and are owned by the Company or by
another wholly owned subsidiary of the Company, free and clear of any
perfected security interest or, to the knowledge of such counsel, any
other security interests, liens, encumbrances, equities or claims,
other than those contained in the Registration Statement and the
Prospectus.
(iv) Each of the Lock-Up Agreements executed by the Company's
directors and officers has been duly and validly delivered by such
persons and constitutes the legal, valid and binding obligation of
each such person enforceable against each such person in accordance
with its terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles.
(v) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and perfor
xxxxx of this Agreement and the issuance and sale of the Shares. This
Agreement has been duly and validly authorized, executed and delivered
by the Company and this Agreement constitutes the legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms except as such enforceability may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance, reorgani
zation, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
20
(vi) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with notice
or lapse of time, or both, would constitute a default) under, or
require consent or waiver under, or result in the execution or
imposition of any lien, charge, claim, security interest or
encumbrance upon any properties or assets of the Company or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed
trust, note or other agreement or instrument of which such counsel is
aware and to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiar ies or any of their
properties or businesses is bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation of which such
counsel is aware or violate any provision of the charter or by-laws of
the Company or any of its Subsidiaries.
(vii) To the best of such counsel's knowledge, no default
exists, and no event has occurred which with notice or lapse of time,
or both, would constitute a default, in the due performance and
observance of any term, covenant or condition by the Company of any
indenture, mortgage, deed of trust, note or any other agreement or
instrument to which the Company is a party or by which it or any of
its assets or properties or businesses may be bound or affected, where
the conse quences of such default, individually or in the aggregate,
would have a Material Adverse Effect.
(viii) To the best of such counsel's knowledge, the Company and
each of its Subsidiaries is not in violation of any term or provision
of its charter or by-laws or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, where the consequences of
such violation, individually or in the aggregate, would have a
Material Adverse Effect.
(ix) No consent, approval, authorization or order of any court
or governmental agency or regulatory body is required for the
execution, delivery or performance of this Agreement by the Company or
the
21
consummation of the transactions contemplated hereby or thereby,
except such as have been obtained under the Securities Act and such as
may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the several Under
writers.
(x) To the best of such counsel's knowledge, there is no
litigation or governmental or other proceeding or investigation,
before any court or before or by any public body or board pending or
threatened against, or involving the assets, properties or businesses
of, the Company which would have a Material Adverse Effect.
(xi) The statements in the Prospectus under the captions
"Liquidity and Capital Resources," "Business-Collaborative Research,
Development and License Agreements" and "Related-Party Transac tions,"
insofar as such statements constitute a summary of documents referred
to therein or matters of law, are fair summaries in all material
respects and accurately present the information called for with
respect to such documents and matters. Accurate copies of all
contracts and other documents required to be filed as exhibits to, or
described in, the Registration Statement have been so filed with the
Commission or are fairly described in the Registration Statement, as
the case may be.
(xii) The Registration Statement, all Preliminary Prospectuses
and the Prospectus and each amendment or supplement thereto (except
for the financial statements and schedules and other financial and
statistical data included therein, as to which such counsel expresses
no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules.
(xiii) Except as may have been waived or as otherwise disclosed
in the Registration Statement and the Prospectus, there are no persons
with registration rights or other similar rights to have any
securities of the Company registered pursuant to the Registration
Statement or otherwise registered by the Company under the Securities
Act.
(xiv) The Registration Statement is effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are threatened, pending or
contemplated. Any required filing of the Prospectus and any supplement
thereto pursuant to Rule 424(b) under the Securities Act has been made
in the manner and within the time period required by such Rule 424(b).
22
(xv) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus under
the caption "Description of Capital Stock."
(xvi) The Company is not an "investment company" or an entity
controlled by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the
laws of the State of Utah, the General Corporation Law of the State of
Delaware and the Federal laws of the United States; provided that such
counsel shall state that in their opinion the Underwriters and they are
justified in relying on such other opinions. Copies of such certificates
and other opinions shall be furnished to the Representatives and counsel
for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representa tives of the Representatives and representatives of the
independent certified public accountants of the Company, at which
conferences the contents of the Registration Statement and the Prospectus
and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing
opinion), on the basis of the foregoing, no facts have come to the
attention of such counsel which lead such counsel to believe that the
Registration Statement at the time it became effective (except with respect
to the financial statements and notes and schedules thereto and other
financial data, as to which such counsel need express no belief) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus as amended or supplemented (except
with respect to the financial statements, notes and schedules thereto and
other financial data, as to which such counsel need make no statement) on
the date thereof contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(h) The Representatives shall have received on each Closing Date from
Xxxxx and Xxxxxxx, special counsel for the Company, an opinion, addressed
to the Representatives and dated such Closing Date, and stating in effect
that:
23
(i) The statements in the Registration Statement under the
headings "Risk Factors" and "Patents and Other Proprietary Technology"
relating to patents, to the extent that they constitute matters of law
or legal conclusions, are accurate and fairly present, in all material
respects, information called for with respect to such matters.
(ii) Except for processing and examination of patent
applications before governmental bodies, there is, to the best of such
counsel's knowledge, no pending or threatened litigation or governmen
tal or other proceeding relating to the Work (to be defined in such
opinion).
(iii) To the best of such counsel's knowledge, the Company, with
regard to the Work, has not infringed and is not infringing any U.S.
patents of any person or entity, the violation of which would have a
material adverse effect on the conduct of the Company's business as
currently conducted.
(iv) To the best of such counsel's knowledge, all of the
applications included in the Work were filed and prosecuted in accor
dance with applicable patent office rules and procedures, and were
prepared without material defects of form. Furthermore, to the best
of such counsel's knowledge, each of the patents included in the Work
discloses patentable subject matter. Also, each of the U.S.
applications included in the Work is being prosecuted diligently, to
the best of such counsel's knowledge.
(v) To the best of such counsel's knowledge, assignments to
the Company or to its subsidiary, NPS Allelix Corp. a/k/a Allelix
Biopharmaceuticals Inc., have been recorded, with the U.S. Patent and
Trademark Office, for each patent and patent application included in
the Work.
(vi) The statements in the Registration Statement under the
captions "Risk Factors" and "Business," insofar as such statements
purport to summarize applicable provisions of the Federal Food, Drug
and Cosmetic Act, as amended, and the regulations promulgated
thereunder, are accurate and fairly present, in all material respects,
information called for with respect to such matters.
(vii) Nothing has come to such counsel's attention that leads
them to believe that, with respect to federal regulatory matters
arising out of the Federal Food, Drug and Cosmetic Act, as amended,
the Public Health Services Act, as amended, and the regulations
promulgated thereunder, the Registration Statement, at the time it
became effective,
24
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as of its
date or at the Closing Date, as the case may be, included or includes
an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
the light of the cir cumstances under which they were made, not
misleading.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company and representatives of the Representatives, at which conferences
the contents of the Registration Statement and the Prospectus as they
related to intellectual property matters were discussed. While such
counsel has not undertaken to independ ently verify and does not assume any
responsibility for the accuracy, complete ness or fairness of the
statements contained in the Registration Statement and the Prospectus
(except as specified in the foregoing opinion), on the basis of the
foregoing, no facts have come to the attention of such counsel with respect
to intellectual property matters which lead such counsel to believe that
the Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and
other financial data, as to which such counsel need express no belief)
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements, notes and
schedules thereto and other financial data, as to which such counsel need
make no statement) on the date thereof and the date of such opinion
contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(i) The Representatives shall have received on each Closing Date from
Xxxxx, Xxxxx & Rossa, special counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, and stating
in effect that:
(i) The statements under the heading "Patents and Other
Proprietary Technology" in the Registration Statement, to the extent
that they constitute matters of law or legal conclusions regarding
intellectual property matters, are accurate and fairly present, in all
material respects, information called for with respect to such
matters. Further, this section does not contain any inaccurate or
misleading statements regarding the above noted matters and contains
accurate descriptions of the Company's patent applications, issued and
allowed patents regarding the above noted matters, and fairly
summarizes the legal matters, documents and proceedings relating
thereto.
25
(ii) The paragraphs under the heading "Risk Factors" in the
Registration Statement concerning protection of intellectual property,
to the extent that they constitute matters of law or legal conclusions
regarding the above noted matters, are accurate and fairly present, in
all material respects, information called for with respect to such
matters.
(iii) Such counsel has reviewed all relevant Company files of
the referenced patents and applications which are in such counsel's
possession to ensure that all of the applications were properly
prosecuted in the ordinary and customary manner, and that all
declarations have been properly executed by the appropriate inventors,
and to the best of such counsel's knowledge, the patents and
applications have been properly prepared and filed on behalf of the
Company with no material defects of form in their respective
preparations. From such counsel's review of the relevant Company
files, to the best of such counsel's knowledge, all relevant prior art
of which such counsel was aware concerning the subject matter of the
specified patents and applications was disclosed to the U.S. Patent
and Trademark Office. To the best of such counsel's knowledge, each
of the reference patents and applications discloses patentable subject
matter.
(iv) To the best of such counsel's knowledge, the domestic and
foreign patent applications currently pending that are derivatives of
the specific issued U.S. patents and that are material to the Company
are being prosecuted in the ordinary and customary manner. A list of
these patent applications may be found in Appendix A to such opinion.
Such counsel has not been advised by foreign associates handling these
cases of any defects of form in the preparation of these applications.
To the best of such counsel's knowledge, there are no third party
claims of ownership asserted against these patent applications or
against the above referenced patents.
(v) Such counsel has investigated the prosecution history
files of the Company that are in such counsel's possession of each of
the identified patents and applications, and to the best of such
counsel's knowledge, believes that assignments to the Company have
been recorded with the U.S. Patent and Trademark Office for each
patent and application. With the exception of U.S. Patent No.
6,022,894 and its domestic and foreign derivative applications, which
are assigned to the Company and Smithkline Xxxxxxx plc and Smithkline
Xxxxxxx, to the best of such counsel's knowledge, the other stated
patents and patent applications have been assigned solely to the
Company. Such counsel's investigation of the registration of
assignments for those patents included
26
only a review of all relevant files of the Company in such counsel's
possession.
(vi) To the best of such counsel's knowledge, there is no
pending or threatened action, suit or claim by others regarding the
above noted matters that the Company is infringing or otherwise
violating any patent rights of others that are material and have not
been disclosed in the Registration Statement and Prospectus. To the
best of such counsel's knowledge, such counsel knows of no pending
infringement by others regarding the specified patents with respect to
noted products.
(vii) Such counsel understands from the Company that three
potential product compounds, namely NPS 568, NPS 1493 and NPS 1506 are
presently being pursued for clinical use with respect to the subject
matter of the above referenced patents. However, since such counsel
understand from management, and have no reason to believe otherwise
(but have not conducted any detailed independent analysis), that all
activity at the Company with regard to these potential products is
solely directed toward Federal Agency approval of a drug, the Company
may be exempt from infringement of any third party U.S. Patents under
35 U.S.C. (S)271(e)(1) unless and until approval of any such product
by the relevant Federal Agency. Such counsel also understands that
any commercial product may be substantially modified from those now
being pursued for clinical use. Thus, such counsel cannot opine with
regard to infringement by such unspecified products.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company and representatives of the Representatives, at which conferences
the contents of the Registration Statement and the Prospectus as they
related to intellectual property matters were discussed. While such counsel
has not undertaken to independ ently verify and does not assume any
responsibility for the accuracy, complete ness or fairness of the
statements contained in the Registration Statement and the Prospectus
(except as specified in the foregoing opinion), on the basis of the
foregoing, no facts have come to the attention of such counsel with respect
to intellectual property matters which lead such counsel to believe that
the Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and
other financial data, as to which such counsel need express no belief)
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements, notes and
schedules thereto and other financial data, as to which such counsel need
make no statement) on the date thereof and the date of such opinion
contained any untrue statement of a material fact or omitted to state a
27
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(j) The Representatives shall have received on each Closing Date from
Xxxxx X. Xxxxxx, counsel for the Company, an opinion, addressed to the
Representatives and dated such Closing Date, and stating in effect that:
(i) To the best of such counsel's knowledge, other than the
specified trademarks and service marks, no other xxxx xxx be consid
ered material to the Company's business as now conducted and no
application to register any of the specified marks is now pending in
any other class.
(ii) The specified marks are registered in the name of, and are
owned by the Company or one of its Subsidiaries, and, to the best of
such counsel's knowledge, the classes of goods and services for which
each of the specified marks are registered are adequate for the Com
pany's business needs.
(iii) With respect to the specified marks, there are no pending
legal or governmental proceedings nor allegations on the part of any
person of infringement and, to the best of such counsel's knowledge,
no such proceedings or allegations are threatened or contemplated.
(iv) To the best of such counsel's knowledge, neither the
Company nor any of its Subsidiaries is infringing or otherwise
violating any trademarks or service marks of any persons and, to the
best of such counsel's knowledge, no person is infringing or otherwise
violating the specified marks in a way which could materially affect
the use thereof by the Company and its Subsidiaries.
(v) To the best of such counsel's knowledge, there are no
asserted claims of any persons relating to the scope or ownership of
the specified marks, and there are no liens which have been filed
against any of them.
(vi) Nothing has come to such counsel's attention that leads
such counsel to believe that any circumstance exists or will arise to
prevent or limit the Company's enjoyment of the protection of such
registered marks to the extent they may be material in the conduct of
the Company's business and affairs as now conducted.
(vii) The statements under the heading "Patents and Other
Proprietary Technology" in the Registration Statement, to the extent
that they constitute matters of law or legal conclusions regarding
ALX-0600,
28
are accurate and fairly present, in all material respects, information
called for with respect to such ALX-0600 matter. Further, this section
does not contain any inaccurate or misleading statements regarding the
above noted ALX-0600 matter and contains accurate descriptions of the
Company's issued patent and patent applications regarding the above
noted ALX-0600 matter, and fairly summarizes the legal matters,
documents and proceedings relating thereto.
(viii) The paragraphs under the heading "Risk Factors" in the
Registration Statement concerning protection of intellectual property,
to the extent that they constitute matters of law or legal conclusions
regarding the above noted ALX-0600 matter, are accurate and fairly
present, in all material respects, information called for with respect
to such ALX-0600 matter.
(ix) Based on due inquiry, such counsel is of the opinion that
the referenced patents and applications have been properly and
diligently prosecuted, and that all declarations for such patents and
applications have been properly executed by the appropriate inventors,
and to the best of such counsel's knowledge, the patents and
applications have been properly prepared and filed with no material
defects of form in their respective preparations. Based on due
inquiry and to the best of such counsel's knowledge, all relevant
prior art concerning the subject matter of such patent and application
was disclosed to the U.S. Patent and Trademark Office. Based on due
inquiry, such counsel is of the opinion that each of the above-
referenced patents and applications discloses patentable subject
matter.
(x) To the best of such counsel's knowledge, the domestic and
foreign patent applications currently pending that are derivatives of
the specific issued and pending U.S. or Canadian patents and that are
material to the Company are being prosecuted in the ordinary and
customary manner. A list of these patent applications may be found in
Appendix A to such opinion. To the best of such counsel's knowledge,
the Company has not been advised by foreign associates handling these
cases of any defects of form in the preparation of these applications.
To the best of such counsel's knowledge, there are no third party
claims of ownership asserted against these patent applications or
against the above referenced patent.
(xi) Based on due inquiry and to the best of such counsel's
knowledge, assignments to the Company have been recorded with the U.S.
Patent and Trademark Office for each patent and application owned by
the Company. Likewise, based on due inquiry and to the best of such
counsel's knowledge, assignments to the Company's licensor of the
29
above-referenced patents and applications owned by said licensor have
been recorded with the U.S. Patent and Trademark Office. To the best
of such counsel's knowledge, the Company's licensor of the patents and
applications shown on the attached Exhibit A is the Ontario numbered
company 1149336 Ontario Inc., which company is owned and controlled by
the Company's academic collaborator, Xxxxxx Xxxxxxx.
(xii) To the best of such counsel's knowledge, there is no
pending or threatened action, suit or claim by others regarding the
above noted ALX-0600 matter that the Company is infringing or
otherwise violating any patent rights of others that are material and
have not been disclosed in the Registration Statement and Prospectus.
To the best of such counsel's knowledge, such counsel knows of no
infringement by others regarding the specified patents with respect to
the noted ALX-0600 matter, which could reasonably be expected to
adversely affect the Company, its current or planned use of the ALX-
0600 matter, or the above-referenced patents and applications.
(xiii) To the best of such counsel's knowledge, all activity at
the Company with regard to the ALX-0600 matter is solely directed
toward Federal Agency approval of a drug. Accordingly, such counsel
is of the view that the Company may be exempt from infringement of any
third party U.S. patents under 35 U.S.C. (S) 271(e)(1) unless and
until approval of any such product by the relevant Federal Agency.
(xiv) To the best of such counsel's knowledge, the Company and
its Subsidiaries own or possess sufficient licenses or other rights to
use all technology covered by patents or trade secrets, and to use all
trademarks, service marks or other proprietary information or know-how
(the "Proprietary Rights") necessary to conduct the business now being
or proposed to be conducted by the Company and its Subsidiaries.
(xv) To the best of such counsel's knowledge, there are no
liens which have been filed against any of the Company's United States
and foreign patents or any of the Company's or its Subsidiaries'
patent applications, whether United States or foreign
("Applications").
(xvi) All material licenses of the Company and its Subsidiaries
to patents and Applications, whether United States or foreign, have
been duly executed, and are in full force and effect and, to such
counsel's knowledge, neither the Company nor any Subsidiary is in
default (declared or undeclared) of any material provision of such
licenses.
30
(xvii) To the best of such counsel's knowledge, the Company and its
Subsidiaries take security measures adequate to assert trade secret
protection in its non-patented technology.
(xviii) The description of the Proprietary Rights in the Registration
Statement is correct in all material respects and fairly and correctly
describes the Company's rights with respect thereto.
(xix) Such counsel does not have any knowledge of, and, to the best
of such counsel's knowledge, the Company has not given or received any
notice of, any pending conflicts with or infringement of the rights of
others with respect to any Proprietary Rights or with respect to any
license of Proprietary Rights.
(xx) To the best of such counsel's knowledge, no Proprietary Rights
used by the Company, and no services or products sold by the Company,
conflict with or infringe upon any proprietary rights of any third party.
(xxi) No claims have been asserted by any person with respect to the
validity of the Company's ownership or right to use the Proprietary Rights
and, to the best of such counsel's knowledge, there is no reasonable basis
for any such claim to be successful.
(xxii) To the best of such counsel's knowledge, no person is
infringing on or violating the Proprietary Rights owned or used by the
Company applicable to any products of the Company.
(xxiii) All of the outstanding shares of Common Stock of the Company
have been duly and validly authorized and issued and are fully paid and
nonassessable and none of them was issued in violation of any preemptive or
other similar right.
(xxiv) To the best of such counsel's knowledge, the current FDA
regulatory status of the Company is accurately described in all
material respects in the Registration Statement under the captions
"Risk Factors" and "Business."
In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company, representa
tives of the Representatives and representatives of the independent public
accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus as they related to intellectual
property matters were discussed. While such counsel has not undertaken to
independ ently verify and does not assume any responsibility for the accuracy,
complete
31
ness or fairness of the statements contained in the Registration Statement and
the Prospectus (except as specified in the foregoing opinion), on the basis of
the foregoing, no facts have come to the attention of such counsel with respect
to intellectual property matters which lead such counsel to believe that the
Registration Statement at the time it became effective (except with respect to
the financial statements and notes and schedules thereto and other financial
data, as to which such counsel need express no belief) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus as amended or supplemented (except with respect to the
financial statements, notes and schedules thereto and other financial data, as
to which such counsel need make no statement) on the date thereof and the date
of such opinion contained any untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(k) All proceedings taken in connection with the sale of the Firm Shares
and the Option Shares as herein contemplated shall be reasonably satisfactory in
form and substance to the Representatives, and their counsel and the
Underwriters shall have received from Skadden, Arps, Slate, Xxxxxxx & Xxxx
(Illinois) a favorable opinion, addressed to the Representatives and dated such
Closing Date, with respect to the Shares, the Registration Statement and the
Prospectus, and such other related matters, as the Representatives may
reasonably request, and the Company shall have furnished to Skadden, Arps,
Slate, Xxxxxxx & Xxxx (Illinois) such documents as they may reasonably request
for the purpose of enabling them to pass upon such matters.
(l) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section 4(n).
(m) The Company shall have furnished or caused to be furnished to the
Representatives such further certificates or documents as the Representatives
shall have reasonably requested.
7. Covenants of the Company.
------------------------
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and
any amendments thereto, to become effective as promptly as possible. The
Company shall prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the
second business day following the execution and
32
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Securities Act.
(ii) The Company shall promptly advise the Representatives in writing
(i) when the Registration Statement and any amendment thereto shall have
become effective, (ii) of the receipt of any comments from the Commission
or of any request by the Commission for any amendment of the Registration
Statement or the Prospectus or for any additional information, (iii) of the
prevention or suspension of the use of any Preliminary Prospectus or the
Prospectus or of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
suspension of qualification of the Shares for the offering or sale in any
jurisdiction or the institution or threatening of any proceeding for that
purpose and (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company shall give notice to the Representatives of its
intent to file any amendment of the Registration Statement or supplement to
the Prospectus and the Company shall not file any such amendment or
supplement unless the Company has furnished the Representatives a copy for
their review prior to filing and shall not file any such proposed amendment
or supplement to which the Representatives reasonably object. The Company
shall use its best efforts to prevent the issuance of any such stop order
or order suspending the qualification or exemption of the Shares under any
state securities or Blue Sky laws and, if issued, to obtain as soon as
possible the withdrawal thereof.
(iii) The Company shall promptly advise the Representatives in writing
if, at any time when a prospectus relating to the Shares is required to be
delivered under the Securities Act and the Rules or the Exchange Act, any
change, event, occurrence which could result in such a change, in the
Company's condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company or the happening of any event
occurs as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the
Securities Act or the Rules, the Company promptly shall prepare and file
with the Commission, subject to the second sentence of paragraph (ii) of
this Section 7(a), an amendment or supplement which shall correct such
statement or omission or an amendment which shall effect such compliance.
33
(iv) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not later
than 45 days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective Date occurs
(or 90 days if such 12-month period coincides with the Company's fiscal
year), an earnings statement (which need not be audited) of the Company,
covering such 12-month period, which shall satisfy the provisions of
Section 11(a) of the Securities Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives and counsel
for the Underwriters, without charge, as many signed copies of the
Registration Statement (including all exhibits thereto and amendments
thereof) as the Representatives may reasonably request and to each other
Underwriter a copy of the Registration Statement (without exhibits thereto)
and all amendments thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or the Rules,
as many copies of any Preliminary Prospectus and the Prospectus and any
amendments thereof and supplements thereto as the Representatives may
reasonably request. If applicable, the copies of the Registration Statement
and Prospectus and each amendment and supplement thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(vi) During the period of five years hereafter, the Company will
furnish the Representatives (A) as soon as available, a copy of each report
of the Company mailed to stockholders or filed with the Commission, and (B)
from time to time such other information concerning the Company as the
Representatives may reasonably request.
(vii) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale in
connection with the offering under the laws of such jurisdictions as the
Representatives may designate and shall maintain such qualifications in
effect so long as required for the distribution of the Shares; provided,
however, that the Company shall not be required in connection therewith, as
a condition thereof, to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or subject itself
to taxation as doing business in any jurisdiction.
(viii) The Company, during the period when the Prospectus is required
to be delivered under the Securities Act and the Rules or the Exchange Act,
will file all documents required to be filed with the
34
Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the
time periods required by the Exchange Act and the regulations promulgated
thereunder.
(ix) Without the prior written consent of CIBC World Markets Corp.,
for a period of 90 days after the date of the Prospectus, the Company shall
not issue, sell or register with the Commission (other than on Form S-8 or
on any successor form), or otherwise dispose of, directly or indirectly,
any equity securities of the Company (or any securities convertible into,
exercisable for or exchangeable for equity securities of the Company),
except for the issuance of the Shares pursuant to the Registration
Statement and the issuance of shares pursuant to the Company's existing
stock option plan or bonus plan as described in the Registration Statement
and the Prospectus.
(x) On or before completion of this offering, the Company shall
make all filings required under applicable securities laws and by the
Nasdaq National Market (including any required registration under the
Exchange Act).
(xi) The Company has furnished or will furnish to the
Representatives the Lock-up Agreements, in form and substance satisfactory
to the Representatives, signed by each of its current officers and
directors designated by the Representatives.
(xii) The Company will supply the Underwriters with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the
Securities Act.
(xiii) Prior to the Closing Date, the Company shall furnish to the
Underwriters, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company, for any periods
subsequent to the periods covered by the financial state ments appearing in
or incorporated by reference in the Registration Statement and the
Prospectus.
(xiv) Prior to the later of (i) the Firm Shares Closing Date and (ii)
the Option Shares Closing Date, if any, the Company will issue no press
release or other communications directly or indirectly and hold no press
conference with respect to the Company, the condition, financial or
otherwise, or the earnings, business affairs or business prospects of any
of them, or the offering of the Shares without the prior written consent of
the Representatives unless in the judgment of the Company
35
and its counsel, and after notification to the Representatives, such
press release or communication is required by law.
(xv) The Company will apply the net proceeds from the offering
of the Shares in the manner set forth under "Use of Proceeds" in the
Prospectus.
(xvi) The Company has not taken, nor will it take, directly or
indirectly, any action designed to, or that might reasonably be
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.
(xvii) The Company will use its best efforts to maintain the
quotation of the Common Stock (including the Shares) on the Nasdaq
National Market and will file with the Nasdaq National Market all
documents and notices required by the Nasdaq National Market of
companies that have shares that are traded in the over-the-counter
market and quotations for which are reported by the Nasdaq National
Market.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each Preliminary
Prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities or Blue
Sky laws of the various jurisdictions referred to in Section 7(a)(vii),
including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Representatives and to the Underwriters of
copies of each Preliminary Prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by
this Section to be so furnished, as may be reasonably requested for use in
connection with the offering and sale of the Shares by the Underwriters or
by dealers to whom Shares may be sold; (v) the filing fees of the NASD in
connection with its review of the terms of the public offering and
reasonable fees and disbursements of counsel for the Underwriters in
connection with such review; (vi) inclusion of the Shares for quotation on
the Nasdaq National Market; (vii) all transfer taxes, if any, with respect
to the sale and delivery of the Shares by the Company to the Underwriters
and (vii) all roadshow expenses.
36
Subject to the provisions of Section 10, the Underwriters agree to pay,
whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the performance
of the obligations of the Underwriters under this Agreement not payable by
the Company pursuant to the preceding sentence, including, without
limitation, the fees and disbursements of counsel for the Underwriters.
8. Indemnification.
----------------
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against
any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal and other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act or other Federal
or state law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading; (ii) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus or the Prospectus or any amend ment thereof or supplement
thereto, or any 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 any Blue Sky application or other information or
other documents executed by the Company filed in any state or other
jurisdiction to qualify any or all of the Shares under the securities laws
thereof (any such application, document or information being hereinafter
referred to as a "Blue Sky Application"); (iv) any untrue statement or
alleged untrue statement of any material fact contained in any audio or
visual materials provided by the Company or based upon written information
furnished by or on behalf of the Company including, without limitation,
slides, videos, films, tape recordings, used in connection with the
marketing of the Securities, including, without limitation, statements
communicated to securities analysts employed by the Underwriters; (v) in
whole or in part, any breach of the representations and warranties set
forth in Section 4 hereof; or (vi) in whole or in part, any failure of the
Company to perform any of its obligations hereunder or under law; provided,
however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of any
losses, claims, damages or liabilities arising from the sale of the Shares
to any person by such Underwriter if such untrue statement or omission or
alleged
37
untrue statement or omission was made in such Preliminary Prospectus, the
Registration Statement or the Prospectus, or such amendment or supplement
thereto, or in any Blue Sky Application in reliance upon and in conformity
with information furnished in writing to the Company by the Representatives
on behalf of any Underwriter expressly for use therein. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, each director of the Company, and each officer of
the Company who signs the Registration Statement, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only insofar
as such losses, claims, damages or liabilities arise out of or are based
upon any untrue statement or omission or alleged untrue statement or
omission which was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment thereof or supplement
thereto, contained in the (i) concession and reallowance figures appearing
under the caption "Underwrit ing" and (ii) the stabilization information
contained under the caption "Under writing" in the Prospectus; provided,
however, that the obligation of each Underwriter to indemnify the Company
(including any controlling person, director or officer thereof) shall be
limited to the net proceeds received by the Company from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 8(a) or 8(b) shall be available to
any party who shall fail to give notice as provided in this Section 8(c) if
the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
that it may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the indemnify
ing party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the
38
indemnifying party shall not be liable to such indemnified party for any
legal or other expenses, except as provided below and except for the
reasonable costs of investigation subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall
have the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the indemnified
party shall have been advised by counsel that there may be one or more
legal defenses available to it which are different from or in addition to
those available to the indemnifying party (in which case the indemnifying
parties shall not have the right to direct the defense of such action on
behalf of the indemnified party) or (iii) the indemnifying parties shall
not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without its
written consent, which consent shall not be unreasonably withheld or
delayed.
9. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnification provided for in
Section 8(a) or 8(b) is due in accordance with its terms but for any reason is
held to be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b), then each indemnifying party shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by any person entitled hereunder
to contribution from any person who may be liable for contribution) to which the
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares or, if such allocation
is not permitted by applicable law or indemnification is not available as a
result of the indemnifying party not having received notice as provided in
Section 8 hereof, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts but before deducting expenses) received by the
Company, as set forth in the table on the cover page of the Prospectus, bear to
(y) the underwriting discounts received by the Underwriters, as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company or
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of
39
a material fact related to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this Section
9, (i) in no case shall any Underwriter (except as may be provided in the
Agreement Among Underwriters) be liable or responsible for any amount in excess
of the underwriting discount applicable to the Shares purchased by such
Underwriter hereunder; and (ii) the Company shall be liable and responsible for
any amount in excess of such underwriting discount; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 9, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act shall
have the same rights to contribution as such Underwriter, and each person, if
any, who controls the Company within the meaning of the Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to clauses (i) and (ii) in the immediately preceding sentence of this
Section 9. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section, notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties from whom
contribution may be sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent. The Underwriter's obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
10. Termination. This Agreement may be terminated with respect to
-----------
the Shares to be purchased on a Closing Date by the Representatives by notifying
the Company at any time
(a) in the absolute discretion of the Representatives at or before any
Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Represen tatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with the
offering; (iii) if there shall be such a material adverse change
40
in general financial, political or economic conditions or the effect of
interna tional conditions on the financial markets in the United States is
such as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares; (iv) if trading in the Shares has been
suspended by the Commission or trading generally on the New York Stock
Exchange, Inc., on the American Stock Exchange, Inc. or the Nasdaq National
Market has been suspended or limited, or minimum or maximum ranges for
prices for securities shall have been fixed, or maximum ranges for prices
for securities have been required, by said exchanges or by order of the
Commission, the NASD, or any other governmental or regulatory authority; or
(v) if a banking moratorium has been declared by any state or Federal
authority; or (vi) if, in the judgment of the Representatives, there has
occurred a Material Adverse Effect, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 6 shall not have been fulfilled when and as required
by this Agree ment.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that (y) if this Agreement
is terminated by the Representatives or the Underwriters because of any failure,
refusal or inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contempla tion of performing their
obligations hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by it under this Agreement, without
some reason sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the Company
or to the other Underwriters for damages occasioned by its failure or refusal.
11. Substitution of Underwriters. If one or more of the Underwriters
----------------------------
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 10) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of
41
the nondefaulting Underwriters shall be obligated to purchase such Shares
on the terms herein set forth in proportion to their respective obligations
hereunder; provided, that in no event shall the maximum number of Shares
that any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 11 by more than one-ninth of such number
of Shares without the written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to one additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares upon
the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
five business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 7(b),
8, 9 and 10. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
12. Miscellaneous. The respective agreements, representations,
-------------
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 8 and 9 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 7(b), 8, 9
and 10 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the
42
Company, and directors and officers of the Company, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser of Shares from any Underwriter merely because of such
purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC World Markets Corp., Xxx Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxxx Xxxxxxxx, with a
copy to Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois), 000 Xxxx Xxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 Attention: Xxxx X. Xxxxxxxxx and (b) if to
the Company, to its agent for service as such agent's address appears on the
cover page of the Registration Statement with a copy to Xxxxxxx Xxxxx & Xxxxxxx,
000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000 Attention: Xxxxx Xxxxxxxxxxx
and Xxxxx X. Xxxxxxxxx.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
NPS PHARMACEUTICALS, INC.
By:_____________________________
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
PRUDENTIAL SECURITIES INCORPORATED
XXXXXXXXX XXXXXXXX, INC.
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By: CIBC WORLD MARKETS CORP.
43
By:__________________________
Title:
44
SCHEDULE I
Number of
Name Firm Shares to be Purchased
---- ----------------------------
CIBC World Markets Corp.
Prudential Securities Incorporated
Xxxxxxxxx Xxxxxxxx, Inc.
Total
=============
45
