ST&B DRAFT
10/23/97
2,500,000 Shares of Common Stock
SYNAPTIC PHARMACEUTICAL CORPORATION
UNDERWRITING AGREEMENT
____________, 1997
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX & XXXXX LLC
VECTOR SECURITIES INTERNATIONAL, INC.
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Dear Sirs:
Synaptic Pharmaceutical Corporation, a corporation organized and
existing under the laws of the State of Delaware (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
several underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of 2,500,000 shares (the "Firm Shares") of its common stock, par value
$.01 per share (the "Common Stock"), and, for the sole purpose of covering
over-allotments in connection with the sale of the Firm Shares, at the option of
the Underwriters, up to an additional 375,000 shares (the "Additional Shares")
of Common Stock. The Firm Shares and any Additional Shares purchased by the
Underwriters are referred to herein as the "Shares". The Shares are more fully
described in the Registration Statement referred to below.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and has filed an amendment or
amendments thereto, on Form S-3 (No. 333-37425), for the registration of the
Shares under the Securities Act of 1933, as amended (the "Act"). Such
registration statement, including the prospectus, financial statements and
schedules, exhibits and all other documents filed as a part thereof, as amended
at the time of effectiveness of the registration statement, including any
information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A or Rule 434 of the Rules and Regulations of the
Commission under the Act (the "Regulations"), is herein called the
"Registration Statement" and the prospectus, in the form first filed with the
Commission pursuant to Rule 424(b) of the Regulations or filed as part of the
Registration Statement at the time of effectiveness if no Rule 424(b) or Rule
434 filing is required, is herein called the "Prospectus". If the Company
has filed an abbreviated registration statement to register an additional
number of shares pursuant to Rule 462(b) under the Act (the "Rule 462
Registration Statement"), then any reference herein to the term "Registration
Statement" shall include such Rule 462 Registration Statement. The term
"preliminary prospectus" as used herein means a preliminary prospectus as
described in Rule 430 of the Regulations. Any reference herein to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") on or before the
effective date of the Registration Statement, the date of such preliminary
prospectus or the date of the Prospectus, as the case may be, and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include (i) the filing of any
document under the Exchange Act after the effective date of the Registration
Statement, the date of such preliminary prospectus or the date of the
Prospectus, as the case may be, which is incorporated therein by reference,
and (ii) any such document so filed.
(b) At the time of the effectiveness of the Registration Statement or
the effectiveness of any post-effective amendment to the Registration Statement,
when the Prospectus is first filed with the Commission pursuant to Rule 424(b)
or Rule 434 of the Regulations, when any supplement to or amendment of the
Prospectus is filed with the Commission, when any document filed under the
Exchange Act is filed and at the Closing Date and the Additional Closing Date,
if any, (as hereinafter respectively defined), each of the Registration
Statement and the Prospectus and any amendments thereof and supplements thereto
complied or will comply in all material respects with the applicable provisions
of the Act and the Regulations and the Exchange Act and the respective rules and
regulations thereunder and does not or will not contain an untrue statement of a
material fact and does not or will not omit to state any material fact required
to be stated therein or necessary in order to make the statements therein (i) in
the case of the Registration Statement, not misleading and (ii) in the case of
the Prospectus, in light of the circumstances under which they were made, not
misleading. When any related preliminary prospectus was first filed with the
Commission (whether filed as part of the registration statement for the
registration of the Shares or any amendment thereto or pursuant to Rule 424(a)
or 424(b)(2) of the Regulations) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary prospectus and any
amendments thereof and supplements thereto complied in all material respects
with the applicable provisions of the Act and the Regulations and the Exchange
Act and the respective rules and regulations thereunder and did not contain an
untrue statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not
misleading. No representation and warranty is made in this subsection (b),
however, with respect to any information contained in
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or omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through you as herein stated
expressly for use in connection with the preparation thereof. If Rule 434 is
used, the Company will comply with the requirements of Rule 434.
(c) Ernst & Young LLP, who have certified the financial statements
included or incorporated by reference in the Registration Statement, are
independent public accountants as required by the Act and the Regulations.
(d) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth in
the Registration Statement and the Prospectus, there has been no material
adverse change or any development involving a prospective material adverse
change in the business, prospects, properties, operations, condition (financial
or other) or results of operations of the Company, whether or not arising from
transactions in the ordinary course of business (a "Material Adverse Change"),
and since the date of the latest balance sheet presented in the Registration
Statement and the Prospectus, the Company has not incurred or undertaken any
liabilities or obligations, direct or contingent, which are material to the
Company, except for liabilities or obligations which are reflected in the
Registration Statement and the Prospectus.
(e) This Agreement and the transactions contemplated herein have been
duly and validly authorized by the Company and this Agreement has been duly and
validly executed and delivered by the Company.
(f) The Company is not in violation of its certificate of
incorporation or by-laws, or in default in the performance or observation of
any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company is a party, by which it
may be bound or to which any of its property or assets is subject. The
execution, delivery, and performance of this Agreement and the consummation
of the transactions contemplated hereby do not and will not (i) conflict with
or result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
pursuant to, any agreement, instrument, franchise, license or permit to which
the Company is a party or by which its properties or assets may be bound or
(ii) violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company or any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or any of its
properties or assets. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any court
or any public, governmental or regulatory agency or body having jurisdiction
over the Company or any of its properties or assets is required for the
execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby, including the issuance, sale and
delivery of the Shares to be issued, sold and delivered by the Company
hereunder, except the registration under the Act of the Shares and such
consents,
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approvals, authorizations, orders, registrations, filings, qualifications,
licenses and permits as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by the
Underwriters.
(g) All of the outstanding shares of Common Stock of the Company are
duly and validly authorized and issued, fully paid and nonassessable and were
not issued and are not now in violation of or subject to any preemptive rights.
The Shares, when issued, delivered and sold in accordance with this Agreement,
will be duly and validly issued and outstanding, fully paid and nonassessable,
and will not have been issued in violation of or be subject to any preemptive
rights. The Company had, at __________, 1997, an authorized and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
The Common Stock, the Firm Shares and the Additional Shares conform to the
descriptions thereof contained in the Registration Statement and the Prospectus.
(h) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company is duly qualified and in good standing as a foreign corporation in the
State of New Jersey and in each other jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or conduct
of its business makes such qualification necessary, except for those failures to
be so qualified or in good standing which will not in the aggregate have a
material adverse effect on the business, prospects, properties, operations,
condition (financial or other) or the results of operations of the Company (a
"Material Adverse Effect"). The Company has all requisite power and authority,
and all necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate its properties and
conduct its business as now being conducted and as described in the Registration
Statement and the Prospectus, and no such consent, approval, authorization,
order, registration, qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the Registration Statement
and the Prospectus.
(i) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company is a party or to which any of its
property is subject or which is pending or, to the knowledge of the Company,
contemplated against the Company which might result in any Material Adverse
Change or which is required to be disclosed in the Registration Statement and
the Prospectus.
(j) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares or any action resulting in a violation of Regulation M
under the Exchange Act.
(k) The financial statements, including the notes thereto, and
supporting schedules included or incorporated by reference in the Registration
Statement and the Prospectus present fairly the financial position of the
Company as of the dates indicated and the results of its operations for the
periods specified; except as otherwise stated in the
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Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis; and the supporting schedules included or incorporated by
reference in the Registration Statement present fairly the information
required to be stated therein.
(l) Except as described in the Prospectus, no holder of securities of
the Company has any rights to the registration of securities of the Company
because of the filing of the Registration Statement or otherwise in connection
with the sale of the Shares contemplated hereby.
(m) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940.
(n) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(o) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
under the Exchange Act, and, when read together with the other information in
the Prospectus, at the time the Registration Statement and any amendments
thereto become effective and at the Closing Date, will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(p) The Company does not own or control, directly or indirectly, any
corporation, partnership, association or other entity.
(q) No labor dispute with the employees of the Company exists or, to
the knowledge of the Company, is imminent; and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors.
(r) Except as disclosed in the Prospectus, the Company owns or
possesses adequate rights to use the technology, patents, patent
applications, patent rights, inventions, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), proprietary techniques (including
processes and substances), trademarks, service marks, trademark
registrations, service xxxx registrations, trade names, copyrights and
licenses described or referred to in the Prospectus or which are necessary
for the conduct or its business as described in the Prospectus. Except as
described in the Prospectus, the Company has not received any notice, nor is
aware of, any infringement of or conflict with asserted rights of others with
respect to any such technology, patents, patent applications, patent rights,
inventions, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
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procedures), proprietary techniques (including processes and substances),
trademarks, service marks, trademark registrations, service xxxx
registrations, trade names, copyrights or licenses.
(s) The Company possesses such certificates, authorities, permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business as now
operated by it. The Company is in compliance with all Governmental Licenses.
All of the Governmental Licenses are valid and in full force and effect; and the
Company has not received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses. All of the descriptions in the
Registration Statement and the Prospectus of applicable statutes, rules and
regulations and orders administered or issued by any governmental or regulatory
authority under the captions "Risk Factors -- Stringent Government Regulation;
No Assurance of Regulatory Agency Approval" and "Business -- Government
Regulation" and other references therein to regulatory matters are true and
accurate in all material respects.
(t) Except as described in the Registration Statement, (A) the
Company is not in violation of any federal, state, local or foreign laws or
regulations relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), and (B) there are no events or circumstances that could form the basis
of an order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the Company
relating to any Hazardous Materials or the violation of any Environmental Laws.
(u) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration Statement
by the Act or by the Regulations which have not been described in the Prospectus
or filed as exhibits to the Registration Statement.
(v) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
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(w) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities, (ii)
entered into any transaction not in the ordinary course of business or (iii)
declared or paid any dividend on its capital stock.
(x) Each of the executive officers and directors of the Company and
certain other stockholders of the Company, who will in the aggregate own
_________ shares of Common Stock upon the completion of the offering of the
Shares, has entered into or is subject to a lock-up agreement (the "Lock-Up
Agreements") under which such stockholder has agreed, subject to certain limited
exceptions, not to, directly or indirectly, offer for sale, sell, agree to sell,
distribute, contract to sell, make a short sale, grant any option for the sale
of or otherwise dispose of, transfer or engage in any hedging or other
transaction that is designed or reasonably expected to lead to a disposition of
(or announce any such offer, sale, agreement, distribution, contract, short
sale, grant of an option or other disposition or transaction relating to) any
shares of Common Stock, any option or warrant to purchase shares of Common Stock
or any securities convertible into, exercisable for or exchangeable for shares
of Common Stock owned by them for a period of 90 days after the date of the
Prospectus, without the prior written consent of Bear, Xxxxxxx & Co. Inc.,
acting alone, or the Representatives, acting jointly; each Lock-Up Agreement
constitutes the legal, valid and binding obligations of the stockholder or
stockholders party thereto enforceable against each such stockholder in
accordance with its terms.
(y) Except as set forth in the Prospectus, the Company is in
compliance in all material respects with all applicable laws, statutes,
ordinances, rules or regulations.
(z) Except as disclosed in the Prospectus, the Company has good and
marketable title to all properties (real and personal) owned by the Company,
free and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described in the
Prospectus or (b) do not, singly or in the aggregate, materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company; and all properties held
under lease by the Company are held under valid, subsisting and enforceable
leases.
(aa) Except as disclosed in the Registration Statement, there are no
outstanding options, warrants, or other rights calling for the issuance of, and
no commitments, plans or arrangements to issue, any shares of capital stock of
the Company or any security convertible into or exchangeable for capital stock
of the Company.
(ab) The Company has complied with, and is and will be in compliance
with, the provisions of that certain Florida act relating to disclosure of doing
business with Cuba, codified as Section Section 17.075 of the Florida statutes,
and the rules and regulations thereunder or is exempt therefrom.
(ac) The Company has filed all federal, state, local and foreign tax
returns that are required to be filed or has duly requested extensions
thereof and has paid all taxes required to be paid by it and any related
assessments, fines or penalties, except for any such
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tax, assessment, fine or penalty that is being contested in good faith and by
appropriate proceedings; and adequate charges, accruals and reserves have
been provided for in the financial statements referred to in Section
1(a)(iii) above in respect of all material federal, state, local and foreign
taxes for all periods as to which the tax liability of the Company has not
been finally determined or remains open to examination by applicable taxing
authorities.
(ad) The Company carries or is entitled to the benefits of insurance
in such amounts and covering such risks as it reasonably believes are
sufficient; all such insurance is in full force and effect.
(ae) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general and specific authorizations, (ii)
transactions are recorded as necessary to permit preparations of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorizations, and (iv) the recorded accountability for assets in
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(af) Each of the Collaborative Agreements (as defined in the
Prospectus) has been duly authorized, executed and delivered by the Company and
is in full force and effect.
(ag) The Shares are authorized for inclusion in the National Market
tier of The Nasdaq Stock Market ("Nasdaq").
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price per share of $_______, the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto plus any additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the office of Xxxxxxx Xxxxxxx & Xxxxxxxx,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as shall
be agreed upon by you and the Company, at 10:00 A.M. on the third or fourth
business day (as permitted under Rule 15c6-1 under the Exchange Act) (unless
postponed in accordance with the provisions of Section 9 hereof) following the
date of the effectiveness of the Registration Statement (or, if the Company has
elected to rely upon Rule 430A of the Regulations, the third or fourth business
day (as permitted under Rule 15c6-1 under the Exchange Act) after the
determination of the initial public offering price of the Firm Shares), or such
other time not later than ten business days after such date as shall be agreed
upon by you and the Company (such time and date of payment and delivery being
herein called the "Closing Date").
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Payment shall be made to the Company [by certified or official bank check or
checks drawn in federal funds or similar same day funds payable to the
order of the Company] [by wire transfer in same day funds], against delivery
to you for the respective accounts of the Underwriters of certificates for the
Firm Shares to be purchased by them. Certificates for the Firm Shares shall be
registered in such name or names and in such authorized denominations as you
may request in writing at least two full business days prior to the Closing
Date. The Company will permit you to examine and package such certificates for
delivery at least one full business day prior to the Closing Date.
(c) In addition, the Company hereby grants to the Underwriters the
option to purchase up to 375,000 Additional Shares at the same purchase price
per share to be paid by the Underwriters to the Company for the Firm Shares
as set forth in this Section 2, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option
may be exercised at any time, in whole or in part, on or before the thirtieth
day following the date of the Prospectus, by written notice by you to the
Company. Such notice shall set forth the aggregate number of Additional
Shares as to which the option is being exercised and the date and time, as
reasonably determined by you, when the Additional Shares are to be delivered
(such date and time being herein sometimes referred to as the "Additional
Closing Date"); PROVIDED, HOWEVER, that the Additional Closing Date shall not
be earlier than the Closing Date or earlier than the second full business day
after the date on which the option shall have been exercised nor later than
the eighth full business day after the date on which the option shall have
been exercised (unless such time and date are postponed in accordance with
the provisions of Section 9 hereof). Certificates for the Additional Shares
shall be registered in such name or names and in such authorized
denominations as you may request in writing at least two full business days
prior to the Additional Closing Date. The Company will permit you to examine
and package such certificates for delivery at least one full business day
prior to the Additional Closing Date.
The number of Additional Shares to be sold to each Underwriter shall
be the number which bears the same ratio to the aggregate number of Additional
Shares being purchased as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto (or such number increased as set forth
in Section 9 hereof) bears to 2,500,000, subject, however, to such adjustments
to eliminate any fractional shares as you in your sole discretion shall make.
Payment for the Additional Shares shall be made [by certified or
official bank check or checks drawn in federal funds or similar same day funds,
payable to the order of the Company] [by wire transfer in same day funds] at the
offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or such other location as may be mutually acceptable, upon delivery of
the certificates for the Additional Shares to you for the respective accounts of
the Underwriters.
3. OFFERING. Upon your authorization of the release of the Firm
Shares, the Underwriters propose to offer the Shares for sale to the public upon
the terms set forth in the Prospectus.
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4. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the Underwriters that:
(a) If the Registration Statement has not yet been declared effective
the Company will use its best efforts to cause the Registration Statement and
any amendments thereto to become effective as promptly as possible, and if Rule
430A is used or the filing of the Prospectus is otherwise required under Rule
424(b) or Rule 434, the Company will file the Prospectus (properly completed if
Rule 430A has been used) pursuant to Rule 424(b) or Rule 434 within the
prescribed time period and will provide evidence satisfactory to you of such
timely filing. If the Company elects to rely on Rule 434, the Company will
prepare and file a term sheet that complies with the requirements of Rule 434.
If the Company elects to rely on Rule 462(b), the Company will file a Rule
462(b) Registration Statement with the Commission by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company will at the time of
filing either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment of such
fee pursuant to Rule 111(b) under the Securities Act; and such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement.
The Company will notify you immediately (and, if requested by you,
will confirm such notice in writing) (i) when the Registration Statement and any
amendments thereto become effective, (ii) of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor, (v) of the receipt of any comments from the
Commission, and (vi) 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 that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the preliminary prospectus or the
Prospectus (including the prospectus required to be filed pursuant to Rule
424(b) or Rule 434) that differs from the prospectus on file at the time of the
effectiveness of the Registration Statement before or after the effective date
of the Registration Statement or file any document under the Exchange Act if
such document would be deemed to be incorporated by reference into the
Prospectus to which you shall reasonably object in writing after being timely
furnished in advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would, in the
judgment of the Underwriters or the Company include an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances
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under which they were made, not misleading, or if it shall be necessary at
any time to amend or supplement the Prospectus or Registration Statement to
comply with the Act or the Regulations, or to file under the Exchange Act so
as to comply therewith any document incorporated by reference in the
Registration Statement or the Prospectus or in any amendment thereof or
supplement thereto, the Company will notify you promptly and prepare and file
with the Commission an appropriate amendment or supplement (in form and
substance satisfactory to you) which will correct such statement or omission
or which will effect such compliance and will use its best efforts to have
any amendment to the Registration Statement declared effective as soon as
possible.
(c) The Company will promptly deliver to you three manually signed
copies of the Registration Statement, including exhibits and all documents
incorporated by reference therein and all amendments thereto, and the Company
will promptly deliver to each of the Underwriters such number of copies of any
preliminary prospectus, the Prospectus, the Registration Statement, all
amendments of and supplements to such documents, if any, and all documents
incorporated by reference in the Registration Statement and Prospectus or any
amendment thereof or supplement thereto, without exhibits, as you may reasonably
request.
(d) The Company will endeavor in good faith, in cooperation with you,
at or prior to the time of effectiveness of the Registration Statement, to
qualify the Shares for offering and sale under the securities laws relating to
the offering or sale of the Shares of such jurisdictions as you may designate
and to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 90 days from the date of the Prospectus, the
Company will not, without the prior written consent of Bear, Xxxxxxx & Co. Inc.,
acting alone, or the Representatives, acting jointly, directly or indirectly
issue, offer for sale, sell, agree to sell, distribute, contract to sell, make a
short sale, grant any option for the sale of, or otherwise dispose of, transfer,
or engage in any hedging or other transaction that is designed or reasonably
expected to lead to a disposition of (or announce any such issuance, offer,
sale, agreement, distribution, contract, short sale, grant of an option or other
disposition or transaction relating to) any shares of Common Stock, any option
or warrant to purchase shares of Common Stock or any securities convertible
into, exercisable for or exchangeable for Common Stock, other than the Company's
sale of Shares hereunder, the Company's issuance of Common Stock upon the
exercise of stock options or other rights presently outstanding and in
connection with transactions involving the Company such as joint ventures,
acquisitions, mergers or similar transactions.
11
(g) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports to its shareholders; and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or
any national securities exchange.
(h) The Company will apply the proceeds from the sale of the Shares
as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares to be
authorized for inclusion on Nasdaq.
(j) The Company, during the period when the Prospectus is required to
be delivered under the Act or the Exchange Act, will file all documents required
to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange
Act within the time periods required by the Exchange Act and the rules and
regulations thereunder.
5. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the
performance of the obligations of the Company hereunder, including those in
connection with (i) preparing, printing, duplicating, filing and distributing
the Registration Statement, as originally filed and all amendments thereof
(including all exhibits thereto), any preliminary prospectus, the Prospectus and
any amendments or supplements thereto (including, without limitation, fees and
expenses of the Company's accountants and counsel), the underwriting documents
(including this Agreement) and all other documents related to the public
offering of the Shares (including those supplied to the Underwriters in
quantities as hereinabove stated), (ii) the issuance, transfer and delivery of
the Shares to the Underwriters, including any transfer or other taxes payable
thereon, (iii) the qualification of the Shares under state or foreign securities
or Blue Sky laws, including the costs of printing and mailing a preliminary and
final "Blue Sky Survey" and the fees of counsel for the Underwriters and such
counsel's disbursements in relation thereto, (iv) quotation of the Shares on
Nasdaq, (v) filing fees of the Commission and the National Association of
Securities Dealers, Inc., (vi) the cost of printing certificates representing
the Shares and (vii) the cost and charges of any transfer agent or registrar.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6, "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Xxxxxxx Xxxxxxx & Xxxxxxxx
("Underwriters' Counsel") pursuant to this Section 6 of any misstatement or
omission, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
12
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York time, on the date of this Agreement, or at such later
time and date as shall have been consented to in writing by you; if the Company
shall have elected to rely upon Rule 430A or Rule 434 of the Regulations, the
Prospectus shall have been filed with the Commission in a timely fashion in
accordance with Section 4(a) hereof; and, at or prior to the Closing Date no
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof shall have been issued and no proceedings
therefor shall have been initiated or threatened by the Commission.
(b) At the Closing Date you shall have received the opinion of Xxxxx
& Xxxxx, L.L.P, counsel for the Company, dated the Closing Date addressed to the
Underwriters and in form and substance satisfactory to Underwriters' Counsel, to
the effect that:
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company has all requisite corporate authority to own, lease and license its
properties and conduct its business as now being conducted and as described
in the Registration Statement and the Prospectus. The Company does not own
or control, directly or indirectly any corporation, partnership,
association or other entity.
(ii) The Company has an authorized capital stock as set forth in the
Registration Statement and the Prospectus. All of the outstanding shares
of Common Stock are duly and validly authorized and issued, are fully paid
and nonassessable and were not issued in violation of or subject to any
preemptive rights. The Shares to be delivered on the Closing Date have
been duly and validly authorized and, when delivered by the Company in
accordance with this Agreement, will be duly and validly issued, fully paid
and nonassessable and will not have been issued in violation of or subject
to any preemptive rights. The Common Stock, the Firm Shares and the
Additional Shares conform to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(iii) The Common Stock currently outstanding is quoted, and the
Shares to be sold under this Agreement to the Underwriters are duly
authorized for quotation, on Nasdaq.
(iv) This Agreement has been duly and validly authorized, executed and
delivered by the Company.
(v) The execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby by the Company do
not and will not (A) conflict with or result in a breach of any of the
terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to, any agreement,
instrument, franchise, license or permit known to such counsel to which the
Company is a party or by which it or its properties or assets may be bound
or (B)
13
violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company, or, to the best knowledge of such
counsel, any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of its properties or assets. No
consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental, or regulatory agency or body having jurisdiction over the
Company or any of its properties or assets is required for the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, except for (1) such as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters (as to which such counsel
need express no opinion) and (2) such as have been made or obtained under
the Act.
(vi) The Registration Statement and the Prospectus and any amendments
thereof or supplements thereto (other than the financial statements and
schedules and other financial data included or incorporated by reference
therein, as to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the Regulations.
The documents filed under the Exchange Act and incorporated by reference in
the Registration Statement and the Prospectus or any amendment thereof or
supplement thereto (other than the financial statements and schedules and
other financial data included or incorporated by reference therein, as to
which no opinion need be rendered) when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder; and such counsel has no
reason to believe that any of such documents, when such documents became
effective or were so filed, as they case may be, contained, in the case of
a registration statement which became effective under the Act, 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, in the case of other documents which were filed under the
Exchange Act with the Commission, an 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 when
such documents were so filed, not misleading.
(vii) The Registration Statement is effective under the Act, and,
to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof has been issued, no proceedings therefor have been initiated or
threatened by the Commission and all filings required by Rule 424(b) of the
Regulations have been made.
(viii) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940.
14
(ix) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements, and with any applicable requirements of the charter and
by-laws of the Company.
(x) Except as disclosed in the Prospectus, to the best of such
counsel's knowledge, there are no outstanding options, warrants or other
rights calling for the issuance of, and no commitments, obligations, plans
or arrangements to issue, any shares of capital stock of the Company or any
security convertible into, exercisable for or exchangeable for capital
stock of the Company. The description thereof contained in the Prospectus,
to the extent that it constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, is true and
accurate in all material respects.
(xi) The information in the Prospectus under "Description of Capital
Stock," to the extent that it constitutes matters of law, summaries of
legal matters, documents or proceedings, or legal conclusions, has been
reviewed by them and is true and accurate in all material respects.
(xii) The statements contained in the Prospectus under the captions
"Risk Factors -- Stringent Government Regulation; No Assurance of
Regulatory Agency Approval" and "Business -- Government Regulation" and
other references therein to food and drug regulatory matters are complete,
true and accurate in all material respects.
(xiii) Each of the executive officers and directors of the Company and
certain other stockholders of the Company, who will in the aggregate own
________ shares of Common Stock upon completion of the offering of the
Shares, has entered into or is subject to a Lock-Up Agreement under which
such stockholder has agreed, subject to certain limited exceptions, not to,
directly or indirectly, offer for sale, sell, agree to sell, distribute,
contract to sell, make a short sale, grant any option for the sale of or
otherwise dispose of, transfer, or engage in any hedging or other
transaction that is designed or reasonably expected to lead to a
disposition of (or announce any such, offer, sale, agreement, distribution,
contract, short sale, grant of an option or other disposition or
transaction relating to) any shares of Common Stock, any option or warrant
to purchase shares of Common Stock or securities convertible into,
exercisable for or exchangeable for Common Stock owned by them for a period
of 90 days after the date of the Prospectus, without the prior written
consent of Bear, Xxxxxxx & Co. Inc., acting alone, or the Representatives,
acting jointly; each Lock-Up Agreement constitutes the legal, valid and
binding obligations of the stockholder or stockholders party thereto
enforceable against each such stockholder in accordance with its terms.
(xiv) In addition, such opinion shall also contain a statement that
such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company and the Underwriters at which the contents and
the Prospectus and related matters were discussed, and no facts have come
to the attention of such counsel which would lead
15
such counsel to believe that either the Registration
Statement at the time it became effective (including the
information deemed to be part of the Registration Statement
at the time of effectiveness pursuant to Rule 430A(b) or Rule 434, if
applicable), or any amendment thereof made prior to the Closing Date as of
the date of such amendment, contained an untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus as of its date (or any amendment thereof or supplement thereto
made prior to the Closing Date as of the date of such amendment or
supplement) and as of the Closing Date contained or contains an untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
(it being understood that such counsel need express no belief or opinion
with respect to the financial statements and schedules and other financial
data included or incorporated by reference therein).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel. The opinion of such
counsel for the Company shall state that the opinion of any such other counsel
is in form satisfactory to such counsel and, in their opinion, you and they are
justified in relying thereon.
(c) At the Closing Date you shall have received the opinion of Xxxx
X. Xxxxxx, General Counsel for the Company, dated the Closing Date addressed to
the Underwriters and in form and substance satisfactory to Underwriters'
Counsel, to the effect that:
(i) The Company is duly qualified and in good standing as a foreign
corporation in the State of New Jersey and in each other jurisdiction in
which the character or location of its properties (owned, leased or
licensed) or the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good standing
which will not in the aggregate have a Material Adverse Effect.
(ii There is no litigation or governmental or other action, suit,
proceeding or investigation before any court or before or by any public,
regulatory or governmental agency or body pending or to the best of such
counsel's knowledge, threatened against, or involving the properties or
business of, the Company which is of
16
a character required to be disclosed in the Registration Statement
and the Prospectus which has not been properly disclosed therein.
(iii) The information in the Prospectus under "Business --
Collaborative Arrangements" and in the Registration Statement under Item 15
to the extent that it constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been reviewed
by such counsel and is true and accurate in all material respects; to the
best of such counsel's knowledge, there are no statutes or regulations, and
no legal or governmental actions, suits or proceedings pending or
threatened against the Company that are not described in the Prospectus.
(iv) There are no franchise agreements, contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments required to
be described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein or filed
as exhibits thereto, and the descriptions thereof or references thereto, to
the extent that they constitute matters of law, summaries of legal matters,
documents or proceedings or legal conclusions have been reviewed by such
counsel and are true and accurate in all material respects.
(v) There are no persons with registration or other similar rights to
have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the Act which have not been
waived.
(vi) Each of the Collaborative Agreements (as defined in the
Prospectus) has been duly authorized, executed and delivered by the Company
and is in full force and effect.
(vii) In addition, such opinion shall also contain a statement that
such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company and the Underwriters at which the contents and
the Prospectus and related matters were discussed and, no facts have come
to the attention of such counsel which would lead such counsel to believe
that either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration Statement
at the time of effectiveness pursuant to Rule 430A(b) or Rule 434, if
applicable), or any amendment thereof made prior to the Closing Date as of
the date of such amendment, contained an untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus as of its date (or any amendment thereof or supplement thereto
made prior to the Closing Date as of the date of such amendment or
supplement) and as of the Closing Date contained or contains an untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
(it being understood that such counsel need express no belief or opinion
with respect to the financial statements and schedules and other financial
data included or incorporated by reference therein).
17
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which such counsel is admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to Underwriters'
Counsel, familiar with the applicable laws; (B) as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible officers of the
Company and certificates or other written statements of officers of departments
of various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company, provided that copies of any such
statements or certificates shall be delivered to Underwriters' Counsel. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and, in such counsel's
opinion, you and they are justified in relying thereon.
(d) At the Closing Date you shall have received the opinion of Xxxxxx
& Xxxxxx, patent counsel for the Company, dated the Closing Date addressed to
the Underwriters and in form and substance satisfactory to Underwriters'
Counsel, to the effect that:
(i) The information in the Prospectus under the captions "Risk
Factors -- Uncertainty of Patent Protection; Dependence on Proprietary
Technology" and "Business -- Patents, Proprietary Technology and Trade
Secrets" accurately describes the intellectual property owned by the
Company and, to the extent that it constitutes matters of law, summaries of
legal matters, documents or proceedings, or legal conclusions, has been
reviewed by them and is true and accurate in all material respects.
(ii) To the best of such counsel's knowledge and except as set forth
in the sections of the Prospectus referred to in clause (d)(i) above, (A)
there are no legal or governmental proceedings pending relating to the
intellectual property owned or used by the Company other than the review of
pending patent applications and (B) no such proceedings, including, without
limitation, interference proceedings, are currently threatened by
governmental authorities or others.
(iii) To the best of such counsel's knowledge, (A) the Company is
not infringing or otherwise violating any rights to intellectual property
owned by others, and (B) the Company is not subject to any current claim or
notice of infringement or other violation of any intellectual property
owned by others.
(iv) Such counsel is familiar with the pending patent applications
filed by the Company (the "Applications") and the Letters Patent issued to
the Company (the "Patents") and (A) to the best of such counsel's
knowledge, the Company is the assignee of record of the Applications and
the Patents, (B) except as set forth in the sections of the Prospectus
referred to in clause (d)(i) above, such counsel is not aware of others who
have asserted ownership rights in the Applications or the Patents, (C) such
counsel has no knowledge of any facts that lead them to conclude that the
18
Company does not have clear title to each of the Applications and the
Patents, and (D) to the best of such counsel's knowledge, each of the
Applications has been filed on behalf of the Company with the United States
Patent and Trademark Office (the "PTO") in accordance with the rules and
regulations of the PTO, and each Application has been awarded a filing date
by the PTO.
(e) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be satisfactory in
form and substance to you and to Underwriters' Counsel, and the Underwriters
shall have received from said Underwriters' Counsel a favorable opinion, dated
as of the Closing Date with respect to the issuance and sale of the Shares, the
Registration Statement and the Prospectus and such other related matters as you
may reasonably require, and the Company shall have furnished to Underwriters'
Counsel such documents as they request for the purpose of enabling them to pass
upon such matters.
(f) At the Closing Date you shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of the Company, dated the
Closing Date to the effect that (i) the condition set forth in subsection (a) of
this Section 6 has been satisfied, (ii) as of the date hereof and as of the
Closing Date the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date the obligations of
the Company to be performed hereunder on or prior thereto have been duly
performed and (iv) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company has not
sustained any material loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any Material Adverse Change, or any
development involving a Material Adverse Change, except in each case as
described in or contemplated by the Prospectus.
(g) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter, from Ernst & Young LLP, independent public
accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in
form and substance satisfactory to you, to the effect that: (i) they are
independent certified public accountants with respect to the Company within
the meaning of the Act and the Regulations and stating that the answer to
Item 10 of the Registration Statement is correct insofar as it relates to
them; (ii) stating that, in their opinion, the financial statements and
schedules of the Company included or incorporated by reference in the
Registration Statement and the Prospectus and covered by their opinion
therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the applicable
published rules and regulations of the Commission thereunder; (iii) on the
basis of procedures consisting of a reading of the latest available unaudited
interim financial statements of the Company, a reading of the minutes of
meetings and consents of the shareholders and boards of directors of the
Company and the committees of such boards subsequent to December 31, 1996,
inquiries of officers and other employees of the Company who have
responsibility for financial and accounting matters of the Company with
respect to transactions and events subsequent to December 31, 1996 and other
specified
19
procedures and inquiries to a date not more than five days prior to the date
of such letter, nothing has come to their attention that would cause them to
believe that: (A) the unaudited financial statements and schedules of the
Company included or incorporated by reference in the Registration Statement
and the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and, if applicable, the
Exchange Act and the applicable published rules and regulations of the
Commission thereunder or that such unaudited financial statements are not
fairly presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements included or incorporated by reference in the
Registration Statement and the Prospectus; (B) with respect to the period
subsequent to June 30, 1997 there were, as of the date of the most recent
available monthly financial statements of the Company and its subsidiaries,
if any, and as of a specified date not more than five days prior to the date
of such letter, any changes in the capital stock or long-term indebtedness of
the Company or any decrease in the net current assets or stockholders' equity
of the Company, in each case as compared with the amounts shown in the most
recent balance sheet presented in the Registration Statement and the
Prospectus, except for changes or decreases which the Registration Statement
and the Prospectus disclose have occurred or may occur or which are set forth
in such letter or (C) that during the period from June 30, 1997 to the date
of the most recent available monthly financial statements of the Company, if
any, and to a specified date not more than five days prior to the date of
such letter, there was any decrease, as compared with the corresponding
period in the prior fiscal year, in total revenues, or total or per share net
income, except for decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur or which are set forth in such
letter; and (iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, and other financial
information pertaining to the Company set forth in the Registration Statement
and the Prospectus, which have been specified by you prior to the date of
this Agreement, to the extent that such amounts, numbers, percentages, and
information may be derived from the general accounting and financial records
of the Company or from schedules furnished by the Company, and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries, and other
appropriate procedures specified by you set forth in such letter, and found
them to be in agreement.
(h) Prior to the Closing Date the Company shall have furnished to you
such further information, certificates and documents as you may reasonably
request.
(i) You shall have received from each person who is a director or
executive officer of the Company and from such stockholders as have been
heretofore designated by you an agreement to the effect that such person will
not, subject to certain limited exceptions, directly or indirectly, offer for
sale, sell, agree to sell, distribute, contract to sell, make a short sale,
grant any option for the sale of or otherwise dispose of, transfer or engage in
any hedging or other transaction that is designed or reasonably expected to lead
to a disposition of (or announce any such offer, sale, agreement, distribution,
contract, short sale, grant of an option or other disposition or transaction
relating to) any shares of Common Stock, any option or warrant to purchase
shares of Common Stock or any securities convertible into, exercisable for or
exchangeable for shares of Common Stock for a period of
20
90 days after the date of the Prospectus without the prior written consent of
Bear, Xxxxxxx & Co. Inc., acting alone, or the Representatives, acting
jointly.
(j) At the Closing Date, the Shares shall have been approved for
quotation Nasdaq.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by you at, or at any time prior to, the Closing Date, and the
obligations of the Underwriters to purchase the Additional Shares may be
cancelled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company in writing, or by
telephone, telex or telegraph, confirmed in writing.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that the Company will not be liable in any such case to the
extent but only to the extent that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have, including any liability under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company, each of the directors of the
Company, each of the officers of the Company who shall have signed the
Registration Statement, and each other person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and any
and all expenses whatsoever
21
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts
paid in settlement of any claim or litigation), jointly or several, to which
they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement for the registration of the Shares, as originally
filed or any amendment thereof, or any related preliminary prospectus or the
Prospectus, or in any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that any such loss, liability, claim, damage or expense arises
out of or is based upon any such untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of any Underwriter through you expressly for use therein; PROVIDED, HOWEVER,
that in no case shall any Underwriter be liable or responsible for any amount
in excess of the underwriting discount applicable to the Shares purchased by
such Underwriter hereunder. This indemnity will be in addition to any
liability which any Underwriter may otherwise have, including any liability
under this Agreement. The Company acknowledges that the statements set forth
in the last paragraph of the cover page and in the third, eighth and ninth
paragraphs under the caption "Underwriting" in the Prospectus constitute the
only information furnished in writing by or on behalf of any Underwriter
expressly for use in the registration statement relating to the Shares as
originally filed or in any amendment thereof, any related preliminary
prospectus or the Prospectus or in any amendment thereof or supplement
thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party
22
or parties), in any of which events such fees and expenses shall be borne by
the indemnifying parties. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action effected without its written consent; PROVIDED,
HOWEVER, that such consent was not unreasonably withheld.
8. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 7 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company and the Underwriters in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and (y) the underwriting discounts and commissions
received by the Underwriters, respectively, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company
and of the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder, and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding the provisions of this Section 8
and the preceding sentence, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at
23
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. For purposes of this Section 8,
each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act shall have the
same rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed
the Registration Statement and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of this Section 8. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution
may be made against another party or parties, notify each party or parties
from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise. No party shall be liable for contribution with
respect to any action or claim settled without its consent; PROVIDED,
HOWEVER, that such consent was not unreasonably withheld.
9. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, then such Firm Shares or Additional Shares to which the
default relates shall be purchased by the non-defaulting Underwriters in
proportion to the respective proportions which the numbers of Firm Shares set
forth opposite their respective names in Schedule I hereto bear to the aggregate
number of Firm Shares set forth opposite the names of the non-defaulting
Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, you may in your discretion
arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within 5 calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Section 5, 7(a) and 8 hereof) or the Underwriters, but nothing in
this Agreement shall relieve a defaulting Underwriter or Underwriters of its or
their liability, if any, to the other Underwriters and the Company for damages
occasioned by its or their default hereunder.
24
(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Additional Closing Date, as
the case may be for a period, not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of Underwriters' Counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 9 with like
effect as if it had originally been a party to this Agreement with respect to
such Firm Shares and Additional Shares.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations
and warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective, upon the later of when (i)
you and the Company shall have received notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. If either the
initial public offering price or the purchase price per Share has not been
agreed upon prior to 5:00 P.M., New York time, on the fifth full business day
after the Registration Statement shall have become effective, this Agreement
shall thereupon terminate without liability to the Company or the Underwriters
except as herein expressly provided. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Company by notifying you or by you
notifying the Company. Notwithstanding the foregoing, the provisions of this
Section 11 and of Sections 1, 5, 7 and 8 hereof shall at all times be in full
force and effect.
(b) You shall have the right to terminate this Agreement at any
time prior to the Closing Date or the obligations of the Underwriters to
purchase the Additional Shares at any time prior to the Additional Closing
Date, as the case may be, if (A) any domestic or international event or act
or occurrence has materially disrupted, or in your opinion will in the
immediate future materially disrupt, the market for the Company's securities
or securities in general; or (B) if trading on the New York or American Stock
Exchanges shall have been suspended, or minimum or maximum prices for trading
shall have been fixed, or maximum ranges for prices for securities shall have
been required, on the New York or American Stock Exchanges by the New York or
American Stock Exchanges or by order of the Commission or any other
governmental authority having jurisdiction; or (C) if a banking moratorium
has been
25
declared by a state or federal authority or if any new restriction materially
adversely affecting the distribution of the Firm Shares or the Additional
Shares, as the case may be, shall have become effective; or (D) (i) if the
United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a
national emergency or war by the United States or (ii) if there shall have
been such change in political, financial or economic conditions, if the
effect of any such event in (i) or (ii) as in your judgment makes it
impracticable or inadvisable to proceed with the offering, sale and delivery
of the Firm Shares or the Additional Shares, as the case may be, on the terms
contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all
out-of-pocket expenses (including the fees and expenses of their counsel),
incurred by the Underwriters in connection herewith.
12. NOTICES. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and , if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxx; if sent to the Company,
shall be mailed, delivered, or telegraphed and confirmed in writing to the
Company, 000 Xxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000, Attention: General
Counsel.
13. PARTIES. This Agreement shall insure solely to the benefit of,
and shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Section 7 and
8, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
26
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
SYNAPTIC PHARMACEUTICAL CORPORATION
By ________________________
Name:
Title:
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
XXXXXXXXX & XXXXX LLC
VECTOR SECURITIES INTERNATIONAL, INC.
By Bear, Xxxxxxx & Co. Inc.
By _______________________________
Name:
Title:
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
27
SCHEDULE I
Number of Firm
NAME OF UNDERWRITER SHARES TO BE PURCHASED
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx & Xxxxx LLC
Vector Securities International, Inc.
Total. . . . . . __________
__________
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