1
Exhibit 1.1
SIGNAL PHARMACEUTICALS, INC.
2,500,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
_________, 0000
XXXXXXXXX & XXXXX LLC
BANCAMERICA XXXXXXXXX XXXXXXXX
XXXXXX BROTHERS INC.
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Signal Pharmaceuticals, Inc., a Delaware corporation (herein
called the "Company"), proposes to issue and sell up to 2,500,000 shares of its
authorized but unissued Common Stock, $0.001 par value (herein called the
"Common Stock") (said 2,500,000 shares of Common Stock being herein called the
"Underwritten Stock"). The Company proposes to grant to the Underwriters (as
hereinafter defined) an option to purchase up to 375,000 additional shares of
Common Stock (herein called the "Option Stock" and with the Underwritten Stock,
herein collectively called the "Stock"). The Common Stock is more fully
described in the Registration Statement and the Prospectus hereinafter
mentioned.
The Company hereby confirms the agreements made with respect to
the purchase of the Stock by the several underwriters, for whom you are acting,
named in Schedule I hereto (herein collectively called the "Underwriters", which
term shall also include any underwriter purchasing Stock pursuant to Section
3(b) hereof). You represent and warrant that you have been authorized by each of
the other Underwriters to enter into this Agreement on its behalf and to act for
it in the manner herein provided.
1. REGISTRATION STATEMENT. The Company has filed with the
Securities and Exchange Commission (herein called the "Commission") a
registration statement on Form S-1 (No. 333-52901), including the related
preliminary prospectus, for the registration under the Securities Act of 1933,
as amended (herein called the "Securities Act"), of the Stock. Copies of such
registration statement and of each amendment thereto, if any, including the
related preliminary prospectus (meeting the requirements of Rule 430A of the
rules and regulations of the Commission) heretofore filed by the Company with
the Commission have been delivered to you.
--------
(1) Plus an option to purchase from the Company up to 375,000 additional
shares to cover over-allotments.
2
The term Registration Statement as used in this agreement shall
mean such registration statement, including all exhibits and financial
statements, all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, in the form in which it became
effective, and any registration statement filed pursuant to Rule 462(b) of the
rules and regulations of the Commission with respect to the Stock (herein called
a Rule 462(b) registration statement), and, in the event of any amendment
thereto after the effective date of such registration statement (herein called
the Effective Date), shall also mean (from and after the effectiveness of such
amendment) such registration statement as so amended (including any Rule 462(b)
registration statement). The term Prospectus as used in this Agreement shall
mean the prospectus relating to the Stock first filed with the Commission
pursuant to Rule 424(b) and Rule 430A (or if no such filing is required, as
included in the Registration Statement) and, in the event of any supplement or
amendment to such prospectus after the Effective Date, shall also mean (from and
after the filing with the Commission of such supplement or the effectiveness of
such amendment) such prospectus as so supplemented or amended. The term
Preliminary Prospectus as used in this Agreement shall mean each preliminary
prospectus included in such registration statement prior to the time it becomes
effective.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants as follows:
(a) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has full corporate power and authority to own or lease its
properties and to conduct its business as described in the Registration
Statement and the Prospectus and as being conducted, and is duly qualified as a
foreign corporation and in good standing in all jurisdictions in which the
character of the property owned or leased or the nature of the business
transacted by it makes qualification necessary, except where the failure to be
so qualified would not have a material adverse effect on the business,
properties, operation, condition (financial or other), results of operations or
prospects of the Company (herein called a "Material Adverse Effect").
(b) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus.
(c) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation,
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable laws relating to bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights generally
or by general equitable principles.
2
3
(d) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the property or assets
of the Company is subject, except for breaches or violations as would not have a
Material Adverse Effect, nor will such actions result in any violation of the
provisions of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties or assets, except for violations as would not have a Material Adverse
Effect, nor will such actions result in any violation of the provisions of the
charter or bylaws of the Company; and except for the registration of the Stock
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as have been obtained or may be required under
the Securities Exchange Act of 1934, as amended (herein called the "Exchange
Act") and applicable state or foreign securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(e) There are no contracts, agreements or understandings between
the Company and any person holding securities of the Company granting such
person (A) the right (other than rights which have been waived or satisfied) to
require the Company to include such securities in the securities registered
pursuant to the Registration Statement, or (B) additional registration rights as
a result of the filing of the Registration Statement. No preemptive rights or
rights of first refusal or co-sale exist with respect to the Stock or the
transactions contemplated by this Agreement, other than such as have been waived
in writing prior to the date hereof.
(f) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the business, properties, management, prospects,
condition (financial or other), stockholders' equity or results of operations of
the Company, whether or not arising from transactions in the ordinary course of
business, other than as set forth in the Registration Statement and the
Prospectus, and since such dates, except in the ordinary course of business, the
Company has not entered into any material transaction not referred to in the
Registration Statement and the Prospectus.
(g) The Registration Statement and the Prospectus comply, and on
the Closing Date (as hereinafter defined) and any later date on which Option
Stock is to be purchased, the Prospectus will comply, in all material respects,
with the provisions of the Securities Act and the rules and regulations of the
Commission thereunder (the "Rules and Regulations"); on the Effective Date, the
Registration Statement did not contain any 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 not misleading; and, on the
Effective Date, the Prospectus did not and, on the Closing Date and any later
date on which Option Stock is to be purchased, will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that none of the
representations and warranties in this
3
4
subparagraph (g) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in conformity
with written information furnished to the Company by or on behalf of the
Underwriters specifically for use in the Registration Statement or the
Prospectus.
(h) The Stock has been duly and validly authorized and, when
issued and sold to the Underwriters as provided herein, will be duly and validly
issued, fully paid and nonassessable; and the Stock conforms to the description
thereof in the Prospectus. No further approval or authority of the stockholders
or the Board of Directors of the Company will be required for the issuance and
sale of the Stock as contemplated herein.
(i) Prior to the Closing Date the Stock to be issued and sold by
the Company will be approved for inclusion on The Nasdaq National Market upon
official notice of issuance.
(j) The Company has not sustained, since the date of the latest
audited financial statements included in the Prospectus, any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there has not been any
material change in the capital stock or, except in the ordinary course of
business, long-term debt of the Company, or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
business, properties, management, prospects, condition (financial or other),
stockholders' equity or results of operations of the Company, otherwise than as
set forth or contemplated in the Prospectus.
(k) The audited financial statements of the Company, together
with the related notes and supporting schedules, and the unaudited financial
statements, filed as part of the Registration Statement or included in the
Prospectus, fairly present the financial condition and results of operations of
the Company at the dates and for the periods indicated, in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The unaudited financial statements (including
related notes) filed as part of the Registration Statement or included in the
Prospectus include all adjustments, consisting of normal recurring adjustments,
that the Company considers necessary for a fair presentation of the financial
position and results of operations for these periods (except for the footnotes
and more detailed information with respect to the three-month numbers announced
and noted in the Registration Statement). The selected and summary financial and
statistical data included in the Registration Statement present fairly the
information shown therein and have been compiled on a basis consistent with the
audited financial statements presented therein. No other financial statements or
schedules are required to be included in the Registration Statement.
(l) Ernst & Young LLP, who has audited the financial statements
of the Company, together with the related schedules and notes, as of December
31, 1997 and for each of the years in the three (3) years ended December 31,
1997, whose report appears in the Registration Statement and in the Prospectus
and who have delivered the Original Letter referred to in Section 9(h) hereof,
are independent public accountants as required by and within the meaning of the
Securities Act and the Rules and Regulations.
4
5
(m) All real property and buildings held under lease by the
Company are held by it under valid, subsisting and, to the best of the Company's
knowledge, enforceable leases, with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such property and
buildings by the Company.
(n) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is reasonably adequate for the conduct of its
business and the value of its properties.
(o) Except as disclosed in the Prospectus, the Company (A) to its
knowledge after diligent investigation for the purposes hereof, owns, or
possesses adequate rights to use, all patents, patent rights, inventions, trade
secrets, know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names and copyrights described or referred to
in the Prospectus or owned or used by it or which are necessary for the conduct
of its business as currently conducted and as proposed in the Prospectus to be
conducted in the future, except for any failure to own or possess any such
rights as would not individually or in the aggregate have a Material Adverse
Effect, and (B) has no reason to believe, and is not aware of any claim, that
the conduct of its business conflicts or will conflict with any such rights of
others which conflict or claim is or may be material to the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company.
(p) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or of which any
property or assets of the Company is the subject which, if determined adversely
to the Company, might have a Material Adverse Effect, and, to the Company's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(q) 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 Securities Act or by the Rules and Regulations which have not
been described in the Prospectus or filed as exhibits to the Registration
Statement or incorporated therein by reference as permitted by the Rules and
Regulations.
(r) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers, stockholders,
collaboration partners, joint venturers, licensees, licensors, consultants,
customers or suppliers of the Company on the other hand, which is required to be
described in the Prospectus which is not so described.
(s) No labor disturbance by the employees of the Company exists
or, to the knowledge of the Company, is imminent which might be expected to have
a Material Adverse Effect.
(t) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has paid
all taxes due thereon, and no tax deficiency has been determined adversely to
the Company which will have (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company, might have) a Material
Adverse Effect.
5
6
(u) 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, other
than option grants and exercises and stock purchases pursuant to the Company's
stock option and employee stock purchase plans in the ordinary course of
business or pursuant to the exercise of warrants in the ordinary course of
business, (ii) incurred any liability or obligation, direct or contingent, other
than liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary course of
business or (iv) declared or paid any dividend on its capital stock.
(v) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.
(w) The Company (i) is not in violation of its charter or bylaws,
(ii) is not in default in any material respect, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained in
any license agreement, collaboration agreement, material indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument to which
it is a party or by which it is bound or to which any of its properties or
assets is subject, other than as would not cause a Material Adverse Effect (and,
to its knowledge, no other party to any such agreement is in default thereof and
no event has occurred which, with notice, lapse of time or both, would
constitute such a default), or (iii) is not in violation in any material respect
of any law, ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject and the Company has not failed to
obtain any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its property
or to the conduct of its business, other than as would not cause a Material
Adverse Effect.
(x) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company (or, to the
knowledge of the Company, any of its predecessors in interest) at, upon or from
any of the property now or previously owned or leased by the Company in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit, except for
any violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions, a Material Adverse Effect; there has been no
material spill, discharge, leak, emission, injection, escape, dumping or release
of any kind onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or with respect to which the Company
has knowledge, except for any such spill, discharge, leak, emission, injection,
escape, dumping or release which would not have or would
6
7
not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic
wastes", "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(y) The Company is not an "investment company" within the meaning
of such term under the United States Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell shares of the Underwritten Stock to the several Underwriters and
each of the Underwriters agrees to purchase from the Company the respective
aggregate number of shares of Underwritten Stock set forth opposite its name in
Schedule I. The price at which such shares of Underwritten Stock shall be sold
by the Company and purchased by the several Underwriters shall be $___ per share
[IPO PRICE LESS DISCOUNT]. In making this Agreement, each Underwriter is
contracting severally and not jointly; except as provided in paragraphs (b) and
(c) of this Section 3, the agreement of each Underwriter is to purchase only the
respective number of shares of the Underwritten Stock specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail
or refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company shall immediately give notice thereof
to you, and the non-defaulting Underwriters shall have the right within 24 hours
after the receipt by you of such notice to purchase, or procure one or more
other Underwriters (the identity of which are subject to the Company's approval,
which shall not be unreasonably withheld) to purchase, in such proportions as
may be agreed upon between you and such purchasing Underwriter or Underwriters
and upon the terms herein set forth, all or any part of the shares of the Stock
which such defaulting Underwriter or Underwriters agreed to purchase. If the
non-defaulting Underwriters fail so to make such arrangements with respect to
all such shares and portion, the number of shares of the Stock which each
non-defaulting Underwriter is otherwise obligated to purchase under this
Agreement shall be automatically increased on a pro rata basis to absorb the
remaining shares and portion which the defaulting Underwriter or Underwriters
agreed to purchase; provided, however, that the non-defaulting Underwriters
shall not be obligated to purchase the shares and portion which the defaulting
Underwriter or Underwriters agreed to purchase if the aggregate number of such
shares of the Stock exceeds 10% of the total number of shares of the Stock which
all Underwriters agreed to purchase hereunder. If the total number of shares of
the Stock which the defaulting Underwriter or Underwriters agreed to purchase
shall not be purchased or absorbed in accordance with the two preceding
sentences, the Company shall have the right, within the 24 hours next succeeding
the 24-hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to you for purchase of such shares and
portion on the terms herein set forth. In any such case, either you or the
Company shall have the right to postpone the Closing Date
7
8
determined as provided in Section 5 hereof for not more than seven business days
after the date originally fixed as the Closing Date pursuant to said Section 5
in order that any necessary changes in the Registration Statement, the
Prospectus, this Agreement or any other documents or arrangements may be made.
If neither the non-defaulting Underwriters nor the Company shall make
arrangements within the 24-hour periods stated above for the purchase of all the
shares of the Stock which the defaulting Underwriter or Underwriters agreed to
purchase hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company to any non-defaulting
Underwriter and without any liability on the part of any non-defaulting
Underwriter to the Company. Nothing in this paragraph (b), and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth, the
Company grants an option to the several Underwriters to purchase, severally and
not jointly, up to all of the shares in the aggregate of the Option Stock from
the Company at the same price per share as the Underwriters shall pay for the
Underwritten Stock. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Stock by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the
thirtieth day after the date of this Agreement upon written or telegraphic
notice by you to the Company setting forth the aggregate number of shares of the
Option Stock as to which the several Underwriters are exercising the option.
Delivery of certificates for the shares of Option Stock, and payment therefor,
shall be made as provided in Section 5 hereof. The number of shares of the
Option Stock to be purchased by each Underwriter shall be the same percentage of
the total number of shares of the Option Stock to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Stock, as
adjusted by you in such manner as you deem advisable to avoid fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters
of the Stock to be purchased by them shall be as set forth in the Prospectus.
The Underwriters may from time to time change the public offering price after
the closing of the initial public offering and increase or decrease the
concessions and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front
cover page of the Prospectus and any Preliminary Prospectus and under
"Underwriting" in the Registration Statement, any Preliminary Prospectus and the
Prospectus relating to the Stock filed by the Company (insofar as such
information relates to the Underwriters) constitutes the only information
furnished by the Underwriters to the Company for inclusion in the Registration
Statement, any Preliminary Prospectus, and the Prospectus, and you on behalf of
the respective Underwriters represent and warrant to the Company that the
statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten
Stock and the Option Stock (if the option granted by Section 3(c) hereof shall
have been exercised not later
8
9
than 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date), and payment therefor, shall be made at the office of Xxxxxx
Godward LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000, at
7:00 a.m., San Francisco time, on the fourth business day after the date of this
Agreement, or at such time on such other day, not later than seven full business
days after such fourth business day, as shall be agreed upon in writing by the
Company and you. The date and hour of such delivery and payment (which may be
postponed as provided in Section 3(b) hereof) are herein called the "Closing
Date."
(b) If the option granted by Section 3(c) hereof shall be
exercised after 7:00 a.m., San Francisco time, on the date two business days
preceding the Closing Date, delivery of certificates for the shares of Option
Stock, and payment therefor, shall be made at the office of Xxxxxx Godward LLP,
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000, at 7:00 a.m., San
Francisco time, on the third business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be
made to the Company or its order by wire transfer of immediately available funds
or one or more certified or official bank check or checks in same day funds.
Such payment shall be made upon delivery of certificates for the Stock to you
for the respective accounts of the several Underwriters against receipt therefor
signed by you. Certificates for the Stock to be delivered to you shall be
registered in such name or names and shall be in such denominations as you may
request at least one business day before the Closing Date, in the case of
Underwritten Stock, and at least one business day prior to the purchase thereof,
in the case of the Option Stock. Such certificates will be made available to the
Underwriters for inspection, checking and packaging at the offices of Lewco
Securities Corporation, 0 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the business day
prior to the Closing Date or, in the case of the Option Stock, by 3:00 p.m., New
York time, on the business day preceding the date of purchase. If the
Representatives so elect, delivery of the Shares purchased from the Company may
be made by credit through full fast transfer to the accounts at The Depository
Trust Company designated by the Representatives.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check or wire shall not have
been received by you on the Closing Date or any later date on which Option Stock
is purchased for the account of such Underwriter. Any such payment by you shall
not relieve such Underwriter from any of its obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants
and agrees as follows:
(a) The Company will (i) prepare and timely file with the
Commission under Rule 424(b) a Prospectus containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A and (ii) not file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been advised
and furnished with a copy or to which you shall have reasonably objected in
writing or which is not in compliance with the Securities Act or the Rules and
Regulations.
(b) The Company will promptly notify each Underwriter in the
event of (i) the request by the Commission for amendment of the Registration
Statement or for supplement to
9
10
the Prospectus or for any additional information, (ii) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, (iii) the institution or notice of intended institution of any action
or proceeding for that purpose, (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification of the Stock
for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company will
make every reasonable effort to prevent the issuance of such a stop order and,
if such an order shall at any time be issued, to obtain the withdrawal thereof
at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver
to you a signed copy of the Registration Statement as originally filed and of
each amendment thereto filed prior to the time the Registration Statement
becomes effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any, to the Registration Statement (together with,
in each case, all exhibits thereto) and will also deliver to you, for
distribution to the Underwriters, a sufficient number of additional conformed
copies of each of the foregoing (but without exhibits) so that one copy of each
may be distributed to each Underwriter, (ii) as promptly as possible deliver to
you and send to the several Underwriters, at such office or offices as you may
designate, as many copies of the Prospectus as you may reasonably request, and
(iii) thereafter from time to time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, likewise send to
the Underwriters as many additional copies of the Prospectus and as many copies
of any supplement to the Prospectus and of any amended prospectus, filed by the
Company with the Commission, as you may reasonably request for the purposes
contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any event relating
to or affecting the Company, or of which the Company shall be advised in writing
by you, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of counsel for the Underwriters, to supplement or
amend the Prospectus in order to make the Prospectus not misleading in the light
of the circumstances existing at the time it is delivered to a purchaser of the
Stock, the Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus so that the Prospectus as
so supplemented or amended will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time such
Prospectus is delivered to such purchaser, not misleading. If, after the initial
public offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters, such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable Rules and
Regulations for such period.
10
11
(e) Prior to the filing thereof with the Commission, the Company
will submit to you, for your information, a copy of any post-effective amendment
to the Registration Statement and any supplement to the Prospectus or any
amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in
the qualification of the Stock for offer and sale under the securities or blue
sky laws of such jurisdictions as you may designate and, during the period in
which a prospectus is required by law to be delivered by an Underwriter or
dealer, in keeping such qualifications in good standing under said securities or
blue sky laws; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. The Company
will, from time to time, prepare and file such statements, reports, and other
documents as are or may be required to continue such qualifications in effect
for so long a period as you may reasonably request for distribution of the
Stock.
(g) During a period of five years commencing with the date
hereof, the Company will furnish to you, and to each Underwriter who may so
request in writing, copies of all periodic and special reports furnished to
stockholders of the Company and of all information, documents and reports filed
with the Commission.
(h) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date, the
Company will make generally available to its security holders an earnings
statement in accordance with Section 11(a) of the Securities Act and Rule 158
thereunder.
(i) The Company agrees to pay all costs and expenses incident to
the performance of its obligations under this Agreement, including all costs and
expenses incident to (i) the preparation, printing and filing with the
Commission and the National Association of Securities Dealers, Inc. of the
Registration Statement, any Preliminary Prospectus and the Prospectus, (ii) the
furnishing to the Underwriters of copies of any Preliminary Prospectus and of
the several documents required by paragraph (c) of this Section 6 to be so
furnished, (iii) the printing of this Agreement and related documents delivered
to the Underwriters, (iv) the preparation, printing and filing of all
supplements and amendments to the Prospectus referred to in paragraph (d) of
this Section 6, (v) the furnishing to you and the Underwriters of the reports
and information referred to in paragraph (g) of this Section 6 and (vi) the
printing and issuance of stock certificates, including the transfer agent's
fees.
(j) The Company agrees to reimburse you, for the account of the
several Underwriters, for blue sky fees and related disbursements (including
counsel fees and disbursements and cost of printing memoranda for the
Underwriters) paid by or for the account of the Underwriters or their counsel in
qualifying the Stock under state securities or blue sky laws and in the review
of the offering by the National Association of Securities Dealers.
(k) The Company hereby agrees that, without the prior written
consent of Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters, the Company will
not, for a period of 180 days following the commencement of the public offering
of the Stock by the Underwriters, directly or indirectly, (i) sell, offer,
contract to sell, make any short sale, pledge, sell any option
11
12
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of any
shares of Common Stock or any securities convertible into or exchangeable or
exercisable for or any rights to purchase or acquire Common Stock or (ii) enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Stock to be sold to the Underwriters pursuant to this
Agreement, (B) shares of Common Stock issued by the Company under the stock
option and stock purchase plans of the Company (the "Plans"), including shares
of Common Stock issued upon the exercise of options granted under the Plans, or
upon the exercise of warrants outstanding as of the date hereof, all as
described in footnote (___) to the table under the caption "Capitalization" in
the Preliminary Prospectus, (C) options to purchase Common Stock granted under
the Company's 1998 Equity Incentive Plan, (D) shares of Common Stock to be
issued to The DuPont Merck Pharmaceutical in accordance with the Stock Purchase
Agreement dated December 26, 1997, and (E) shares of Common Stock issued by the
Company in connection with additional collaborative arrangements or license
agreements similar to those described in the Prospectus, provided, however, that
in each of (A) through (E), the Company shall cause the person to whom such
securities are issued to enter into an agreement restricting the transfer of any
securities held by such holder for a period of 180 days from the commencement of
the public offering of the Stock without the prior written consent of Xxxxxxxxx
& Xxxxx LLC.
(l) The Company agrees to use its best efforts to cause all
directors, officers and securityholders to agree that, without the prior written
consent of Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters, such person or
entity will not, for a period of 180 days following the commencement of the
public offering of the Stock by the Underwriters, directly or indirectly, (i)
sell, offer, contract to sell, lend, make any short sale, pledge, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose of any
shares of Common Stock or any securities convertible into or exchangeable or
exercisable for or any rights to purchase or acquire Common Stock or (ii) enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise.
(m) If at any time during the 271-day period after the
Registration Statement becomes effective any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price for the Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
12
13
(n) Prior to the Effective Date, to apply for the listing of the
Stock on The Nasdaq National Market and to use its best efforts to complete that
listing, subject only to official notice of issuance, prior to the Closing Date.
(o) To apply the net proceeds from the sale of the Stock being
sold by the Company as set forth in the Prospectus.
(p) The Company is familiar with the Investment Company Act of
1940, as amended, and has in the past conducted its affairs, and will in the
future conduct its affairs, in such a manner to ensure that the Company was not
and will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
(q) The Company will complete, prior to the consummation of the
sale of the Stock, (i) the Company's reincorporation under Delaware law and (ii)
the 4-for-1 reverse stock split to be effected concurrently therewith.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person (including each partner or officer thereof) who
controls any Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act, or the common law or otherwise, and
the Company agrees to reimburse each such Underwriter and controlling person for
any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any Rule
462(b) registration statement) or any post-effective amendment thereto
(including any Rule 462(b) registration statement), or 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, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that (1) the indemnity agreements of the Company contained in this paragraph (a)
shall not apply to any such losses, claims,
13
14
damages, liabilities or expenses if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of any Underwriter
for use in any Preliminary Prospectus or the Registration Statement or the
Prospectus or any such amendment thereof or supplement thereto and (2) the
indemnity agreement contained in this paragraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
expenses purchased the Stock which is the subject thereof (or to the benefit of
any person controlling such Underwriter) if at or prior to the written
confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof. The indemnity agreements of
the Company contained in this paragraph (a) and the representations and
warranties of the Company contained in Section 2 hereof shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any indemnified party and shall survive the delivery of and payment
for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its officers who signs the Registration Statement
on his own behalf or pursuant to a power of attorney, each of its directors,
each other Underwriter and each person (including each partner or officer
thereof) who controls the Company or any such other Underwriter within the
meaning of Section 15 of the Securities Act, from and against any and all
losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or the common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any Rule
462(b) registration statement) or any post-effective amendment thereto
(including any Rule 462(b) registration statement) or 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 or (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, if such statement or omission was made in reliance upon
and in conformity with information furnished as herein stated or otherwise
furnished in writing to the Company by or on behalf of such indemnifying
Underwriter for use in the Registration Statement or the Prospectus or any such
amendment thereof or supplement thereto. Notwithstanding the provisions of this
paragraph 7(b), no Underwriter shall be liable for any amount in excess of the
underwriting discount applicable to the Stock purchased by such Underwriter. The
indemnity agreement of each Underwriter contained in this paragraph (b) shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any indemnified party and shall survive the delivery of
and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a)
and (b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
14
15
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party shall be entitled at its own
expense to participate in the defense of any action, suit or proceeding against,
or investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (herein called the Notice of Defense) to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after receipt of
the Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will not be
liable under paragraphs (a) through (c) of this Section 7 for any legal or other
expenses subsequently incurred by the indemnified party or parties in connection
with the defense of the action, suit, investigation, inquiry or proceeding,
except that (A) the indemnifying party or parties shall bear the legal and other
expenses incurred in connection with the conduct of the defense as referred to
in clause (i) of the proviso to the preceding sentence and (B) the indemnifying
party or parties shall bear such other expenses as it or they have authorized to
be incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering
15
16
of the Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of each indemnifying party in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, or actions in
respect thereof, 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 respective proportions as the total net proceeds from the
offering of the Stock received by the Company and the total underwriting
discount received by the Underwriters, as set forth in the table on the cover
page of the Prospectus, bear to the aggregate public offering price of the
Stock. Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Stock purchased by such
Underwriter. 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. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service
of a summons or other initial legal process upon it in any action instituted
against it in respect of which contribution may be sought, it will promptly give
written notice of such service to the party or parties from whom contribution
may be sought, but the omission so to notify such party or parties of any such
service shall not relieve the party from whom contribution may be sought from
any obligation it may have hereunder or otherwise (except as specifically
provided in paragraph (c) of this Section 7).
(e) The Company will not, without the prior written consent of
each Underwriter, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such Underwriter
or any person who controls such Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of such Underwriter and each such controlling
person from all liability arising out of such claim, action, suit or proceeding.
16
17
8. TERMINATION. This Agreement may be terminated by you at any
time prior to the Closing Date by giving written notice to the Company if after
the date of this Agreement trading in the Common Stock shall have been
suspended, or if there shall have occurred (i) the engagement in hostilities or
an escalation of major hostilities by the United States or the declaration of
war or a national emergency by the United States on or after the date hereof,
(ii) any outbreak of hostilities or other national or international calamity or
crisis or change in economic or political conditions if the effect of such
outbreak, calamity, crisis or change in economic or political conditions in the
financial markets of the United States would, in the Underwriters' reasonable
judgment, make the offering or delivery of the Stock impracticable, (iii)
suspension of trading in securities generally or a material adverse decline in
value of securities generally on the New York Stock Exchange, the American Stock
Exchange, The Nasdaq Stock Market, or limitations on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such exchange or system, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of, or
commencement of any proceeding or investigation by, any court, legislative body,
agency or other governmental authority which in the Underwriters' reasonable
opinion materially and adversely affects or will materially and adversely affect
the business or operations of the Company, (v) declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in the Underwriters' reasonable opinion has a
material adverse effect on the securities markets in the United States. If this
Agreement shall be terminated pursuant to this Section 8, there shall be no
liability of the Company to the Underwriters and no liability of the
Underwriters to the Company; provided, however, that in the event of any such
termination the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all costs and expenses referred to in
paragraphs (i) and (j) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters to purchase and pay for the Stock shall be subject to
the accuracy, as of the date hereof and the Closing Date and any later date on
which Option Stock is to be purchased, as the case may be, of the
representations and warranties of the Company herein, to the performance by the
Company of all its obligations to be performed hereunder at or prior to the
Closing Date or any later date on which Option Stock is to be purchased, as the
case may be, and to the following further conditions:
(a) The Registration Statement and Prospectus shall have been
timely filed with the Commission in accordance with Section 5(a) and shall have
become effective as of the date hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to the Closing Date or any later date on which Option Stock
is to be purchased that the Registration Statement or the Prospectus or any
amendment or supplement thereto contains an
17
18
untrue statement of a fact which, in the opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx
LLP, counsel for the Underwriters, is material or omits to state a fact which,
in the opinion of such counsel, is material and is required to be stated therein
or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Registration
Statement, the Prospectus and the certificates representing the Stock, and the
registration, authorization, issue, sale and delivery of the Stock, and all
other legal matters relating to this Agreement and the transactions contemplated
hereby, shall be, on or prior to the Closing Date or any later date on which
Option Stock is to be purchased, reasonably satisfactory to Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP, counsel for the Underwriters, and the Company shall have furnished
to such counsel all documents and information that they may have reasonably
requested to enable them to pass upon such matters.
(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct in all material respects and neither the Registration Statement nor the
Prospectus omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, respectively, not misleading,
(ii) since the Effective Date, no event has occurred which should have been set
forth in a supplement or amendment to the Prospectus which has not been set
forth in such a supplement or amendment, (iii) since the respective dates as of
which information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the business, business prospects,
properties, condition (financial or other) or results of operations of the
Company, whether or not arising from transactions in the ordinary course of
business, and, since such dates, except in the ordinary course of business, the
Company has not entered into any material transaction not referred to in the
Registration Statement in the form in which it originally became effective and
the Prospectus contained therein, (iv) the Company does not have any material
contingent obligations which are not disclosed in the Registration Statement and
the Prospectus, (v) there are not any pending or known threatened legal
proceedings to which the Company is a party or of which property of the Company
is the subject which are material and which are not disclosed in the
Registration Statement and the Prospectus, (vi) there are not any franchises,
contracts, leases or other documents which are required to be filed as exhibits
to the Registration Statement which have not been filed as required, (vii) the
representations and warranties of the Company herein are true and correct in all
material respects as of the Closing Date or any later date on which Option Stock
is to be purchased, as the case may be, and (viii) there has not been any
material change in the market for securities in general or in political,
financial or economic conditions from those reasonably foreseeable so as to
render it impracticable in your reasonable judgment to make a public offering of
the Stock, or a material adverse change in market levels for securities in
general (or those of companies in particular) or financial or economic
conditions which render it inadvisable to proceed.
(e) You shall have received from Xxxxxx Godward LLP, counsel for
the Company, an opinion, addressed to the Underwriters and dated the Closing
Date, in form and substance reasonably satisfactory to the Representatives
covering the matters set forth in Annex A hereto, and if Option Stock is
purchased at any date after the Closing Date, such counsel will
18
19
provide an additional opinion, addressed to the Underwriters and dated such
later date, confirming that the statements expressed as of the Closing Date in
such opinion remain valid as of such later date.
(f) You shall have received from Seed and Xxxxx LLP, patent
counsel for the Company, an opinion, addressed to the Underwriters and dated the
Closing Date, in form and substance reasonably satisfactory to the
Representatives covering the matters set forth in Annex B hereto, and if Option
Stock is purchased at any date after the Closing Date, such counsel will provide
an additional opinion, addressed to the Underwriters and dated such later date,
confirming that the statements expressed as of the Closing Date in such opinion
remain valid as of such later date.
(g) You shall have received from Xxxxxxx, Phleger & Xxxxxxxx LLP,
counsel for the Underwriters, an opinion, dated the Closing Date and any later
date on which Option Stock is to be purchased, with respect to the sufficiency
of all such corporate proceedings and other legal matters relating to this
Agreement and the transactions contemplated hereby as you may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may have requested for the purpose of enabling them to pass upon such
matters.
(h) You shall have received from Ernst & Young LLP a letter, in
form and substance satisfactory to the Representatives, addressed to or for the
use of the Underwriters and dated as of the date hereof (the "Original Letter")
(i) confirming that they are independent certified public accountants with
respect to the Company within the meaning of the Securities Act and the
applicable published Rules and Regulations and (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings.
(i) With respect to the Original Letter, the Company shall have
furnished to the Representatives a letter (the "Bring-Down Letter") of such
accountants, addressed to the Underwriters and dated the Closing Date and any
later date on which Option Stock is to be purchased (i) confirming that they are
independent public accountants within the meaning of the Securities Act and the
applicable Rules and Regulations, (ii) confirming, as of the date of the
Bring-Down Letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the date of the
Bring-Down Letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the Original Letter, and
(iii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to reflect any
changes in the facts described in the Original Letter since the date of the
Original Letter or to reflect the availability of more recent financial
statements, data or information. The Original Letter and the Bring-Down Letter
shall not disclose any change, or any development involving a prospective
change, in or affecting the condition (financial or otherwise), earnings,
operations, properties, business or business prospects of the Company which, in
your sole judgment, makes it impractical or
19
20
inadvisable to proceed with the public offering of the Stock or the purchase of
the Option Stock as contemplated by the Prospectus.
In addition, you shall have received from Ernst & Young
LLP a letter stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's financial statements as of and at
December 31, 1997, did not disclose any weakness in internal controls that they
considered to be material weaknesses.
(j) You shall have received on the Closing Date and on any later
date on which Option Stock is purchased, a certificate of the Company dated the
Closing Date or such later date, as the case may be, and signed by the President
and the Chief Financial Officer of the Company, stating that:
(i) The representations, warranties and agreements of the
Company in this Agreement are true and correct in all material
respects as if made on and as of the Closing Date and any later
date on which the Option Stock is to be purchased, as the case
may be; the Company has complied with all the agreements
contained herein and satisfied all the conditions on its part to
be performed or satisfied at or prior to the Closing Date or any
later date on which Option Stock is to be purchased, as the case
may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or threatened
under the Securities Act;
(iii) When the Registration Statement became effective and
at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Prospectus, and
any amendments or supplements thereto, contained all material
information required to be included therein by the Securities Act
and the Rules and Regulations and in all material respects
conformed to the requirements of the Securities Act and the Rules
and Regulations, the Registration Statement, and any amendment or
supplement thereto, did not and does not include any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, the Prospectus, and any amendment or
supplement thereto, did not and does not include any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and,
since the effective date of the Registration Statement, there has
occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, there has not been (a) any material adverse change in
the business, business prospects, properties, condition
(financial or other) or results of operations of the Company, (b)
any transaction
20
21
that is material to the Company, except transactions entered into
in the ordinary course of business, (c) any obligation, direct or
contingent, incurred by the Company that is material to the
Company, except obligations incurred in the ordinary course of
business, (d) any change in the capital stock or, except in the
ordinary course of business, outstanding indebtedness of the
Company that is material to the Company, (e) any dividend or
distribution of any kind declared, paid or made on the capital
stock of the Company, or (f) any loss or damage (whether or not
insured) to the property of the Company which has been sustained
or will have been sustained which has a material adverse effect
on the business, business prospects, properties, condition
(financial or other) or results of operations of the Company.
(k) The Company shall have furnished to you such further
certificates and documents as you shall reasonably request (including
certificates of officers of the Company) as to the accuracy of the
representations and warranties of the Company herein, as to the performance by
the Company of their respective obligations hereunder and as to the other
conditions concurrent and precedent to the obligations of the Underwriters
hereunder.
(l) You shall have been furnished evidence in usual written form
from the appropriate authorities of the several jurisdictions, or other evidence
satisfactory to you, of the qualification referred to in paragraph (f) of
Section 6 hereof.
(m) Prior to the Closing Date, the Stock to be issued and sold by
the Company shall have been approved for inclusion on The Nasdaq National Market
and the Company's registration statement pursuant to Section 12(g) of the
Exchange Act shall have been declared effective by the Commission.
(n) On or prior to the Closing Date, you shall have received,
from all officers, directors and securityholders, agreements, in form reasonably
satisfactory to Xxxxxxxxx & Xxxxx LLC, stating that without the prior written
consent of Xxxxxxxxx & Xxxxx LLC on behalf of the Underwriters, such person or
entity will not, for a period of 180 days following the commencement of the
public offering of the Stock by the Underwriters, directly or indirectly, (i)
sell, offer, lend, contract to sell, make any short sale, pledge, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose of any
shares of Common Stock or any securities convertible into or exchangeable or
exercisable for or any rights to purchase or acquire Common Stock or (ii) enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise.
(o) The Company shall have completed, prior to the consummation
of the sale of the Stock, (i) the Company's reincorporation under Delaware law
and (ii) the 4-for-1 reverse stock split to be effected concurrently therewith.
All the agreements, opinions, certificates and letters mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only
21
22
if Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters, shall be
satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall
not be fulfilled, this Agreement may be terminated by you by giving written
notice to the Company. Any such termination shall be without liability of the
Company to the Underwriters and without liability of the Underwriters to the
Company; provided, however, that (i) in the event of such termination, the
Company agrees to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company under
this Agreement, including all costs and expenses referred to in paragraphs (i)
and (j) of Section 6 hereof, and (ii) if this Agreement is terminated by you
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein, to fulfill any of the conditions herein, or to
comply with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon demand
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY. The obligation
of the Company to deliver the Stock shall be subject to the conditions that (a)
the Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10
shall not be fulfilled, this Agreement may be terminated by the Company by
giving notice to you. Any such termination shall be without liability of the
Company to the Underwriters and without liability of the Underwriters to the
Company; provided, however, that in the event of any such termination the
Company agrees to indemnify and hold harmless the Underwriters from all costs or
expenses incident to the performance of the obligations of the Company under
this Agreement, including all costs and expenses referred to in paragraphs (i)
and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to its other
obligations under Section 7 of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of the Company and the several Underwriters and, with
respect to the provisions of Section 7 hereof, the several parties (in addition
to the Company and the several Underwriters) indemnified under the provisions of
said Section 7, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
22
23
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing and, if to the Underwriters, shall
be mailed or delivered to Xxxxxxxxx & Xxxxx LLC, Xxx Xxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, with a copy to Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, Two
Embarcadero Place, 0000 Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, Attention: J.
Xxxxxxx Xxxxxxxxx, Esq.; and if to the Company, shall be mailed or delivered to
it at its office, Attention: Xxxx X. Xxxxx, Ph.D., with a copy to Xxxxxx Godward
LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxxxxxx X. Xxxx, Esq.
14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or their respective directors or officers, and (c)
delivery and payment for the Stock under this Agreement; provided, however, that
if this Agreement is terminated prior to the Closing Date, the provisions of
paragraphs (k) and (l) of Section 6 hereof shall be of no further force or
effect.
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California, without respect to the conflicts of
law provisions thereof.
[remainder of page intentionally blank]
23
24
Please sign and return to the Company the enclosed duplicates of
this letter, whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
SIGNAL PHARMACEUTICALS, INC.
By:
Xxxx X. Xxxxx, Ph.D.
President and Chief Executive Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
XXXXXXXXX & XXXXX LLC
BANCAMERICA XXXXXXXXX XXXXXXXX
XXXXXX BROTHERS INC.
By Xxxxxxxxx & Xxxxx LLC
By_____________________________
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
24
25
SCHEDULE I
UNDERWRITERS
Shares to be
Underwriters Purchased
------------ ------------
Xxxxxxxxx & Xxxxx LLC..............................................
BancAmerica Xxxxxxxxx Xxxxxxxx ....................................
Xxxxxx Brothers Inc................................................
---------
TOTAL ..................................................... 2,500,000
26
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF
XXXXXX GODWARD LLP, COUNSEL FOR THE COMPANY
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, to the best of such counsel's knowledge, is duly qualified as
a foreign corporation and in good standing in each state of the United States of
America in which its ownership or leasing of property requires such
qualification (except where the failure to be so qualified would not have a
material adverse effect on the business, properties, financial condition or
results of operations of the Company), and has full corporate power and
authority to own or lease its properties and conduct its business as described
in the Registration Statement;
(ii) To the best of such counsel's knowledge, the Company does
not own or control, directly or indirectly, any corporation, association or
other entity.
(iii) The Stock to be issued by the Company pursuant to the terms
of the Underwriting Agreement has been duly authorized and, upon issuance and
delivery against payment therefor in accordance with the terms thereof, will be
duly and validly issued and fully paid and nonassessable, and no preemptive
rights of, or rights of refusal in favor of, any third party, including any
stockholders of the Company exist with respect to the Stock, or the issue and
sale thereof, pursuant to the Certificate of Incorporation or Bylaws of the
Company and, to the best of such counsel's knowledge, there are no contractual
preemptive rights that have not been waived, or rights of first refusal or
rights of co-sale which exist with respect to the issue and sale of the Stock;
(iv) The Company has the corporate power and authority to enter
into the Underwriting Agreement and to issue, sell and deliver to the
Underwriters the Stock to be issued and sold by it thereunder;
(v) The Underwriting Agreement and the transactions contemplated
thereby have been duly authorized by all necessary corporate action on the part
of the Company and the Underwriting Agreement has been duly executed and
delivered by the Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally or by general equitable principles or the
availability of equitable remedies; provided that such counsel need not express
any opinion with respect to the indemnification or contribution provisions
thereof;
(vi) The Registration Statement has become effective under the
Securities Act and to our knowledge no stop order suspending the effectiveness
of the Registration Statement or
27
suspending or preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending, threatened or
contemplated by the Commission;
(vii) The Registration Statement and the Prospectus (other than
the financial statements (including supporting schedules), other financial data
and statistical data derived therefrom as to which such counsel need express no
opinion), as of the effective date of the Registration Statement, complied as to
form in all material respects with the requirements of the Securities Act and
the applicable rules and regulations promulgated thereunder;
(viii) The authorized, issued and outstanding capital stock of
the Company was and is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein; the issued and outstanding
shares of capital stock of the Company have been duly and validly issued and are
fully paid and nonassessable, and have not been issued in violation of or
subject to any preemptive right or, to the best of such counsel's knowledge,
co-sale right, registration right, right of first refusal or other similar
right; except as disclosed in or specifically contemplated by the Registration
Statement and 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, 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 and all outstanding shares of Preferred Stock of the
Company have been duly and validly converted into Common Stock of the Company;
(ix) The information required to be set forth in the Registration
Statement in answer to Items 9 (Description of Securities) and 10 (Interest of
Counsel) (insofar as it relates to such counsel) and, to the best of such
counsel's knowledge, in Items 11(c) (Legal Proceedings), 11(n) (Certain
Relationships and Related Transactions) of Form S-1 is accurately set forth
therein to the extent required under the Securities Act and the applicable Rules
and Regulations or no response is required with respect to such Items, and, the
description of the Company's stock option plans, the options granted and which
may be granted thereunder, and the Company's employee stock purchase plans set
forth in the Prospectus accurately presents the information required to be shown
with respect to said plans and options to the extent required by the Securities
Act and the applicable Rules and Regulations; and the form of certificate
evidencing the Common Stock and filed as an exhibit to the Registration
Statement complies with Delaware law;
(x) The descriptions in the Registration Statement and the
Prospectus of the charter and bylaws of the Company and of the Delaware General
Corporation Law and under the captions "Management -- Executive Officers,
Directors and Key Employees," "Management -- Limitation on Directors' and
Executive Officers' Liability and Indemnification," "Description of Capital
Stock" and Item 14 (Indemnification of Directors and Officers), as applicable,
are accurate in all material respects and present the information required to be
presented by the Securities Act and the applicable Rules and Regulations;
28
(xi) Such counsel does not know of any agreement, license,
franchise, contract, lease, document or legal or government action, suit or
proceeding, pending or overtly threatened, which in the opinion of such counsel
is of a character required to be described or referred to in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described or referred to therein or filed as required by
the Securities Act and the applicable Rules and Regulations;
(xii) The performance of this Agreement and the consummation of
the transactions herein contemplated will not (a) result in any violation of the
Company's charter or bylaws or (b) result in a material breach or violation of
any of the terms and provisions of, or constitute a default under, any bond,
debenture, note or other evidence of indebtedness, or any material lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company is a party or by which its
properties are bound and which is filed as an exhibit to the Registration
Statement, or any applicable statute, rule or regulation, other than state
securities or blue sky laws, or any order, writ or decree known to such counsel
of any court, government or governmental agency or body having jurisdiction over
the Company or any of its properties or operations;
(xiv) The Company is not presently (a) in material violation of
its charter or bylaws, (b) in material breach of any applicable statute, rule or
regulation or any order, writ or decree of any court or governmental agency or
body having jurisdiction over the Company or any of its properties or
operations, or (c) in breach of or default with respect to any material
provision of any material agreement, mortgage, license, lease or other
instrument to which the Company is a party or by which any of its properties are
bound, except for such default or breach as would not have a material adverse
effect on the condition (financial or otherwise), earnings, operations or
business of the Company;
(xv) Except as set forth in the Registration Statement and
Prospectus, to the best of such counsel's knowledge, no holders of Common Stock
or other securities of the Company have registration rights with respect to
securities of the Company and, except as set forth in the Registration Statement
and Prospectus, all holders of securities of the Company having such rights to
registration of such shares of Common Stock or other securities, because of the
filing of the Registration Statement by the Company have, with respect to the
offering contemplated thereby, waived such rights or such rights have expired by
reason of lapse of time following notification of the Company's intent to file
the Registration Statement or have included securities in the Registration
Statement pursuant to the exercise of and in full satisfaction of such rights;
(xvi) No consent, approval, authorization or order of or
qualification with any court or governmental agency or body having jurisdiction
over the Company or any of its properties or operations is required for the
consummation of the transactions contemplated in the Underwriting Agreement,
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 Stock by the Underwriters; and
29
(xvii) The Stock issued and sold by the Company has been duly
approved for inclusion on the Nasdaq National Market upon official notice of
issuance.
(xviii)Such counsel has participated in conferences with
officials and other representatives of the Company, the Representatives,
Underwriters' Counsel and the independent certified public accountants of the
Company, at which such conferences the contents of the Registration Statement
and Prospectus and related matters were discussed, and, while such counsel has
not independently verified and is not passing upon the accuracy, completeness or
fairness of the Registration Statement or Prospectus, on the basis of the
foregoing, no facts have come to such counsel's attention that have caused
such counsel to believe that the Registration Statement (except as to the
financial statements and schedules, other financial data and statistical data
derived therefrom contained or incorporated by reference therein, as to which
such counsel need not express any opinion or belief) at the Effective Date
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 (except as to the financial statements
and schedules, other financial data and statistical data derived therefrom
contained or incorporated by reference therein, as to which such counsel need
not express any opinion or belief) as of its date or at the Closing Date (or any
later date on which Option Stock is purchased), contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading;
--------------------------------------------
Counsel rendering the foregoing opinion may rely as to questions
of law not involving the laws of the United States or of the State of California
or the General Corporation Law of the State of Delaware, upon opinions of local
counsel satisfactory in form and scope to counsel for the Underwriters, in which
case their opinion is to state that they are so relying, and that they have no
knowledge of any material misstatement or inaccuracy in any such opinion. Copies
of any opinions so relied upon shall be delivered to the Representatives and to
counsel for the Underwriters and the foregoing opinion shall also state that
counsel knows of no reason the Underwriters are not entitled to rely upon the
opinions of such local counsel.
30
ANNEX B
FORM OF OPINION OF
SEED AND XXXXX LLP,
PATENT COUNSEL FOR THE COMPANY
Such counsel are familiar with the technology used by the Company
in its business and the manner of its use thereof and have read the Registration
Statement and the Prospectus, including particularly the portions of the
Registration Statement and the Prospectus referring to patents, trade secrets,
trademarks, service marks or other proprietary information or materials and:
It is the opinion of this firm that statements under the captions
"Risk Factors - Dependence on Patents and Proprietary Rights" and "Business -
Patents and Proprietary Rights" in the Prospectus, to the extent that such
statements relate solely to and constitute a description or summary of the legal
matters, documents or proceedings relating to the Representation and to the
extent such legal matters, documents or proceedings have been disclosed to us
during the course of the Representation, are accurate and complete statements,
and nothing has come to our attention that causes us to believe that the
above-described portions of the Prospectus contain any untrue statement or
omission of a 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, and when read in conjunction with the remainder of the Prospectus,
not misleading.
In addition, it is the opinion of the firm that:
(a) based solely upon a review of matters which counsel has been engaged
to provide direct substantive attention, this firm has no reason to believe
that there are any legal or governmental proceedings pending relating to patent
rights, trade secrets, trademarks, or service marks of the Company, and to the
best of such counsel's knowledge no proceedings are threatened by governmental
authorities or others;
(b) based solely upon a review of matters which counsel has been engaged
to provide direct substantive attention, this firm has no reason to believe that
the Company is infringing or otherwise violating any patents, including the
allowed patent referred to above, trade secrets, trademarks, or service marks
of others, and to the best of such counsel's knowledge there are no
infringements by others of any of the Company's patents, trade secrets,
trademarks, or service marks, which in the judgment of such counsel could
affect materially the use thereof by the Company; and
(c) based solely upon a review of matters which counsel has been engaged
to provide direct substantive attention, this firm has no reason to believe that
the Company does not own or possess adequate licenses or other rights to (i) use
all material patents, patent applications, trademarks, trade secrets, service
marks or other proprietary information or materials described in the Prospectus
and, (ii) conduct the business now being or proposed to be conducted by the
Company as described in the Prospectus.
SEED and XXXXX LLP
