Exhibit 1
2,500,000 Shares
VION PHARMACEUTICALS, INC.
Common Stock
UNDERWRITING AGREEMENT
August 9, 2001
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
X.X. Xxxxxxxxx, Towbin
As Representatives of the several Underwriters
c/o Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Vion Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
2,500,000 shares (the "Firm Shares") of the Company's Common Stock, $0.01 par
value per share (the "Common Stock"), to the several underwriters named in
Schedule I (collectively, the "Underwriters"), for whom Xxxxxx Xxxxxx Xxxxxxxx &
Co., Inc. ("GKM") and X.X. Xxxxxxxxx, Towbin are acting as representatives
(collectively, the "Representatives"). The Company has also agreed to grant to
the Underwriters an option (the "Option") to purchase up to an additional
375,000 shares of Common Stock (the "Option Shares") on the terms and for the
purposes set forth in Section 1(b). The Firm Shares and the Option Shares are
hereinafter collectively referred to as the "Shares."
The public offering price per share at which the Shares are initially
offered and the purchase price per share for the Shares to be paid by the
Underwriters shall be agreed upon by the Company and the Representatives, acting
on behalf of the several Underwriters, and such agreement shall be set forth in
a separate written instrument substantially in the form of Exhibit A hereto (the
"Price Determination Agreement"). The Price Determination Agreement may take the
form of an exchange of any standard form of written telecommunication between
the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Shares
shall be governed by this Agreement, as supplemented by the Price Determination
Agreement. From and after the date of the execution and delivery of the Price
Determination Agreement, this Agreement shall be deemed to incorporate, and,
unless the context otherwise indicates, all references contained herein to
"this Agreement" and to the phrase "herein" shall be deemed to include, the
Price Determination Agreement.
The Company confirms as follows its agreement with the Representatives
and the several other Underwriters:
1. Agreement to Sell and Purchase.
(a) Purchase of Firm Shares. On the basis of the representations,
warranties and agreements of the Company herein contained and subject
to all the terms and conditions of this Agreement, the Company agrees
to sell to the several Underwriters and each of the several
Underwriters, severally and not jointly, agrees to purchase from the
Company, at the purchase price per share to be agreed upon by the
Company and the Representatives in accordance with Section 1(c) hereof
and as set forth in the Price Determination Agreement, the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule
I, plus such additional number of Firm Shares which such Underwriter
may become obligated to purchase pursuant to Section 8 hereof.
(b) Purchase of Option Shares. Subject to all the terms and
conditions of this Agreement, the Company grants the Option to the
several Underwriters to purchase up to 375,000 Option Shares from the
Company at the same price per share as the Underwriters shall pay for
the Firm Shares. The Option may be exercised only to cover
over-allotments in the sale of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time on or before the 30th
day after the date of this Agreement (or, if the Company has elected to
rely on Rule 430A, on or before the 45th day after the date of the
Price Determination Agreement), upon written notice (the "Option Shares
Notice") by the Representatives to the Company no later than 12:00
noon, New York City time, at least two and no more than five business
days before the date specified for closing in the Option Shares Notice
(the "Option Closing Date") setting forth the aggregate number of
Option Shares to be purchased and the time and date for such purchase.
On the Option Closing Date, the Company shall issue and sell to the
Underwriters and the Underwriters shall purchase from the Company the
number of Option Shares set forth in the Option Shares Notice.
(c) Price Determination Agreement. The public offering price per
share at which the Firm Shares are initially offered and the purchase
price per share for the Firm Shares to be paid by the several
Underwriters shall be agreed upon and set forth in the Price
Determination Agreement. In the event such price has not been agreed
upon and the Price Determination Agreement has not been executed by the
close of business on the fourteenth business day following the date of
this Agreement, this Agreement shall terminate forthwith, without
liability
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of any party to any other party except that Sections 4(i), 4(j) and 6
shall remain in effect.
2. Delivery and Payment.
(a) Closing. Delivery of the Firm Shares shall be made to the
Representatives for the accounts of the Underwriters against payment of
the purchase price by wire transfer of immediately available funds to
the order of the Company at the offices of Xxxxxxxx & Xxxxxxxx LLP in
New York, New York (or such other place as may be agreed upon among the
Representatives and the Company). Such payment shall be made at 10:00
a.m., New York City time, on the third business day (the fourth
business day, should the offering be priced after 4:30 PM, EST/EDT)
after the date on which the first bona fide offering of the Firm Shares
to the public is made by the Underwriters or at such time on such other
date, not later than ten business days after such date, as may be
agreed upon by the Company and the Representatives (such date is
hereinafter referred to as the "Closing Date").
(b) Option Closing. To the extent the Option is exercised,
delivery of the Option Shares against payment by the Representatives
(in the manner and at the location specified above) shall take place at
the time and date (which may be the Closing Date) specified in the
Option Shares Notice.
(c) Certificates. Certificates evidencing the Shares shall be in
definitive form and shall be registered in such names and in such
denominations as the Representatives shall request at least two
business days prior to the Closing Date or the Option Closing Date, as
the case may be, by written notice to the Company. For the purpose of
expediting the checking and packaging of certificates for the Shares,
the Company agrees to make such certificates available for inspection
at least 24 hours prior to the Closing Date or the Option Closing Date,
as the case may be.
(d) Tax Stamps. The cost of original issue tax stamps, if any, in
connection with the issuance and delivery of the Shares by the Company
to the respective Underwriters shall be borne by the Company. The
Company shall pay and hold each Underwriter and any subsequent holder
of the Shares harmless from any and all liabilities with respect to or
resulting from any failure or delay in paying Federal and state stamp
and other transfer taxes, if any, which may be payable or determined to
be payable in connection with the original issuance or sale to such
Underwriter of the Shares.
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3. Representations and Warranties of the Company. The Company
represents and warrants to, and covenants with, each Underwriter as follows:
(a) Compliance with Registration Requirements. The Company meets
the requirements for use of Form S-3 and has filed with the Securities
and Exchange Commission (the "Commission") a registration statement on
Form S-3 (No. 333-58206), including a prospectus relating to the
Shares, for the registration of such securities under the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Act"). The Company meets the
requirements of Rule 415 under the Act for the registration, offer and
sale of the Shares. A prospectus supplement reflecting the terms of the
Shares, the terms of the offering thereof and the other matters set
forth therein has been prepared or will be prepared and will be filed
pursuant to Rule 424 under the Act. Such prospectus supplement, in the
form first filed after the date hereof pursuant to Rule 424, is herein
referred to as the "Prospectus Supplement." Such registration
statement, as amended at the date hereof, including all documents
incorporated or deemed to be incorporated by reference therein and the
exhibits thereto, in the form it was declared effective by the
Commission under the Act is herein referred to as the "Registration
Statement" and the base prospectus included therein and relating to all
offerings of securities under the Registration Statement, as amended on
June 21, 2001 and as supplemented by the Prospectus Supplement, is
herein referred to as the "Prospectus," except that if such base
prospectus is amended or supplemented on or prior to the date on which
the Prospectus Supplement is first filed pursuant to Rule 424, the term
"Prospectus" shall refer to the base prospectus as so amended or
supplemented and as supplemented by the Prospectus Supplement, in
either case including the documents filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder (collectively, the
"Exchange Act"), that are incorporated by reference therein. If the
Company files a registration statement to register a portion of the
Shares and relies on Rule 462(b) under the Act for such registration
statement to become effective upon filing with the Commission (the
"Rule 462 Registration Statement"), then any reference to the
"Registration Statement" shall be deemed to include the Rule 462
Registration Statement, as amended from time to time. All references in
this Agreement to the Registration Statement, the Rule 462 Registration
Statement, the Prospectus Supplement or the Prospectus, or any
amendments or supplements to the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval ("XXXXX") System.
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(b) Effectiveness of Registration. The Registration Statement, any
Rule 462(b) Registration Statement and any post-effective amendment
thereto have been declared effective by the Commission under the Act.
The date that the Registration Statement was declared effective by the
Commission is referred to in this Agreement as the "Effective Date."
The Company has responded to all requests, if any, of the Commission
for additional or supplemental information. No stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect and no proceedings for such purpose
have been instituted or are pending or, to the best knowledge of the
Company, are contemplated or threatened by the Commission.
(c) Accuracy of Registration Statement. Each of the Registration
Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and
at all subsequent times, complied and will comply in all material
respects with the Act and did not and will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not misleading. The Prospectus, as amended or supplemented, as
of its date and at all subsequent times, complied and will comply in
all material respects with the Act and did not or will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading, in light of
the circumstances under which they were made. The foregoing
representations and warranties in this Section 3(c) do not apply to any
statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the
Company by the Representatives specifically for inclusion in the
Registration Statement or Prospectus or any amendment or supplement
thereto. For all purposes of this Agreement, the only information
relating to any Underwriter furnished in writing to the Company by the
Representatives specifically for inclusion in the Registration
Statement or the Prospectus are the amounts of the selling concession
and reallowance set forth in the third paragraph in the section
entitled "Underwriting" in the Prospectus Supplement and the eighth
paragraph in the section entitled "Underwriting" in the Prospectus
Supplement concerning stabilization and overallotment by the
Underwriters. The Company has not distributed any offering material in
connection with the offering or sale of the Shares other than the
Registration Statement and the Prospectus.
(d) Documents Incorporated by Reference. The documents
incorporated or deemed to be incorporated by reference in the
Prospectus, at the time they were or hereafter are filed with the
Commission, conformed and will conform in all material respects to the
requirements of the Exchange Act, and, when read together with the
other information in the Prospectus, at the time the Registration
Statement and any amendments thereto become effective and at the
Closing Date, will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the fact
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required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(e) Organization; Good Standing. The Company is, and at the
Closing Date will be, a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware. The
Company has, and at the Closing Date will have, full power and
authority to own or lease all the assets owned or leased by it and to
conduct its business as described or incorporated by reference in the
Registration Statement and the Prospectus. The Company is, and at the
Closing Date will be, duly licensed or qualified to do business in and
in good standing as a foreign corporation in all jurisdictions in which
the nature of the activities conducted by it or the character of the
assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or in
good standing would not have a Material Adverse Effect (as defined in
section 3(k) hereof). Complete and correct copies of the certificate of
incorporation and of the by-laws of the Company and all amendments
thereto have been delivered to the Representatives, and no changes
therein will be made subsequent to the date hereof and prior to the
Closing Date. The Company does not own or control any subsidiary.
(f) Authorization of Shares. The outstanding shares of Common
Stock have been, and the Shares to be issued and sold by the Company
upon such issuance in accordance with this Agreement will be, duly
authorized, validly issued, fully paid and non-assessable and will not
be subject to any preemptive, first refusal, or similar right. The
description of the Common Stock included or incorporated by reference
in the Registration Statement and the Prospectus is now, and at the
Closing Date will be, complete and accurate in all material respects.
Except as set forth or incorporated by reference in the Prospectus, and
except with respect to options to purchase Common Stock granted or
exercised after the date thereof under the Company's Amended and
Restated 1993 Stock Option Plan, the Company does not have outstanding,
and at the Closing Date will not have outstanding, any shares of Common
Stock, any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of Common Stock
or any such warrants, convertible securities or obligations.
(g) Financial Statements. The financial statements and schedules
included or incorporated by reference in the Registration Statement or
the Prospectus present fairly in all material respects the financial
condition of the Company as of the respective dates thereof and the
results of operations and cash flows of the Company for the respective
periods covered thereby, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
entire period involved, except as otherwise disclosed or incorporated
by reference in the Prospectus. No other financial statements or
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schedules of the Company are required by the Act or the Exchange Act to
be included or incorporated by reference in the Registration Statement
or the Prospectus. Ernst & Young LLP (the "Accountants") who have
reported on such financial statements and schedules, are independent
accountants with respect to the Company as required by the Act. The
statements included in the Registration Statement with respect to the
Accountants pursuant to Rule 509 of Regulation S-K under the Act are
true and correct in all material respects.
(h) Accounting System. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(i) No Material Adverse Changes. Since June 30, 2001, the date of
the last financial statements included in the Company's filings with
the Commission and prior to the Closing Date, except as set forth or
incorporated by reference in the Prospectus, (i) there has not been and
will not have been a material adverse change in the business,
properties, business prospects, condition (financial or otherwise) or
results of operations of the Company arising for any reason whatsoever
(a "Material Adverse Change") or a material change in the
capitalization of the Company, (ii) the Company has not incurred, nor
will it incur, any material liabilities or obligations, direct or
contingent, nor has it entered into, nor will it enter into, any
material transactions not in the ordinary course of business, other
than pursuant to this Agreement and the transactions referred to
herein, and (iii) the Company has not and will not have paid or
declared any dividends or other distributions of any kind on any class
of its capital stock.
(j) Investment Company. The Company is not an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company
Act").
(k) Litigation. Except as set forth or incorporated by reference
in the Prospectus, there are no actions, suits or proceedings pending,
or to the Company's knowledge, threatened against or affecting, the
Company or any of its officers in their capacity as such, before or by
any Federal or state court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, wherein an
unfavorable ruling, decision or finding would
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reasonably be expected to have a material adverse effect on the
business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company (a "Material
Adverse Effect"). The Company has not received any notice of
proceedings relating to the revocation or modification of any
authorization, approval, order, license, certificate, franchise or
permit. There are no pending investigations known to the Company
involving the Company by any governmental agency having jurisdiction
over the Company or its business or operations. The disclosures
included or incorporated by reference in the Prospectus and the
Registration Statement concerning the effects of Federal, state, local
and foreign laws, rules and regulations on the business of the Company
as currently conducted and as proposed to be conducted are correct in
all material respects and do not omit to state a material fact
required to be stated therein or necessary to make the statements
contained therein not misleading, in light of the circumstances under
which they were made.
(l) Necessary Licenses, Compliance with Laws and Regulations and
Performance of Obligations and Contracts. The Company has, and at the
Closing Date will have, (i) all governmental licenses, permits,
consents, orders, approvals and other authorizations necessary to carry
on its business as currently carried on and as described in the
Prospectus, except where the failure to have such licenses, permits,
consents, orders, approvals or other authorizations would not have a
Material Adverse Effect, (ii) complied in all material respects with
all laws, regulations and orders applicable to it or its business and
(iii) performed all obligations required to be performed by it, and is
not, and at the Closing Date will not be, in default under any
indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement, lease, license or other
agreement or instrument which is material to its business (including,
but not limited to, the instruments and agreements that have been filed
as exhibits to the Registration Statement and the documents
incorporated by reference or deemed to be incorporated by reference
therein) to which it is a party or by which its property is bound or
affected (collectively, a "Contract") except to the extent that the
Company has not yet satisfied its obligation to register under the Act
up to 220,000 shares of Common Stock issuable upon exercise of certain
warrants issued under the Warrant Agreement by and between the Company
and Xxxxx Xxxxxx & Co., Inc. dated as of October 29, 1999 (such
agreement, the "Warrant Agreement," and such obligation, the
"Registration Obligation"). To the best knowledge of the Company, no
other party under any Contract to which it is a party is in default in
any respect thereunder or has given written, or to the knowledge of the
officers and directors of the Company oral, notice to the Company or
any of its officers or directors of such other party's intention to
terminate, cancel or refuse to renew any Contract. The Company is not
now, and at the Closing Date will not be, in violation of any provision
of its certificate of incorporation or by-laws.
(m) FDA Matters and Clinical Trials.
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(i) As of the date of this Agreement, except as set forth in
the Registration Statement or the Prospectus, the Company is not
required to file or obtain any registration, application, license,
request for exemption, permit or other regulatory authorization
with the U.S. Food and Drug Administration (the "FDA") or any
other federal, state, local or foreign regulatory body that
regulates the types of matters subject to the jurisdiction of the
FDA (together with the FDA, "Health Authorities") in order to
conduct its business as described in the Registration Statement
and the Prospectus.
(ii) To the best knowledge of the Company, the clinical
trials, studies and other preclinical tests conducted by the
Company or in which the Company has participated that are
described in the Registration Statement and the Prospectus or the
results of which are referred to in the Registration Statement or
the Prospectus, and such studies and tests conducted on behalf of
the Company, were and, if still pending, are, being conducted in
accordance with experimental protocols, procedures and controls
generally used by qualified experts in the preclinical or clinical
study of new drugs or diagnostics as applied to comparable
products to those being developed by the Company; to the best
knowledge of the Company, the descriptions of the results of such
studies, tests and trials contained in the Registration Statement
and the Prospectus are accurate and complete in all material
respects, and the Company has no knowledge of any other trials,
studies or tests, the results of which the Company believes
reasonably call into question the clinical trial results described
or referred to in the Registration Statement and the Prospectus.
(iii) The Company has not received any notices or
correspondence from any Health Authority which have not been
resolved requiring or threatening the termination, suspension or
modification of any animal studies, preclinical tests or clinical
trials conducted by or on behalf of the Company or in which the
Company has participated that are described in the Registration
Statement or the Prospectus or the results of which are referred
to in the Registration Statement or the Prospectus.
(iv) The Company has no knowledge of any adverse event that
has resulted from any of such studies, tests or trials that was
not disclosed as required to any Health Authority.
(n) No Consent of Governmental Body Needed. No consent, approval,
authorization or order of, or any filing or declaration with, any court
or governmental agency or body is required in connection with the
authorization, issuance, transfer, sale or delivery of the Shares by
the Company, in connection with the execution, delivery and performance
of this Agreement by the Company or in connection with the taking by
the Company of any action contemplated hereby, except as have been
obtained under the Act and such as may be required under U.S. state or
Canadian provincial securities or Blue Sky laws or the by-laws
9
and rules of the National Association of Securities Dealers, Inc. (the
"NASD") in connection with the purchase and distribution by the
Underwriters of the Shares to be sold by the Company.
(o) Qualification with Respect to Certain NASD Matters. The
aggregate value of voting Common Stock held by non-affiliates of the
Company is $100,000,000 or more. The Company has had an annual trading
volume of at least 3,000,000 shares of its Common Stock. The Company
has been subject to the reporting requirements of the Exchange Act for
36 months and has timely filed all required reports under the Exchange
Act for the previous 12 months. The Company has not defaulted on any
preferred stock dividend, sinking fund payment, interest payment, or
lease obligation since the end of the most recent fiscal year for which
certified financial statements of the Company were included in a report
filed under Section 13(a) or 15(d) of the Exchange Act.
(p) Agreement Duly Authorized and No Breach of Obligations or
Charter. The Company has full corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance
with the terms hereof, except as the enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or
general equitable principles. The performance of this Agreement and the
consummation of the transactions contemplated hereby, and the
application of the net proceeds from the offering and sale of the
Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds" will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of
the Company pursuant to the terms or provisions of, or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, or give any other party a right to terminate any of
its obligations under, or result in the acceleration of any obligation
under, (x) the certificate of incorporation or by-laws of the Company,
or (y) any Contract to which the Company is a party or by which the
Company or any of its properties is bound or affected, or violate or
conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or other governmental agency or body applicable
to the business or properties of the Company.
(q) Title to Property. The Company has good and marketable title
to all properties and assets described or incorporated by reference in
the Prospectus to be owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except as set forth or incorporated by
reference in the Prospectus or are not material to the business of the
Company. Except as described in the Prospectus, the Company has valid,
subsisting and enforceable leases for the properties described or
incorporated by reference in the Prospectus as leased by it,
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with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such properties
by the Company.
(r) Documents Described in Registration Statement. There is no
document or Contract of a character required to be described or
incorporated by reference in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
that is not described or filed as required. All such documents and
Contracts that are currently in effect and that are described or
incorporated by reference in the Registration Statement or the
Prospectus or filed as an exhibit to the Registration Statement were
duly authorized, executed and delivered by the Company, and constitute
valid and binding agreements of the Company and are enforceable against
the Company in accordance with the terms thereof.
(s) No Untrue Statement. No statement, representation, warranty or
covenant made by the Company in this Agreement or made in any
certificate or document required by this Agreement to be delivered to
the Representatives was or will be, when made, inaccurate, untrue or
incorrect.
(t) No Price Stabilization or Manipulation. Neither the Company
nor any of its directors, officers or controlling persons has taken,
directly or indirectly, any action intended to cause or result in, or
which might reasonably be expected to cause or result in, or which has
constituted, stabilization or manipulation, under the Act or otherwise,
of the price of any security of the Company to facilitate the sale or
resale of the Shares.
(u) No Registration Rights. No holder of securities of the Company
has rights to register any securities of the Company because of the
filing of the Registration Statement, the Prospectus or the offering of
the Shares, except for the Registration Obligation under the Warrant
Agreement, and rights that have been duly waived by such holder, have
expired or have been fulfilled by registration prior to the date of
this Agreement.
(v) Stock Exchange Listing. The Shares are duly authorized for
listing on the Nasdaq National Market, subject only to notice of
issuance.
(w) Labor Matters. The Company is not involved in any material
labor dispute nor, to the knowledge of the Company, is any such dispute
threatened.
(x) No Unlawful Contributions or Payments. Neither the Company nor
to the best of the Company's knowledge, any of its officers, directors,
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employees or agents, have made any contribution or other payment to any
official of, or candidate for, any federal, state or foreign office in
violation of any law or of the character required to be disclosed in
the Prospectus.
(y) Taxes. The Company has filed all necessary federal, state and
foreign income and franchise tax returns and has paid all taxes
required to be paid by it and, if due and payable, any related or
similar assessment, fine or penalty levied against it except where the
failure to file such tax returns or to pay such taxes and other
payments would not have a Material Adverse Effect. The Company has made
adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 3(g) above in respect of all material
federal, state and foreign income and franchise taxes for all periods
as to which the tax liability of the Company has not been finally
determined.
(z) Insurance. The Company carries, or is covered by, insurance in
such amounts and covering such risks as it believes is adequate for the
conduct of its business and the value of its properties as is customary
for companies engaged in similar industries.
(aa) Defined Benefit Plans. The Company has not maintained or
contributed to a defined benefit plan as defined in Section 3(35) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). No plan maintained or contributed to by the Company that is
subject to ERISA (an "ERISA Plan") (or any trust created thereunder)
has engaged in a "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code that could subject the Company
to any material tax penalty on prohibited transactions and that has not
adequately been corrected. Each ERISA Plan is in compliance in all
material respects with all reporting, disclosure and other requirements
of the Code and ERISA as they relate to such ERISA Plan, except for any
noncompliance which would not result in the imposition of a material
tax or monetary penalty. With respect to each ERISA Plan that is
intended to be "qualified" within the meaning of Section 401(a) of the
Code, either (i) a determination letter has been issued by the Internal
Revenue Service stating that such ERISA Plan and the attendant trust
are qualified thereunder, or (ii) the remedial amendment period under
Section 401(b) of the Code with respect to the establishment of such
ERISA Plan has not ended and a determination letter application will be
filed with respect to such ERISA Plan prior to the end of such remedial
amendment period. The Company has not ever completely or partially
withdrawn from a "multiemployer plan," as defined in Section 3(37) of
ERISA.
(bb) Intellectual Property. Except as set forth or incorporated by
reference in the Prospectus, the Company owns, has licensed or
otherwise has adequate rights to use trade secrets, know-how,
technology (including other unpatented and/or unpatentable proprietary
or confidential information, systems
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or procedures), inventions, designs, processes, works of authorship,
computer programs and technical data and information (collectively,
the "Intellectual Property") that are or could reasonably be expected
to be material to its business as currently conducted or proposed to
be conducted or to the development, manufacture, operation and sale of
any products and services sold or proposed to be sold by the Company.
Except as set forth or incorporated by reference in the Prospectus,
the Company has not received any notice of infringement of or conflict
with asserted rights of others with respect to any Intellectual
Property. Except as set forth or incorporated by reference in the
Prospectus, the Company is not obligated or under any liability
whatsoever to make any material payment by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any
Intellectual Property, with respect to the use thereof or in
connection with the conduct of its business or otherwise.
(cc) Trademarks. The Company owns, or is licensed or otherwise has
the full exclusive right to use, all material trademarks and trade
names that are used in or reasonably necessary for the conduct of its
business as currently conducted and as described in the Prospectus. The
Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any such trademarks or trade
names, or challenging or questioning the validity or effectiveness of
any such trademark or trade name. The use, in connection with the
business and operations of the Company of such trademarks and trade
names does not, to the Company's knowledge, infringe on the rights of
any person.
(dd) Protection of Intellectual Property. The Company has taken
reasonable security measures to protect the secrecy, confidentiality
and value of all its Intellectual Property in all material aspects, in
such manner as it believes is adequate for the conduct of its business
and the value of its Intellectual Property as is customary for
companies engaged in similar industries.
(ee) Related Party Transactions. There are no business
relationships or related party transactions involving the Company or
any other person required to be described in the Prospectus that have
not been described or incorporated therein by reference.
(ff) Environmental Matters. The Company (i) is in compliance with
any and all applicable federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, "Environmental Laws"), (ii) has received all permits,
licenses or other approvals required of it under applicable
Environmental Laws to conduct its businesses and (iii) is in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive permits, licenses or other approvals or failure to comply with
the terms and
13
conditions of such permits, licenses or approvals would not, either
singly or in the aggregate, have a Material Adverse Effect.
4. Agreements of the Company. The Company agrees with each Underwriter
as follows:
(a) Amendments and Supplements to Registration Statement. The
Company shall not, during such period as the Prospectus is required by
law to be delivered in connection with sales of the Shares by an
Underwriter or dealer, file any amendment or supplement to the
Registration Statement or the Prospectus, unless a copy thereof shall
first have been submitted to the Representatives within a reasonable
period of time prior to the filing thereof and the Representatives
shall not have objected thereto in good faith.
(b) Notifications to the Representatives. If the Registration
Statement has not already been declared effective by the Commission,
the Company shall use its best efforts to cause the Registration
Statement to become effective, and shall notify the Representatives
promptly, and shall confirm such advice in writing, (i) when any
post-effective amendment to the Registration Statement has become
effective, (ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information, (iii) of the commencement by the Commission or
by any state securities commission of any proceedings for the
suspension of the qualification of any of the Shares for offering or
sale in any jurisdiction or of the initiation, or the threatening, of
any proceeding for that purpose, including, without limitation, the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose or the threat thereof, (iv) of the
happening of any event during the period mentioned in the second
sentence of Section 4(e) hereof that in the judgment of the Company
makes any statement made in the Registration Statement or the
Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the
statements therein, in light of the circumstances in which they are
made, not misleading and (v) of receipt by the Company or any
representative of the Company of any other communication from the
Commission relating to the Company, the Registration Statement or the
Prospectus. If at any time the Commission shall issue any order
suspending the effectiveness of the Registration Statement, the Company
shall use best efforts to obtain the withdrawal of such order at the
earliest possible moment. The Company shall use its best efforts to
comply with the provisions of and make all requisite filings with the
Commission pursuant to Rule 430A and to notify the Representatives
promptly of all such filings.
14
(c) Executed Registration Statements. The Company shall furnish to
the Representatives, without charge, two signed copies of the
Registration Statement and of any post-effective amendment thereto,
including financial statements and schedules, and all exhibits thereto
(including any document filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus), and shall furnish to
the Representatives, without charge, a signed copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) Undertakings. The Company shall comply with all the provisions
of any undertakings contained in the Registration Statement.
(e) Prospectus. On the Effective Date, and thereafter from time to
time, the Company shall deliver to each of the Underwriters, without
charge, as many copies of the Prospectus and any amendment or
supplement thereto as the Representatives may reasonably request. The
Company consents to the use of the Prospectus and any amendment or
supplement thereto by the Underwriters and by all dealers to whom the
Shares may be sold, both in connection with the offering or sale of the
Shares and for any period of time thereafter during which the
Prospectus is required by law to be delivered in connection therewith.
If during such period of time any event shall occur that in the
judgment of the Company or counsel to the Underwriters should be set
forth in the Prospectus in order to make any statement therein, in the
light of the circumstances under which it was made, not misleading, or
if it is necessary to supplement or amend the Prospectus to comply with
law, the Company shall forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and shall
deliver to each of the Underwriters, without charge, such number of
copies thereof as the Representatives may reasonably request. The
Company shall not file any document under the Exchange Act before the
termination of the offering of the Shares by the Underwriters if such
document would be deemed to be incorporated by reference into the
Prospectus unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing
thereof and the Representatives shall not have objected thereto in good
faith.
(f) Compliance with Blue Sky Laws. Prior to any public offering of
the Shares by the Underwriters, the Company shall cooperate with the
Representatives and counsel to the Underwriters in connection with the
registration or qualification (or the obtaining of exemptions from the
application thereof) of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the
Representatives may request, including, without limitation, the
provinces and territories of Canada and other jurisdictions outside the
United States; provided, however, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not
now so
15
qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
(g) Delivery of Financial Statements. During the period of five
years commencing on the Effective Date, the Company shall furnish to
the Representatives and each other Underwriter who may so request
copies of such financial statements and other periodic and special
reports as the Company may from time to time distribute generally to
the holders of any class of its capital stock, and will furnish to the
Representatives and each other Underwriter who may so request a copy of
each annual or other report it shall be required to file with the
Commission.
(h) Availability of Earnings Statements. The Company shall make
generally available to holders of its securities as soon as may be
practicable but in no event later than the last day of the fifteenth
full calendar month following the calendar quarter in which the
Effective Date occurred, an earnings statement (which need not be
audited but shall be in reasonable detail) for a period of 12 months
ended commencing on the first day of the first fiscal quarter following
the filing of the last report of the Company contemplated by Rule
158(c)(3) under the Act, which satisfies the provisions of Section
11(a) of the Act (including such Rule 158).
(i) Reimbursement of Certain Expenses. Whether or not any of the
transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company shall pay, or reimburse if paid by
the Representatives, all costs and expenses incident to the performance
of the obligations of the Company under this Agreement, including but
not limited to costs and expenses of or relating to (i) the
preparation, printing and filing of the Registration Statement and
exhibits to it, the Prospectus and any amendment or supplement to the
Registration Statement or the Prospectus, (ii) the preparation and
delivery of certificates representing the Shares, (iii) the printing of
this Agreement, the Agreement Among Underwriters and any Dealer
Agreements and any Underwriters' Questionnaire, (iv) furnishing
(including costs of shipping, mailing and courier) such copies of the
Registration Statement, the Prospectus and all amendments and
supplements thereto, as may be requested for use in connection with the
offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold, (v) the listing of the Shares on the Nasdaq
National Market, (vi) any filings required to be made by the
Representatives with the NASD, and the fees, disbursements and other
charges of counsel for the Underwriters in connection therewith (not to
exceed $6,000 in the aggregate), (vii) the registration or
qualification of the Shares for offer and sale under the securities or
Blue Sky laws of such jurisdictions designated pursuant to Section 4(f)
hereof, including the fees, disbursements and other charges of
16
counsel to the Underwriters in connection therewith (not to exceed
$5,000 in the aggregate), and, if requested by the Representatives,
the preparation and printing of preliminary, supplemental and final
Blue Sky memoranda, (viii) counsel to the Company, (ix) the transfer
agent for the Shares, (x) the Accountants, (xi) the marketing of the
offering by the Company, including, without limitation, all costs and
expenses of commercial airline tickets, hotels, meals and other travel
expenses of officers, employees, agents and other representatives of
the Company (but not officers, employees, agents or other
representatives of the Representatives), and (xiii) all fees, costs
and expenses for consultants used by the Company in connection with
the offering.
(j) Reimbursement of Expenses upon Termination of Agreement. If
this Agreement shall be terminated by the Company pursuant to any of
the provisions hereof or if for any reason the Company shall be unable
to perform its obligations hereunder, the Company shall reimburse the
several Underwriters for all out-of-pocket expenses (including the
fees, disbursements and other charges of counsel to the Underwriters)
reasonably incurred by them in connection herewith.
(k) No Stabilization or Manipulation. The Company shall not at any
time, directly or indirectly, take any action intended to cause or
result in, or which might reasonably be expected to cause or result in,
or which will constitute, stabilization or manipulation, under the Act
or otherwise, of the price of the shares of Common Stock to facilitate
the sale or resale of any of the Shares.
(l) Use of Proceeds. The Company shall apply the net proceeds from
the offering and sale of the Shares to be sold by the Company in the
manner set forth in the Prospectus under "Use of Proceeds." The Company
shall not invest, or otherwise use, the proceeds received from the sale
of the Shares in such a manner as would require the Company to register
as an investment company under the Investment Company Act.
(m) Lock-up Agreements of Management and Affiliates. The Company
shall not, and shall cause each of its executive officers, directors,
Xxxxxxx Associates, L.P. and Xxxxxxx International, L.P. to enter into
agreements with the Representatives in the form set forth in Exhibit B
to the effect that they shall not, for a period of 90 days after the
date of the Prospectus Supplement, without the prior written consent of
GKM (which consent may be withheld in its sole discretion), offer to
sell, sell, pledge, contract to sell, purchase any option to sell,
grant any option for the purchase of, lend, or otherwise dispose of, or
require the Company to file with the Commission a registration
statement under the Act to register, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common
Stock or warrants or other rights to acquire shares of Common Stock of
which they are now, or may in the future become, the beneficial owner
(within the meaning of Rule 13d-3 under the
17
Exchange Act) (other than, with respect to the Company, in connection
with bona fide business acquisitions and strategic alliances, provided
that the parties to such acquisitions or alliances agree to be subject
to this lock-up, or pursuant to employee stock option plans existing
on, or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of the Prospectus Supplement).
(n) Required Reports. The Company will timely file all such
reports, forms or other documents as may be required from time to time
under the Act and the Exchange Act, and all such reports, forms and
documents filed will comply in all material respects as to form and
substance with the applicable requirements of the Act and the Exchange
Act.
(o) Registration Obligation. The Company will use commercially
reasonable efforts to promptly satisfy the Registration Obligation
under the Warrant Agreement.
5. Conditions of the Obligations of the Underwriters. In addition to
the execution and delivery of the Price Determination Agreement, the obligations
of each Underwriter hereunder are subject to the following conditions:
(a) The Company shall have filed the Prospectus (including the
Prospectus Supplement) with the Commission (including the information
required by Rule 430A under the Securities Act) in the manner and
within the time period required by Rule 424(b) under the Securities
Act; or the Company shall have filed a post-effective amendment to the
Registration Statement containing the information required by such Rule
430A, and such post-effective amendment shall have become effective;
or, if the Company elected to rely upon Rule 434 under the Securities
Act and obtained the Representatives' written consent thereto, the
Company shall have filed a term sheet with the Commission in the manner
and within the time period required by Rule 424(b).
(b) No Stop Orders, Requests for Information and No Amendments.
(i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose
shall be pending or are, to the best knowledge of the Company,
threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or
registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose
shall be pending before or threatened or contemplated by the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such
authorities shall have been complied with to the satisfaction of the
staff of the Commission or such authorities and (iv) after the date
hereof no
18
amendment or supplement to the Registration Statement or the
Prospectus shall have been filed unless a copy thereof was first
submitted to the Representatives and the Representatives did not
object thereto in good faith, and the Representatives shall have
received certificates, dated the Closing Date and the Option Closing
Date and signed by the Chief Executive Officer and the Chief Financial
Officer of the Company (who may, as to proceedings threatened, rely
upon the best of their information and belief), to the effect of
clauses (i), (ii) and (iii).
(c) No Material Adverse Changes. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as set forth or incorporated by reference in the
Prospectus (i) there shall not have been a Material Adverse Change,
(ii) the Company shall not have incurred any material liabilities or
obligations, direct or contingent, the effect of any of which is such
as to make it impracticable or inadvisable in the judgment of the
Underwriters to market the Shares on the terms and in the manner
contemplated by the Prospectus Supplement, (iii) the Company shall not
have entered into any material transactions not in the ordinary course
of business other than pursuant to this Agreement and the transactions
referred to herein, (iv) the Company has not issued any securities
(other than the Shares) or declared or paid any dividend or made any
distribution in respect of its capital stock of any class or debt
(long-term or short-term), and (v) no material amount of the assets of
the Company shall have been pledged, mortgaged or otherwise encumbered.
(d) No Actions, Suits or Proceedings. Since the respective dates
as of which information is given or incorporated by reference in the
Registration Statement and the Prospectus, there shall have been no
actions, suits or proceedings instituted, or to the Company's
knowledge, threatened against or affecting, the Company or any of its
officers in their capacity as such, before or by any Federal, state or
local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, wherein an unfavorable
ruling, decision or finding would reasonably be expected to have a
Material Adverse Effect.
(e) All Representations True and Correct and All Conditions
Fulfilled. Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at
the Closing Date as if made at the Closing Date and, with respect to
the Option Shares, at the Option Closing Date as if made at the Option
Closing Date, and all covenants and agreements contained herein to be
performed by the Company and all conditions contained herein to be
fulfilled or complied with by the Company at or prior to the Closing
Date and, with respect to the Option Shares, at or prior to the Option
Closing Date, shall have been duly performed, fulfilled or complied
with.
19
(f) Opinions of Counsel to the Company. The Representatives shall
have received the opinions and letters, each dated the Closing Date
and, with respect to the Option Shares, the Option Closing Date,
reasonably satisfactory in form and substance to counsel for the
Underwriters, from Fulbright & Xxxxxxxx L.L.P., counsel to the Company,
to the effect set forth in Exhibit C, and from Xxxxxx & Xxxxxxx LLP,
Xxxxxxx Xxxxx, LLP and Jacobson, Price, Xxxxxx and Xxxxx LLP patent
counsel to the Company.
(g) Opinion of Counsel to the Underwriters. The Representatives
shall have received an opinion, dated the Closing Date and the Option
Closing Date, from Xxxxxxxx & Xxxxxxxx LLP, counsel to the
Underwriters, with respect to the Registration Statement, the
Prospectus and this Agreement, which opinion shall be satisfactory in
all respects to the Representatives.
(h) Accountant's Comfort Letter. On the date of the Prospectus
Supplement, the Representatives shall have received from the
Accountants a letter dated the date of its delivery, addressed to the
Representatives, in form and substance reasonably satisfactory to the
Representatives, containing statements and information of the type
ordinarily included in accountant's "comfort letters" to underwriters,
delivered according to Statement of Auditing Standards No. 72 (or any
successor bulletin), with respect to the audited and unaudited
financial statements and certain financial information contained or
incorporated by reference in the Registration Statement and the
Prospectus. At the Closing Date and, as to the Option Shares, the
Option Closing Date, the Representatives shall have received from the
Accountants a letter dated such date, in form and substance reasonably
satisfactory to the Representatives, to the effect that they reaffirm
the statements made in the letter furnished by them pursuant to the
preceding sentence, except that the specified date referred to therein
for the carrying out of procedures shall be no more than three business
days prior to the Closing Date.
(i) Officer's Certificates. At the Closing Date and, as to the
Option Shares, the Option Closing Date, there shall be furnished to the
Representatives an accurate certificate, dated the date of its
delivery, signed by each of the Chief Executive Officer and the Chief
Financial Officer of the Company, in form and substance satisfactory to
the Representatives, to the effect that:
(i) each signer of such certificate has carefully examined
the Registration Statement and the Prospectus (including any
documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus);
(ii) there has not been a Material Adverse Change;
20
(iii) each of the representations and warranties of the
Company contained in this Agreement are, at the time such
certificate is delivered, true and correct in all material
respects; and
(iv) each of the covenants required herein to be performed by
the Company on or prior to the date of such certificate has been
duly, timely and fully performed and each condition herein
required to be complied with by the Company on or prior to the
delivery of such certificate has been duly, timely and fully
complied with.
(j) Lock-Up Agreements. On or prior to the Closing Date, the
Representatives shall have received the executed "lock-up" agreements
referred to in Section 4(m).
(k) Compliance with Blue Sky Laws. The Shares shall be qualified
for sale in such states and jurisdictions as the Representatives may
reasonably request, including, without limitation, the provinces and
territories of Canada and other jurisdictions outside the United
States, and each such qualification shall be in effect and not subject
to any stop order or other proceeding on the Closing Date and the
Option Closing Date.
(l) Stock Exchange Listing. The Shares shall have been duly
authorized for listing on the Nasdaq National Market, subject only to
notice of issuance.
(m) Company Certificates. The shall have furnished to the
Representatives such certificates, in addition to those specifically
mentioned herein, as the Representatives may have reasonably requested
as to the accuracy and completeness at the Closing Date and the Option
Closing Date of any statement in the Registration Statement or the
Prospectus or any documents filed under the Exchange Act and deemed to
be incorporated by reference into the Prospectus, as to the accuracy at
the Closing Date and the Option Closing Date of the representations and
warranties of the Company herein, as to the performance by the Company
of its obligations hereunder, or as to the fulfillment of the
conditions concurrent and precedent to the obligations hereunder of the
Representatives.
6. Indemnification.
(a) Indemnification of the Underwriters. The Company shall
indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person, if any, who
controls each Underwriter within the meaning of Section 15 of the Act
or Section 20 of the
21
Exchange Act from and against any and all losses, claims, liabilities,
expenses and damages (including any and all investigative, legal and
other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding between any of
the indemnified parties and any indemnifying parties or between any
indemnified party and any third party, or otherwise, or any claim
asserted), to which they, or any of them, may become subject under the
Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses,
claims, liabilities, expenses or damages arise out of or are based on
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto),
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of 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 the Company shall not be
liable to the extent that such loss, claim, liability, expense or
damage arises from the sale of the Shares in the public offering to
any person by an Underwriter and is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance on
and in conformity with information relating to any Underwriter
furnished in writing to the Company by the Representatives on behalf
of any Underwriter expressly for inclusion in the Registration
Statement or the Prospectus; and provided, further, that the foregoing
indemnity shall not apply if copies of the Prospectus were timely
delivered to the Underwriters pursuant to this Agreement and a copy of
the Prospectus (as then amended or supplemented, if the Company shall
have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of an Underwriter to the person asserting the
loss, claim, liability, expense or damage, if required by law so to
have been delivered, at or prior to the written confirmation of the
sale of the Shares to such person, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to
such loss, claim, liability, expense or damage. If multiple claims are
brought against any Underwriter, the directors, officers, employees
and agents of such Underwriter and any person, if any, who controls
such Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, in an arbitration proceeding, and
indemnification is permitted under applicable law and is provided for
under this Agreement with respect to at least one such claim, the
Company agrees that any arbitration award shall be conclusively deemed
to be based on claims as to which indemnification is permitted and
provided for, except to the extent the arbitration award expressly
states that the award, or any portion thereof, is based solely on a
claim as to which indemnification is not available. This indemnity
agreement will be in addition to any liability that the Company might
otherwise have.
22
(b) Indemnification of the Company. Each Underwriter shall
indemnify and hold harmless the Company, its agents, each person, if
any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, each director of the Company and
each officer of the Company who signs the Registration Statement to the
same extent as the foregoing indemnity from the Company to each
Underwriter, but only insofar as losses, claims, liabilities, expenses
or damages arise out of or are based on any untrue statement or
omission or alleged untrue statement or omission made in reliance on
and in conformity with information relating to each Underwriter
furnished in writing to the Company by the Representatives on behalf of
such Underwriter expressly for use in the Registration Statement, or
the Prospectus. This indemnity will be in addition to any liability
that each Underwriter might otherwise have.
(c) Indemnification Procedures. Any party that proposes to assert
the right to be indemnified under this Section 6 shall, promptly after
receipt of notice of commencement of any action against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section 6, notify each such indemnifying party of
the commencement of such action, enclosing a copy of all papers served,
but the omission so to notify such indemnifying party shall not relieve
the indemnifying party from any liability that it may have to any
indemnified party under the foregoing provisions of this Section 6
unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party.
If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it
elects by delivering written notice to the indemnified party promptly
after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly
notified, to assume the defense of the action, with counsel
satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided
below and except for the reasonable costs of investigation subsequently
incurred by the indemnified party in connection with the defense. The
indemnified party will have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless (i) the
employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has
reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying
party, (iii) a conflict or potential conflict exists (based on advice
of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party shall not
have the right to direct the defense of such action on behalf of the
indemnified party) or (iv) the indemnifying party has not in fact
employed counsel to assume the defense of
23
such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable
fees, disbursements and other charges of counsel shall be at the
expense of the indemnifying party or parties. It is understood that
the indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one
time for all such indemnified party or parties. All such fees,
disbursements and other charges shall be reimbursed by the
indemnifying party promptly as they are incurred. An indemnifying
party shall not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be
unreasonably withheld or delayed). No indemnifying party shall,
without the prior written consent of each indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding relating to the matters
contemplated by this Section 6 (whether or not any indemnified party
is a party thereto), unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising or that may arise out of such claim, action or
proceeding.
(d) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in the foregoing paragraphs of this Section 6 is applicable in
accordance with its terms but for any reason is held to be unavailable
from the Company or the Underwriters, the Company and the Underwriters
shall contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted,
but after deducting any contribution received by the Company from
persons other than the Underwriters, such as persons who control the
Company within the meaning of the Act, officers of the Company who
signed the Registration Statement and directors of the Company, who
also may be liable for contribution) to which the Company and the
Underwriters may be subject in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page
of the Prospectus. If, but only if, the allocation provided by the
foregoing sentence is not permitted by applicable law, the allocation
of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing
sentence but also the relative fault of the Company, on the one hand,
and the Underwriters, on the other, with respect to the statements or
omissions which resulted in such loss, claim, liability, expense or
damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative
fault shall be determined by reference
24
to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to
information supplied by the Company or Representatives on behalf of
the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if contributions pursuant to
this Section 6(d) were to be determined by pro rata allocation or by
any other method of allocation (even if the Underwriters were treated
as one entity for such purpose) which does not take into account the
equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof, referred
to above in this Section 6(d) shall be deemed to include, for purpose
of this Section 6(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 6(d), no Underwriter shall be required to contribute any
amount in excess of the underwriting discounts and commissions
received by it, and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligation to
contribute as provided in this Section 6(d) are several in proportion
to their respective underwriting obligations and not joint. For
purposes of this Section 6(d), any person who controls a party to this
Agreement within the meaning of the Act will have the same rights to
contribution as that party, and each officer of the Company who signed
the Registration Statement will have the same rights to contribution
as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 6(d), will
notify any such party or parties from whom contribution may be sought,
but the omission so to notify will not relieve the party or parties
from whom contribution may be sought from any other obligation it or
they may have under this Section 6(d). No party will be liable for
contribution with respect to any action or claim settled without its
written consent (which consent will not be unreasonably withheld).
(e) Survival. The indemnity and contribution agreements contained
in this Section 6 and the representations and warranties of the Company
contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of
the Underwriters, (ii) acceptance of any of the Shares and payment
therefor or (iii) any termination of this Agreement.
7. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Shares, on or prior to the Option Closing Date), by notice
to the Company from the Representatives, without liability on the part of any
Underwriter to the Company, if, prior to delivery and payment for the Firm
Shares (or the Option Shares, as
25
the case may be), in the sole judgment of the Representatives, any of the
following shall occur:
(a) trading or quotation in any of the equity securities of the
Company shall have been suspended or limited by the Commission or by
the Nasdaq National Market;
(b) trading in securities generally on the New York Stock Exchange
or the Nasdaq National Market shall have been suspended or limited or
minimum or maximum prices shall have been generally established on such
exchange, or additional material governmental restrictions, not in
force on the date of this Agreement, shall have been imposed upon
trading in securities generally by such exchange or by order of the
Commission or any court or other governmental authority;
(c) a general banking moratorium shall have been declared by any
of Federal, New York or Delaware authorities;
(d) any material adverse change in the financial or securities
markets in the United States or in political, financial or economic
conditions in the United States or any outbreak or material escalation
of hostilities or declaration by the United States of a national
emergency or war or other calamity or crisis shall have occurred, the
effect of any of which is such as to make it impracticable or
inadvisable to market the Shares on the terms and in the manner
contemplated by the Prospectus;
(e) if the Company shall have sustained a loss material or
substantial to the Company by reason of flood, fire, accident,
hurricane, earthquake, theft, sabotage, or other calamity or malicious
act, whether or not such loss shall have been insured, the effect of
any of which is such as to make it impracticable or inadvisable to
market the Shares on the terms and in the manner contemplated by the
Prospectus; or
(f) if there shall have been a Material Adverse Change.
8. Substitution of Underwriters. If any one or more of the Underwriters
shall fail or refuse to purchase any of the Firm Shares which it or they have
agreed to purchase hereunder, and the aggregate number of Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of Firm Shares, the other
Underwriters shall be obligated, severally, to purchase the Firm Shares which
such defaulting Underwriter or Underwriters agreed but
26
failed or refused to purchase, in the proportions which the number of Firm
Shares which they have respectively agreed to purchase pursuant to Section 1
bears to the aggregate number of Firm Shares which all such non-defaulting
Underwriters have so agreed to purchase, or in such other proportions as the
Representatives may specify; provided that in no event shall the maximum number
of Firm Shares which any Underwriter has become obligated to purchase pursuant
to Section 1 be increased pursuant to this Section 8 by more than one-ninth of
the number of Firm Shares agreed to be purchased by such Underwriter without the
prior written consent of such Underwriter. If any Underwriter or Underwriters
shall fail or refuse to purchase any Firm Shares and the aggregate number of
Firm Shares which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase exceeds one-tenth of the aggregate number of the Firm
Shares and arrangements satisfactory to the Company and the Representatives for
the purchase of such Firm Shares are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, or the Company for the purchase or sale of any
Shares under this Agreement. In any such case either the Representatives or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken pursuant to this Section 8 shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
9. Miscellaneous.
(a) Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified,
shall be mailed or delivered (a) if to the Company, at the office of
the Company, 0 Xxxxxxx Xxxx, Xxx Xxxxx, XX 00000, Attention: Chief
Executive Officer or (b) if to the Underwriters, at the offices of GKM,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Director of
Investment Banking. Any such notice shall be effective only upon
receipt. Any notice under Section 7 may be made by telecopy or
telephone, but if so made shall be subsequently confirmed in writing.
(b) No Third Party Beneficiaries. This Agreement has been and is
made solely for the benefit of the several Underwriters, the Company
and of the controlling persons, directors and officers referred to in
Section 6, and their respective successors and assigns, and no other
person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement
shall not include a purchaser of Shares from the Underwriters in his,
her or its capacity as such a purchaser, as such purchaser of Shares
from any of the several Underwriters.
27
(c) Survival of Representations and Warranties. All
representations, warranties and agreements of the Company contained
herein or in certificates or other instruments delivered pursuant
hereto, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter or any of
their controlling persons and shall survive delivery of and payment for
the Shares hereunder.
(d) Actions of the Representatives. Any action required or
permitted to be taken by the Representatives under this Agreement may
be taken by them jointly or by GKM.
(e) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE. Each party hereto hereby irrevocably submits for purposes of any
action arising from this Agreement brought by the other party hereto to
the jurisdiction of the courts of New York State located in the Borough
of Manhattan and the U.S. District Court for the Southern District of
New York. This Agreement may be signed in two or more counterparts with
the same effect as if the signatures thereto and hereto were upon the
same instrument.
(f) Survival of Provisions upon Invalidity of Any Single
Provision. In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired
thereby.
(g) Waiver of Jury Trial. The Company and the Underwriters each
hereby irrevocably waive any right they may have to a trial by jury in
respect of any claim based upon or arising out of this Agreement or the
transactions contemplated hereby.
(h) Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience and reference only
and are not to be considered in construing this Agreement.
(i) Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties hereto and supersedes all prior
agreements and understandings relating to the subject matter hereof.
This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by
GKM and the Company.
28
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
VION PHARMACEUTICALS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President, Finance
Confirmed as of the date first above mentioned:
XXXXXX XXXXXX XXXXXXXX & CO., INC.
X.X. XXXXXXXXX, TOWBIN
Acting on behalf of themselves and as
Representatives of the several Underwriters named
in Schedule I hereof.
c/o Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
XXXXXX XXXXXX XXXXXXXX & CO., INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
X.X. XXXXXXXXX, TOWBIN
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
SCHEDULE I
Number of
Firm
Underwriters Common Shares
to be Purchased
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc. ....................... 2,000,000
X.X. Xxxxxxxxx, Towbin.................................... 500,000
Total............................................ 2,500,000
I-1
EXHIBIT A
VION PHARMACEUTICALS, INC.
PRICE DETERMINATION AGREEMENT
August 9, 2001
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
X.X. Xxxxxxxxx, Towbin
As Representatives of the several Underwriters
c/o Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated August 9, 2001
(the "Underwriting Agreement"), among Vion Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc. ("GKM") and X.X.
Xxxxxxxxx, Towbin, as representatives of the several underwriters named in
Schedule I thereto (collectively, the "Underwriters"). The Underwriting
Agreement provides for the purchase by Underwriters from the Company subject to
the terms and conditions set forth therein, of an aggregate of 2,500,000 shares
(the "Firm Shares") of Common Stock, par value $0.01 per share. This Agreement
is the Price Determination Agreement referred to in the Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the undersigned
agree with the Representatives as follows:
1. The public offering price per share at which the Firm Shares
shall initially be offered shall be $5.00.
2. The purchase price per share for the Firm Shares to be paid by
the Underwriters shall be $4.6625, representing an amount equal to the public
offering price set forth above, less $0.3375 per share, representing the
underwriting discounts and commissions.
The Company represents and warrants to each of the Underwriters that
the representations and warranties of the Company set forth in Section 3 of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
A-1
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE. Each party hereto hereby irrevocably
submits for purposes of any action arising from this Agreement brought by the
other party hereto to the jurisdiction of the courts of New York State located
in the Borough of Manhattan and the U.S. District Court for the Southern
District of New York.
A-2
If the foregoing is in accordance with your understanding of the
agreement among the Company and the Underwriters, please sign and return to the
Company a counterpart hereof, whereupon this instrument along with all
counterparts and together with the Underwriting Agreement shall be a binding
agreement among the Company and the Underwriters in accordance with its terms
and the terms of the Underwriting Agreement.
Very truly yours,
VION PHARMACEUTICALS
By:
---------------------------
Name:
Title:
Confirmed as of the date first above mentioned:
XXXXXX XXXXXX XXXXXXXX & CO., INC.
X.X. XXXXXXXXX, TOWBIN
Acting on behalf of themselves and as
Representatives of the several Underwriters named
in Schedule I hereof.
c/o Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
XXXXXX XXXXXX XXXXXXXX & CO., INC.
By:
---------------------------
Name:
Title:
X.X. XXXXXXXXX, TOWBIN
By:
---------------------------
Name:
Title:
EXHIBIT B
, 2001
---------- ---
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
As a Representative of the several Underwriters
c/o Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned understands that Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
("GKM"), as a Representative of the several Underwriters (the "Underwriters"),
proposes to enter into an Underwriting Agreement (the "Underwriting Agreement")
with Vion Pharmaceuticals, Inc., a Delaware corporation (the "Company")
providing for a public offering (the "Public Offering") by the Underwriters of
shares of the common stock, par value $.001 per share, of the Company (the
"Common Stock").
In consideration of the Underwriting Agreement, the undersigned hereby
agrees that the undersigned shall not, for a period of 90 days after the date of
the Prospectus Supplement relating to the Public Offering, without the prior
written consent of GKM (which consent may be withheld in its sole discretion),
offer to sell, sell, pledge, contract to sell, purchase any option to sell,
grant any option for the purchase of, lend, or otherwise dispose of, or require
or request the Company to file with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended (the "Act"),
to register, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or warrants or other rights to
acquire shares of Common Stock of which the undersigned is now, or may in the
future become, the beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended). Transfers or dispositions can be
made sooner in the case of gifts, estate planning transfers and transfers to
affiliates of the undersigned where the donee or transferee, as the case may be,
signs a copy of this agreement and promptly delivers a copy to GKM. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of shares
of Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock owned either of record or beneficially by the undersigned
except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is irrevocable
and shall be binding upon the undersigned's heirs, legal representatives,
successors and assigns. This agreement will remain in full force and effect
notwithstanding the substitution or addition of any Underwriters to the Public
Offering.
B-1
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
By:
---------------------------------
Print Name:
-------------------------
Phone Number:
---------------------------
B-2
EXHIBIT C
Form of Opinion of
Fulbright & Xxxxxxxx L.L.P.
August __, 2001
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
X.X. Xxxxxxxxx, Towbin
As representatives of the several Underwriters
c/o General Xxxxxx Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Vion Pharmaceuticals, Inc.
-------------------------
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement (the "Underwriting
Agreement"), dated August __, 2001, by and among you as representatives of the
Underwriters named in Schedule I to the Underwriting Agreement (the
"Underwriters"), and Vion Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), which provides, among other things, (i) for the purchase by the
Underwriters of an aggregate of 2,500,000 shares (the "Firm Shares") of the
Company's Common Stock, $.01 par value (the "Common Stock"), and (ii) for the
grant to the Underwriters of an option to purchase up to an additional 375,000
shares (the "Option Shares") of Common Stock to cover over-allotments, if any,
in the sale of the Firm Shares by the Underwriters. The Firm Shares and the
Option Shares are collectively referred to herein as the "Shares." This opinion
is rendered by us, as counsel to the Company, pursuant to Section 5(f) of the
Underwriting Agreement. Capitalized terms used in this opinion that are not
otherwise defined have the respective meanings given them in the Underwriting
Agreement.
In connection with this opinion, we have examined the registration
statement on Form S-3 (No. 333-58206) covering the registration of up to
4,700,000 shares of Common Stock under the Securities Act of 1933, as amended
(the "Act"), filed with the Securities and Exchange Commission (the
"Commission"), including Amendments No. 1 and 2 thereto, when it became
effective on June 26, 2001, covering the registration of the Shares (the
"Registration Statement"), and all documents incorporated by reference in the
Registration Statement (the "Incorporated Documents"), the prospectus, dated
June 21, 2001 (the "Prospectus"), the prospectus supplement filed in accordance
with Rule 424(b)(5) of the Act on August __, 2001 (the "Prospectus Supplement"
and, together with the Prospectus, the "Final Prospectus"), the Underwriting
Agreement and such documents, corporate records and questions of law as we deem
necessary for the purposes of this opinion. We have also examined such
certificates of public officials, corporate officers of the Company and of other
persons as we have deemed relevant and
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
X.X. Xxxxxxxxx, Towbin
As representatives of the several Underwriters
August __, 2001
Page 2
appropriate as a basis for the opinions expressed herein. Further, in making the
foregoing examinations, we have assumed the genuineness of all signatures, the
legal capacity of each natural person signatory to any of the documents reviewed
by us, the authenticity of all documents submitted to us as originals and the
conformity to authentic original documents of all documents submitted to us as
copies. In making the foregoing examinations, we have assumed that all
representations and warranties made in the aforesaid documents (other than those
which are expressed herein as our opinions) were and are true, correct and
complete.
In rendering the opinions expressed herein, we have assumed that each
of the documents examined by us (other than the Underwriting Agreement) has been
duly authorized, executed and delivered by each of the parties thereto and that
the Underwriting Agreement has been duly authorized, executed and delivered by
or on behalf of each of the parties thereto other than the Company, that each
such party has the requisite power and authority to execute, deliver and perform
such documents to which it is a party and that such documents constitute the
legal, valid and binding obligations of each such party thereto.
Based upon the foregoing, and upon an examination of such questions of
law as we have considered necessary or appropriate, and subject to the
assumptions, exceptions, qualifications and limitations set forth herein, we
advise you that, in our opinion:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company is duly licensed or qualified to do business as a
foreign corporation and is in good standing in the State of Connecticut.
3. The authorized capital stock of the Company conforms in all material
respects as to legal matters to the description contained in the Final
Prospectus and the Incorporated Documents. The authorized capital stock of the
Company is as set forth in the Final Prospectus under the caption "Recent
Developments." The form of certificate used to evidence the Company's Common
Stock is in due and proper form and complies with all applicable statutory
requirements. All of the issued and outstanding shares of Common Stock have
been, and the Shares, when issued, delivered and paid for by the Underwriters in
accordance with the terms of the Underwriting Agreement, will be, duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to any preemptive or similar rights arising under the Delaware General
Corporation Law, the Company's Certificate of Incorporation or By-laws, or any
agreement listed as an exhibit to the Registration Statement or listed as an
exhibit to any of the Incorporated Documents (the "Exhibits"). To our knowledge,
except for the registration rights granted with respect to [220,000] shares of
Common Stock issued or issuable upon
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
X.X. Xxxxxxxxx, Towbin
As representatives of the several Underwriters
August __, 2001
Page 3
exercise of the warrants originally granted to Xxxxx Xxxxxx & Co., Inc. pursuant
to the Warrant Agreement, dated October 29, 1999, neither the filing of the
Registration Statement nor the offering or sale of the Shares pursuant to the
Underwriting Agreement gives rise to any rights for the registration of any
shares of Common Stock or other securities of the Company pursuant to any of the
Exhibits, except as disclosed in the Registration Statement, or such rights as
have been satisfied, waived or terminated.
4. To our knowledge, the Company meets the requirements for use of Form
S-3 and Rule 415 under the Act in connection with the offering contemplated by
the Underwriting Agreement.
5. To our knowledge, except as described in the Registration Statement,
the Final Prospectus and the Incorporated Documents, there are no options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from the Company any shares of capital stock of the Company.
6. The Registration Statement has become effective under the Act, and,
to our knowledge, (A) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued under the Act,
and (B) no proceedings for that purpose have been instituted, are pending or are
threatened by the Commission under the Act. The Final Prospectus has been filed
in the manner, and at the time, contemplated by Rule 424(b) under the Act.
7. The Registration Statement and each amendment thereto and the Final
Prospectus and, if any, each amendment and supplement thereto (except the
financial statements, schedules and other financial and statistical data
contained therein, as to which we do not express any opinion), appear on their
face to comply as to form in all material respects with the requirements of the
Act. Each of the Incorporated Documents (except the financial statements,
schedules and other financial and statistical data contained therein, as to
which we do not express any opinion), appear on their face to comply as to form
in all material respects with the requirements of the Exchange Act.
8. The descriptions of statutes, regulations, litigation, contracts and
other documents, insofar as such descriptions relate to matters of law or
purport to constitute a summary of the provisions of the documents described
therein, contained in the Registration Statement, the Incorporated Documents and
the Final Prospectus under the captions "RISK FACTORS -- If Yale University does
not conduct research relating to products we would like to pursue, we may never
realize any benefits from our funding provide to Yale," "BUSINESS -- Licensed
Product and Product Candidates -- MELASYN," "BUSINESS -- Sponsored Research and
License Agreements," "Directors and Executive Officers of the Registrant,"
"Executive Compensation,"
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
X.X. Xxxxxxxxx, Towbin
As representatives of the several Underwriters
August __, 2001
Page 4
"Certain Relationships and Related Transactions," "Description of Common Stock"
and "Recent Developments" and the information set forth in Item 1 of the
Company's Registration Statement on Form 8-A filed on October 26, 1998 fairly
present in all material respects summaries of the information required to be
shown.
9. To our knowledge, there are no contracts or documents which are
required by the Act to be described in the Registration Statement or the Final
Prospectus or to be filed as exhibits to the Registration Statement or any of
the Incorporated Documents which are not so described or filed.
10. To our knowledge, there is not pending or threatened against the
Company any action, suit, arbitration, claim, governmental or other proceeding
(informal or formal) or investigation before or by any Governmental Body which
is required to be disclosed in the Registration Statement, the Final Prospectus
or the Incorporated Documents which is not so disclosed therein, or that
purports to challenge any of the transactions contemplated by the Underwriting
Agreement.
11. The Company has the corporate power and authority to execute,
deliver and comply with its obligations under the Underwriting Agreement and to
consummate the transactions provided for therein; and the execution and delivery
by the Company of, and the performance by the Company under, the Underwriting
Agreement have been duly authorized by all requisite corporate action on behalf
of the Company. The Underwriting Agreement has been executed and delivered on
behalf of the Company by a duly authorized officer of the Company. The
Underwriting Agreement constitutes a valid, legal and binding obligation of the
Company enforceable against the Company in accordance with its terms.
12. The execution and delivery of the Underwriting Agreement by the
Company, and the Company's compliance with the terms of the Underwriting
Agreement (A) do not result in the creation or imposition of any encumbrance
upon any property or assets of the Company pursuant to the terms or provisions
of, or constitute a breach of, or default under, any material agreement included
as an Exhibit and (B) do not violate (x) the Certificate of Incorporation or
By-laws of the Company, (y) any laws which are known to us to be applicable to
the Company where such violation would reasonably be expected to have a material
adverse effect on the validity, performance or enforceability of any of the
terms of the Underwriting Agreement applicable to the Company or (z) to our
knowledge, any of the Company's existing obligations under any judgment, decree
or order of any arbitrator or Governmental Body naming the Company; no consent,
approval, authorization or order of, or filing with, any Governmental Body is
legally required for the execution, delivery and performance of the Underwriting
Agreement by the Company, except such as may be required under the Act and the
Rules and Regulations, such as
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
X.X. Xxxxxxxxx, Towbin
As representatives of the several Underwriters
August __, 2001
Page 5
may be required by the bylaws and rules of the NASD in connection with the
purchase and distribution by the Underwriters of the Shares, and such as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution by the Underwriters of the Shares.
13. To our knowledge, (a) the Company is not an "investment company" as
such term is defined in the Investment Company Act, nor (b) shall the Company be
an investment company as a result of the transactions contemplated by the
Underwriting Agreement.
In addition, in the course of the preparation of the Registration
Statement and the Final Prospectus, we have participated in conferences with
officers and other representatives of the Company, representatives of the
independent accountants of the Company, representatives of the Underwriters and
representatives of counsel for the Underwriters, at which the contents of the
Registration Statement and the Final Prospectus and related matters were
discussed, and we have reviewed the Incorporated Documents, and at which we
inquired of the representatives of the Company as to the materiality of the
facts disclosed to us and, although we do not pass upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of any statement
contained in the Registration Statement or the Final Prospectus and we have made
no independent check or verification thereof, based upon the foregoing (relying
as to materiality to a large extent upon the officers and representatives of the
Company) no facts have come to our attention that have led us to believe that
the Registration Statement (except as to the financial statements and notes
thereto and other financial and statistical data included therein as to which we
do not express any opinion or belief), as of the date of effectiveness,
contained an untrue statement of material fact or omitted to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading or that the Final Prospectus (except as to the financial
statements and the notes thereto and other financial and statistical data
included therein or excluded therefrom, as to which we do not express any
opinion or belief), as of its date or as of the date of this opinion, contained
or contains an untrue statement of 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.
Notwithstanding anything herein to the contrary, it is understood and
agreed that other counsel to the Company are rendering opinions with respect to
(i) the sections of the Final Prospectus entitled "RISK FACTORS -- If we are
found to be infringing on patents or trade secrets owned by others, we may be
forced to cease or alter our drug development efforts, obtain a license to
continue the development or sale of our products and/or pay damages," and the
section of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 (the "Annual Report") incorporated by reference into the Final
Prospectus entitled "BUSINESS -- Patents, Licenses and Trade Secrets" and (ii)
the sections of the Final Prospectus
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
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As representatives of the several Underwriters
August __, 2001
Page 6
entitled "RISK FACTORS -- If we do not obtain regulatory approval for our
products, we will not be able to sell our products and the value of our company
and our financial results will be harmed" and the section of the Annual Report
incorporated by reference into the Prospectus entitled "BUSINESS -- Government
Regulation," and no opinions are expressed herein with respect to such sections
or matters.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations.
A. The foregoing opinions are expressly limited to matters under and
governed by the internal laws of the State of New York (exclusive of conflict of
law principles), the internal corporate law of the State of Delaware and
applicable Federal laws of the United States of America. With respect to laws,
regulations and the like referred to herein, in addition to all other
limitations set forth herein, such references are limited to laws, regulations
and the like of the State of New York (exclusive of conflict of law principles),
the internal corporate law of the State of Delaware and such applicable Federal
laws of the United States of America as each is in effect and force as of even
date of this opinion. We express no opinions concerning the Federal Food, Drug,
and Cosmetic Act or related rules and regulations or any intellectual property
laws, statutes, rules or other regulations.
B. In rendering the opinion expressed in paragraphs 1 and 2 above
regarding existence, good standing and qualification to do business as a foreign
corporation, we have relied solely on certificates of, and oral confirmations
from, public officials, and have conducted no further investigation.
C. In rendering the opinion expressed in paragraph 3 above regarding
the fully paid status of the securities outstanding prior to the date hereof, we
have relied solely on the certificate of certain officers of the Company that
the Company has received payment in full of the purchase price or other
consideration specified by the Board of Directors of the Company for all shares
of capital stock of the Company outstanding on or prior to the date hereof and
have conducted no further investigation, and that the purchase price therefor
was at least equal to the par value of such shares.
D. Our opinion in paragraph 11 above regarding the enforceability of
the Underwriting Agreement is subject to the following:
(1) The enforceability of such document may be limited or affected
by (a) bankruptcy, insolvency, reorganization, moratorium,
liquidation, rearrangement, probate, conservatorship,
fraudulent transfer, fraudulent conveyance and other
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August __, 2001
Page 7
similar laws (including court decisions) now or hereafter in
effect and affecting the rights and remedies of creditors
generally or providing for the relief of debtors, (b) the
refusal of a particular court to grant (i) equitable remedies,
including, without limiting the generality of the foregoing,
specific performance and injunctive relief, or (ii) a
particular remedy sought under such documents as opposed to
another remedy provided for therein or another remedy
available at law or in equity, (c) general principles of
equity (regardless of whether such remedies are sought in a
proceeding in equity or at law) and (d) judicial discretion;
and
(2) In rendering such opinion, we express no opinion as to the
legality, validity, enforceability or binding effect of
provisions of the such document relating to indemnities and
rights of contribution to the extent prohibited by public
policy or which might require indemnification for losses or
expenses caused by negligence, gross negligence, willful
misconduct, fraud or illegality of an indemnified party.
E. Our opinions expressed in paragraph 12 above as to no violation
under laws and as to no consent, approval, authorization or order of, or filing
with, any Governmental Body being legally required for the execution, delivery
and performance of the Underwriting Agreement, are based upon a review of those
laws that, in our experience, are normally applicable to the transactions
contemplated by the Underwriting Agreement.
F. Our opinion expressed in paragraph 13 above as to the Company being
an investment company as a result of the transactions contemplated by the
Underwriting Agreement is based on the assumption that the Company will use the
proceeds from the sale of the Shares in the manner described under the heading
"Use of Proceeds" in the Final Prospectus.
G. In rendering the opinions set forth herein, we have relied as to
determination of materiality relevant to our opinions to a large extent upon the
officers and representatives of the Company.
H. With respect to references herein to "known to us", "to our
knowledge" or words or phrases of similar import (whether modified by any
additional phrases), such references mean the actual, current knowledge that
those attorneys of this Firm who have devoted substantive attention to legal
matters in representing the Company or who have participated in the review of
the Registration Statement and the Final Prospectus. In addition, as to certain
factual matters, we have relied on, and assumed the truth, accuracy and
completeness of, a certificate of Xxxx Xxxxxxx, President and Chief Executive
Officer, and Xxxxxx X. Xxxxxxx, Vice President, Finance and Chief Financial
Officer, respectively, of the Company. With your permission, we have not
examined any records of any of courts,
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As representatives of the several Underwriters
August __, 2001
Page 8
boards, other tribunals or public records with respect to any litigation,
investigation or proceedings, or judgments, orders or decrees, in any event
applicable to the Company, or any of its properties. Notwithstanding the
foregoing, in rendering the opinion set forth in paragraph 6 above as to the
effectiveness of the Registration Statement, our knowledge is based solely upon
a telephone call with the Commission on the effective date thereof and, in
rendering the opinion set forth in paragraph 6 above as to the existence of a
stop order or a proceeding for that purpose, our knowledge is based solely upon
a telephone call with the Commission on the date hereof.
The opinions expressed herein are solely for the benefit of, and may
only be relied upon by, you and by Xxxxxxxx and Forester LLP, as counsel for the
Underwriters, solely for the purpose of rendering their opinion to the
Underwriters. This opinion may not be furnished to (except in connection with
any legal or arbitral proceedings or as may be required by applicable law, and
in any such events, as shall be directed or required incident thereto pursuant
to a duly issued subpoena, writ, order or other legal process or otherwise
necessary to your defense in any such action), or relied upon by, any other
person without the prior written consent of this Firm. The opinions expressed
herein are as of the date hereof (and not as of any other date) or, to the
extent a reference to a certificate or other document is made herein, to such
date, and we make no undertaking to amend or supplement such opinions as facts
and circumstances come to our attention or changes in the law occur which
could affect such opinions.
Very truly yours,
