1
EXHIBIT 1.1
______________ Shares
APPLIED MOLECULAR EVOLUTION, INC.
Common Stock
UNDERWRITING AGREEMENT
__________, 2000
CIBC World Markets Corp.
PaineWebber Incorporated
XX Xxxxx Securities Corporation
c/o CIBC World Markets Corp.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several Underwriters named on Schedule I attached hereto.
Ladies and Gentlemen:
Applied Molecular Evolution, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions contained herein, to
sell to you and the other underwriters named on Schedule I to this Agreement
(the "Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of [__________] shares (the "Firm Shares") of
the Company's Common Stock, $0.001 par value (the "Common Stock"). The
respective amounts of the Firm Shares to be purchased by each of the several
Underwriters are set forth opposite their names on Schedule I hereto. In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional [_________] shares (the "Option Shares") of Common
Stock from it for the purpose of covering over-allotments in connection with the
sale of the Firm Shares. The Firm Shares and the Option Shares are together
called the "Shares."
1. Sale and Purchase of the Shares.
On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a price of $_____ per share
(the "Initial Price"), the number of Firm Shares set forth opposite the
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name of such Underwriter under the column "Number of Firm Shares to be
Purchased from the Company" on Schedule I to this Agreement, subject to
adjustment in accordance with Section 11 hereof.
(b) The Company grants to the several Underwriters an option
to purchase, severally and not jointly, all or any part of the Option
Shares at the Initial Price. The number of Option Shares to be purchased
by each Underwriter shall be the same percentage (adjusted by the
Representatives to eliminate fractions) of the total number of Option
Shares to be purchased by the Underwriters as such Underwriter is
purchasing of the Firm Shares. Such option may be exercised only to
cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the
Firm Shares Closing Date (as defined below), and from time to time
thereafter within 30 days after the date of this Agreement, in each case
upon written, facsimile or telegraphic notice, or verbal or telephonic
notice confirmed by written, facsimile or telegraphic notice, by the
Representatives to the Company no later than 12:00 noon, New York City
time, on the business day before the Firm Shares Closing Date or at
least two business days before the Option Shares Closing Date (as
defined below), as the case may be, setting forth the number of Option
Shares to be purchased and the time and date (if other than the Firm
Shares Closing Date) of such purchase.
2. Delivery and Payment. Delivery by the Company of the Firm
Shares to the Representatives for the respective accounts of the Underwriters,
and payment of the purchase price by certified or official bank check or checks
payable in New York Clearing House (same day) funds drawn to the order of the
Company for the shares purchased from the Company, against delivery of the
respective certificates therefor to the Representatives, shall take place at the
offices of CIBC World Markets Corp., Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, at 10:00 a.m., New York City time, on the third business day
following the date of this Agreement, or at such time on such other date, not
later than 10 business days after the date of this Agreement, as shall be agreed
upon by the Company and the Representatives (such time and date of delivery and
payment are called the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares is
exercised in whole or in part on one or more occasions, delivery by the Company
of the Option Shares to the Representatives for the respective accounts of the
Underwriters and payment of the purchase price thereof in immediately available
funds by wire transfer or by certified or official bank check or checks payable
in New York Clearing House (same day) funds to the Company shall take place at
the offices of CIBC World Markets Corp. specified above at the time and on the
date (which may be the same date as, but in no event shall be earlier than, the
Firm Shares Closing Date) specified in the notice referred to in Section 1(b)
(such time and date of delivery and payment are called the "Option Shares
Closing Date"). The Firm Shares Closing Date and the Option Shares Closing Date
are called, individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such
names and shall be
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in such denominations as the Representatives shall request at least two full
business days before the Firm Shares Closing Date or, in the case of Option
Shares, on the day of notice of exercise of the option as described in Section
l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The
Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Securities and
Exchange Commission (the "Commission") a Registration Statement (as hereinafter
defined) on Form S-1 (No. 333-_______), including a preliminary prospectus
relating to the Shares, and such amendments thereof as may have been required to
the date of this Agreement. Copies of such Registration Statement (including all
amendments thereof) and of the related Preliminary Prospectus (as hereinafter
defined) have heretofore been delivered by the Company to you. The term
"Preliminary Prospectus" means any preliminary prospectus (as described in Rule
430 of the Rules) included at any time as a part of the Registration Statement
or filed with the Commission by the Company with the consent of the
Representatives pursuant to Rule 424(a) of the Rules. The term "Registration
Statement" as used in this Agreement means the initial registration statement
(including all exhibits, financial schedules and information deemed to be a part
of the Registration Statement), as amended at the time and on the date it
becomes effective (the "Effective Date") including the information (if any)
deemed to be part thereof at the time of effectiveness pursuant to Rule 430A of
the Rules. If the Company has filed an abbreviated registration statement to
register additional Shares pursuant to Rule 462(b) under the Rules (the "462(b)
Registration Statement") then any reference herein to the Registration Statement
shall also be deemed to include such 462(b) Registration Statement. The term
"Prospectus" as used in this Agreement means the prospectus in the form included
in the Registration Statement at the time of effectiveness or, if Rule 430A of
the Rules is relied on, the term Prospectus shall also include the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules.
The Company understands that the Underwriters propose to make
a public offering of the Shares, as set forth in and pursuant to the Prospectus,
as soon after the Effective Date and the date of this Agreement as the
Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each Preliminary Prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement
complied, and on the date of the Prospectus, the date any post-effective
amendment to the Registration Statement becomes effective, the date any
supplement or amendment to the Prospectus is filed with the Commission
and each Closing Date, the Registration Statement and the Prospectus
(and any amendment thereof or supplement thereto) will comply, in all
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material respects, with the applicable provisions of the Securities Act
and the Rules. The Registration Statement did not, as of the Effective
Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and on the Effective Date
and the other dates referred to above neither the Registration Statement
nor the Prospectus, nor any amendment thereof or supplement thereto,
will contain any untrue statement of a material fact or will omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. When any related
preliminary prospectus was first filed with the Commission (whether
filed as part of the Registration Statement or any amendment thereto or
pursuant to Rule 424(a) of the Rules) and when any amendment thereof or
supplement thereto was first filed with the Commission, such preliminary
prospectus as amended or supplemented complied in all material respects
with the applicable provisions of the Securities Act and the Rules and
did not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. Notwithstanding the
foregoing, none of the representations and warranties in this paragraph
4(a) shall apply to statements in, or omissions from, the Registration
Statement or the Prospectus made in reliance upon, and in conformity
with, information herein or otherwise furnished in writing by the
Representatives on behalf of the several Underwriters for use in the
Registration Statement or the Prospectus. With respect to the preceding
sentence, the Company acknowledges that the only information furnished
in writing by the Representatives on behalf of the several Underwriters
for use in the Registration Statement or the Prospectus is the
statements contained under the caption "Underwriting" in the Prospectus.
(b) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or preventing
the use of the Prospectus has been issued and no proceedings for that
purpose have been instituted or are threatened under the Securities Act.
Any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) of the Rules has been or will be made in the
manner and within the time period required by such Rule 424(b).
(c) The financial statements of the Company (including all
notes and schedules thereto) included or incorporated by reference in
the Registration Statement and Prospectus present fairly the financial
position, the results of operations, the statements of cash flows and
the statements of stockholders' equity and the other information
purported to be shown therein of the Company at the respective dates and
for the respective periods to which they apply; and such financial
statements and related schedules and notes have been prepared in
conformity with generally accepted accounting principles, consistently
applied throughout the periods involved, and all adjustments necessary
for a fair presentation of the results for such periods have been made.
The summary and selected financial data included in the Prospectus
present fairly the information shown therein as at the respective dates
and for the respective periods
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specified and the summary and selected financial data have been
presented on a basis consistent with the consolidated financial
statements so set forth in the Prospectus and other financial
information. The Company has no significant subsidiaries as defined in
rule 210.1-02 of regulation SX of the Rules.
(d) Ernst & Young LLP, whose reports are filed with the
Commission as a part of the Registration Statement, are and, during the
periods covered by their reports, were independent public accountants as
required by the Securities Act and the Rules.
(e) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of the
jurisdiction of its incorporation. The Company is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted by it or
location of the assets or properties owned, leased or licensed by it
requires such qualification, except for such jurisdictions where the
failure to so qualify would not have a material adverse effect on the
assets or properties, business, results of operations or financial
condition of the Company (a "Material Adverse Effect"). The Company does
not own, lease or license any asset or property or conduct any business
outside the United States of America. The Company has all requisite
corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and
from all governmental or regulatory bodies or any other person or entity
(collectively, the "Permits"), to own, lease and license its assets and
properties and conduct its business, all of which are valid and in full
force and effect, as described in the Registration Statement and the
Prospectus, except where the lack of such Permits, individually or in
the aggregate, would not have a Material Adverse Effect. The Company has
fulfilled and performed in all material respects all of their material
obligations with respect to such Permits and no event has occurred that
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the
rights of the Company thereunder. Except as may be required under the
Securities Act and state and foreign Blue Sky laws, no other Permits are
required to enter into, deliver and perform this Agreement and to issue
and sell the Shares.
(f) The Company owns or possesses adequate and enforceable
rights to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how and other similar rights and
proprietary knowledge (collectively, "Intangibles") described in the
Prospectus as being owned by it necessary for the conduct of its
business. The Company has neither received any notice of, nor is it
aware of, any infringement of or conflict with asserted rights of others
with respect to any Intangibles.
(g) The Company has good and marketable title in fee simple to
all items of real property and good and marketable title to all personal
property described in the Prospectus as being owned by them. Any real
property and buildings described in the Prospectus as being held under
lease by the Company is held by it under valid, existing
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and enforceable leases, free and clear of all liens, encumbrances,
claims, security interests and defects, except such as are described in
the Registration Statement and the Prospectus or would not have a
Material Adverse Effect.
(h) There are no litigation or governmental proceedings to
which the Company is subject or which is pending or, to the knowledge of
the Company, threatened, against the Company, which, individually or in
the aggregate, might have a Material Adverse Effect, affect the
consummation of this Agreement or which is required to be disclosed in
the Registration Statement and the Prospectus that is not so disclosed.
(i) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described therein, (a) there has not been any material adverse change
with regard to the assets or properties, business, results of operations
or financial condition of the Company; (b) the Company has not sustained
any loss or interference with its assets, businesses or properties
(whether owned or leased) from fire, explosion, earthquake, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order
or decree which would have a Material Adverse Effect; and (c) since the
date of the latest balance sheet included in the Registration Statement
and the Prospectus, except as reflected therein, the Company has not (i)
issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except such liabilities or obligations
incurred in the ordinary course of business, (ii) entered into any
transaction not in the ordinary course of business or (iii) declared or
paid any dividend or made any distribution on any shares of its stock or
redeemed, purchased or otherwise acquired or agreed to redeem, purchase
or otherwise acquire any shares of its stock except as such would not,
singly or in the aggregate, have a Material Adverse Effect.
(j) There is no document, contract or other agreement of a
character required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed as required by the Securities Act or
Rules. Each description of a contract, document or other agreement in
the Registration Statement and the Prospectus accurately summarizes the
terms of the underlying document, contract or agreement. Each agreement
described in the Registration Statement and Prospectus or listed in the
Exhibits to the Registration Statement or incorporated by reference is
in full force and effect and is valid and enforceable by and against the
Company in accordance with its terms. Neither the Company nor to the
Company's knowledge any other party is in default in the observance or
performance of any term or obligation to be performed by it under any
such agreement, and no event has occurred which with notice or lapse of
time or both would constitute such a default, in any such case which
default or event, individually or in the aggregate, would have a
Material Adverse Effect. No default exists, and no event has occurred
which with notice or lapse of time or both would constitute a default,
in the due performance and observance of any term, covenant or
condition, by the Company of any other agreement or instrument to which
the Company is a party or by which the
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Company, its properties or business may be bound or affected which
default or event, individually or in the aggregate, would have a
Material Adverse Effect.
(k) The Company is not in violation of any term or provision
of its amended and restated certificate of incorporation or by-laws or
of any franchise, license, permit, judgment, decree, order, statute,
rule or regulation, where the consequences of such violation,
individually or in the aggregate, would have a Material Adverse Effect.
(l) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and
sale by the Company of the Shares) will give rise to a right to
terminate or accelerate the due date of any payment due under, or
conflict with or result in the breach of any term or provision of, or
constitute a default (or an event which with notice or lapse of time or
both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company pursuant to the
terms of, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which either the
Company or any of its properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or violate any provision of the
amended and restated certificate of incorporation or by-laws of the
Company, except for such consents or waivers which have already been
obtained and are in full force and effect and except for any breach or
default which would not, singly or in the aggregate, have a Material
Adverse Effect.
(m) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the issued
and outstanding shares of Common Stock have been duly and validly issued
and are fully paid and nonassessable. There are no statutory preemptive
or other similar rights to subscribe for or to purchase or acquire any
shares of Common Stock of the Company or any such rights pursuant to its
Certificate of Incorporation or by-laws or any agreement or instrument
to or by which the Company is a party or bound. The Shares, when issued
and sold pursuant to this Agreement, will be duly and validly issued,
fully paid and nonassessable and none of them will be issued in
violation of any preemptive or other similar right. Except as disclosed
in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of,
and there is no commitment, plan or arrangement to issue, any share of
stock of the Company or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock and the Shares conform in
all material respects to all statements in relation thereto contained in
the Registration Statement and the Prospectus.
(n) No holder of any security of the Company has the right to
have any security owned by such holder included in the Registration
Statement or to demand
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registration of any security owned by such holder during the period
ending 180 days after the date of this Agreement. Stockholders of the
Company holding no less than 95% of the outstanding shares of the
Company (including without limitation all directors, officers and 5% or
greater stockholders) have delivered to the Representatives their
enforceable written lock-up agreements in a form approved by the
Representatives ("Lock-Up Agreement").
(o) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares by
the Company. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes and will
constitute the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(p) The Company is not involved in any labor dispute nor, to
the knowledge of the Company, is any such dispute threatened, which
dispute would have a Material Adverse Effect. The Company is not aware
of any existing or imminent labor disturbance by the employees of any of
its principal suppliers or contractors which would have a Material
Adverse Effect. The Company is not aware of any threatened or pending
litigation between the Company and any of its executive officers which,
if adversely determined, could have a Material Adverse Effect and has no
reason to believe that such officers will not remain in the employment
of the Company.
(q) No transaction has occurred between or among the Company
and any of its officers or directors or five percent shareholders or any
affiliate or affiliates of any such officer or director or five percent
shareholders that is required to be described in and is not described in
the Registration Statement and the Prospectus.
(r) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the Common Stock to facilitate the sale or resale of any
of the Shares.
(s) The Company has filed all Federal, state, local and
foreign tax returns which are required to be filed through the date
hereof, or have received extensions thereof, and have paid all taxes
shown on such returns and all assessments received by them to the extent
that the same are material and have become due. There are no tax audits
or investigations pending, which if adversely determined would have a
Material Adverse Effect; nor are there any material proposed additional
tax assessments against the Company.
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(t) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation
("Nasdaq") National Market System, subject to official Notice of
Issuance. A registration statement has been filed on Form 8-A pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which registration statement complies in all material
respects with the Exchange Act.
(u) The books, records and accounts of the Company accurately
and fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the
Company. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(v) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which they are engaged or propose to
engage after giving effect to the transactions described in the
Prospectus; all policies of insurance and fidelity or surety bonds
insuring the Company or the Company's business, assets, employees,
officers and directors are in full force and effect; the Company is in
compliance with the terms of such policies and instruments in all
material respects; and the Company has no reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not have
a Material Adverse Effect. The Company has not been denied any insurance
coverage which it has sought or for which it has applied.
(w) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws or whose absence the Company
reasonably believes would not have a Material Adverse Effect) has been
obtained or made and is in full force and effect.
(x) There are no affiliations with the NASD among the
Company's officers, directors or, to the best of the knowledge of the
Company, any five percent or greater stockholder of the Company, except
as set forth in the Registration Statement or
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otherwise disclosed in writing to the Representatives.
(y) (i) The Company is in compliance in all material respects
with all rules, laws and regulations relating to the use, treatment,
storage and disposal of toxic substances and protection of health or the
environment ("Environmental Law") which are applicable to its business;
(ii) the Company has not received any notice from any governmental
authority or third party of an asserted claim under Environmental Laws;
(iii) the Company has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and is in compliance with all terms and conditions of any such
permit, license or approval; (iv) to the Company's knowledge, no facts
currently exist that will require the Company to make future material
capital expenditures to comply with Environmental Laws; and (v) no
property which is or has been owned, leased or occupied by the Company
has been designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation of Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et. seq., "CERCLA") or otherwise
designated as a contaminated site under applicable state or local law.
The Company has not been named as a "potentially responsible party"
under CERCLA.
(z) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operation s and properties of the Company, in the course of which the
Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly
or in the aggregate, have a Material Adverse Effect.
(aa) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of proceeds thereof
as described in the Prospectus, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(bb) The Company or any other person associated with or acting
on behalf of the Company including, without limitation, any director,
officer, agent or employee of the Company has not, directly or
indirectly, while acting on behalf of the Company (i) used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds; (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any other unlawful payment.
(cc) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with
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management's general or specific authorizations; (2) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (3) access to assets is permitted only in
accordance with management's general or specific authorization; and (4)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(dd) The Company is in compliance in all material respects
with all rules, laws and regulations relating to the development,
testing, manufacturing, sale and distribution of pharmaceuticals and
other products regulated by the United States Food and Drug
Administration, or similar state or foreign governmental agencies.
5. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters under this Agreement are several and not joint.
The respective obligations of the Underwriters to purchase the Shares are
subject to each of the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in
accordance with Section 6(a) of this Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be in
effect and no order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the Commission, and any requests for
additional information on the part of the Commission (to be included in
the Registration Statement or the Prospectus or otherwise) shall have
been complied with to the satisfaction of the Commission and the
Representatives.
(c) The representations and warranties of the Company
contained in this Agreement and in the certificates delivered pursuant
to Section 5(d) shall be true and correct in all material respects when
made and on and as of each Closing Date as if made on such date. The
Company shall have performed all covenants and agreements and satisfied
all the conditions contained in this Agreement required to be performed
or satisfied by it at or before such Closing Date.
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(d) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such
Closing Date, of the chief executive or chief operating officer and the
chief financial officer or chief accounting officer of the Company to
the effect that (i) the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and this Agreement
and that the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
such Closing Date with the same effect as if made on such Closing Date
and the Company has performed all material covenants and agreements and
satisfied all material conditions contained in this Agreement required
to be performed or satisfied by it at or prior to such Closing Date, and
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and to the best of their knowledge, no
proceedings for that purpose have been instituted or are pending under
the Securities Act.
(e) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from
Ernst & Young LLP addressed to the Representatives and dated,
respectively, the date of this Agreement and each such Closing Date, in
form and substance reasonably satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of
the Securities Act and the Rules, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them and
stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included or incorporated by
reference in the Registration Statement and the Prospectus and
reported on by them comply as to form in all material respects
with the applicable accounting requirements of the Securities
Act and the Rules;
(ii) on the basis of a reading of the amounts included
in the Registration Statement and the Prospectus under the
headings "Summary Financial Information" and "Selected
Financial Data," carrying out certain procedures (but not an
examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such
letter, a reading of the minutes of the meetings of the
stockholders and directors of the Company, and inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters of the Company as to
transactions and events subsequent to the date of the latest
audited financial statements, except as disclosed in the
Registration Statement and the Prospectus, nothing came to
their attention which caused them to believe that:
(A) the amounts in "Summary Financial
Information," and "Selected Financial Data" included in
the Registration Statement and the Prospectus do not
agree with the corresponding amounts in the audited and
unaudited financial statements from which such amounts
were derived; or
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13
(B) with respect to the Company, there were, at
a specified date not more than three business days
prior to the date of the letter, any increases in the
current liabilities and long-term liabilities of the
Company or any decreases in net income or in working
capital or the stockholders' equity in the Company, as
compared with the amounts shown on the Company's
audited balance sheet for the fiscal year ended
December 31, 1999 and the three months ended March 31,
2000 included in the Registration Statement;
(iii) they have performed certain other procedures as
may be permitted under Generally Acceptable Auditing Standards
as a result of which they determined that certain information
of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information
derived from the general accounting records of the Company)
set forth in the Registration Statement and the Prospectus and
reasonably specified by the Representatives agrees with the
accounting records of the Company; and
(iv) based upon the procedures set forth in clauses
(ii) and (iii) above and a reading of the amounts included in
the Registration Statement under the headings "Summary
Financial Information" and "Selected Consolidated Financial
Data" included in the Registration Statement and Prospectus
and a reading of the financial statements from which certain
of such data were derived, nothing has come to their attention
that gives them reason to believe that the "Summary Financial
Information" and "Selected Consolidated Financial Data"
included in the Registration Statement and Prospectus do not
comply as to the form in all material respects with the
applicable accounting requirements of the Securities Act and
the Rules or that the information set forth therein is not
fairly stated in relation to the financial statements included
in the Registration Statement or Prospectus from which certain
of such data were derived are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included in the Registration Statement and
Prospectus.
References to the Registration Statement and the
Prospectus in this paragraph (e) are to such documents as
amended and supplemented at the date of the letter.
(f) The Representatives shall have received on each Closing
Date from Pillsbury Madison & Sutro LLP, counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing Date,
and stating in effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of
the state of its incorporation. To
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14
the best of such counsel's knowledge, the Company has
no significant subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture,
association or other business organization. The Company is
duly qualified and in good standing as a foreign corporation
in each jurisdiction in which the character or location of its
assets or properties (owned, leased or licensed) or the nature
of its businesses makes such qualification necessary, except
for such jurisdictions where the failure to so qualify,
individually or in the aggregate, would not have a Material
Adverse Effect.
(ii) The Company has all requisite corporate power and
authority to own, lease and license its assets and properties
and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus and
with respect to the Company to enter into, deliver and perform
this Agreement and to issue and sell the Shares other than
those required under the state and foreign Blue Sky laws.
(iii) The Company has authorized and issued capital
stock as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization"; the
certificates evidencing the Shares are in due and proper legal
form and have been duly authorized for issuance by the
Company; all of the outstanding shares of Common Stock of the
Company have been duly and validly authorized and issued and
are fully paid and nonassessable and none of them was issued
in violation of any preemptive or other similar right. The
Shares when issued and sold pursuant to this Agreement, will
be duly and validly issued, outstanding, fully paid and
nonassessable and none of them will have been issued in
violation of any preemptive or other similar right. To the
best of such counsel's knowledge, except as disclosed in the
Registration Statement and the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase or
any restriction upon the voting or transfer of any securities
of the Company pursuant to the Company's Certificate of
Incorporation or by-laws or other governing documents or any
agreements or other instruments to which the Company is a
party or by which it is bound. To the best of such counsel's
knowledge, except as disclosed in the Registration Statement
and the Prospectus, there is no outstanding option, warrant or
other right calling for the issuance of, and no commitment,
plan or arrangement to issue, any share of stock of the
Company or any security convertible into, exercisable for, or
exchangeable for stock of the Company.
(iv) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution,
delivery and performance of this Agreement and the issuance
and sale of the Shares. This Agreement has been duly and
validly authorized, executed and delivered by the Company.
(v) Neither the execution, delivery and performance of
this Agreement
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15
by the Company nor the consummation of any of the
transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the
Shares) will give rise to a right to terminate or accelerate
the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or
constitute a default (or any event which with notice or lapse
of time, or both, would constitute a default) under, or
require consent or waiver under, or result in the execution or
imposition of any lien, charge, claim, security interest or
encumbrance upon any properties or assets of the Company
pursuant to the terms of any indenture, mortgage, deed trust,
note or other agreement or instrument of which such counsel is
aware and to which the Company is a party or by which either
the Company or any of its properties or businesses is bound,
or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation of which such counsel is aware or
violate any provision of the charter or by-laws of the
Company, except as would not have a Material Adverse Effect.
(vi) To the best of such counsel's knowledge, no
default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default, in the due
performance and observance of any term, covenant or condition
by the Company of any material agreement or instrument to
which the Company is a party or by which it or any of its
assets or properties or businesses may be bound or affected
and which is attached to the Registration Statement as an
exhibit, where the consequences of such default, individually
or in the aggregate, would have a Material Adverse Effect.
(vii) To the best of such counsel's knowledge, the
Company is not in violation of any term or provision of its
amended and restated certificate of incorporation or by-laws
or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of such
violation, individually or in the aggregate, would have a
Material Adverse Effect.
(viii) No consent, approval, authorization or order of
any court or governmental agency or regulatory body is
required for the execution, delivery or performance of this
Agreement by the Company or the consummation of the
transactions contemplated hereby or thereby, except such as
have been obtained under the Securities Act and such as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the
several Underwriters.
(ix) To the best of such counsel's knowledge, there is
no litigation or governmental or other proceeding or
investigation, before any court or before or by any public
body or board pending or threatened against, or involving the
assets, properties or businesses of, the Company which would
have a Material Adverse Effect.
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16
(viii) The capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock."
The statements in the Prospectus under the captions
"Description of Capital Stock" and "Shares Eligible for Future
Sale," insofar as such statements constitute a summary of
documents referred to therein or matters of law, are fair
summaries in all material respects and accurately present the
information called for with respect to such documents and
matters. Accurate copies of all contracts and other documents
required to be filed as exhibits to, or described in, the
Registration Statement have been so filed with the Commission
or are fairly described in the Registration Statement, as the
case may be.
(xi) The Registration Statement, all preliminary
prospectuses and the Prospectus and each amendment or
supplement thereto (except for the financial statements and
schedules and other financial and statistical data included
therein, as to which such counsel expresses no opinion) comply
as to form in all material respects with the requirements of
the Securities Act and the Rules.
(xii) The Registration Statement is effective under the
Securities Act, and no stop order suspending the effectiveness
of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are
threatened, pending or contemplated. Any required filing of
the Prospectus and any supplement thereto pursuant to Rule
424(b) under the Securities Act has been made in the manner
and within the time period required by such Rule 424(b).
(xiii) The Shares have been approved for listing on the
Nasdaq National Market System.
(xiv) The Company is not an "investment company" or an
entity controlled by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, they may rely
as to matters of fact on certificates of responsible officers of the Company and
public officials. Copies of such certificates shall be furnished to the
Representatives and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except as
specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to
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17
believe that the Registration Statement at the time it became effective (except
with respect to the financial statements and notes and schedules thereto and
other financial data and the matters covered in the opinion provided pursuant to
paragraph (h) hereof as to which such counsel need express no belief) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus as amended or supplemented (except with
respect to the financial statements, notes and schedules thereto and other
financial data and the matters covered in the opinion provided pursuant to
paragraph (h) hereof, as to which such counsel need make no statement) on the
date thereof contained any untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(h) The Representatives shall have received on each Closing
Date from Xxxxxxxx & Xxxxxx, special patent counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing Date,
and stating in effect the opinions set forth on Exhibit A attached
hereto and incorporated herein by this reference.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus as they related to the matters
set forth in the foregoing opinion were discussed. While such counsel has not
undertaken to independently verify and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as specified in the foregoing
opinion), on the basis of the foregoing, no facts have come to the attention of
such counsel with respect to the matters set forth in the foregoing opinion
which lead such counsel to believe that the Registration Statement at the time
it became effective (except with respect to the financial statements and notes
and schedules thereto and other financial data, as to which such counsel need
express no belief) contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements, notes and
schedules thereto and other financial data, as to which such counsel need make
no statement) on the date thereof and the date of such opinion contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(i) The Representatives shall have received copies of the
Lock-up Agreements executed by each entity or person described in
Section 4(n).
(j) The Company shall have furnished or caused to be furnished
to the Representatives such further certificates or documents as the
Representatives shall have reasonably requested.
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18
6. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of
execution of this Agreement, and any amendments thereto, to
become effective as promptly as possible. The Company shall
prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than the
Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act.
(ii) The Company shall promptly advise the
Representatives in writing (i) when any amendment to the
Registration Statement shall have become effective, (ii) of
any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any additional
information, (iii) of the prevention or suspension of the use
of any preliminary prospectus or the Prospectus or of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution
or threatening of any proceeding for that purpose and (iv) of
the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the
Representatives a copy for its review prior to filing and
shall not file any such proposed amendment or supplement to
which the Representatives reasonably object. The Company shall
use its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(iii) If, at any time when a prospectus relating to the
Shares is required to be delivered under the Securities Act
and the Rules, any event occurs as a result of which the
Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the
light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend or supplement
the Prospectus to comply with the Securities Act or the Rules,
the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii)
of this Section 6(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall
effect such compliance.
(iv) The Company shall make generally available to its
security holders and to the Representatives as soon as
practicable, but not later than 45 days after
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19
the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective
Date occurs (or 90 days if such 12-month period coincides with
the Company's fiscal year), an earnings statement (which need
not be audited) of the Company, covering such 12-month period,
which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives
and counsel for the Underwriters, without charge, signed
copies of the Registration Statement (including all exhibits
thereto and amendments thereof) and to each other Underwriter
a copy of the Registration Statement (without exhibits
thereto) and all amendments thereof and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by
the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and any amendments
thereof and supplements thereto as the Representatives may
reasonably request.
(vi) The Company shall cooperate with the
Representatives and their counsel in endeavoring to qualify
the Shares for offer and sale in connection with the offering
under the laws of such jurisdictions as the Representatives
may designate and shall maintain such qualifications in effect
so long as required for the distribution of the Shares;
provided, however, that the Company shall not be required in
connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service
of process in any jurisdiction or subject itself to taxation
as doing business in any jurisdiction.
(vii) Without the prior written consent of CIBC World
Markets Corp., for a period of 180 days after the date of this
Agreement, the Company and each of its individual directors
and executive officers shall not issue, sell or register with
the Commission (other than on Form S-8 or on any successor
form), or otherwise dispose of, directly or indirectly, any
equity securities of the Company (or any securities
convertible into, exercisable for or exchangeable for equity
securities of the Company), except for the issuance of the
Shares pursuant to the Registration Statement, the issuance of
options or shares pursuant to the Company's existing stock
option plan or bonus plan as described in the Registration
Statement and the Prospectus or the Company's employee stock
purchase plans and the issuance of shares or options pursuant
to the Company's corporate collaboration, equipment leasing or
similar transaction. In the event that during this period, (i)
any shares are issued pursuant to the Company's existing stock
option plan or bonus plan that are exercisable during such 180
day period or (ii) any registration is effected on Form S-8 or
on any successor form relating to shares that are exercisable
during such 180 period, the Company shall obtain the written
agreement of such grantee or purchaser or holder of such
registered securities that, for a period of 180 days after the
date of this Agreement, such person will not, without the
prior written consent of CIBC World Markets Corp.,
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20
offer for sale, sell, distribute, grant any option for the
sale of, or otherwise dispose of, directly or indirectly, or
exercise any registration rights with respect to, any shares
of Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common
Stock) owned by such person.
(viii) On or before completion of this offering, the
Company shall make all filings required under applicable
securities laws and by the Nasdaq National Market (including
any required registration under the Exchange Act).
(ix) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration
or qualification of the Shares for offer and sale under the securities
or Blue Sky laws of the various jurisdictions referred to in Section
6(a)(vi), including the reasonable fees and disbursements of counsel for
the Underwriters in connection with such registration and qualification
and the preparation, printing, distribution and shipment of preliminary
and supplementary Blue Sky memoranda; (iv) the furnishing (including
costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of each preliminary prospectus, the Prospectus
and all amendments or supplements to the Prospectus, and of the several
documents required by this Section to be so furnished, as may be
reasonably requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be sold;
(v) the filing fees of the NASD in connection with its review of the
terms of the public offering and reasonable fees and disbursements of
counsel for the Underwriters in connection with such review; (vi)
inclusion of the Shares for quotation on the Nasdaq National Market
System; and (vii) all transfer taxes, if any, with respect to the sale
and delivery of the Shares by the Company to the Underwriters.
(c) Subject to the provisions of Section 10, the Underwriters
agree to pay, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the performance of the obligations of the Underwriters under
this Agreement not payable by the Company pursuant to the preceding
paragraph, including, without limitation, the fees and disbursements of
counsel for the Underwriters.
7. Indemnification.
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21
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement or the Prospectus
or any amendment thereof or supplement thereto, or in any Blue Sky
application or other information or other documents executed by the
Company filed in any state or other jurisdiction to qualify any or all
of the Shares under the securities laws thereof (any such application,
document or information being hereinafter referred to as a "Blue Sky
Application") or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) in
whole or in part upon any breach of the representations and warranties
set forth in Section 4 hereof, or (iii) in whole or in part upon any
failure of the Company to perform any of its obligations hereunder or
under law; provided, however, that such indemnity shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter)
on account of any losses, claims, damages or liabilities arising from
the sale of the Shares to any person by such Underwriter if such untrue
statement or omission or alleged untrue statement or omission was made
in such preliminary prospectus, the Registration Statement or the
Prospectus, or such amendment or supplement thereto, or in any Blue Sky
Application in reliance upon and in conformity with information
furnished in writing to the Company by the Representatives on behalf of
any Underwriter specifically for use therein. This indemnity agreement
will be in addition to any liability which the Company may otherwise
have.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, each director of the Company, and
each officer of the Company who signs the Registration Statement, to the
same extent as the foregoing indemnity from the Company to each
Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, the Registration Statement or the Prospectus, or
any amendment thereof or supplement thereto, contained in the (i)
concession and reallowance figures appearing under the caption
"Underwriting" and (ii) the stabilization information contained under
the caption "Underwriting" in the Prospectus; provided, however, that
the obligation of each Underwriter to indemnify the Company (including
any controlling person, director or officer thereof) shall be limited
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22
to the net proceeds received by the Company from such Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or
parties under this Section, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of all
papers served. No indemnification provided for in Section 7(a) or 7(b)
shall be available to any party who shall fail to give notice as
provided in this Section 7(c) if the party to whom notice was not given
was unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice but the omission
so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve it from any liability that it may have to
any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized in
writing by the indemnifying parties, (ii) the indemnified party shall
have been advised by counsel that there may be one or more legal
defenses available to it which are different from or in addition to
those available to the indemnifying party (in which case the
indemnifying parties shall not have the right to direct the defense of
such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action,
suit, proceeding or claim effected without its written consent, which
consent shall not be unreasonably withheld or delayed.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in Section 7(a) or 7(b) is due in accordance with its terms but for any
reason is held to be unavailable to or insufficient to hold harmless an
indemnified party under Section 7(a) or 7(b), then each indemnifying
party shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted,
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23
but after deducting any contribution received by any person entitled
hereunder to contribution from any person who may be liable for
contribution) to which the indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from
the offering of the Shares or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company
and the Underwriters shall be deemed to be in the same proportion as (x)
the total proceeds from the offering (net of underwriting discounts but
before deducting expenses) received by the Company, as set forth in the
table on the cover page of the Prospectus, bear to (y) the underwriting
discounts received by the Underwriters, as set forth in the table on the
cover page of the Prospectus. The relative fault of the Company or the
Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
related to information supplied by the Company or the Underwriters and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8 (i) in no case shall
any Underwriter (except as may be provided in the Agreement Among
Underwriters) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such
Underwriter hereunder; (ii) the Company shall be liable and responsible
for any amount in excess of such underwriting discount; provided,
however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8 each person, if any,
who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of the Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as
the Company, subject in each case to clauses (i) and (ii) in the
immediately preceding sentence of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of
any action, suit or proceeding against such party in respect of which a
claim for contribution may be made against another party or parties
under this Section, notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties from
whom contribution may be sought shall not relieve the party or parties
- 23 -
24
from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this Section. No party
shall be liable for contribution with respect to any action, suit,
proceeding or claim settled without its written consent. The
Underwriter's obligations to contribute pursuant to this Section 8 are
several in proportion to their respective underwriting commitments and
not joint.
9. Termination. This Agreement may be terminated with respect
to the Shares to be purchased on a Closing Date by the Representatives by
notifying the Company at any time
(a) in the absolute discretion of the Representatives at or
before any Closing Date: (i) if on or prior to such date, any domestic
or international event or act or occurrence has materially disrupted, or
in the opinion of the Representatives will in the future materially
disrupt, the securities markets; (ii) if there has occurred any new
outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United States
is such as to make it, in the judgment of the Representatives,
inadvisable to proceed with the offering; (iii) if there shall be such a
material adverse change in general financial, political or economic
conditions or the effect of international conditions on the financial
markets in the United States is such as to make it, in the judgment of
the Representatives, inadvisable or impracticable to market the Shares;
(iv) if trading in the Shares has been suspended by the Commission or
trading generally on the New York Stock Exchange, Inc., on the American
Stock Exchange, Inc. or the Nasdaq National Market System has been
suspended or limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for
securities have been required, by said exchanges or by order of the
Commission, the National Association of Securities Dealers, Inc., or any
other governmental or regulatory authority; or (v) if a banking
moratorium has been declared by any state or Federal authority; or (vi)
if, the Representatives reasonably believe a Material Adverse Effect has
occurred, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 6 shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to any Underwriter, and
no Underwriter shall be under any liability to the Company, except that (y) if
this Agreement is terminated by the Representatives or the Underwriters because
of any failure, refusal or inability on the part of the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, the Company
will reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with the proposed purchase and sale of the Shares or in contemplation
of performing their obligations hereunder and (z) no Underwriter who shall have
failed or refused to purchase the Shares agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify cancellation or
termination of its obligations under this Agreement, shall be relieved of
liability to the Company or to the other Underwriters for damages
- 24 -
25
occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more substitute
underwriters to purchase such Shares or make such other arrangements as the
Representatives may deem advisable or one or more of the remaining Underwriters
may agree to purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares
that all the Underwriters are obligated to purchase on such Closing
Date, then each of the nondefaulting Underwriters shall be obligated to
purchase such Shares on the terms herein set forth in proportion to
their respective obligations hereunder; provided, that in no event shall
the maximum number of Shares that any Underwriter has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 10 by more
than one-ninth of such number of Shares without the written consent of
such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date,
then the Company shall be entitled to one additional business day within
which it may, but is not obligated to, find one or more substitute
underwriters reasonably satisfactory to the Representatives to purchase
such Shares upon the terms set forth in this Agreement.
In any such case, either the Representatives or the Company
shall have the right to postpone the applicable Closing Date for a period of not
more than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration Statement
or Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(b),
7, 8 and 9. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
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26
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(b), 7, 8
and 9 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and their respective successors and assigns, and, to
the extent expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing
and mailed or delivered or by telephone or telegraph if subsequently confirmed
in writing, (a) if to the Representatives, c/o CIBC World Markets Corp., Xxx
Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: __________________,
with a copy to XxXxxxxxx, Will & Xxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxxxxxx and (b) if to the
Company, to its agent for service as such agent's address appears on the cover
page of the Registration Statement with a copy to Pillsbury Madison & Sutro LLP,
00000 Xx Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000-0000, Attention:
Xxxx X. Xxxx.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflict of laws.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
- 26 -
27
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
APPLIED MOLECULAR EVOLUTION, INC
By
----------------------------------
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
PAINEWEBBER INCORPORATED
XX XXXXX SECURITIES CORPORATION
Acting severally on behalf of itself and as representative of the several
Underwriters named in Schedule I annexed hereto.
By CIBC WORLD MARKETS CORP.
By
-------------------------
Title:
- 27 -
28
SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- ------------
CIBC World Markets Corp.
PaineWebber, Incorporated
XX Xxxxx Securities Corporation
------------
Total
- 28 -
29
EXHIBIT A
OPINION OF SPECIAL PATENT COUNSEL
- 29 -
30
EXHIBIT A TO EXHIBIT 1.1
THIS DOCUMENT IS IN DRAFT FORM ONLY AND IS PROVIDED ONLY AS A PROPOSED FORMAT.
NO STATEMENT IS TO BE TAKEN AS A REPRESENTATION OF XXXXXXXX & XXXXXX LLP
___________, 2000
CIBC World Markets Corp.
Xxxxx Xxxxxx Incorporated
XX Xxxxx Securities Corporation
c/o CIBC World Markets Corp.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We represent Applied Molecular Evolution, Inc., a Delaware corporation (the
"Company"), with respect to certain matters as described below. This opinion is
being rendered to you pursuant to section 5(g) of the Underwriting Agreement
dated _______, 2000 (the "Underwriting Agreement") between you and the Company
relating to the issuance and sale of shares of the Company's Common Stock.
We have examined such documents and other matters as we have deemed
necessary in order to render the opinion set forth herein. In rendering these
opinions, as to factual matters not directly within our actual knowledge, we
have relied upon, and have assumed the accuracy, completeness and genuineness
of, certificates, other documents and oral and written representations of public
officials and oral and written representations made to us by officers, employees
and agents of the Company.
On the basis of the foregoing, and subject to the qualifications set forth
below, we are of the opinion that:
i. We represent the Company in matters relating to intellectual property
including certain patents and trademarks.
31
Page 2
ii. The sections of the registration Statement entitled "Prospectus
Summary: Our Approach," "Litigation, other proceedings or
third-party claims of intellectual property infringement could
adversely impact our business," and "Intellectual Property" are
hereinafter referred to as the "Intellectual Property Section."
iii. To the best of our knowledge, the statements in the Intellectual
Property Sections are accurate and fairly present the matters of law
and legal conclusions stated therein.
iv. Nothing has come to our attention which causes us to believe that
the Intellectual Property Sections contain any untrue statement of a
material fact with respect to the patent position of the Company, or
omit to state any material fact relating to the patent position of
the Company.
v. Nothing has come to our attention which causes us to believe that
(a) any patent application referred to in the Intellectual Property
Section was not properly filed in accordance with all applicable
legal and procedural requirements; (b) the issued patents referred
to in the Intellectual Property Section do not include valid claims;
(c) any invention claim in any valid claim in the Issued Patents is
not owned or licensed to the Company by the Company; or (d) any
relevant prior art material to examination of any United States
Patent application has not been disclosed to the United States
Patent and Trademark office.
vi. To our knowledge, the Company has not received any notice asserting
any ownership rights contrary to those of the Company for any patent
application or issued patent.
vi. To our knowledge, the Company has not received any notice of any
legal proceedings to challenge the validity or enforceability of any
patent application or issued patent.
viii. To our knowledge, the Company has not received any notice of
infringement of, or conflict with, rights or claims of others with
respect to any patent, trademark, or service xxxx.
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Page 3
ix. To our knowledge, other than proceedings in the various
patent and trademark offices, there are no legal or
governmental proceedings pending relating to any patent,
patent application, trademark, or service xxxx, to our
knowledge, no such proceedings are threatened or
contemplated by governmental authorities or others.
x. While we have not undertaken to independently verify and
do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in
the Registration Statement and the Prospectus (except as
specified in the foregoing opinion), no facts have come
to our attention with respect to the matters set forth
in the foregoing opinion which lead such counsel to
believe that the Registration Statement contains, at the
time it became effective contained, any untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or that the
Prospectus as amended or supplemented (except with
respect to the financial statements, notes and schedules
thereto and other financial data, as to which such
counsel need make no statement) on the date thereof and
the date of such opinion contained any untrue statement
of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading.
The foregoing opinion is subject to the following
qualifications:
(a) We have assumed (i) The genuineness of all
signatures and the authenticity of all documents submitted to us
as originals, (ii) the conformity to original documents of all
documents submitted to us as photostatic or telecopied
originals, (iii) the due authorization, execution and delivery
of all documents by or on behalf of all parties other than the
Company, and (iv) the truth, accuracy and completeness of the
information, factual matters, representations and warranties
contained in the records, documents, instruments and
certificates we have reviewed.
(b) As used in the opinions set forth above, the
expression "to
33
Page 4
the best of our knowledge after due inquiry" with reference to matter of
fact means that, after an examination of documents in our files and
documents made available to us by the Company and after inquiries of
certain officers and employees of the Company, we find no reason to believe
that such opinions are factually incorrect; but beyond that we have made no
independent factual investigation for the purpose of rendering an opinion
to our knowledge.
(c) We have not advised the Company as to any matters except those
relating to intellectual property, including certain licenses, patents and
trade secrets.
This opinion is furnished by us as counsel for the Company to you as
Representatives of the Underwriters, and is solely for the benefit of the
several Underwriters in conjunction with the present proposed initial public
offering of the Company.
Sincerely,
XXXXXXXX & XXXXXX LLP
Xxxxxxx Xxxxxxxx
CAC/sej
