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EXHIBIT 1.01
GUILFORD PHARMACEUTICALS INC.
COMMON STOCK
UNDERWRITING AGREEMENT
, 1997
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Xxxxxxxxxxx & Co., Inc.
Alex. Xxxxx & Sons Incorporated
Xxxxxxxxx & Xxxxx LLC
c/o Oppenheimer & Co., Inc.
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
GUILFORD PHARMACEUTICALS 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 3,250,000 shares (the "Firm Shares") of the
Company's Common Stock, $.01 par value per share (the "Common Stock"). The
respective amounts of the Firm Shares to be so purchased by the several
Underwriters are set forth opposite their names in Schedule I hereto. The
Company also proposes to grant to the Underwriters an option to purchase up to
an additional 487,500 shares of Common Stock (the "Option Shares") from them
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 covenants contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to sell to the Underwriters, and
each Underwriter agrees, severally and not jointly, to purchase from the
Company, at a price of $__________ per share (the "Initial Price"), the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule I to
this Agreement, subject to adjustment in accordance with Section 10 hereof.
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(b) The Company grants to the several Underwriters an
option to purchase 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 two days before the Firm
Shares Closing Date (as defined below), and only once thereafter within 30 days
after the date of this Agreement, upon written or telegraphic notice, or verbal
or telephonic notice confirmed by written or telegraphic notice, by the
Representatives to the Company no later than 12:00 noon, New York City time, on
the business day two days 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 wire transfer, certified or official bank
check or checks payable in same-day funds drawn to the order of the Company,
against delivery of certificates therefor to the Representatives for the
several accounts of the Underwriters, shall take place at the offices of
Xxxxxxxxxxx & Co., Inc., at Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time, (a) on the third full
business day following the first day that the Shares are traded, (b) if this
Agreement is executed and delivered after 4:30 p.m. New York City Time, on the
fourth business day following the date of this Agreement, or (c) at such other
time or date, but not later than the fourth full business day following the
Effective Date (as hereinafter defined), 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, delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the Underwriters and payment of the purchase
price by wire transfer, certified or official bank check or checks payable in
New York Clearing House (next day) funds to the order of the Company shall take
place at the offices of Xxxxxxxxxxx & Co., Inc. specified above at the time and
on the date (which may be the same date as, but in no event shall be earlier
than, the Firm Shares Closing Date) specified in the notice referred to in
Section 1(b) (such time and date of delivery and payment are called the "Option
Shares Closing Date"). The Firm Shares Closing Date and the Option Shares
Closing Date are called, individually, a "Closing Date" and, together, the
"Closing Dates."
Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at
least two full business days before the Firm Shares Closing Date or, in the
case of Option Shares, on the day of notice of exercise of the option as
described in Section l(c) and shall be made available to the Representatives
for
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checking and packaging, at such place as is designated by the Representatives,
on 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 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 on Form S-3 (No.
333-23001), including a preliminary prospectus relating to the Shares, and has
filed with the Commission the Registration Statement (as hereinafter defined)
and such amendments thereof as may have been required to the date of this
Agreement. The number of executed copies requested by you of such Registration
Statement (including all amendments thereof) and of the related preliminary
prospectus have heretofore been delivered by the Company to you. The term
"preliminary prospectus" means any preliminary prospectus (as described in Rule
430 of the Rules), including the documents incorporated by reference therein,
included at any time as a part of the Registration Statement. The Registration
Statement, as amended at the time and on the date it became effective (the
"Effective Date"), including all documents incorporated by reference therein
and all exhibits and information, if any, deemed to be part of the Registration
Statement pursuant to Rule 424(b), Rule 430A, Rule 434 and Rule 462(b) of the
Rules, is called the "Registration Statement." The term "Prospectus" means the
prospectus, including the documents incorporated by reference therein, in the
form first used to confirm sales of the Shares (whether such prospectus was
included in the Registration Statement at the time of effectiveness or was
subsequently 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 in the United States, as set forth in and pursuant to
the Prospectus and an offer of the Shares on a private placement basis in
Canada in the provinces of British Columbia, Ontario and Quebec, as soon after
the Effective Date and the date of this Agreement as the Representatives deem
advisable. The Canadian private placement shall be pursuant to an offering
memorandum (the "Offering Memorandum") comprised of the Prospectus and a
Canadian wrapper. The Company hereby confirms that the Underwriters and
dealers have been authorized to distribute or cause to be distributed each
preliminary prospectus and Offering Memorandum 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 and the Offering Memorandum, on the
date any post-effective amendment to the Registration Statement shall become
effective, on the date any supplement or amendment to the Prospectus or
Offering Memorandum is filed with the Commission and on each Closing Date, the
Registration Statement, the Prospectus and the Offering Memorandum (and any
amendment thereof or supplement thereto) will comply in all material respects
with the applicable provisions of the Securities Act and the Rules; the
Registration Statement did not, as
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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 other dates referred
to above neither the Registration Statement, the Prospectus, nor the Offering
Memorandum, 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 did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
warranties in this paragraph 4(a) shall apply to statements in, or omissions
from, the Registration Statement, the Prospectus or the Offering Memorandum
made in reliance upon, and in conformity with, information herein or otherwise
furnished in writing to the Company by or on behalf of the Underwriters for use
in the Registration Statement, the Prospectus or the Offering Memorandum. With
respect to the preceding sentence, the only information furnished in writing by
the Representatives on behalf of the several Underwriters specifically for
inclusion in the Registration Statement, any preliminary prospectus, the
Prospectus or the Offering Memorandum is the last paragraph on the cover page,
the paragraphs with respect to stabilization and passive market making on the
inside front cover page of the Prospectus, the names of the Underwriters and
paragraphs 2, 4 and 5 contained under the caption "Underwriting" in the
Prospectus. Notwithstanding the foregoing, if any revised prospectus shall be
provided to the Underwriters by the Company for use in connection with the
offering of the Shares that differs from the prospectus referred to in the
immediately preceding sentence (whether or not such revised prospectus is
required to be filed with the Commission pursuant to Rule 424(b) of the Rules),
the term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to the Underwriters for such use.
(b) The financial statements of the Company (including
all notes and schedules thereto) included 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 have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved.
The summary and selected financial data included in the Prospectus present
fairly the information shown therein as at the respective dates and for the
respective periods specified, and the summary and selected financial data have
been presented on a basis consistent with the financial statements so set forth
in the Prospectus and other financial information.
(c) To the knowledge of the Company, KPMG Peat Marwick
LLP, whose report is filed with the Commission as a part of the Registration
Statement, are and, during the
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periods covered by their report, were independent public accountants as
required by the Securities Act and the Rules.
(d) The Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has no subsidiary or subsidiaries
and does not control, directly or indirectly, any corporation, partnership or
joint venture except for Gell Pharmaceuticals Inc., GPI Holdings Inc., GPI NIL
Holdings Inc. and Holabird Holdings N.V. ("Holabird"). Holabird is a
corporation duly organized under the laws of the Netherlands. Holabird is
currently inactive and has no assets or liabilities. The Company and each such
subsidiary or other entity (collectively, "Subsidiaries") is duly qualified 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
business makes such qualification necessary 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, prospects or condition
(financial or otherwise) of the Company (a "Material Adverse Effect"). The
qualification of the Company in Maryland is the only such qualification
required. 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, to own, lease and license its assets and properties and
conduct its businesses as now being conducted and as described in the
Registration Statement and the Prospectus except for such authorizations,
approvals, consents, orders, material licenses, certificates and permits the
failure of which to obtain would not have a Material Adverse Effect.
(e) Each of the Company and its Subsidiaries owns, or
possesses adequate and enforceable rights to use, each of the patents listed in
the Registration Statement and each preliminary prospectus under the caption
"Business -- Patents and Proprietary Technology" (the "Patents") and, except as
disclosed in the Registration Statement and the Prospectus, owns or possesses
adequate and enforceable rights to use all trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge (collectively with
the Patents, "Intangibles") necessary for the conduct of its business as
described and as contemplated in the Registration Statement and the Prospectus.
Neither the Company nor any of its Subsidiaries has received any notice of any
infringement of or conflict with, nor, to the Company's knowledge, has
infringed, nor is infringing on asserted rights of others with respect to any
Intangibles which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect.
(f) Except as disclosed in the Prospectus and for the
security interest held by General Electric Capital Corporation ("GECC") on any
equipment leased by the Company pursuant to the Master Lease Agreement with
GECC, the Company and its Subsidiaries has good and marketable title to each of
the items of personal property which are reflected in the financial statements
referred to in Section 4(b) or are referred to in the Registration Statement
and the Prospectus as being owned by it and valid and enforceable leasehold
interests in each of the items of real and personal property which are referred
to in the Registration Statement and the
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Prospectus as being leased by it, in each case free and clear of all liens,
encumbrances, claims, security interests and defects, other than those
described in the Registration Statement and the Prospectus and those which do
not and will not have a Material Adverse Effect.
(g) Except as disclosed in the Registration Statement and
the Prospectus, there is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, pending or, to the
Company's best knowledge, threatened (and the Company does not know of any
basis therefor) against, or involving the assets, properties or business of,
the Company or its Subsidiaries (i) which is required to be disclosed in the
Prospectus or (ii) which is reasonably likely to have a Material Adverse
Effect.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except
as described therein, (i) there has not been any material adverse change in the
assets or properties, business, results of operations, prospects or condition
(financial or otherwise), of the Company or its Subsidiaries, whether or not
arising from transactions in the ordinary course of business; (ii) none of the
Company or its Subsidiaries has sustained any material 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 (iii) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, except as reflected therein, none of
the Company or its Subsidiaries has (1) issued any securities other than the
issuance of securities pursuant to the exercise of options granted under stock
option plans or agreements existing prior to the date of the latest balance
sheet included in the Registration Statement and Prospectus or incurred any
liability or obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business, (2)
entered into any material transaction not in the ordinary course of business or
(3) declared or paid any dividend or made any distribution on any shares of its
capital stock or redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its capital stock.
(i) There is no document or contract of a character
required to be described in or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. Each agreement
described in the Registration Statement and the Prospectus or listed in the
Exhibits to the Registration Statement or any document incorporated by
reference therein is in full force and effect and is valid and enforceable by
the Company in accordance with its terms, assuming the due authorization,
execution and delivery thereof by each of the other parties thereto. 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 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
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party or by which it or its properties or business may be bound or affected
which default or event would have a Material Adverse Effect.
(j) None of the Company or its Subsidiaries is in
violation of any franchise, license, permit, judgment, decree, order, statute,
rule or regulation, where the consequences of such violation would have a
Material Adverse Effect or of any term or provision of its Certificate of
Incorporation or Bylaws.
(k) 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 or its Subsidiaries is a party or
by which it or its Subsidiaries or any of their properties or businesses is
bound or any franchise, license, permit, judgment, decree, order, statute, rule
or regulation applicable to the Company or its Subsidiaries or violate any
provision of the Certificate of Incorporation or Bylaws of the Company or its
Subsidiaries, except for such consents or waivers which have already been
obtained and are in full force and effect.
(l) The Company has authorized, and, at December 31, 1996
had outstanding, capital stock as set forth in the Registration Statement and
Prospectus under the heading "Capitalization" in the Prospectus; there have
been no changes in the outstanding capital stock of the Company since that date
except to the extent that certain outstanding options and warrants set forth in
the footnotes thereto may have been exercised. 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 authorized and validly 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 authorized and validly issued and fully paid and
nonassessable. Except as disclosed in the Registration Statement and the
Prospectus, there are no preemptive rights or any restriction upon the voting
or transfer of any securities of the Company pursuant to its Certificate of
Incorporation, Bylaws or other governing documents or any agreement or other
instrument to which the Company is a party or by which it may be bound. The
issued shares of capital stock of each of the Company's Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable and are
owned by the Company free and clear of any perfected security interest or, any
other security interests, liens, encumbrances, equities or claims. 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 securities or
obligations convertible into any shares of capital stock of the Company or its
Subsidiaries or any such options, rights, convertible securities or
obligations.
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(m) There are no holders of securities of the Company
who, by reason of the filing of the Registration Statement under the Securities
Act or the execution by the Company of this Agreement, have the right, not
previously satisfied or waived, to request or demand that the Company register
under the Securities Act such securities held by them. Certain shareholders
and each director and executive officer of the Company, holding in the
aggregate 3,742,889 shares of Common Stock and options to purchase 1,250,142
shares of Common Stock have delivered to the Representatives its, his or her
enforceable written agreement (collectively, the "Lock-Up Agreements") that it,
he or she will not, directly or indirectly, from the date thereof and until a
period of 90 days, after the date of this Agreement, sell, offer, contract to
sell, make a short sale, pledge, otherwise dispose of, or reduce its, his or
her risk through the use of any option, put, call or other derivative security
relative to, (collectively, "sell") any shares of Common Stock (or any
securities convertible into or exchangeable or exercisable for any other rights
to purchase or acquire Common Stock) owned by it, him or her, without the prior
written consent of Xxxxxxxxxxx & Co., Inc. To the knowledge of the Company,
from March 7, 1997 through the date hereof, no such shareholder, officer or
director has sold any of its Common Stock (or any securities convertible into
or exchangeable or exercisable for other rights to purchase or acquire Common
Stock) or reduce its, his or her risk through the use of any option, put, call
or other derivative security relative to its Common Stock.
(n) 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 a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except (i) as the enforceability hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
and (ii) to the extent that rights to indemnity or contribution under this
Agreement may be limited by Federal and state securities laws or the public
policy underlying such laws.
(o) No labor dispute with the employees of the Company
exists or, to the knowledge of the Company, is threatened; and the Company is
not aware of any existing or imminent labor disturbance by the employees of any
of its principal suppliers or contractors which would have a Material Adverse
Effect. The Company is not aware of any threatened or pending litigation
between the Company or its Subsidiaries and any of its executive officers
which, if adversely determined, could have a Material Adverse Effect and has no
reason to believe that any such officers will not remain in the employment of
the Company. No collective bargaining agreement exists with any of the
Company's or its Subsidiaries' employees and, to the knowledge of the Company,
no such agreement is imminent.
(p) No transaction has occurred between or among the
Company and any of its affiliates, its officers or directors or any affiliate
or affiliates of any such officer or director that is required to be described
in and is not described in the Registration Statement and the Prospectus or any
document incorporated by reference therein.
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(q) 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 of the Company.
(r) Each of the Company and its Subsidiaries has filed
all Federal, state, local and foreign tax returns which were required to be
filed to the date hereof, or has received extensions thereof, and such returns
are each true, correct and complete in all material respects, and has paid all
taxes shown on such returns and all assessments received by it to the extent
that the same are material and have become due, and there are no tax audits or
investigations pending, which if adversely determined would have a Material
Adverse Effect.
(s) 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.
(t) Neither the Company, its Subsidiaries, nor to the
Company's knowledge, any director, officer, employee, agent or other person
acting on behalf of the Company or its Subsidiaries, has, in the course of his
actions for, or on behalf of, the Company violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977 or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(u) 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 Securities
Act or state securities or Blue Sky laws has been obtained or made and is in
full force and effect).
(v) The Shares have been authorized for listing on The
Nasdaq National Market.
(w) 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 shareholder of the Company, except as set forth in
the Registration Statement or otherwise disclosed in writing to the
Representatives of the Underwriters.
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(x) (i) Each of the Company and its Subsidiaries is in
compliance in all material respects with all rules, laws and regulation
relating to the use, treatment, storage and disposal of toxic substances and
protection of health or the environment ("Environmental Laws") which are
applicable to its business, (ii) none of the Company or its Subsidiaries has
received any notice from any governmental authority or third party of an
asserted claim under Environmental Laws, (iii) to the Company's knowledge, no
facts currently exist that will require the Company or its Subsidiaries to make
future material capital expenditures to comply with Environmental Laws, and
(iv) no property which is or has been owned, leased or occupied by the Company
or its Subsidiaries has been designated as a Superfund site pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended (42 U.S.C. Section 9601, et seq.), or otherwise designated as a
contaminated site under applicable state or local law.
(y) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
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)(i) 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 Representatives.
(c) The representations and warranties of the Company
contained in this Agreement and in the certificate delivered pursuant to
Section 5(d) hereof 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, and the
Company shall have performed all covenants and agreements and satisfied all the
conditions in all material respects contained in this Agreement required to be
performed or satisfied by it at or before such Closing Date.
(d) The Representatives shall have received on each
Closing Date a certificate, addressed to the Representatives and dated such
Closing Date, of the chief executive officer and the chief financial officer of
the Company to the effect that (i) the signers of such certificate have
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 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 covenants and
agreements and satisfied all conditions
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contained in this Agreement in all material respects 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 Act.
(e) The Representatives shall have received from KPMG
Peat Marwick LLP, on the date this Agreement is executed and on each Closing
Date, a letter dated such date, in form and substance satisfactory to the
Representatives and their counsel, to the effect that they are independent
public accountants with respect to the Company within the meaning of the
Securities Act and the Rules and that:
(i) in their opinion the audited financial
statements and the related financial statement schedules, if any, included in
the Registration Statement and the Prospectus and covered by their reports
therein 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 Data" and "Selected Financial Data," carrying out certain
procedures (but not an audit 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
Data" 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
(B) with respect to the Company there
were, at a specified date not more than five business days prior to the date of
the letter, any change in the capital stock of the Company, increase in
long-term debt of the Company or decreases in net current assets of the Company
or decreases in the stockholders' equity of the Company, as compared with the
amounts shown on the Company's audited December 31, 1996 balance sheet 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
11.
12
(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 Data" and
"Selected 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 give them reason to believe
that the "Summary Financial Data" and "Selected 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 from which it was derived, or
that 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 as of the date
of the letter.
(f) The Representatives shall have received on each
Closing Date from Xxxxx & Xxxxxxx, L.L.P., counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, stating in effect
that:
(i) Each of the Company and its Subsidiaries (as
used in this Section 5(f) only, the term "Subsidiaries" shall not be deemed to
include Holabird) was incorporated and is validly existing and in good standing
under the laws of the State of Delaware. The Company is duly qualified and in
good standing as a foreign corporation in Maryland.
(ii) Each of the Company and its Subsidiaries has
the corporate power and corporate authority under its Certificate of
Incorporation and the Delaware General Corporation Law, as amended (the
"DGCL"), to own, lease, license and operate its assets and properties and
conduct their business as it may be described in the Prospectus and with
respect to the Company to enter into, deliver and perform this Agreement as of
the date of such opinion and to issue and sell the Shares.
(iii) Except as disclosed elsewhere in this
Agreement, the Company has authorized and outstanding capital stock as of the
date of the Capitalization table in the Prospectus as set forth in the
Prospectus under the heading "Capitalization"; there have been no changes in
the outstanding capital stock of the Company since that date except to the
extent that certain outstanding options and warrants set forth in the footnotes
thereto may have been exercised and for the issuance of 750,000 shares of
Common Stock to The Xxxxx Foundation on March 5, 1997 upon exercise of its put
right with respect to its ownership interest in Gell Pharmaceuticals Inc.; the
form of certificate evidencing the Shares complies with the requirements of
Section 158 of the DGCL; all of the outstanding shares of Common Stock of the
Company have been duly authorized and validly issued and, assuming receipt of
the consideration therefor as provided in resolutions of the Company's Board of
Directors authorizing issuance thereof, are fully paid and nonassessable under
the DGCL. There are no
12.
13
statutory preemptive rights to subscribe for or to purchase or acquire any
shares of Common Stock of the Company or its Subsidiaries pursuant to the
Company's Certificate of Incorporation or Bylaws or any agreement filed as an
exhibit to the Registration Statement. The Shares, when issued and sold
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable under the DGCL. To 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 securities of the
Company or any of its Subsidiaries. The issued shares of capital stock of each
of the Company's Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are owned by the Company free and clear of any
perfected security interest or, to the knowledge of such counsel, any other
security interests, liens, encumbrances, equities or claims.
(iv) To such counsel's knowledge, no holders of
securities of the Company have rights, which have not been waived or complied
with, to the registration of shares of Common Stock or other securities,
because of the filing of the Registration Statement by the Company or the
offering contemplated hereby.
(v) This Agreement has been duly authorized,
executed and delivered by the Company.
(vi) The execution, delivery and performance as of
the date hereof of this Agreement by the Company do not (i) violate the DGCL or
the Certificate of Incorporation or the Bylaws of the Company or (ii) to such
counsel's knowledge, breach or constitute a default under any contract or
agreement filed as an exhibit to the Registration Statement, the Company's
Report on Form 10-K for the year ended December 31, 1996 (the "Form 10-K") or
referenced in paragraph (xiii) hereof.
(vii) No consent, approval, authorization or order
of any governmental or regulatory body is required for the performance of this
Agreement by the Company as of the date of such opinion, except such as have
been obtained under the Securities Act and such as may be required by the NASD
pursuant to its Corporate Finance Rules or under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by the
several Underwriters or such as may be required under the Investment Company
Act (as to which no opinion need be expressed).
(viii) The Registration Statement, all preliminary
prospectuses and the Prospectus and each amendment or supplement thereto
(except for the financial statements and supporting schedules and other
financial and statistical data derived therefrom included therein or omitted
therefrom, as to which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Securities Act and the
Rules. In passing upon compliance as to form only, such counsel may assume
that all statements made in the Registration Statement and the Prospectus are
correct and complete.
(ix) The Registration Statement has become
effective under the Securities Act; and, to such counsel's knowledge, no stop
order suspending the effectiveness of
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14
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 made in the manner and within the time period required by such Rule
424(b).
(x) The Shares have been authorized for listing
on The Nasdaq National Market System.
(xi) The statements under the captions "Risk
Factors--Government Regulation and Product Approvals" and "Business-Government
Regulation and Product Testing," insofar as such statements purport to
summarize applicable provisions of the Federal Food, Drug, and Cosmetic Act, as
amended, and the regulations promulgated thereunder, are accurate summaries in
all material respects of the provisions purported to be summarized under such
captions in the Prospectus.
(xii) The authorized Common Stock of the Company
conforms in all material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock."
(xiii) The descriptions under the caption
"Business-Technology Licensing Agreements" of certain provisions of the
agreement dated March 15, 1994 between Scios Inc. and the Company, the
agreement dated March 18, 1994 between the Company and the Research Triangle
Institute, the agreement dated June 25, 1996 between the Company, MIT and Xxxxx
Xxxxxxx, the agreement dated July 17, 1996 between the Company and Xxxxx
Xxxxxxx, the and the agreements dated January 2, 1996 and February 5, 1996
between the Company and Xxxxx Xxxxxxx are accurate in all material respects.
To the extent deemed advisable by such counsel, they may rely
as to matters of fact on certificates of responsible officers of the Company
and public officials and on the opinions of the counsel satisfactory to the
Representatives as to matters which are governed by laws other than the DGCL or
the Federal laws of the United States; provided that such counsel shall state
that in their opinion the Underwriters and they are justified in relying on
such other opinions. Copies of such certificates and other opinions shall be
furnished to the Representatives and counsel for the Underwriters.
Based solely upon an officers' certificate and such counsel's review
of its litigation docket and an inquiry of attorneys who provide services to
the Company, such counsel also shall confirm that, to such counsel's knowledge,
there are no legal or governmental proceedings pending or threatened against
the Company or its Subsidiaries except as set forth on Schedule II attached
hereto.
In addition, such counsel shall state that during the course of the
preparation of the Registration Statement, such counsel participated in
conferences with officers and other representatives of the Company, with
representatives of the independent public accountants of
14.
15
the Company and with you and your representatives. While such counsel has not
undertaken to determine independently, and does not assume any responsibility
for, the accuracy, completeness, or fairness of the statements in the
Registration Statement or Prospectus (except as specified in opinions (xi),
(xii) and (xiii), such counsel may state on the basis of these conferences and
its activities as counsel to the Company in connection with the Registration
Statement that no facts have come to such counsel's attention which cause such
counsel to believe that (i) the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as of its date and
as of any Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, (ii) there are any contracts or documents of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not described or
referred to therein or so filed or (iii) there are no contracts or documents of
a character required to be filed as an exhibit to the Company's Report on Form
10-K pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act;
provided that in making the foregoing statements (which shall not constitute an
opinion), such counsel shall not be required to express any view as to patent
or trademark matters or the financial statements and supporting schedules and
other financial and statistical information, and data derived therefrom
included in or omitted from the Registration Statement or the Prospectus.
(g) The Representatives shall have received on each
Closing Date from Nath & Associates, patent counsel for the Company, an opinion
addressed to the Representatives and dated such Closing Date, and stating in
effect that:
(i) The statements in the Prospectus and
Registration Statement under the captions "Risk Factors - Uncertainty Regarding
Patents and Proprietary Technology," "Business - Patents, and Proprietary
Technology," and "Business-Technology License Agreements" have been reviewed by
such patent counsel and are accurate in all material respects and fairly
present the information disclosed therein.
(ii) To the best of such patent counsel's
knowledge, after due inquiries, such patent counsel believes the Registration
Statement and the Prospectus do not contain any untrue statement of material
fact, or do not omit to state any material fact which would be required to be
stated in the Registration Statement and the Prospectus or are necessary to
make the statements therein not misleading.
(iii) Except as disclosed in the Prospectus, the
Company has obtained all material intellectual property licenses required for
the conduct of its business and, to the best of such patent counsel's
knowledge, after due inquiry, such licenses are in full force and effect and
the Company is complying therewith in all material respects.
(iv) Except as, and to the extent set forth, in
the Prospectus, to the best of such patent counsel's knowledge, after due
inquiry, the Company is not under any obligation
15.
16
to pay to any third party royalties or fees of any kind whatsoever with respect
to such technology or any related intellectual properties developed, employed,
or used in the present conduct of the Company's affairs.
(v) To the best of such patent counsel's
knowledge, there is no claim or action by any person pertaining to, or
proceeding, pending or threatened, which challenges the rights of the Company
with respect to the Company's patents, trademarks and intellectual property
licenses.
(h) All proceedings taken in connection with the sale of
the Firm Shares and the Option Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives and their
counsel, and the Underwriters shall have received from Xxxxxx Godward LLP,
counsel for the Underwriters, an opinion, addressed to the Representatives and
dated such Closing Date, with respect to the Shares, the Registration Statement
and the Prospectus, and such other related matters, as the Representatives may
reasonably request, and the Company shall have furnished to Xxxxxx Godward LLP
such documents as they may reasonably request for the purpose of enabling them
to pass upon such matters.
(i) The Representatives shall have received copies of the
Lock-up Agreements executed by each entity or person described in Section 4(m).
6. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees with the several
Underwriters as follows:
(i) 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, and shall promptly advise the
Representatives (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 their review prior to
filing and shall not file any such proposed amendment or supplement to which
the Representatives reasonably object. The Company shall use its best efforts
to prevent the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.
16.
17
(ii) 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 (i) of this Section
6(a), an amendment or supplement which shall correct such statement or omission
or an amendment which shall effect such compliance.
(iii) The Company shall make generally available to
its security holders and to the Representatives as soon as practicable, but not
later than 45 days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective Date occurs (or 90
days if such 12-month period coincides with the Company's fiscal year), an
income 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.
(iv) 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.
(v) The Company shall cooperate with the
Representatives and their counsel in endeavoring to qualify the Shares for
offer and sale in connection with this offering under the state Blue Sky laws
of such jurisdictions (including in Canada the provinces of British Columbia,
Ontario and Quebec) 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.
(vi) For a period of five years after the date of
this Agreement, the Company shall supply to the Representatives, and to each
other Underwriter who may so request in writing, copies of such financial
statements and other periodic and special reports as the
17.
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Company may from time to time distribute generally to the holders of any class
of its capital stock and furnish to the Representatives a copy of each annual
and other report it shall be required to file with the Commission.
(vii) Without the prior written consent of the
Representatives, for a period of 90 days after the date of this Agreement, the
Company shall not issue, sell or register with the Commission, or otherwise
dispose of, directly or indirectly, any equity securities of the Company (or
any securities convertible into or exercisable or exchangeable for equity
securities of the Company), except for the issuance of the Shares pursuant to
the Registration Statement, the issuance of shares pursuant to the Company's
existing stock option plans (as amended or supplemented from time to time),
existing employee share purchase plan or existing separate stock option
agreements exchange rights or warrants, in each case if disclosed in the
Prospectus, or the issuance of Common Stock in connection with a corporate
partnering transaction if such shares may not be sold or transferred by such
corporate partner prior to the expiration of the 90-day period set forth
herein. In the event that, during this period, any shares are issued to any of
the Company's officers or directors pursuant to the Company's existing stock
option plan or employee share purchase plan, the Company shall obtain the
written agreement of such grantee or purchaser or holder of such registered
securities that, for a period of 90 days after the date of this Agreement, such
person will not, directly or indirectly, without the prior written consent of
Xxxxxxxxxxx & Co., Inc., sell, offer, contract to sell, make a short sale,
pledge, otherwise dispose of, or reduce its, his or her risk through the use of
any option, put, call or other derivative security relative to, any shares of
Common Stock (or any securities convertible into or exchangeable or exercisable
for any other rights to purchase or acquire Common Stock other than shares of
Common Stock issuable upon exercise of outstanding options) 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
Nasdaq.
(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 of the
Company incident to the public offering of the Shares in the United States and
the private placement of the Shares in Canada 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 filing and distribution of this Agreement; (ii) the
preparation and delivery of certificates for the Shares to the Representatives;
(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)(v), 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
18.
19
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) the furnishing (including costs of shipping and mailing) to the
Representatives and to the Underwriters of copies of all reports and
information required by Section 6(a)(vi); (vii) the inclusion of the Shares for
quotation on the Nasdaq National Market; and (viii) all transfer taxes, if any,
with respect to the sale and delivery of the Shares by the Company to the
Underwriters. Subject to the provisions of Section 9, the Underwriters agree
to pay, whether or not the transactions contemplated hereby are consummated or
this Agreement is terminated, all costs and expenses incident to the
performance of the obligations of the Underwriters under this Agreement not
payable by the Company pursuant to the preceding sentence, including, without
limitation, the fees and disbursements of counsel for the Underwriters.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act or under Canadian securities law in the provinces of British Columbia,
Ontario and Quebec 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 or provincial 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, the
Prospectus, the Offering Memorandum or any amendment thereof or supplement
thereto, 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 or (ii) any breach of the
representations and warranties set forth in Section 4 hereof; 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, the Prospectus or the Offering Memorandum, or such amendment or
supplement, 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 and; provided, further, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter or any person controlling such Underwriter,
from whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, if 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 such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares
19.
20
to such person, and if the Prospectus (as so amended or supplemented) would
have cured the defect giving rise to such loss, claim, damage or liability.
(b) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, 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, 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
last paragraph of the cover page, in the paragraphs relating to stabilization
and passive market making on the inside front cover page of the Prospectus, the
list of Underwriters and the statements contained in paragraphs 2, 4 and 5
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 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 other 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 reasonably
concluded that there may be a conflict of interest between the indemnifying
parties and the indemnified party in the conduct of the defense of such action
(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
20.
21
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 one counsel shall for all similarly situated indemnified parties 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 unreasonably be withheld.
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 from the Company, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Securities Act, officers of the Company
who signed the Registration Statement and directors of the Company, who may
also be liable for contribution) to which the Company and one or more of the
Underwriters 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 commissions 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 commissions 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, and (ii) the Company shall be liable and responsible for
any amount in excess of such underwriting discount; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities
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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 from whom contribution may be
sought from any obligation it or they may have hereunder or otherwise (except
as specifically provided in Section 7(c)). No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent; provided, however, that such consent shall not be
unreasonably withheld. The Underwriters' 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 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 reasonable 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 intentional conditions on the financial
markets in the United States is such as to make it, in the reasonable 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. or Nasdaq has been suspended or
limited, or minimum or maximum ranges for prices for securities shall have been
imposed, by said exchanges or by order of the Commission, the NASD or any other
governmental or regulatory authority; or (v) if a banking moratorium has been
declared by any state or Federal authority, or
(b) at or before any Closing Date, that any of the
conditions specified in Section 5 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
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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 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 an 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
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Company or the nondefaulting Underwriters arising out of such default. A
substitute underwriter hereunder shall become an Underwriter for all purposes
of this Agreement.
11. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company 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 and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the 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 Oppenheimer & Co., Inc.,
Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention:
Xxxxx X. Xxxxxxx, with a copy to Xxxxxxx X. Xxxxx, Xxxxxx Godward LLP, Xxx
Xxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile (415)
951-3699 and (b) if to the Company, to its agent for service as such agent's
address appears on the cover page of the Registration Statement, with a copy to
Xxxxxxx X. Silver, Xxxxx & Xxxxxxx, L.L.P., 000 Xxxxx Xxxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxx 00000, facsimile (000) 000-0000.
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.
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This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
GUILFORD PHARMACEUTICALS INC.
By:
------------------------------
Title:
---------------------------
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written.
XXXXXXXXXXX & CO., INC.
ALEX. XXXXX & SONS INCORPORATED
XXXXXXXXX & XXXXX LLC
As Representatives of the several
Underwriters named in Schedule I.
By: XXXXXXXXXXX & CO., INC.
By:
-------------------------------------
Title:
----------------------------------
25.
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SCHEDULE I
NUMBER OF FIRM
NAME OF UNDERWRITER SHARES TO BE PURCHASED
Xxxxxxxxxxx & Co., Inc.
Alex. Xxxxx & Sons Incorporated
Xxxxxxxxx & Xxxxx LLC
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
=============
3,250,000
