EXHIBIT 1.1
3,000,000 Shares
CELL THERAPEUTICS, INC.
Common Stock
(no par value)
UNDERWRITING AGREEMENT
----------------------
March ___, 1997
UBS Securities LLC
Xxxxxxxxxx Securities
Xxxxxxx Xxxxx & Associates, Inc.
As Representatives of the Several Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Cell Therapeutics, Inc., a Washington corporation (the "Company"), proposes
to issue and sell 3,000,000 shares (the "Firm Shares") of its authorized but
unissued Common Stock, no par value per share (the "Common Stock"), to the
several underwriters listed on Schedule A to this Agreement (collectively, the
----------
"Underwriters"). The Company also proposes to grant to the Underwriters an
option to purchase up to 450,000 additional shares (the "Option Shares") of
Common Stock on the terms and for the purposes set forth in Section 3(c). The
Firm Shares and the Option Shares are hereinafter collectively referred to as
the "Shares."
The Company wishes to confirm as follows its agreements with you (the
"Representatives") and the other Underwriters on whose behalf you are acting in
connection with the several purchases by the Underwriters of the Shares.
1. Registration Statement. A registration statement on Form S-1 (File
No. 333-20855) including a prospectus relating to the Shares and each amendment
thereto has been prepared by the Company in conformity with the requirements of
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. There have been delivered to each of you one signed copy of such
registration statement and each such amendment, together with one copy of each
exhibit filed therewith. Conformed copies of such registration statement and
amendments (but without exhibits) and of the related preliminary prospectus have
been delivered to you in such reasonable quantities as you have requested for
each of the Underwriters. If such registration statement has not become
effective as of the date hereof, a further
amendment to such registration statement, including a form of final prospectus,
necessary to permit such registration statement to become effective will be
filed promptly by the Company with the Commission. If such registration
statement has become effective as of the date hereof, a final prospectus
containing all Rule 430A Information (as hereinafter defined) will be filed by
the Company with the Commission in accordance with Rule 424(b) of the Rules and
Regulations on or before the second business day after the date hereof (or such
earlier time as may be required by the Rules and Regulations).
The term "Registration Statement" as used in this Agreement shall mean such
registration statement (including all exhibits thereto and financial statements
included therein) at the time such registration statement becomes or became
effective and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date (as hereinafter defined), shall also mean
such registration statement as so amended; provided, however, that such term
shall include all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes effective
as provided by Rule 430A of the Rules and Regulations and shall also mean any
registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations with respect to the Shares. The term "Preliminary Prospectus" shall
mean any preliminary prospectus referred to in the preceding paragraph and any
preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean the prospectus relating to the Shares in the
form in which it is first filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations or, if no filing pursuant to Rule 424(b) of the Rules
and Regulations is required, shall mean the form of final prospectus included in
the Registration Statement at the time such registration statement becomes
effective and shall also include the form of prospectus contained within the
Offering Memorandum used in connection with the offering of the Shares in
Canada. The term "Rule 430A Information" means information with respect to the
Shares and the offering thereof permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A of the Rules and
Regulations.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants as follows:
(a) The Company has not received, and has no notice of, any order of the
Commission preventing or suspending the use of any Preliminary Prospectus, or
instituted proceedings for that purpose, and each Preliminary Prospectus, at the
time of filing thereof, conformed in all material respects to the requirements
of the Act and the Rules and Regulations. When the Registration Statement
became or becomes, as the case may be, effective (the "Effective Date") and at
all times subsequent thereto up to and at the Closing Date (as hereinafter
defined), any later date on which Option Shares are to be purchased (the "Option
Closing Date") and when any post-effective amendment to the Registration
Statement becomes effective or any amendment or supplement to the Prospectus is
filed with the Commission, (i) the Registration Statement and Prospectus, and
any amendments or supplements thereto, will contain all material statements
which are required to be stated therein by, and will comply in all material
respects with the requirements of, the Act and the Rules and Regulations, (ii)
the Registration Statement or any amendment or supplement thereto will not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (iii) the Prospectus or any amendment or supplement thereto
will not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing
representations and warranties in this
-2-
section 2(a) do not apply to any statements or omissions made in reliance on and
in conformity with the information contained in the section of the Prospectus
entitled "Underwriting" (except for the sixth and eighth paragraphs thereof),
the stabilization legend on the inside front cover page of the Prospectus and
the information in the last paragraph of text on the front cover page of the
Prospectus. The Company has not distributed any offering material in connection
with the offering or sale of the Shares other than the Registration Statement,
the Preliminary Prospectus, the Prospectus or any other materials, if any,
permitted by the Act.
(b) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Washington, with
full corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement. The Company is
duly qualified to do business as a foreign corporation in good standing in each
jurisdiction where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the business, properties, financial
condition or results of operations of the Company and its Subsidiary (as
hereinafter defined) taken as a whole (a "Material Adverse Effect"). The
Company has no subsidiaries (as defined in the Rules and Regulations) other than
CTI Technologies, Inc., a Nevada corporation (the "Subsidiary"). The Company
owns 100% of the outstanding common stock of the Subsidiary. Other than the
Subsidiary, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture, association or
other entity. Complete and correct copies of the articles of incorporation and
of the bylaws of the Company and the Subsidiary and all amendments thereto have
been delivered to the Representatives, and except as set forth in the exhibits
to the Registration Statement no changes therein will be made subsequent to the
date hereof and prior to the Closing Date or, if later, the Option Closing Date.
The Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement. The Subsidiary is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction where the ownership or leasing
of the properties or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a Material Adverse Effect.
All of the outstanding shares of capital stock of the Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable and (except as
otherwise described in this Section 1(b)) are owned by the Company and are not
subject to any security interest, other encumbrance or adverse claims. No
options, warrants or other rights to purchase, agreements or other obligations
to issue or other rights to convert any obligation into shares of capital stock
or ownership interests in the Subsidiary are outstanding.
(c) The Company has full power and authority (corporate and otherwise) to
enter into this Agreement and to perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the Company
and, assuming due execution and delivery by the Representatives, is a valid and
binding agreement on the part of the Company, enforceable against the Company in
accordance with its terms, except as rights to indemnity and contribution
hereunder may be limited by applicable laws or equitable principles and except
as enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles. The performance of this Agreement
by the Company and the consummation by the Company of the transactions herein
contemplated will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any indenture, mortgage, deed
of trust, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, or any material lease, material contract or other material
agreement or
-3-
instrument to which the Company or the Subsidiary is a party or by which its
properties are bound, (ii) the articles of incorporation or bylaws of the
Company or the Subsidiary or (iii) any applicable law, order, rule, regulation,
writ, injunction or decree of any court or governmental agency or body to which
the Company or the Subsidiary is subject. The Company is not required to obtain
or make (as the case may be) any consent, approval, authorization, order,
designation or filing by or with any court or regulatory, administrative or
other governmental agency or body as a requirement for the consummation by the
Company of the transactions herein contemplated, except such as may be required
under the Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or under state securities or blue sky ("Blue Sky") laws or under the rules
and regulations of the National Association of Securities Dealers, Inc. ("NASD")
or under applicable Canadian securities law.
(d) There is not pending or, to the Company's knowledge, threatened, any
action, suit, claim, proceeding or investigation against the Company or its
Subsidiary or any of their respective officers or any of their respective
properties, assets or rights before any court or governmental agency or body or
otherwise which might result in a Material Adverse Effect or prevent the
consummation of the transactions contemplated hereby, other than as described in
the Registration Statement. There are no statutes, rules, regulations,
agreements, contracts, leases or documents that are required to be described in
the Prospectus, or to be filed as exhibits to the Registration Statement by the
Act or by the Rules and Regulations that have not been accurately described in
all material respects in the Prospectus or filed as exhibits to the Registration
Statement.
(e) All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and were not
issued in violation of any preemptive right, resale right, right of first
refusal or similar right. The authorized and outstanding capital stock of the
Company at the Closing conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus (and such
description correctly states the substance of the provisions of the instruments
defining the capital stock of the Company). The Shares have been duly
authorized for issuance and sale to the Underwriters pursuant to this Agreement
and, when issued and delivered by the Company against payment therefor in
accordance with the terms of this Agreement, will be duly and validly issued and
fully paid and nonassessable and will be sold free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest. Except as
set forth in the Prospectus, no preemptive right, co-sale right, registration
right, right of first refusal or other similar rights of securityholders exists
with respect to any of the Shares or the issue and sale thereof other than those
that have been expressly waived prior to the date hereof. No holder of
securities of the Company has the right to cause the Company to include such
holder's securities in the Registration Statement. No further approval or
authorization of any security holder, the Board of Directors or any duly
appointed committee thereof or others is required for the issuance and sale or
transfer of the Shares, except as may be required under the Act, the Exchange
Act or under state securities or Blue Sky laws. Except as disclosed in or
contemplated by the Prospectus and the financial statements of the Company, and
the related notes thereto, included in the Prospectus, and except for rights of
the Company to require Xxxxxxx & Xxxxxxx Development Corporation ("JJDC") to
purchase shares of Common Stock upon the occurrence of certain events pursuant
to the Stock Purchase Agreement between the Company and JJDC filed as an exhibit
to the Registration Statement, the Company does not have outstanding any options
or warrants to purchase, or any preemptive rights or other rights to subscribe
for or to purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital stock or any
such options, rights, convertible securities or obligations. The description of
the Company's stock option and other plans or arrangements, and the options or
other rights granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents, in
-4-
all material respects, the information required to be shown with respect to such
plans, arrangements, options and rights.
(f) Ernst & Young LLP (the "Accountants") who have examined the financial
statements, together with the related notes, of the Company filed with the
Commission as a part of the Registration Statement, which are included in the
Prospectus, are independent public accountants within the meaning of the Act and
the Rules and Regulations. The financial statements of the Company, together
with the related notes, forming part of the Registration Statement and the
Prospectus, fairly present the financial position and the results of operations
of the Company at the respective dates and for the respective periods to which
they apply. All financial statements, together with the related notes, filed
with the Commission as part of the Registration Statement have been prepared in
accordance with generally accepted accounting principles as in effect in the
United States consistently applied throughout the periods involved except as may
be otherwise stated in the Registration Statement. The selected and summary
financial data included in the Registration Statement present fairly the
information shown therein and have been compiled on a basis consistent with the
financial statements presented therein. No other financial statements or
schedules are required by the Act or the Rules and Regulations to be included in
the Registration Statement.
(g) Except as set forth in the Prospectus (i) the Company and its
Subsidiary have good and marketable title to all material tangible properties
and assets described in the Prospectus as owned by them, free and clear of any
pledge, lien, security interest, charge, encumbrance, claim, equitable
interest, or restriction, other than liens securing equipment in favor of
Aberlyn Capital Management Limited Partnership, Financing for Science
International, Inc., and other equipment lessors, (ii) the agreements to which
the Company or its Subsidiary is a party described in the Prospectus are valid
agreements, enforceable against the Company or its Subsidiary in accordance with
their terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles, and,
to the Company's knowledge, the other contracting party or parties thereto are
not in material breach or default under any of such agreements and (iii) the
Company has valid and enforceable leases for the properties described in the
Prospectus as leased by it, and such leases conform in all material respects to
the description thereof, if any, set forth in the Registration Statement.
Except as set forth in the Prospectus, the Company and its Subsidiary owns or
leases all such properties as are necessary to its operations as now conducted.
(h) The Company and its Subsidiary now hold and at the Closing Date and
any later Option Closing Date, as the case may be, will hold, all licenses,
certificates, approvals and permits, including, without limitation, all such
licenses, certificates, approvals and permits as are required for laboratory
use, pharmaceutical manufacturing, and the experimental use of animals and the
use and disposal of hazardous or potentially hazardous substances from all
United States federal and state, foreign and other regulatory authorities,
including but not limited to the United States Food and Drug Administration (the
"FDA") and any foreign regulatory authorities performing functions similar to
those performed by the FDA, that are material to the conduct of the business of
the Company (as such business is currently conducted), except for such licenses,
certificates, approvals and permits the failure of which to hold would not have
a Material Adverse Effect, all of which are valid and in full force and effect
and there is no proceeding pending or, to the knowledge of the Company,
threatened which may cause any such license, certificate, approval or permit to
be withdrawn, canceled, suspended or not renewed. Neither the Company nor its
Subsidiary is in violation of its articles of incorporation or bylaws, except
for defaults or violations which would not have a Material Adverse Effect, in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any
-5-
bond, debenture, note or other evidence of indebtedness or in any contract,
indenture, mortgage, loan agreement, joint venture or other agreement or
instrument to which it is a party or by which it or any of its properties are
bound, or in violation of any applicable law, order, rule, regulation, writ,
injunction or decree of any court or governmental agency or body, including, but
not limited to, the FDA, to which the Company or its Subsidiary is subject. All
of the descriptions in the Registration Statement and Prospectus of the legal
and governmental proceedings by or before the FDA or any foreign, state or local
government body exercising comparable authority are true, complete and accurate
in all material respects.
(i) The Company and its Subsidiary have filed on a timely basis or caused
to be filed (or obtained valid, currently effective extensions for filing) all
necessary United States federal, state, local and foreign income, franchise and
other tax returns and have paid all taxes shown thereon as due. The Company has
no knowledge of any tax deficiency which has been or might be asserted against
the Company or its Subsidiary. All material tax liabilities are adequately
provided for within the financial statements of the Company.
(j) The Company and its Subsidiary maintain insurance of the types and in
the amounts adequate for their respective businesses and consistent with
insurance coverage maintained by similar companies in similar businesses,
including, but not limited to, insurance covering clinical trial liability and
real and personal property owned or leased against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect. No notice of cancellation or termination
has been received with respect to any such policy.
(k) No collective bargaining agreement is applicable to any employees of
the Company or its Subsidiary. There are no labor disputes between the Company
or its Subsidiary and any such employees that might reasonably be expected to
materially adversely affect the conduct of its business or any unresolved labor
union grievances or unfair labor practice or labor arbitration proceedings
pending, or to the knowledge of the Company or its Subsidiary, threatened,
relating to the business of the Company or its Subsidiary. There are no
discrimination charges (relating to sex, age, religion, race, national origin,
ethnicity, handicap or veteran status) pending before any federal or state
agency or authority against the Company or its Subsidiary.
(l) Except as described in the Prospectus, the Company and its Subsidiary
own or possess adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, trade names, copyrights, manufacturing processes, formulae, trade
secrets, know-how, franchises, and other material intellectual property rights
and assets (collectively, "Intellectual Property") necessary to the conduct of
their businesses substantially as now conducted and as proposed to be conducted
as described in the Prospectus. The Company's and its Subsidiary's rights to
use the Intellectual Property are valid, enforceable and in good standing. The
Company has no knowledge of any facts which would preclude it from having rights
to its patent applications referenced in the Prospectus. The Company has no
knowledge that it or its Subsidiary lacks or will be unable to obtain any rights
or licenses to use any of the Intellectual Property necessary to conduct the
business substantially as now conducted or proposed to be conducted by it as
described in the Prospectus, except as described in the Prospectus or where the
failure to so possess or obtain any such rights or licenses would not have a
Material Adverse Effect. The Prospectus fairly and accurately describes the
Company's rights with respect to the Intellectual Property. Except as would not
have a Material Adverse Effect, the Company has not received any notice of
infringement or of conflict with rights or claims of others with respect to any
Intellectual Property. The Company is not aware of any asserted rights or
patents of others which are infringed
-6-
upon by potential products or processes referred to in the Prospectus in such a
manner as to result in a Material Adverse Effect, except as described in the
Prospectus. The Company or its Subsidiary have duly and properly filed or
caused to be filed with the United States Patent and Trademark Office (the
"PTO") and applicable foreign and international patent authorities all patent
applications described or referred to in the Prospectus, and believes it has
complied with the PTO's duty of candor and disclosure for each of the United
States patent applications described or referred to in the Prospectus, except
where the failure to obtain any such patent would not have a Material Adverse
Effect; the Company is unaware of any facts which would preclude the grant of a
patent from each of the patent applications described or referred to in the
Prospectus; and the Company has no knowledge of any facts which would preclude
it or its Subsidiary from having clear title to its patent applications
described or referred to in the Prospectus, except where the failure to have
clear title to any such patent application would not have a Material Adverse
Effect.
(m) The Company is conducting its business in compliance with all of the
laws, rules and regulations of the jurisdictions in which it is conducting
business except where any such failure to be in compliance would not have a
Material Adverse Effect.
(n) The Company is not an "investment company," or a "promoter" or
"principal underwriter" for a registered investment company, as such terms are
defined in the Investment Company Act of 1940, as amended.
(o) Neither the Company nor its Subsidiary has incurred any liability for
a fee, commission, or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by this
Agreement other than the underwriting discounts and commissions contemplated
hereby.
(p) The Company and its Subsidiary (i) are in compliance with any and all
applicable United States, federal and Washington state and local environmental
laws, rules, regulations, treaties, statutes and codes promulgated by any and
all governmental authorities relating to the protection of human health and
safety, the environment or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
its business as currently conducted, and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where any such
noncompliance or failure to receive required permits, licenses or other
approvals would not have a Material Adverse Effect. No action, proceeding,
revocation proceeding, writ, injunction or claim is pending or threatened
relating to the Environmental Laws or to the Company's or its Subsidiary's
activities involving Hazardous Materials. "Hazardous Materials" means any
material or substance (i) that is prohibited or regulated by any environmental
law, rule, regulation, order, treaty, statute or code promulgated by any
governmental authority, or any amendment or modification thereto, or (ii) that
has been designated or regulated by any governmental authority as radioactive,
toxic, hazardous or otherwise a danger to health, reproduction or the
environment.
(q) Except as disclosed in the Registration Statement, (i) neither the
Company nor its Subsidiary has engaged in the generation, use, manufacture,
transportation or storage of any Hazardous Materials on any of the Company's or
its Subsidiary properties or former properties, except where such use,
manufacture, transportation or storage is in compliance with Environmental Laws,
(ii) no Hazardous Materials have been treated or disposed of by the Company or
its Subsidiary on any of the Company's or its Subsidiary's properties or on
properties formerly owned or leased by the Company or its Subsidiary during the
time of such ownership or lease, except in compliance with Environmental
-7-
Laws and (iii) no spills, discharges, releases, deposits, emplacements, leaks or
disposal of any Hazardous Materials have occurred on or under or have emanated
from any of the Company's or its Subsidiary's properties or former properties.
(r) 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 conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets and
reasonable and appropriate action is taken with respect to any differences.
(s) Neither the Company nor its Subsidiary has at any time during the last
five years (i) made any unlawful contribution to any candidate for foreign
office, or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any foreign, United States federal or state
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of
the United States. To the knowledge of the Company and its Subsidiary, no
employee, officer or director of the Company or its Subsidiary, has been
debarred under section 306(a) or 306(b) of the Federal Food, Drug and Cosmetic
Act or has, within the last five years, been convicted of (x) a criminal offense
relating to the development or approval process of any drug product, or (y) a
felony involving bribery, payment of illegal gratuities, fraud, perjury, false
statements, racketeering, blackmail, extortion, falsification or destruction of
records, or interference with, obstruction of an investigation into, or
prosecution of, any criminal offense or a conspiracy to commit, aid or abet such
felony.
(t) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act. The Shares have been duly authorized for quotation on the
National Association of Securities Dealers, Inc. Automated Quotation System
National Market System ("Nasdaq National Market"), subject to notice of
issuance. The Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the Nasdaq National Market, nor has the
Company received any notification that the Commission or the Nasdaq National
Market is contemplating terminating such registration or listing.
(u) Neither the Company nor, to its knowledge, any of its officers,
directors or affiliates has taken, and at the Closing Date and at any later
Option Closing Date, neither the Company nor, to its knowledge, any of its
officers, directors or affiliates will have taken, directly or indirectly, any
action which has constituted, or might reasonably be expected to constitute, the
stabilization or manipulation of the price of sale or resale of the Shares.
(v) Neither the Company nor its Subsidiary does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075 of the Florida Statutes and the Company agrees to
comply with such Section if prior to the completion of the distribution of the
Shares it commences doing such business.
(w) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been (i) any
material adverse change, or any development which, in the Company's reasonable
judgment, is likely to cause a material adverse change, in the business,
properties or assets described or referred to in the Registration Statement, or
the results of operations, condition (financial or otherwise), business or
operations of the Company and its Subsidiary
-8-
taken as a whole, (ii) any transaction which is material to the Company or its
Subsidiary, except transactions described or referred to in the Prospectus and
transactions in the ordinary course of business, (iii) any obligation, direct or
contingent, which is material to the Company and its Subsidiary taken as a
whole, incurred by the Company or its Subsidiary, except obligations incurred in
the ordinary course of business, (iv) any change in the capital stock or
outstanding indebtedness of the Company or its Subsidiary, other than as
contemplated by the Prospectus and shares of Common Stock that may be issued
upon the exercise of outstanding stock options and warrants, (v) any material
change by the Company in its accounting methods, principles or practices, (vi)
any revaluation by the Company of any material amount of its assets, (vii) any
sale of a material amount of property of the Company, (viii) any discharge or
satisfaction by the Company of any material lien, security interest, charge or
other encumbrance or any payment by the Company of any material obligation or
liability (fixed or contingent), other than in the ordinary course of business,
(ix) any material investment by the Company of a capital nature, whether by
purchase of stock or securities, contributions to capital, property transfers or
otherwise, in any other partnership, corporation or other entity, other than the
Subsidiary, (x) any waiver or release by the Company of any rights of material
value, including, without limitation, any rights in any Intellectual Property of
material value, or (xi) any dividend or distribution of any kind declared, paid
or made on the capital stock of the Company.
3. Purchase of the Shares by the Underwriters.
(a) On the basis of the representations and warranties and subject to the
terms and conditions herein set forth, the Company agrees to issue and sell the
Firm Shares to the several Underwriters, and each of the Underwriters agrees to
purchase from the Company the respective aggregate number of Firm Shares set
forth opposite its name on Schedule A, plus such additional number of Firm
----------
Shares which such Underwriter may become obligated to purchase pursuant to
Section 3(b) hereof. The price at which such Firm Shares shall be sold by the
Company and purchased by the several Underwriters shall be $_____ per share. In
making this Agreement, each Underwriter is contracting severally and not
jointly; except as provided in paragraphs (b) and (c) of this Section 3, the
agreement of each Underwriter is to purchase only the respective number of Firm
Shares specified on Schedule A.
----------
(b) If for any reason one or more of the Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 10 hereof) to purchase and pay for the
number of Shares agreed to be purchased by such Underwriter or Underwriters, the
nondefaulting Underwriters shall have the right within twenty-four (24) hours
after such default to purchase, or procure one or more other Underwriters to
purchase, in such proportions as may be agreed upon between you and such
purchasing Underwriter or Underwriters and upon the terms herein set forth, all
or any part of the Shares which such defaulting Underwriter or Underwriters
agreed to purchase. If the nondefaulting Underwriters so fail to make such
arrangements with respect to all such Shares and portion, the number of Shares
which each nondefaulting Underwriter is otherwise obligated to purchase under
this Agreement shall be automatically increased on a pro rata basis (as adjusted
by you in such manner as you deem advisable to avoid fractional shares) to
absorb the remaining shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase; provided, however, that the nondefaulting
Underwriters shall not be obligated to purchase the Shares and portion which the
defaulting Underwriter or Underwriters agreed to purchase if the aggregate
number of such Shares exceeds 10% of the total number of Shares which all
Underwriters agreed to purchase hereunder. If the total number of Shares which
the defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within twenty-four (24) hours next succeeding the
24-hour period
-9-
referred to above, to make arrangements with other underwriters or purchasers
reasonably satisfactory to you for purchase of such Shares and portion on the
terms herein set forth. In any such case, either you or the Company shall have
the right to postpone the Closing Date determined as provided in Section 5
hereof for not more than seven business days after the date originally fixed as
the Closing Date pursuant to said Section 5 in order that any necessary changes
in the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If the aggregate number of Shares which the
defaulting Underwriter or Underwriters agreed to purchase exceeds 10% of the
total number of Shares which all Underwriters agreed to purchase hereunder, and
if neither the nondefaulting Underwriters nor the Company shall make
arrangements within the 24-hour periods stated above for the purchase of all the
Shares which the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall be terminated without further act or deed and
without any liability on the part of the Company to any nondefaulting
Underwriter and without any liability on the part of any nondefaulting
Underwriter to the Company. Nothing in this paragraph (b), and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
grants an option to the several Underwriters to purchase all or any portion of
the Option Shares from the Company at the same price per share as the
Underwriters shall pay for the Firm Shares. Said option may be exercised only
to cover over-allotments in the sale of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of this Agreement upon written or telegraphic
notice by you to the Company setting forth the aggregate number of shares of the
Option Shares as to which the several Underwriters are exercising the option.
Delivery of certificates for the shares of Option Shares, and payment therefor,
shall be made as provided in Section 5 hereof. Each Underwriter will purchase
such percentage of the Option Shares as is equal to the percentage of Firm
Shares that such Underwriter is purchasing, the exact number of shares to be
adjusted by you in such manner as you deem advisable to avoid fractional shares.
4. Offering by Underwriters.
(a) The terms of the initial public offering of the Shares in the United
States by the Underwriters shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering and private
placement prices after the closing of the initial public offering and the
private placement, respectively, and increase or decrease the concessions and
discounts to dealers as they may determine.
(b) You, on behalf of the Underwriters, represent and warrant that (i) the
information set forth in the last paragraph of text on the front cover page of
the Prospectus, the stabilization legend on the inside front cover page of the
Prospectus and the section of the Prospectus "Underwriting" (except for
paragraphs six and eight thereof) in the Registration Statement, any Preliminary
Prospectus and the Prospectus relating to the Shares (insofar as such
information relates to the Underwriters) constitutes the only information
furnished by the Underwriters to the Company for inclusion in the Registration
Statement, any Preliminary Prospectus, and the Prospectus, and that the
statements made therein are correct and do not omit to state any material fact
required to be stated therein or necessary to make the statements made therein
in light of the circumstances under which they were made not misleading, and
(ii) the Underwriters have not distributed and will not distribute prior to the
Closing Date or on any Option Closing Date, as the case may be, any of offering
material in connection with the offering
-10-
and sale of the shares other than the Preliminary Prospectus, the Prospectus,
the Registration Statement, and other materials permitted by the Act.
5. Delivery of and Payment for the Shares.
(a) Delivery of certificates for the Firm Shares and the Option Shares (if
the option granted pursuant to Section 3(c) hereof shall have been exercised not
later than 1:00 p.m., New York time, on the date at least two business days
preceding the Closing Date), and payment therefor, shall be made at the office
of Pillsbury Madison & Sutro LLP, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000
at [10:00 a.m.], New York time, on the fourth business day after the date of
this Agreement, or at such time on such other day, not later than seven full
business days after such fourth business day, as shall be agreed upon in writing
by the Company and you (the "Closing Date").
(b) If the option granted pursuant to Section 3(c) hereof shall be
exercised after 1:00 p.m., New York City time, on the date two business days
preceding the Closing Date, and on or before the 30th day after the date of this
Agreement, delivery of certificates for the Option Shares, and payment therefor,
shall be made at the office of Pillsbury Madison & Sutro LLP, 000 Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, XX 00000 at 10:00 a.m., New York time, on the third
business day after the exercise of such option.
(c) Payment for the Shares purchased from the Company shall be made to the
Company or its order, by either a same day funds check or Federal Funds (same
day funds) wire transfer. Such payment shall be made upon delivery of
certificates for the Shares to you for the respective accounts of the several
Underwriters against receipt therefor signed by you. Certificates for the Shares
to be delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least three business days before the
Closing Date, in the case of Firm Shares, and at least two business days prior
to the Option Closing Date, in the case of the Option Shares. Such certificates
will be made available to the Underwriters for inspection, checking and
packaging at a location in New York, New York, designated by the Underwriters
not less than one full business day prior to the Closing Date or, in the case of
the Option Shares, by 3:00 p.m., New York time, on the business day preceding
the Option Closing Date.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or any later Option Closing Date. Any such
payment by you shall not relieve such Underwriter from any of its obligations
hereunder.
6. Further Agreements of the Company. The Company covenants and agrees as
follows:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible; the Company will use its best efforts to
cause any abbreviated registration statement pursuant to Rule 462(b) of the
Rules and Regulations as may be required subsequent to the date the Registration
Statement is declared effective to become effective as promptly as possible; it
will notify you, promptly after it shall receive notice thereof, of the time
when the Registration Statement or any subsequent amendment to the Registration
Statement has become effective or any supplement to the Prospectus has been
filed. If the Company omitted
-11-
information from the Registration Statement at the time it was originally
declared effective in reliance upon Rule 430A(a), the Company will provide
evidence satisfactory to you that the Prospectus contains such information and
has been filed, within the time period prescribed, with the Commission pursuant
to subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations or as
part of a post-effective amendment to such Registration Statement as originally
declared effective which is declared effective by the Commission. If for any
reason the filing of the final form of Prospectus is required under Rule
424(b)(3) of the Rules and Regulations, it will provide evidence satisfactory to
you that the Prospectus contains such information and has been filed with the
Commission within the time period prescribed. The Company will notify you
promptly of any request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional information.
Promptly upon your request, it will prepare and file with the Commission any
amendments or supplements to the Registration Statement or Prospectus which, in
the reasonable opinion of counsel to the several Underwriters ("Underwriters'
Counsel"), may be necessary or advisable in connection with the distribution of
the Shares by the Underwriters. The Company will promptly prepare and file with
the Commission, and promptly notify you of the filing of, any amendments or
supplements to the Registration Statement or Prospectus which may be necessary
to correct any statements or omissions, if, at any time when a prospectus
relating to the Shares is required to be delivered under the Act, any event
shall have occurred as a result of which the Prospectus or any other prospectus
relating to the Shares as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. In case any Underwriter is required to deliver a prospectus
within the nine-month period referred to in Section 10(a)(3) of the Act in
connection with the sale of the Shares, the Company will prepare promptly upon
request, but at the expense of such Underwriter, such amendment or amendments to
the Registration Statement and such prospectus or prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of the
Act. The Company will file no amendment or supplement to the Registration
Statement or Prospectus that shall not previously have been submitted to you a
reasonable time prior to the proposed filing thereof or to which you shall
reasonably object in writing or which is not in compliance with the Act and
Rules and Regulations or the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive notice or
obtain knowledge thereof of the issuance of any stop order by the Commission
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the initiation or threat of any proceeding for that purpose;
and it will promptly use its best efforts to prevent the issuance of any such
stop order or to obtain its withdrawal at the earliest possible moment if such
stop order should be issued.
(c) The Company will cooperate with you in endeavoring to qualify the
Shares for offering and sale under the securities laws of such jurisdictions as
you may designate and to continue such qualifications in effect for so long as
may be required for purposes of the distribution of the Shares, except that the
Company shall not be required in connection therewith or as a condition thereof
to qualify as a foreign corporation, or to execute a general consent to service
of process in any jurisdiction, or to make any undertaking with respect to the
conduct of its business. In each jurisdiction in which the Shares shall have
been qualified, the Company will make and file such statements, reports and
other documents in each year as are or may be reasonably required by the laws of
such jurisdictions so as to continue such qualifications in effect for so long a
period as you may reasonably request for distribution of the Shares, or as
otherwise may be required by law.
(d) The Company will furnish to you, as soon as available, copies of the
Registration Statement (three of which will be signed and which will include all
exhibits), each Preliminary
-12-
Prospectus, the Prospectus and any amendments or supplements to such documents,
including any prospectus prepared to permit compliance with Section 10(a)(3) of
the Act, all in such quantities as you may from time to time reasonably request.
(e) The Company will make generally available to its stockholders as soon
as practicable, but in any event not later than the 45th day following the end
of the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement, an earnings statement (which will
be in reasonable detail but need not be audited) complying with the provisions
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and
covering a twelve-month period beginning after the effective date of the
Registration Statement, and will advise you in writing when such statement has
been made available.
(f) During a period of five years after the date hereof, the Company will
furnish to each Representative and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a copy
of its annual report to stockholders for such year; and the Company will furnish
to the Representatives (i) as soon as available, a copy of each report or
definitive proxy statement of the Company filed with the Commission under the
Exchange Act or mailed to stockholders, and (ii) from time to time, such other
information concerning the Company as the Representatives may reasonably
request.
(g) Prior to or simultaneously with the execution and delivery of this
Agreement, the Company will obtain "lock-up" agreements, in substantially the
form of Annex B hereto, from each beneficial owner of the Company's Common Stock
listed on Schedule B to this Agreement.
----------
(h) The Company shall not, during the 180 days following the effective
date of the Registration Statement, except with the prior written consent of UBS
Securities LLC, file a registration statement covering any of its shares of
capital stock. The Company may file one or more registration statements
covering shares of its common stock pursuant to registration rights agreements
between the Company and its shareholders, which agreements are filed as exhibits
to the Registration Statement; provided, however, that such registration
statement shall be declared effective the the Commission with the expiration of
such ISO 180 day period.
(i) The Company shall not, during the 180 days following the effective
date of the Registration Statement, except with the prior written consent of UBS
Securities LLC, issue, sell, offer or agree to sell, grant, distribute or
otherwise dispose of, directly or indirectly, any shares of Common Stock, or any
options, rights or warrants with respect to shares of Common Stock, or any
securities convertible into or exchangeable for Common Stock, other than (i) the
sale of Shares hereunder, (ii) the sale of shares of Common Stock to JJDC
pursuant to the Stock Purchase Agreement between the Company and JJDC filed as
an exhibit to the Registration Statement, (iii) the grant of options or the
issuance of shares of Common Stock under the Company's stock option plans or
stock purchase plan, as the case may be, (iv) the issuance of shares of Common
Stock upon exercise of the currently outstanding options or warrants described
in the Registration Statement and (v) securities issued in connection with
acquisitions by the Company.
(j) The Company will apply the net proceeds from the sale of the Shares
being sold by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
-13-
(k) The Company will maintain a Transfer Agent and, if necessary under the
jurisdiction of incorporation of the Company, a Registrar (which may be the same
entity as the Transfer Agent) for its Common Stock.
(l) The Company will use its best efforts to maintain listing of its
shares of Common Stock on the Nasdaq National Market.
(m) The Company will in the future conduct its affairs, in such a manner
so as to ensure that the Company was not and will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations thereunder.
(n) If at any time during the 180-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your reasonable
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth above
consult with you in good faith regarding the necessity of disseminating a press
release or other public statement responding to or commenting on such rumor,
publication or event and, if the Company in its reasonable judgment determines
that such a press release or other public statement is appropriate, the
substance of any press release or other public statement; provided however, that
no such registration statement shall be declared effective by the Commission
until the expiration of such 180 day period.
7. Expenses. The Company agrees with each Underwriter that:
(a) The Company will pay and bear all costs, fees and expenses in
connection with the preparation, printing and filing of the Registration
Statement (including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus and any amendments or supplements thereto
(including any wrap-around thereto in connection with the offering of the Shares
in Canada); the reproduction of this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreement, the Blue Sky Memoranda and any
instruments related to any of the foregoing; the issuance and delivery of the
Shares hereunder to the several Underwriters, including transfer taxes, if any;
the cost of all stock certificates representing the Shares and Transfer Agents'
and Registrars' fees; the fees and disbursements of corporate, patent and
regulatory counsel for the Company; all fees and other charges of the Company's
independent public accountants; the cost of furnishing to the several
Underwriters copies of the Registration Statement (including appropriate
exhibits), Preliminary Prospectuses and the Prospectus, and any amendments or
supplements to any of the foregoing (including any wrap-around thereto prepared
by the Underwriters in connection with the offering of the Shares in Canada);
NASD filing fees and expenses incident to securing any required review and the
cost of qualifying the Shares under the laws of such jurisdictions within the
United States as you may designate (including filing fees and fees and
disbursements of Underwriters' Counsel in connection with such NASD filings and
Blue Sky qualifications); listing application fees of the Nasdaq National
Market; fees related to the filing of reports in Canada; and all other expenses
directly incurred by the Company in connection with the performance of its
obligations hereunder.
(b) If the transactions contemplated hereby are not consummated by reason
of any failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed hereunder or to fulfill any condition of
the Underwriters' obligations hereunder, the Company will, in
-14-
addition to paying the expenses described in clause (a) above, reimburse the
several Underwriters for all out-of-pocket expenses (including reasonable fees
and disbursements of Underwriters' Counsel) incurred by the Underwriters in
reviewing the Registration Statement and the Prospectus (including any wrap-
around thereto prepared by the Underwriters in connection with the offering of
the Shares in Canada) and in otherwise investigating, preparing to market or
marketing the Shares. The Company will in no event be liable to any of the
several Underwriters for any loss of anticipated profits from the sale by them
of the Shares.
8. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Shares, as provided herein,
shall be subject to the accuracy, as of the date hereof and the Closing Date and
any later Option Closing Date, as the case may be, of the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective not later than
10:00 a.m., New York time, on the date following the date of this Agreement, or
such later time or date as shall be consented to in writing by you. If the
filing of the Prospectus, or any supplement thereto, is required pursuant to
Rule 424(b) and Rule 430A of the Rules and Regulations, the Prospectus shall
have been filed in the manner and within the time period required by Rule 424(b)
and Rule 430A of the Rules and Regulations. No stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request of
the Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in connection with
this Agreement, the form of Registration Statement and the Prospectus, and the
registration, authorization, issue, sale and delivery of the Shares shall have
been reasonably satisfactory to authorization, issue, sale and delivery of the
Shares shall have been reasonably satisfactory to Underwriters' Counsel, and
such counsel shall have been furnished with such papers and information as they
may reasonably have requested to enable them to pass upon the matters referred
to in this subsection.
(c) You shall have received, at no cost to you, on the Closing Date and on
any later Option Closing Date, as the case may be, the opinions of (i) Shearman
& Sterling, corporate counsel to the Company, (ii) Xxxxxxx Xxxxxxxxxxx, Manager,
Legal Affairs of the Company, and (iii) Xxxxx & Lardner, patent counsel to the
Company, dated the Closing Date or such later Option Closing Date, in
substantially the forms attached hereto on Appendix A, addressed to the
-----------
Underwriters and with reproduced copies of signed counterparts thereof for each
of the Representatives.
(d) You shall have received from Pillsbury Madison & Sutro LLP,
Underwriters' Counsel, an opinion or opinions, dated the Closing Date or on any
later Option Closing Date, as the case may be, in form and substance reasonably
satisfactory to you, with respect to the sufficiency of all corporate
proceedings undertaken by the Company and other legal matters relating to this
Agreement and the transactions contemplated hereby as you may reasonably
require, and the Company shall have furnished to such counsel such documents as
it may have reasonably requested for the purpose of enabling it to pass upon
such matters.
-15-
(e) You shall have received on the Closing Date and on any later Option
Closing Date, as the case may be, a letter from the Accountants addressed to the
Company and the Underwriters, dated the Closing Date or such later Option
Closing Date, as the case may be, confirming that it is an independent certified
public accountant with respect to the Company within the meaning of the Act and
the Rules and Regulations thereunder and based upon the procedures described in
its letter delivered to you concurrently with the execution of this Agreement
(herein called the "Original Letter"), but carried out to a date not more than
three days prior to the Closing Date or any such later Option Closing Date, as
the case may be, (i) confirming that the statements and conclusions set forth in
the Original Letter are accurate as of the Closing Date or such later Option
Closing Date, as the case may be; and (ii) setting forth any revisions and
additions to the statements and conclusions set forth in the Original Letter
that are necessary to reflect any changes in the facts described in the Original
Letter since the date of such letter, or to reflect the availability of more
recent financial statements, data or information. The letter shall not disclose
any change, or any development involving a prospective change, in or affecting
the business or properties of the Company which, in your reasonable judgment,
makes it impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Prospectus.
(f) You shall have received on the Closing Date and on any later Option
Closing Date, as the case may be, a certificate of the President, the Executive
Vice President, Finance and Administrator and the Executive Vice President,
Research Program Chairman of the Company, dated the Closing Date or such later
date, to the effect that as of such date (and you shall be satisfied that as of
such date):
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date or
any later Option Closing Date, as the case may be; and the Company has
complied with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied at or prior to the Closing Date or
any later Option Closing Date, as the case may be;
(ii) The Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus has been
issued, and no proceedings for that purpose have been instituted or are
pending or, to the best of their knowledge, threatened under the Act;
(iii) they have carefully reviewed the Registration Statement and the
Prospectus; and, when the Registration Statement became effective and at
all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus and any amendments or supplements
thereto contained all statements and information required to be included
therein or necessary to make the statements therein not misleading; and
when the Registration Statement became effective, and at all times
subsequent thereto up to the delivery of such certificate, none of the
Registration Statement or the Prospectus or any amendment or supplement
thereto included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading; and, since the effective date of the
Registration Statement, there has occurred no event required to be set
forth in an amended or supplemented Prospectus that has not been so set
forth; and
-16-
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
(A) any material adverse change in the properties or assets described or
referred to in the Registration Statement and the Prospectus or in the
condition (financial or otherwise), operations, business or prospects of
the Company and its Subsidiary, (B) any transaction which is material to
the Company and its Subsidiary, except transactions entered into in the
ordinary course of business, (C) any obligation, direct or contingent,
incurred by the Company or its Subsidiary, which is material to the Company
and its Subsidiary taken as a whole, (D) any change in the capital stock or
outstanding indebtedness of the Company or its Subsidiary which is material
to the Company and its Subsidiary taken as a whole, other than as
contemplated by the Prospectus, or (E) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company.
(g) The Company shall have furnished to you such further certificates and
documents as you shall reasonably request as to the accuracy of the
representations and warranties of the Company herein, as to the performance by
the Company of its obligations hereunder and as to the other conditions
concurrent and precedent to the obligations of the Underwriters hereunder.
(h) The Firm Shares and the Option Shares, if any, shall have been
approved for designation upon notice of issuance on the Nasdaq National Market.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
9. Indemnification and Contribution.
(a) Subject to the provisions of paragraph (d) below, the Company agrees
to indemnify and hold harmless each Underwriter and each person (including each
partner or officer thereof) who controls any Underwriter within the meaning of
Section 15 of the Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Act, the Exchange Act, or the common law or
otherwise, and the Company agrees to reimburse each such Underwriter and
controlling person for any legal or other out-of-pocket expenses (including,
except as otherwise hereinafter provided, reasonable fees and disbursements of
counsel) incurred by the respective indemnified parties in connection with
defending against any such losses, claims, damages or liabilities or in
connection with any investigation or inquiry of, or other proceeding which may
be brought against, the respective indemnified parties, in each case arising out
of or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (including the Prospectus
as part thereof and any 462(b) registration statement) or any post-effective
amendment thereto (including any 462(b) registration statement), or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that (1) the indemnity agreements of the Company
-17-
contained in this paragraph (a) shall not apply to any such losses, claims,
damages, liabilities or expenses if such statement or omission is contained in
the section of the Prospectus entitled "Underwriting" (except for the sixth and
eighth paragraphs thereof), the stabilization legend on the inside front cover
page of the Prospectus or the last paragraph of text on the cover page of the
Prospectus, and (2) the indemnity agreement contained in this paragraph (a) with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Shares which is the subject thereof (or to
the benefit of any person controlling such Underwriter) if at or prior to the
written confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (a) of Section 6 hereof. The indemnity agreements of
the Company contained in this paragraph (a) and the representations and
warranties of the Company contained in Section 2 hereof shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any indemnified party and shall survive the delivery of any payment
for the Shares.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its executive officers, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Act, from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Act, the Exchange Act, or the common law or
otherwise and to reimburse each of them for any legal or other expenses
including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that in the cases of clauses (i) and (ii) above,
such statement or omission is contained in the Section of the Prospectus
entitled "Underwriting" (except for the sixth and eighth paragraphs thereof),
the stabilization legend on the inside front cover page of the Prospectus or the
last paragraph of text on the cover page of the Prospectus. The indemnity
agreement of each Underwriter contained in this paragraph (b) shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party and shall survive the delivery of and
payment for the Shares.
(c) Each party indemnified under the provision of paragraphs (a) and (b)
of this Section 9 agrees that, upon the service of a summons or other initial
legal process upon it in any action or suit instituted against it or upon its
receipt of written notification of the commencement of any investigation or
inquiry of, or proceeding against it, in respect of which indemnity may be
sought on account of any
-18-
indemnity agreement contained in such paragraphs, it will promptly give written
notice (a "Notice") of such service or notification to the party or parties from
whom indemnification may be sought hereunder. No indemnification provided for
in such paragraphs shall be available to any party who shall fail so to give the
Notice if the party to whom such Notice was not given was unaware of the action,
suit, investigation, inquiry or proceeding to which the Notice would have
related and was prejudiced by the failure to give the Notice, but the omission
so to notify such indemnifying party or parties of any such service or
notification shall not relieve such indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of such indemnity agreement. Any indemnifying party
shall be entitled at its own expense to participate in the defense of any
action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(the "Notice of Defense") to the indemnified party, to assume (alone or in
conjunction with any other indemnifying party or parties) the entire defense of
such action, suit, investigation, inquiry or proceeding, in which event such
defense shall be conducted, at the expense of the indemnifying party or parties,
by counsel chosen by such indemnifying party or parties and reasonably
satisfactory to the indemnified party or parties; provided, however, that (i) if
the indemnified party or parties reasonably determine that there may be a
conflict between the positions of the indemnifying party or parties and of the
indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties and (ii) in any event, the
indemnified party or parties shall be entitled, at its or their own expense to
have counsel chosen by such indemnified party or parties participate in, but not
conduct, the defense. It is understood that the indemnifying parties shall not,
in respect of the legal defenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for (A)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all of the Underwriters and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act, and (B) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Act. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
paragraphs (a) through (c) of this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding, except that
(A) the indemnifying party or parties shall bear the legal and other expenses
incurred in connection with the conduct of the defense as referred to in clause
(i) of the proviso to the preceding sentence and (B) the indemnifying party or
parties shall bear such other expenses as it or they have authorized to be
incurred by the indemnified party or parties. If, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding. The
indemnifying party or parties shall not be liable for any settlement of any
proceeding effected without its or their written consent, provided such consent
has not been unreasonably withheld.
(d) If the indemnification provided for in this Section 9 is unavailable
or insufficient to hold harmless an indemnified party under paragraph (a) or (b)
of this Section 9, then each indemnifying
-19-
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in paragraph (a) or (b) of this
Section 9 (i) in such proportion as is appropriate to reflect the relative
benefits received by each indemnifying party from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
each indemnifying party in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, or actions in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other, shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Shares received by the Company and the total
underwriting discount received by the Underwriters, as set forth in the table on
the cover page of the Prospectus, bear to the aggregate public offering price of
the Shares. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities, or actions in respect thereof, referred to in the first sentence
of this paragraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigation,
preparation to defend or defense against any action or claim which is the
subject of this paragraph (d). Notwithstanding the provisions of this paragraph
(d), no Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this paragraph (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 9).
(e) The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of such Underwriter and each such controlling person from
all liability arising out of such claim, action, suit or proceeding.
-20-
(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof, including without limitation the
provisions of this Section 9 and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 9 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act.
10. Termination. This Agreement may be terminated by you at any time on
or prior to the Closing Date or on or prior to any later Option Closing Date, as
the case may be, (i) if the Company shall have failed, refused or been unable,
at or prior to the Closing Date, or on or prior to any later Option Closing
Date, as the case may be, to perform any agreement on its part to be performed,
or because any other condition of the Underwriters' obligations hereunder
required to be fulfilled by the Company is not fulfilled, or (ii) if trading on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market shall have been suspended, or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have been
required on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market, by such trading exchanges or by order of the Commission
or any other governmental authority having jurisdiction, or if a banking
moratorium shall have been declared by federal or New York authorities, or (iii)
if the Company shall have sustained a loss by strike, fire, flood, accident or
other calamity of such character as to have a Material Adverse Effect regardless
of whether or not such loss shall have been insured, or (iv) if there shall have
been a material adverse change in the general political or economic conditions
or financial markets in the United States as in the reasonable judgment of the
Representatives makes it inadvisable or impracticable to proceed with the
offering, sale and delivery of the Shares, or (v) if there shall have occurred
an outbreak or escalation of hostilities between the United States and any
foreign power or of any other insurrection or armed conflict involving the
United States or other national or international calamity, hostilities or crisis
or the declaration by the United States of a national emergency which, in the
reasonable judgment of the Representatives, adversely affects the marketability
of the Shares, or (vi) if since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have
occurred any material adverse change or any development involving a prospective
material adverse change in or affecting the condition, financial or otherwise,
of the Company or the business affairs, management, or business prospects of the
Company, whether or not arising in the ordinary course of business, or (vii) if
any foreign, federal or state statute, regulation, rule or order of any court or
other governmental authority shall have been enacted, published, decreed or
otherwise promulgated which in the reasonable judgment of the Representatives
materially and adversely affects or will materially and adversely affect the
business or operations of the Company, or trading in the Common Stock shall have
been suspended, or (viii) there shall have occurred a material adverse decline
in the value of securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market or (ix) action shall be
taken by any foreign, federal, state or local government or agency in respect of
its monetary or fiscal affairs which, in the reasonable judgment of the
Representatives, has a material adverse effect on the securities markets in the
United States. If this Agreement shall be terminated in accordance with this
Section 10, there shall be no liability of the Company to the Underwriters and
no liability of the Underwriters to the Company; provided, however, that in the
event of any such termination the Company agrees to indemnify and hold harmless
the Underwriters from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in Section 7 hereof.
-21-
If you elect to terminate this Agreement as provided in this Section 9, 10
and 11the Company shall be notified promptly by you by telephone, telecopy or
telegram, confirmed by letter.
11. Reimbursement of Certain Expenses.
(a) In addition to their other obligations under Section 9 of this
Agreement, the Company hereby agrees to reimburse on a quarterly basis the
Underwriters for all reasonable legal and other expenses incurred in connection
with investigating or defending any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in paragraph (a) of Section 9 of this
Agreement, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the obligations under this Section 11 and the
possibility that such payments might later be held to be improper; provided,
however, that (i) to the extent any such payment is ultimately held to be
improper, the persons receiving such payments shall promptly refund them and
(ii) such persons shall provide to the Company, upon request, reasonable
assurances of their ability to effect any refund, when and if due.
(b) In addition to their other obligations under Section 9 of this
Agreement, the Underwriters hereby agree to reimburse on a quarterly basis the
Company for all reasonable legal and other expenses incurred in connection with
investigating or defending any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in paragraph (b) of Section 9 of this
Agreement, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the obligations under this Section 11 and the
possibility that such payments might later be held to be improper; provided,
however, that (i) to the extent any such payment is ultimately held to be
improper, the Company shall promptly refund it and (ii) the Company shall
provide to the Underwriter, upon request, reasonable assurances of its ability
to effect any refund, when and if due.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of the Company and the several Underwriters and, with respect to
the provisions of Section 9 hereof, the several parties (in addition to the
Company and the several Underwriters) indemnified under the provisions of said
Section 9, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the Shares from any of the several Underwriters.
13. Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by facsimile and, if to the Underwriters, shall
be mailed, sent by facsimile or delivered to UBS Securities LLC, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxxxx Xxxxxxx, with a copy
to Xxxxx X. Xxxxxxx, Esq, Pillsbury Madison & Sutro LLP, 000 Xxxxxxxxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000; and if to the Company, shall be mailed, sent by
facsimile or delivered to it at its office, 000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xx. Xxxxx X. Xxxxxx, with a copy to
Xxxxxxx X. Xxxxxxx, Shearman & Sterling, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
XX 00000. All notices given by telegraph shall be promptly confirmed by letter.
14. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(i) any investigation made by or on behalf of any Underwriter or
-22-
controlling person thereof, or by or on behalf of the Company or its respective
directors of officers, and (ii) delivery of and payment for the Shares under
this Agreement; provided, however, that if this Agreement is terminated prior to
the Closing Date, the provisions of Section 6 hereof shall be of no further
force and effect.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
You will act as Representatives of the several Underwriters in all dealings
with the Company under this Agreement, and any action under or in respect of
this Agreement taken by you jointly or by UBS Securities LLC, as
Representatives, will be binding upon all of the Underwriters.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
[INTENTIONALLY LEFT BLANK]
-23-
Please sign and return to the Company the enclosed duplicates of this letter,
whereupon this letter will become a binding agreement among the Company and the
several UnderwriterS in accordance with its terms.
Very truly yours,
CELL THERAPEUTICS, INC.
By
---------------------------------------------
Xx. Xxxxx X. Xxxxxx,
President and Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
UBS Securities LLC
Xxxxxxxxxx Securities
Xxxxxxx Xxxxx & Associates
By: UBS SECURITIES LLC
By ______________________________
Name _____________________________
Title ____________________________
Acting on behalf of the several
Underwriters, including themselves,
named on Schedule A hereto.
----------
-24-
SCHEDULE A
----------
UNDERWRITERS
------------
Number of Shares
Underwriters to be Purchased
------------ ----------------
UBS Securities LLC...........
Xxxxxxxxxx Securities........
Xxxxxxx Xxxxx & Associates...
Total 3,000,000
---------
-25-
SCHEDULE B
----------
LOCK-UP AGREEMENTS
------------------
[TO COME]
-26-
APPENDIX A
----------
1. Opinion of Counsel to the Company. Shearman & Sterling shall opine to
---------------------------------
the effect that:
(a) The Company has been duly organized and is validly existing as a
corporation, and is in good standing under, the laws of the State of Washington;
(b) The Company has the corporate power and authority to own or lease all
of the assets owned or leased by it and to conduct its business, in each case as
described in the Registration Statement and the Prospectus, and has all
licenses, permits, consents, orders, approvals and authorizations of any federal
or state government authority that are necessary to conduct its business as
described in the Registration Statement and the Prospectus; the Company is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions in which the ownership or leasing of its properties or the conduct
of business requires such qualification, except where the failure to so qualify
would not have a Material Adverse Effect.
(c) Other than the Subsidiary, the Company does not own or control,
directly or indirectly, any corporation, association or other entity. The
Subsidiary has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement. All of the
outstanding shares of capital stock of each of the Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable and are owned by
the Company, subject to no security interest, other encumbrance or adverse
claim; to the best of such counsel's knowledge, no options, warrants or other
rights to purchase, agreements or other obligations to issue or other rights to
convert any obligation into shares of capital stock or ownership interests in
the Subsidiary are outstanding;
(d) The authorized, issued and outstanding capital stock of the Company is
as set forth under the caption "Capitalization" in the Prospectus; all
necessary and proper corporate proceedings have been taken in order to validly
authorize such Common Stock; the issued and outstanding shares of the Company's
capital stock have been duly authorized and validly issued and are fully paid
and nonassessable, and have not been issued in violation of any preemptive
right, co-sale right, registration right, right of first refusal or other
similar right known to such counsel; the securities listed in Item 15 of Part II
of the Registration Statement have been issued in compliance with federal and
state securities laws;
(e) The Shares to be issued by the Company pursuant to this Agreement have
been duly authorized and will be, upon issuance and delivery against payment
therefor in accordance with the terms hereof, validly issued, fully paid and
nonassessable, and, to the knowledge of such counsel, the shareholders of the
Company do not have any preemptive right, co-sale right, registration right,
right of first refusal or other similar right, which rights have not previously
been waived, in connection with the purchase or sale of any of the Shares;
(f) The Company has full corporate power and authority to enter into this
Agreement and to issue, sell and deliver to the Underwriters the Firm Shares or
the Option Shares, as the case may be, to be issued and sold by it hereunder;
A-1
(g) This Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company and is a valid and binding agreement of the Company, enforceable in
accordance with its terms [standard exceptions permitted];
(h) The Registration Statement has become effective under the Act and, to
such counsel's knowledge, no stop order 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
pending or threatened under the Act; any required filing of the Prospectus and
any supplement thereto pursuant to Rule 424(b) of the Rules and Regulations has
been made in the manner and within the time period required by such Rule 424(b);
(i) The Registration Statement, all Preliminary Prospectuses, the
Prospectus, and each amendment or supplement thereto (other than the financial
statements, financial data and supporting schedules included therein, as to
which such counsel need express no opinion), comply as to form in all material
respects with the requirements of the Act and the applicable Rules and
Regulations and to such counsel's knowledge, there are no agreements, contracts,
leases or documents of a character required to be described in, or filed as an
exhibit to, the Registration Statement which are not described or filed as
required by the Act and the applicable Rules and Regulations;
(j) The terms and provisions of the capital stock of the Company conform
to the description thereof contained in the Registration Statement and the
Prospectus, and the information in the Prospectus under the caption "Description
of Capital Stock", to the extent that it constitutes matters of law or legal
conclusions, has been reviewed by such counsel and is correct, and the form of
certificate evidencing the Common Stock complies with the applicable provisions
of Washington law;
(k) The statements in the Registration Statement and the Prospectus
summarizing statutes, rules and regulations, including the Washington
corporation law and the description of the articles of incorporation and bylaws
are accurate and fairly and correctly present the information required to be
presented by the Act or the Rules and Regulations in all material respects; and
such counsel does not know of any statutes, rules or regulations required to be
described in the Registration Statement or the Prospectus that are not described
or referred to therein as required;
(l) The statements under the captions "Business - Collaborations," "Risk
Factors - Shares Eligible for Future Sale", "Management - Employment
Agreements", "Management - Stock Option Plans", "Management - Employee Stock
Purchase Plan", "Management - Compensation Committee Interlocks and Insider
Participation," "Certain Transactions," and "Description of Capital Stock" in
the Prospectus, insofar as such statements constitute a summary of documents
referred to therein or matters of law, are accurate summaries and fairly and
correctly present, in all material respects, the information called for with
respect to such documents and matters; provided that such counsel shall be
entitled to rely on representations of the Company with respect to certain
factual matters contained in such statements, and provided further that such
counsel shall state that nothing has come to the attention of such counsel which
leads them to believe that such representations are not true and correct in all
material respects;
(m) The information required to be set forth in the Registration Statement
in answer to Items 9, 10 (insofar as it relates to such counsel), 11(c) of Form
S-1 is to the best of such counsel's knowledge accurately and adequately set
forth therein in all material respects or no response is required with respect
to such Items;
A-2
(n) The execution, delivery and performance of this Agreement and the
consummation of the transactions therein contemplated do not and will not (i)
conflict with or result in a breach of any of the terms or provisions of or,
constitute a default under, the certificate of incorporation or bylaws of the
Company, any agreement or document filed as an exhibit to the Registration
Statement, or any statute, rule or regulation applicable to the Company (except
that no opinion need to be expressed with respect to compliance with federal and
state securities laws) or (ii) to the knowledge of such counsel, result in the
creation or imposition of any lien or encumbrance upon any of the assets of the
Company pursuant to the terms or provisions of, or result in a breach or
violation of any of the terms or provisions of, or constitute a default or
result in the acceleration of any obligation under, any indenture, mortgage,
deed of trust, loan agreement, bond, debenture, note agreement, other evidence
of indebtedness, lease, contract or other agreement or instrument to which the
Company is a party or by which its property is bound or (iii) to the knowledge
of such counsel, conflict with or result in a violation or breach of, or
constitute a default under, any applicable license, authorization, approval,
permit, judgment, franchise, order, writ or decree of any court or governmental
agency or body;
(o) No authorization, approval, consent, order, designation or declaration
of or filing by or with any governmental authority or agency is necessary in
connection with the execution and delivery of this Agreement by the Company and
the consummation of the transactions therein contemplated except such as may
have been obtained under the Act and the Rules and Regulations or such as may be
required under state securities or Blue Sky laws or by the bylaws and rules of
the NASD in connection with the purchase and distribution of the Shares by the
Underwriters;
(p) The Company is not in violation of its articles of incorporation or
bylaws, and to the best of such counsel's knowledge, the Company is not in
breach of or default with respect to any provision of any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
by which it or any of its properties may be bound or affected and, to the best
of such counsel's knowledge, the Company is in compliance with all laws, rules,
regulations, judgments, decrees, orders and statutes of any court or
jurisdiction to which it is subject;
(q) To such counsel's knowledge, there are no pending or threatened
actions, suits, claims, proceedings or investigations that, if successful, would
have a Material Adverse Effect or would limit, revoke, cancel, suspend, or cause
not to be renewed any existing license, certificate, registration, approval or
permit, known to such counsel, from any state, federal, or regulatory authority
that is material to the conduct of the business of the Company as presently
conducted, or that is of a character otherwise required to be disclosed in the
Registration Statement or the Prospectus under the Act or the applicable Rules
and Regulations;
(r) To such counsel's knowledge, except as set forth in the Registration
Statement and Prospectus, no holders of shares of Common Stock or other
securities of the Company have registration rights with respect to securities of
the Company and, except as set forth in the Registration Statement and
Prospectus, all holders of securities of the Company having registration rights
with respect to shares of Common Stock or other securities have, with respect to
the offering contemplated hereby, waived such rights or such rights have
otherwise been waived or such rights have expired by reason of lapse of time
following notification of the Company's intent to file the Registration
Statement.
(s) No transfer taxes are required to be paid in connection with the sale
or delivery to the Underwriters of the Firm Shares or the Option Shares;
A-3
(t) The Company will not, upon consummation of the transactions
contemplated by this Agreement, be an "investment company," or a "promoter" or
"principal underwriter" for, a "registered investment company," as such terms
are defined in the Investment Company Act of 1940, as amended;
In addition, such counsel shall include a statement to the effect that such
counsel has participated in conferences with officials and other representatives
of the Company, the Representatives, Underwriters' Counsel and the independent
public accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed,
and although they have not verified the accuracy or completeness of the
statements contained in the Registration Statement or the Prospectus, nothing
has come to the attention of such counsel which caused them to believe that, at
the time the Registration Statement became effective the Registration Statement
(except as to financial statements, financial and statistical data and
supporting schedules contained therein, as to which such counsel need express no
opinion) 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 at the Closing Date or any later Option Closing Date,
as the case may be, the Registration Statement or the Prospectus (except as
aforesaid) 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, in light of the circumstances under,which they were made,
not misleading.
Counsel rendering the foregoing may rely (i) as to questions of law not
involving the laws of the United States, upon opinions of local counsel, and
(ii) as to questions of fact upon representations or certificates of officers of
the Company and of governmental officials, as the case may be, in which case its
opinion is to state that it is so doing and that it has no actual knowledge of
any material misstatement or inaccuracy in such opinions, representations or
certificates, and that they believe that they and the Underwriters are justified
in relying on such opinions or certificates. Copies of any opinion,
representation or certificate so relied upon shall be delivered to you, as
Representatives of the Underwriters, and to Underwriters' Counsel.
A-4
2. Opinion of Patent Counsel. Xxxxx & Xxxxxxx shall indicate that they
-------------------------
served as special counsel to the Company with respect to patents and proprietary
rights, and shall opine that:
(a) The statements in the Registration Statement and the Prospectus
under the captions "Risk Factors--Ability to Protect Intellectual Property"
and "Business--Patents and Proprietary Rights," insofar as such statements
constitute a summary of documents referred to therein or matters of law,
are accurate summaries and fairly and correctly present, in all material
respects, the information called for with respect to such documents and
matters; provided, however, that we have relied on representations of the
Company with respect to the factual matters contained in such statements,
that nothing has come to our attention which leads us to believe that such
representations are not true and correct in all material respects.
(b) To the best of such counsel's knowledge and belief, there are no
legal or governmental proceedings pending relating to patent rights, trade
secrets, trademarks service marks or other proprietary information or
materials of the Company. Also, to the best of such counsel's knowledge
and belief, no such proceedings are threatened or contemplated by
governmental authorities or others.
(c) Such counsel does not know of any contracts or other documents,
relating to the Company's patents, trade secrets, trademarks, service marks
or other proprietary information or materials, of a character required to
be filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus, that are not
filed or described as required.
(d) The Company is listed in the records of the U.S. Patent and
Trademark Office as the holder of record or exclusive license of each of
the patents listed on attached Schedule I and each of the applications
listed on attached Schedule II. To the best of such counsel's knowledge,
the Company has not received any notice of infringement or of conflict with
rights or claims of others, or is not infringing or otherwise violating any
patents, trade secrets, trademarks, service marks, or other proprietary
information or materials, of others, and to the best of such counsel's
knowledge and belief, there are no infringements by others of any of the
Company's patents, trade secrets, trademarks, service marks, or other
proprietary information or materials which in such counsel's judgment could
affect materially the use thereof by the Company. Except as described in
the Prospectus, such counsel is not aware of any patent applications of
others which, if issued in the form available to such counsel, would be
infringed by the activities or proposed activities of the Company, as
described in the Prospectus. Such counsel is not aware of any valid
patents of others which are infringed by specific products or processes
referred to in the Prospectus in such a manner as to materially and
adversely affect the Company.
(e) Such counsel has no knowledge of any facts which would preclude
the Company from having valid license rights or clear title to the patents
referenced in the Prospectus. Such counsel has no knowledge that the
Company lacks or will be unable to obtain any rights or licenses to use all
patents and other material intangible property and assets necessary to
conduct the business now conducted or proposed to be conducted by the
Company as described in the Prospectus, except as described in the
A-5
Prospectus. Counsel is unaware of any facts which form a basis for a
finding of unenforceability or invalidity of any of the Company's patents
and other material intangible property and assets.
(f) Subject to any disclosure to the contrary in the Prospectus, such
counsel is not aware of any material fact with respect to the patent
applications of the Company presently on file that (g) would preclude the
issuance of patents with respect to such applications or (h) would lead
such counsel to conclude that such patents, when issued, would not be valid
and enforceable in accordance with applicable regulations.
In addition, such counsel shall state that although they have not
verified the accuracy or completeness of the statements contained in the
Prospectus, nothing has come to the attention of such counsel that caused
them to believe that, at the time the Registration Statement became
effective, or at the Closing Date or any later Option Closing Date, as the
case may be, the portion of the Prospectus (i) under the caption "Risk
Factors--Ability to Protect Intellectual Property" and (ii) under the
caption "Business--Patents and Proprietary Rights" contained any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
Such counsel may advise you that, in rendering their opinion, they
have relied on certain factual representations of the Company and that they
have not independently verified the accuracy and completeness of such
representations.
Such counsel consents to the use of its name and in the Registration
Statement and the Prospectus.
A-6
