6,000,000
CRITICAL THERAPEUTICS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
, 2004
XX XXXXX & CO., LLC
CIBC WORLD MARKETS
XXXXX XXXXXXX & CO.
LEERINK XXXXX & COMPANY
As Representatives of the several Underwriters
c/o XX Xxxxx & Co., LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. Critical Therapeutics, Inc. a Delaware corporation (the
"Company"), proposes to sell, pursuant to the terms of this Agreement, to the
several underwriters named in Schedule A hereto (the "Underwriters," or, each,
an "Underwriter"), an aggregate of 6,000,000 shares of Common Stock, $.001 par
value (the "Common Stock"), of the Company. The aggregate of 6,000,000 shares so
proposed to be sold is hereinafter referred to as the "Firm Stock". The Company
also proposes to sell to the Underwriters, upon the terms and conditions set
forth in Section 3 hereof, up to an additional 900,000 shares of Common Stock
(the "Optional Stock"). The Firm Stock and the Optional Stock are hereinafter
collectively referred to as the "Stock". XX Xxxxx & Co., LLC ("XX Xxxxx"), CIBC
World Markets, Xxxxx Xxxxxxx & Co. and Leerink Xxxxx & Company are acting as
representatives of the several Underwriters and in such capacity are hereinafter
referred to as the "Representatives." As part of the offering contemplated by
this Agreement, XX Xxxxx (the "Designated Underwriter") has agreed to reserve,
out of the Firm Stock purchased by it under this Agreement, up to 300,000 shares
for sale to the Company's customers and business partners and friends of the
Company's officers, directors and employees (collectively, "Participants"), as
set forth in the Prospectus (as defined herein) under the heading "Underwriting"
(the "Directed Share Program"). The Firm Stock to be sold by the Designated
Underwriter pursuant to the Directed Share Program (the "Directed Shares") will
be sold by the Designated Underwriter pursuant to this Agreement at the public
offering price. Any Directed Shares not subscribed for by the end of the
business day on which this Agreement is executed will be offered to the public
by the Underwriters as set forth in the Prospectus.
2. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, the several Underwriters that:
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(a) A registration statement on Form S-1 (File No. 333-113727) (the
"Initial Registration Statement") in respect of the Stock has been filed
with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, and, excluding exhibits
thereto, to you for each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Securities Act") and the rules
and regulations (the "Rules and Regulations") of the Commission
thereunder, which became effective upon filing, no other document with
respect to the Initial Registration Statement has heretofore been filed
with the Commission, without your prior consent; and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose has
been initiated or threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the Rules and Regulations, is
hereinafter called a "Preliminary Prospectus"); the various parts of the
Initial Registration Statement and the Rule 462(b) Registration Statement,
if any, including all exhibits thereto and including the information
contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act and deemed by virtue of
Rule 430A under the Securities Act to be part of the Initial Registration
Statement at the time it was declared effective, each as amended at the
time such part of the Initial Registration Statement became effective or
such part of the Rule 462(b) Registration Statement, if any, became or
hereafter becomes effective, are hereinafter collectively called the
"Registration Statements"; and such final prospectus, in the form first
filed pursuant to Rule 424(b) under the Securities Act, is hereinafter
called the "Prospectus". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Securities Act. No order
preventing or suspending the use of any Preliminary Prospectus has been
issued by the Commission.
(b) The Initial Registration Statement conforms (and the Rule 462(b)
Registration Statement, if any, the Prospectus and any amendments or
supplements to either of the Registration Statements or the Prospectus,
when they become effective or are filed with the Commission, as the case
may be, will conform) in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as
of the applicable effective date (as to the Registration Statements and
any amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain 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; provided, however, that the foregoing representations and
warranties shall not apply to information contained in or omitted from the
Registration Statements or the Prospectus or any such amendment or
supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company through the Representatives by or on
behalf of any Underwriter specifically for inclusion therein, which
information the parties hereto agree is limited to the Underwriters'
Information (as defined in section 16).
(c) The only subsidiary (as defined in Section 14) of the Company is CTI
Securities Corp., a Massachusetts securities corporation and a wholly
owned subsidiary of the Company (the "Securities Sub"). Each of the
Company and the Securities Sub has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation, is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in
which its respective ownership or lease of property or the conduct of its
respective businesses requires such qualification and has all power and
authority necessary to own or hold its respective properties and to
conduct the businesses in which it is engaged, except
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where the failure to so qualify or have such power or authority would not
have, singly or in the aggregate, a material adverse effect on the
condition (financial or otherwise), results of operations, business or
prospects of the Company and the Securities Sub taken as a whole (a
"Material Adverse Effect").
(d) This Agreement has been duly authorized executed and delivered by the
Company.
(e) The Stock to be issued and sold by the Company to the Underwriters
hereunder has been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and nonassessable and free of any preemptive or
similar rights and will conform to the description thereof contained in
the Prospectus.
(f) The Company has an authorized capitalization as set forth in the
Prospectus under the "Actual" column of the table set forth under the
heading "Capitalization", and all of the issued shares of capital stock of
the Company, have been duly and validly authorized and issued, are fully
paid and nonassessable, have been issued in compliance with federal and
state securities laws, and conform to the description thereof contained in
the Prospectus. None of the outstanding shares of Common Stock was issued
in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive
rights, rights of first refusal or other rights to purchase from the
Company, or equity or debt securities issued by the Company convertible
into or exchangeable or exercisable for, any capital stock of the Company
or the Securities Sub other than those accurately described in the
Prospectus. The description in the Prospectus of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options
or other rights granted thereunder, is accurate and includes the
information required under the Securities Act to be shown with respect to
such plans, arrangements, options and rights.
(g) All the outstanding shares of capital stock of the Securities Sub have
been duly authorized and validly issued, are fully paid and nonassessable
and, except to the extent set forth in the Prospectus, are owned by the
Company directly, free and clear of any claim, lien, encumbrance, security
interest, restriction upon voting or transfer or any other claim of any
third party, other than the security interest held by Silicon Valley Bank
as described in the Prospectus.
(h) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute (with or without notice or lapse of
time or both) a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
the Securities Sub is a party or by which the Company or the Securities
Sub is bound or to which any of the property or assets of the Company or
the Securities Sub is subject, (ii) result in any violation of the
provisions of the charter or by-laws of the Company or the Securities Sub
or (iii) result in any violation of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or the Securities Sub or any of their properties or
assets.
(i) Except for the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or qualifications
as may be required under the Exchange Act of 1934, as amended (the
"Exchange Act") and applicable state securities laws, the rules and
regulations of the National Association of Securities Dealers, Inc.
("NASD") and the Nasdaq National Market ("Nasdaq") in connection with the
purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any
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such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby.
(j) To the knowledge of the Company, Deloitte & Touche LLP, who have
expressed their opinions on the audited financial statements included in
the Registration Statements and the Prospectus are independent public
accountants with respect to the Company as required by the Securities Act
and the Rules and Regulations.
(k) The financial statements, together with the related notes, included in
the Prospectus and in each Registration Statement fairly present the
financial position and the results of operations and changes in financial
position of the Company and the Securities Sub at the respective dates or
for the respective periods therein specified. Such statements and related
notes have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis, except as may be set
forth in the Prospectus; provided, however, that those financial
statements that are unaudited are subject to year-end adjustments and do
not contain all footnotes required under GAAP. The financial statements,
together with the related notes, included in the Prospectus comply as to
form in all material respects with the Securities Act and the Rules and
Regulations thereunder. No other financial statements or supporting
schedules or exhibits are required by the Securities Act or the Rules and
Regulations thereunder to be included in the Prospectus.
(l) Neither the Company nor the Securities Sub has sustained, since
December 31, 2003, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since such date, there has not been any change in the
long-term debt or capital stock of the Company or the Securities Sub
except as set forth or contemplated in the Prospectus, nor has there been
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the business, general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and the Securities Sub taken as a whole,
otherwise than as set forth or contemplated in the Prospectus.
(m) Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company or the Securities Sub
is a party or of which any property or assets of the Company or the
Securities Sub is the subject, including any proceeding before the FDA or
comparable federal, state, local or foreign governmental bodies (it being
understood that the interaction between the Company and the FDA and such
comparable governmental bodies relating solely to the clinical development
and product approval process shall not be deemed proceedings for purposes
of this representation), which is required to be described in the
Registration Statement or the Prospectus and is not described therein, or
which, singly or in the aggregate, if determined adversely to the Company
or the Securities Sub, could reasonably be expected to have a Material
Adverse Effect or would prevent or adversely affect the ability of the
Company to perform its obligations under this Agreement; and the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others. The Company is in
compliance with all applicable federal, state, local and foreign laws,
regulations, orders and decrees governing its business as prescribed by
the United States Food and Drug Administration (the "FDA"), or any other
federal, state or foreign agencies or bodies engaged in the regulation of
pharmaceuticals or biohazardous substances or materials, except where
noncompliance would not, singly or in the aggregate, have a Material
Adverse Effect. All preclinical and clinical studies conducted by or on
behalf of the Company to support approval for commercialization of the
Company's products have been conducted by the Company, or to the Company's
knowledge by third parties, in compliance with all applicable federal,
state or foreign laws, rules, orders or regulations, except for such
failure or failures to be in compliance as could
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not reasonably be expected to have, singly or in the aggregate, a Material
Adverse Effect. No filing or submission to the FDA or any other federal,
state or foreign regulatory body by the Company, or to the knowledge of
the Company, by any other party that is intended to be the basis for any
approval relating to approval for commercialization of the Company's
products, contains any material omission or material false information.
(n) Neither the Company nor the Securities Sub (i) is in violation of its
charter or by-laws, (ii) is in default in any respect, and no event has
occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or
(iii) is in violation in any respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets may
be subject except any violations or defaults which, singly or in the
aggregate, would not have a Material Adverse Effect.
(o) Each of the Company and the Securities Sub possesses all licenses,
certificates, authorizations and permits issued by, and has made all
filings with, the appropriate local, state, federal or foreign regulatory
agencies or bodies which are necessary for the conduct of their respective
businesses as described in the Prospectus, including without limitation
all such licenses, certificates, authorizations and permits required by
the FDA or any other federal, state or foreign agencies or bodies engaged
in the regulation of pharmaceuticals or biohazardous materials, except
where any failures to possess or make the same, singly or in the
aggregate, would not have a Material Adverse Effect; all of such licenses,
certificates, authorizations and permits are valid and in full force and
effect, except where the invalidity of such licenses, certificates,
authorizations and permits or the failure of such licenses, certificates,
authorizations and permits to be in full force and effect would not,
singly or in the aggregate, have a Material Adverse Effect; and the
Company has not received notification of any actions or proceedings
relating to revocation or modification of any such license, certificate,
authorization or permit and has no reason to believe that any such
license, certificate, authorization or permit will not be renewed. The
studies, tests and preclinical or clinical trials, if any, conducted by or
on behalf of the Company that are described in the Registration Statements
and the Prospectus (the "Company Studies and Trials") were and, if still
pending, are being, conducted in all material respects in accordance with
experimental protocols, procedures and controls pursuant to, where
applicable, accepted professional scientific standards; the descriptions
of the results of the Company Studies and Trials contained in the
Registration Statements and the Prospectus are accurate in all material
respects; and the Company has not received any notices or correspondence
from the FDA or any foreign, state or local governmental body exercising
comparable authority requiring the termination, suspension or material
modification of any Company Studies or Trials that termination, suspension
or material modification could reasonably be expected to have a Material
Adverse Effect.
(p) Neither the Company nor the Securities Sub is, or after giving effect
to the offering of the Stock and the application of the proceeds thereof
as described in the Prospectus will become, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations of the Commission thereunder.
(q) Neither the Company nor any of its officers or directors or, to the
knowledge of the Company, its affiliates has taken or will take, directly
or indirectly, any action designed or intended to stabilize or manipulate
the price of any security of the Company, or which caused or
6
resulted in, or which might in the future reasonably be expected to cause
or result in, stabilization or manipulation of the price of any security
of the Company.
(r) The Company owns or possesses all licenses or other rights from all
necessary third parties (the "Licensors") to use the patents, trademarks,
trademark registrations, service marks, service xxxx registrations, trade
names, copyrights, licenses, inventions, trade secrets, know-how and other
intellectual property rights necessary to conduct its business in the
manner described in the Prospectus (excluding generally available
"off-the-shelf" software programs licensed pursuant to shrink wrap or
"click and accept" licenses, the "Company Intellectual Property"), and the
Company is not aware of any claim to the contrary or any challenge by any
other person to the rights of the Company or the Securities Sub with
respect to the foregoing that are likely to cause the Company to be (i)
liable for damages, (ii) required to obtain licenses at other than nominal
cost, or (iii) stopped from manufacturing, using or selling its products
or conducting other activities. Except where such failure to make the same
would not, singly or in the aggregate, have a Material Adverse Effect, (i)
the Company is recorded with the PTO (as defined below) or recorded in the
equivalent foreign patent office as the sole or joint current owner of
record for each intellectual property registration and application for
registration owned by the Company or the Securities Sub, and (ii) such
applications for registration and registrations have been duly maintained,
are subsisting, in full force and effect, have not been cancelled,
expired, or abandoned. To the knowledge of the Company, the Company's
business as now conducted and as proposed to be conducted as described in
the Prospectus does not and will not infringe or conflict with any
patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, know-how or other intellectual property right or
franchise right of any person except where such infringement or
infringements would not, singly or in the aggregate, have a Material
Adverse Effect. Except as described in the Prospectus, there are no
oppositions, cancellations, invalidity proceedings, re-examination
proceedings, suits or arbitrations pending or for which notice has been
provided to the Company or, to the knowledge of the Company, threatened,
challenging the Company's' ownership of, right to use, or the validity or
enforceability of, any Company Intellectual Property which would, singly
or in the aggregate, have a Material Adverse Effect.
(s) To the knowledge of the Company, all patent applications filed by the
Company for all inventions owned by or licensed to the Company that are
material to the conduct of the business of the Company in the manner in
which it has been and is contemplated to be conducted as described in the
Prospectus, have been duly and properly filed or caused to be filed with
the United States Patent and Trademark Office ("PTO") and, in some cases,
applicable foreign and international patent authorities. To the knowledge
of the Company, assignments for all patents and patent applications,
including, without limitation any continuations, divisionals,
continuations-in-part, renewals, reissues and applications for
registration of any of the foregoing owned by or licensed to the Company
(collectively, the "Patents") that are material to the conduct of the
business of the Company in the manner in which it has been and is
contemplated to be conducted as described in the Prospectus, have been
properly executed and recorded for each named inventor. To the knowledge
of the Company, all printed publications and patent references material to
the patentability of the inventions claimed in the Patents have been
disclosed to those patent offices so requiring. To the knowledge of the
Company, each of the Company, its assignors or the Licensors, as
applicable, has met its duty of candor and good faith to the PTO for the
Patents. To the knowledge of the Company, no material misrepresentation
has been made to any patent office in connection with the Patents. The
Company is not aware of any facts material to a determination of
patentability regarding the Patents not disclosed to the PTO or other
applicable patent office. The Company is not aware of any facts not
disclosed to the PTO or other applicable patent office that would preclude
the patentability, validity or enforceability of
7
any patent or patent application in the Patents. The Company has no
knowledge of any facts that would preclude the Company or the Licensors,
as applicable, from having clear title to the patents and patent
applications in the Patents.
(t) To the knowledge of the Company, no third party is engaging in any
activity that infringes, misappropriates or otherwise violates any Company
Intellectual Property, except as described in the Prospectus and except
for such activities that, singly or in the aggregate, would not have a
Material Adverse Effect.
(u) Except for the security interest granted to Silicon Valley Bank as
described in the Prospectus, each of the Company and the Securities Sub
has valid title to, or has valid rights to lease or otherwise use, all
items of real or personal property which are material to the business of
the Company and the Securities Sub taken as a whole, in each case free and
clear of all liens, encumbrances, security interests, claims and defects
that could reasonably be expected to result in a Material Adverse Effect.
(v) No labor disturbance by the employees of the Company or the Securities
Sub exists or, to the Company's knowledge, is imminent which could
reasonably be expected to have a Material Adverse Effect. The Company is
not aware that any key employee or significant group of employees of the
Company or the Securities Sub plans to terminate employment with the
Company or the Securities Sub.
(w) No "prohibited transaction" (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan which singly or in the aggregate would have a
Material Adverse Effect; each employee benefit plan is in compliance in
all material respects with applicable law, including ERISA and the Code;
the Company has not incurred and does not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from,
any "pension plan"; and each "pension plan" (as defined in ERISA) for
which the Company would have any material liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification.
(x) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any kind of
toxic or other wastes or other hazardous substances by, due to, or caused
by the Company or the Securities Sub (or, to the best of the Company's
knowledge, any other entity for whose acts or omissions the Company or the
Securities Sub is or may be liable) upon any of the property now or
previously owned or leased by the Company or the Securities Sub, or upon
any other property, in violation of any statute or any ordinance, rule,
regulation, order, judgment, decree or permit or which would, under any
statute or any ordinance, rule (including rule of common law), regulation,
order, judgment, decree or permit, give rise to any liability, except for
any violation or liability which would not have, singly or in the
aggregate with all such violations and liabilities, a Material Adverse
Effect; there has been no disposal, discharge, emission or other release
of any kind onto such property or into the environment surrounding such
property of any toxic or other wastes or other hazardous substances with
respect to which the Company or the Securities Sub have knowledge, except
for
8
any such disposal, discharge, emission, or other release of any kind which
would not have, singly or in the aggregate with all such discharges and
other releases, a Material Adverse Effect.
(y) The Company and the Securities Sub each (i) have filed all federal,
state and foreign income and franchise tax returns required to be filed,
all of which when filed were true, complete and correct in all material
respects, (ii) have paid all federal state, local and foreign taxes due
and payable for which it is liable, and (iii) do not have any tax
deficiency or claims outstanding or assessed or, to the Company's
knowledge, proposed against it except where such failure to file or to pay
or such deficiency or claim could not reasonably be expected to have a
Material Adverse Effect.
(z) Each of the Company and the Securities Sub carries, or is covered by,
insurance in such amounts and covering such risks as the Company believes
is adequate for the conduct of their respective businesses and the value
of their respective properties and as is customary for similarly sized
companies engaged in similar businesses in similar industries.
(aa) Each of the Company and the Securities Sub 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 authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(bb) The minute books of the Company and the Securities Sub have been made
available to the Underwriters and counsel for the Underwriters, and such
books contain a summary of all meetings and actions of the board of
directors (including each board committee) and shareholders of the Company
and the Securities Sub since the time of their respective incorporation
through the date of its latest meeting and action.
(cc) There is no franchise, lease, contract, agreement or document
required by the Securities Act or by the Rules and Regulations to be
described in the Prospectus or to be filed as an exhibit to the
Registration Statements which is not described or filed therein as
required; and all descriptions of any such franchises, leases, contracts,
agreements or documents contained in the Registration Statements are
accurate descriptions of such documents in all material respects. Other
than as described in the Prospectus, no such franchise, lease, contract or
agreement has been suspended or terminated for convenience or default by
the Company or any of the other parties thereto, and the Company has not
received notice of, and has no other knowledge of, any such pending or
threatened suspension or termination, except for such pending or
threatened suspensions or terminations that would not reasonably be
expected to, singly or in the aggregate, have a Material Adverse Effect.
Further, other than as described in the Prospectus, all such franchises,
leases, contracts, agreements and documents are in full force and effect
and the Company is not in breach, violation or default of any such
franchises, leases, contracts, agreements or documents and no event has
occurred which with notice or lapse of time or both would constitute a
breach, violation or default by the Company of any such franchises,
leases, contracts, agreements or documents, except for such failures to be
in full force and effect and such breaches, violations or defaults as
singly or in the aggregate could not reasonably be expected to result in a
Material Adverse Effect.
9
(dd) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required
to be described in the Prospectus and which is not so described.
(ee) Except as set forth in the Prospectus, no person or entity has the
right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness of the
Registration Statements or otherwise, except for persons and entities who
have expressly waived such right or who have been given timely and proper
notice and have failed to exercise such right within the time or times
required under the terms and conditions of such right.
(ff) Neither the Company nor the Securities Sub owns any "margin
securities" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Stock will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Securities to be considered a
"purpose credit" within the meanings of Regulation T, U or X of the
Federal Reserve Board.
(gg) Neither the Company nor the Securities Sub is a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Company or the Underwriters for a brokerage
commission, finder's fee or like payment in connection with the offering
and sale of the Stock.
(hh) No forward-looking statement (within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act) contained in the
Prospectus has been made or reaffirmed without a reasonable basis or has
been disclosed other than in good faith.
(ii) The Stock has been approved for listing subject to notice of issuance
on Nasdaq.
(jj) The Company has taken all necessary actions to ensure that upon the
effectiveness of the Registration Statement, it will be in compliance with
all applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and all rules
and regulations promulgated thereunder or implementing the provisions
thereof (the "Xxxxxxxx-Xxxxx Act") that are then in effect.
(kk) The Company has taken all necessary actions to ensure that upon
approval of the Stock for inclusion by Nasdaq, it will be in compliance
with all applicable corporate governance requirements set forth in the
Nasdaq Marketplace Rules that are then in effect, and with respect to
other applicable corporate governance requirements set forth in the Nasdaq
Marketplace Rules not currently in effect, the Company is taking such
steps as are reasonable, in light of the effective dates of such
requirements, to ensure that it will be in compliance with such
requirements upon and all times after the effectiveness thereof.
(ll) Neither the Company nor the Securities Sub nor, to the best of the
Company's knowledge, any employee or agent of the Company or the
Securities Sub, has made any contribution or other payment to any official
of, or candidate for, any federal, state or foreign office in violation in
any material respect of any law or of the character required to be
disclosed in the Prospectus.
(mm) There are no transactions, arrangements or other relationships
between and/or among the Company, any of its affiliates (as such term is
defined in Rule 405 of the Securities Act) and any
10
unconsolidated entity, including, but not limited to, any structured
finance, special purpose or limited purpose entity that could reasonably
be expected to materially affect the Company's liquidity or the
availability of or requirements for its capital resources required to be
described in the Prospectus which have not been described as required.
(nn) There are no outstanding loans, advances (except normal advances for
business expense in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers
or directors of the Company, except as disclosed in the Prospectus.
(oo) The Registration Statements, the Prospectus and the Preliminary
Prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions
in which they are distributed in connection with the Directed Share
Program. No authorization, approval, consent, license, order, registration
or qualification of or with any government, governmental instrumentality
or court, other than such as have been obtained or those as may be
required by the NASD, is necessary under the securities laws or
regulations of any foreign jurisdiction in which the Directed Shares are
offered outside the United States.
(pp) The Company has not offered, or caused the Underwriters to offer, any
Firm Stock to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or business partner
of the Company to alter the customer's or business partner's level or type
of business with the Company or (ii) a trade journalist or publication to
write or publish favorable information about the Company or its products.
3. Purchase Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company the number of shares of Firm Stock set forth opposite the name
of such Underwriter in Schedule A hereto.
The purchase price per share to be paid by the Underwriters to the Company
for the Stock will be $_____ per share (the "Purchase Price").
The Company will deliver the Firm Stock to the Representatives for the
respective accounts of the several Underwriters (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given at or prior
to 12:00 Noon, New York City time, on the second full business day preceding the
First Closing Date (as defined below) against payment of the aggregate Purchase
Price therefor by wire transfer to an account at a bank acceptable to XX Xxxxx,
payable to the order of the Company, all at the offices of Xxxx and Xxxx LLP, 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx. Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The time and date of
the delivery and closing shall be at 10:00 A.M., New York City time, on , 2004,
in accordance with Rule 15c6-1 of the Exchange Act. The time and date of such
payment and delivery are herein referred to as the "First Closing Date". The
First Closing Date and the location of delivery of, and the form of payment for,
the Firm Stock may be varied by agreement between the Company and XX Xxxxx.
The Company shall make the certificates for the Firm Stock available to
the Representatives for examination on behalf of the Underwriters in New York,
New York at least twenty-four hours prior to the First Closing Date.
11
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Underwriters may purchase all or less than all of the Optional Stock. The price
per share to be paid for the Optional Stock shall be the Purchase Price. The
Company agrees to sell to the Underwriters the number of shares of Optional
Stock specified in the written notice by XX Xxxxx described below and the
Underwriters agree, severally and not jointly, to purchase such shares of
Optional Stock. Such shares of Optional Stock shall be purchased from the
Company and for the account of each Underwriter in the same proportion as the
number of shares of Firm Stock set forth opposite such Underwriter's name bears
to the total number of shares of Firm Stock (subject to adjustment by XX Xxxxx
to eliminate fractions). The option granted hereby may be exercised as to all or
any part of the Optional Stock at any time, and from time to time, not more than
thirty (30) days subsequent to the date of this Agreement. No Optional Stock
shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered. The right to purchase the Optional Stock
or any portion thereof may be surrendered and terminated at any time upon notice
by XX Xxxxx to the Company.
The option granted hereby may be exercised by written notice being given
to the Company by XX Xxxxx setting forth the number of shares of the Optional
Stock to be purchased by the Underwriters and the date and time for delivery of
and payment for the Optional Stock. Each date and time for delivery of and
payment for the Optional Stock (which may be the First Closing Date, but not
earlier) is herein called the "Option Closing Date" and shall in no event be
earlier than two (2) business days nor later than five (5) business days after
written notice is given. (The Option Closing Date and the First Closing Date are
herein called the "Closing Dates".)
The Company will deliver the Optional Stock to the Underwriters (in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice in writing to the Company given at
or prior to 12:00 Noon, New York City time, on the second full business day
preceding the Option Closing Date against payment of the aggregate Purchase
Price therefor in federal (same day) funds by certified or official bank check
or checks or wire transfer to an account at a bank acceptable to XX Xxxxx
payable to the order of the Company all at the offices of Xxxx and Xxxx LLP, 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx. Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The Company shall
make the certificates for the Optional Stock available to the Representatives
for examination on behalf of the Underwriters in New York, New York not later
than 10:00 A.M., New York Time, on the business day preceding the Option Closing
Date. The Option Closing Date and the location of delivery of, and the form of
payment for, the Optional Stock may be varied by agreement between the Company
and XX Xxxxx.
The several Underwriters propose to offer the Stock for sale upon the
terms and conditions set forth in the Prospectus.
4. Further Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) The Company will prepare the Rule 462(b) Registration Statement, if
necessary, in a form approved by the Representatives and file the Rule
462(b) Registration Statement with the Commission on the date hereof;
prepare the Prospectus in a form approved by the Representatives and file
such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the second business day following the execution and delivery of this
Agreement; make no further amendment or supplement to the Registration
Statements or to the Prospectus to which the Representatives shall
reasonably object by notice to the Company after a reasonable period (not
less than two business days) to review unless the Company, after receipt
of such objection, shall
12
determine, based upon the advise of its outside counsel, that such
amendment or supplement is required by law; advise the Representatives,
promptly after it receives notice thereof, of the time when any amendment
to either Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Representatives with copies thereof; advise the
Representatives, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statements or the Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, use
promptly its best efforts to obtain its withdrawal.
(b) If at any time prior to the expiration of nine months after the
effective date of the Initial Registration Statement when a prospectus
relating to the Stock is required to be delivered any event occurs as a
result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the
Securities Act, the Company will promptly notify the Representatives
thereof and upon their request will prepare an amended or supplemented
Prospectus which will correct such statement or omission or effect such
compliance. The Company will furnish without charge to each Underwriter
and to any dealer in securities as many copies as the Representatives may
from time to time reasonably request of such amended or supplemented
Prospectus; and in case any Underwriter is required to deliver a
prospectus relating to the Stock nine months or more after the effective
date of the Initial Registration Statement, the Company upon the request
of the Representatives and at the expense of such Underwriter will prepare
promptly an amended or supplemented Prospectus as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the
Securities Act.
(c) The Company will furnish promptly to each of the Representatives and
to counsel for the Underwriters a signed copy of each of the Registration
Statements as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith.
(d) The Company will deliver promptly to the Representatives in New York
City such number of the following documents as the Representatives shall
reasonably request: (i) conformed copies of the Registration Statements as
originally filed with the Commission and each amendment thereto (in each
case excluding exhibits), (ii) each Preliminary Prospectus, and (iii) the
Prospectus (not later than 10:00 A.M., New York City time, of the business
day following the execution and delivery of this Agreement) and any
amended or supplemented Prospectus (not later than 10:00 A.M., New York
City time, on the business day following the date of such amendment or
supplement).
(e) The Company will make generally available to its shareholders as soon
as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including, at the option
of the Company, Rule 158).
13
(f) The Company will promptly take from time to time such actions as the
Representatives may reasonably request to qualify the Stock for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Representatives may designate and to continue such qualifications in
effect for so long as required for the distribution of the Stock; provided
that the Company and its subsidiaries shall not be obligated to qualify as
foreign corporations in any jurisdiction in which they are not so
qualified or to file a general consent to service of process in any
jurisdiction.
(g) During the period of five years from the date hereof, the Company will
deliver to the Representatives and, upon request, to each of the other
Underwriters, (i) as soon as they are available, copies of all reports or
other communications furnished to shareholders and (i) as soon as they are
available, copies of any reports and financial statements furnished or
filed with the Commission pursuant to the Exchange Act or any national
securities exchange or automatic quotation system on which the Stock is
listed or quoted.
(h) The Company will not directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock for a period of 180 days from the date of the Prospectus
without the prior written consent of XX Xxxxx other than the Company's
sale of the Stock hereunder and the grant of any stock option or stock
option right or the issuance of shares pursuant to employee benefit plans,
qualified stock option plans, employee stock purchase plans or other
employee compensation plans as in existence on the date hereof or pursuant
to currently outstanding options, warrants, rights, convertible preferred
stock or convertible indebtedness; provided, however, that the Company may
issue up to an aggregate of 956,278 shares of Common Stock in connection
with entering into new product acquisitions or licensing arrangements,
provided any recipient of such shares of Common Stock enters into a
lock-up agreement substantially in the form of Exhibit I hereto.
(i) The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
(j) Prior to each of the Closing Dates, the Company will furnish to the
Representatives, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for any
periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(k) Prior to each of the Closing Dates, the Company will not issue any
press release or other communication directly or indirectly or hold any
press conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of business
and consistent with the past practices of the Company and of which the
Representatives are notified), without the prior written consent of the
Representatives, unless in the judgment of the Company and its counsel,
and after notification to the Representatives, such press release or
communication is required by law.
(l) Without limiting the provisions of Section 4(h) in connection with the
offering of the Stock, until XX Xxxxx shall have notified the Company of
the completion of the resale of the Stock, the Company will not, and will
cause its affiliated purchasers (as defined in Regulation M under the
Exchange Act) not to, either alone or with one or more other persons, bid
for or purchase, for any account in which it or any of its affiliated
purchasers has a beneficial interest,
14
any Stock, or attempt to induce any person to purchase any Stock; and not
to, and to cause its affiliated purchasers not to, make bids or purchase
for the purpose of creating actual, or apparent, active trading in or of
raising the price of the Stock.
(m) The Company will not take any action prior to the Option Closing Date
which would require the Prospectus to be amended or supplemented pursuant
to Section 4(b).
(n) For at least one year from the date hereof, the Company shall at all
times comply with all applicable provisions of the Xxxxxxxx-Xxxxx Act in
effect from time to time.
(o) The Company will apply the net proceeds from the sale of the Stock as
set forth in the Prospectus under the heading "Use of Proceeds".
(p) In connection with the Directed Share Program, the Company will ensure
that the Directed Shares will be restricted to the extent required by the
NASD or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three (3) months following the date of the
effectiveness of the Registration Statement. The Designated Underwriter
will notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer agent to place stop
transfer restrictions upon such securities for such period of time.
(q) The Company will pay all fees and disbursements of counsel incurred by
the Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
(r) The Company will comply with all applicable securities and other
applicable securities and other laws, rules and regulations in each
foreign jurisdiction in which the Directed Shares are offered in
connection with the Directed Share Program.
5. Payment of Expenses. The Company agrees with the Underwriter to pay (a) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Stock and any taxes payable in that connection; (b) the costs incident to
the registration of the Stock under the Securities Act; (c) the costs incident
to the preparation, printing and distribution of each Registration Statement,
Preliminary Prospectus, Prospectus any amendments and exhibits thereto the costs
of printing, reproducing and distributing the "Agreement Among Underwriters"
between the Representatives and the Underwriters, the Master Selected Dealers'
Agreement, the Underwriters' Questionnaire and this Agreement by mail, telex or
other means of communications; (d) the fees and expenses (including related fees
and expenses of counsel for the Underwriters) reasonably incurred in connection
with filings made with the National Association of Securities Dealers; (e) any
applicable listing or other fees; (f) the fees and expenses of qualifying the
Stock under the securities laws of the several jurisdictions as provided in
Section 4(f) and of preparing, printing and distributing Blue Sky Memoranda and
Legal Investment Surveys (including related fees and expenses of counsel to the
Underwriters reasonably incurred in connection therewith); (g) all fees and
expenses of the registrar and transfer agent of the Common Stock; and (h) all
other costs and expenses incident to the performance of the obligations of the
Company under this Agreement (including, without limitation, the fees and
expenses of the Company's counsel and the Company's independent accountants);
provided that, except as otherwise provided in this Section 5 and in Section 10,
the Underwriters shall pay their own costs and expenses, including travel, meals
and lodging costs, the fees and expenses of their counsel, any transfer taxes on
the Stock which they may sell and the expenses of advertising any offering of
the Stock made by the Underwriters.
15
6. Conditions of Underwriters' Obligations. The respective obligations of the
several Underwriters hereunder on any Closing Date are subject to the accuracy,
when made and on each of the Closing Dates, of the representations and
warranties of the Company contained herein, to the accuracy of the statements of
the Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder, and to each of the
following additional terms and conditions:
(a) No stop order suspending the effectiveness of either of the
Registration Statements shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission, and any
request for additional information on the part of the Commission (to be
included in the Registration Statements or the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the
Representatives. The Rule 462(b) Registration Statement, if any, and the
Prospectus shall have been timely filed with the Commission in accordance
with Section 4(a).
(b) None of the Underwriters shall have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement or
the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Underwriters,
is material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary
to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement the Stock, the
Registration Statement and the Prospectus and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
(d) Xxxx and Xxxx LLP shall have furnished to the Representatives such
counsel's written opinion, as counsel to the Company, addressed to the
Underwriters and dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) Each of the Company and the Securities Sub has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of
incorporation, is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction listed
on an exhibit to such opinion, and has all power and authority
necessary to own or hold its respective properties and to
conduct the business in which it is engaged as such properties
and business are described in the Prospectus.
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock
of the Company, including the Stock being delivered on the
Closing Date, have been duly and validly authorized and
issued, are fully paid and nonassessable and conform to the
description thereof contained in the Prospectus under the
caption "Description of Capital Stock."
(iii) All the outstanding shares of capital stock of the Securities
Sub have been duly authorized and validly issued, are fully
paid and nonassessable and except to the extent set forth in
the Prospectus, are owned of record by the Company.
16
(iv) There are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of,
any shares of the Stock pursuant to the Delaware General
Corporation Law, the Company's charter or by-laws or any of
the agreements or other instruments listed on an exhibit to
such opinion.
(v) This Agreement has been duly authorized, executed and
delivered by the Company.
(vi) The execution and delivery of this Agreement by the Company
and the consummation of the transactions contemplated hereby
by the Company (A) will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument that is
filed as an exhibit to the Registration Statement and to which
the Company or the Securities Sub is a party or by which the
Company or the Securities Sub is bound or to which any of the
properties or assets of the Company or the Securities Sub is
subject (a "Filed Contract"), and (B) will not result in any
violation of the Charter or by-laws of the Company or of the
Securities Sub or any Massachusetts state law, rule or
regulation that in such counsel's experience is normally
applicable in transactions of the type completed by the
Agreement, the Delaware General Corporation Law or any order,
judgment or decree specifically naming the Company of any
court or governmental agency or body or court having
jurisdiction over the Company or the Securities Sub or any of
their properties or assets of which such counsel is aware.
Except for the registration of the Stock under the Securities
Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Securities Act, the Exchange Act, applicable Blue Sky laws of
the states or foreign jurisdictions, no consent, approval,
authorization or order of, or filing or registration with, any
court or governmental agency or body is required for the
execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions
contemplated hereby.
(vii) The statements in the Prospectus under the headings "Risk
Factors - - Anti-takeover provisions in our charter documents
and under Delaware law could prevent or delay transactions
that stockholders may favor"; "Business - - License and
Royalty Agreements"; "Business - - Regulatory Matters";
"Management - - Employee Benefit Plans"; "Description of
Capital Stock"; "Shares Eligible for Future Sale"; "Material
United States Income Tax Considerations for Non-United States
Holders"; and "Underwriting" (only with respect to the
description of this Agreement), and in the Registration
Statement in Item 14, to the extent that they constitute
summaries of matters of law or regulation or legal conclusions
or summarize the terms of agreements or other documents, have
been reviewed by such counsel and are correct in all material
respects.
(viii) To such counsel's knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings
pending to which the Company the
17
Securities Sub is a party or of which any property or asset of
the Company or the Securities Sub is subject that is required
by the Securities Act or the rules and regulations thereunder
to be described in the Registration Statement or the
Prospectus that is not so described.
(ix) The Registration Statement was declared effective under the
Securities Act to such counsel's knowledge as of the date and
time specified in such opinion, the Rule 462(b) Registration
Statement, if any, was filed with the Commission on the date
specified therein, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on the date
specified therein and, to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose
is pending or threatened by the Commission.
(x) To such counsel's knowledge, except as described in the
Prospectus, no person or entity has the right to require
registration of shares of Common Stock or other securities of
the Company because of the filing or effectiveness of the
Registration Statements or otherwise, except for persons and
entities who have expressly waived such right or who have been
given proper notice and have failed to exercise such right
within the time or times required under the terms and
conditions of such right.
(xi) The Company is not an "investment company" within the meaning
of the Investment Company Act and the rules and regulations of
the Commission thereunder.
Such counsel shall also have furnished to the Representatives a written
statement, addressed to the Underwriters and dated the Closing Date, as follows:
"In the course of acting as counsel for the Company in connection
with the preparation of the Registration Statement and the
Prospectus, we have participated in conferences with officers and
other representatives of the Company, representatives of and counsel
for the Underwriters and representatives of the independent public
accountants of the Company, during which the contents of the
Registration Statement and the Prospectus were discussed. While the
limitations inherent in the independent verification of factual
matters and the character of determinations involved in the
registration process are such that we are not passing upon and do
not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement
or the Prospectus (except to the extent expressly set forth in
clause (vii) above), subject to the foregoing and based on such
participation and discussions:
(a) the Registration Statement, as of the Effective Date, and the
Prospectus, as of the date thereof (except for the financial
statements, including the notes and schedules thereto, and other
financial, statistical and accounting data and information,
information relating to the Company's intellectual property and
information relating to the Underwriters and the method of
distribution of the Shares by the Underwriters included therein or
omitted therefrom, as to which we express no view) appear on their
face to be appropriately responsive in all material respects
18
to the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder,
(b) no facts have come to our attention that have caused us to
believe that (i) the Registration Statement, as of the Effective
Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading (except as set forth in
the parenthetical in clause (a) above) or (ii) the Prospectus, as of
the date it was filed with the Commission pursuant to Rules 424(b)
and 430A under the Securities Act or as of the date hereof,
contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading (except as set forth in the
parenthetical in clause (a) above) and
(c) we are not aware of any contract or other document of a
character required by the Securities Act and the applicable rules
and regulations of the Commission thereunder to be described in the
Registration Statement or Prospectus or to be filed as an exhibit to
the Registration Statement that is not so described or filed as
required."
The foregoing opinion and statement may be qualified by a statement to the
effect that such counsel has not independently verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus and takes no responsibility therefor except to the
extent set forth in the opinion described in clauses (vii) and (viii) above.
(e) Xxxxxxxx, Xxxxx, Xxxxx & Xxxxxxxx, P.C., shall have furnished to the
Representatives such counsel's written opinion, as patent counsel to the
Company, addressed to the Underwriters and dated the Closing Date, in form
and substance, reasonably satisfactory to the Representatives to the
effect that:
(i) The statements in the Prospectus under the caption "Business -
- Proprietary Rights and Licensing," insofar as such
statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters
referred to therein.
(ii) Such counsel is not aware of any facts that would preclude the
Company or the Licensors from having clear title to their
respective patents and patent applications included in the
Patents, or that would preclude the Company from having a
valid license to the patents and patent applications in the
Patents licensed from the Licensors. To the knowledge of such
counsel, the Company, the Licensors, and inventors have
complied with the PTO duty of candor and good faith in dealing
with the PTO, including the duty to disclose to the PTO all
information known to be material to the patentability of each
such United States patents and patent applications. To the
knowledge of such counsel, all assignments from each named
inventor to, as the case may be, the Company or the Licensors
have been executed and recorded with the PTO for each patent
and patent application. Such counsel has no knowledge that the
Company lacks any rights or licenses to use all patents and
know-how necessary to conduct the business now conducted or
proposed to be conducted by the Company as described in the
Registration Statements and Prospectus, except as described
19
therein. Such counsel does not know of any facts that would
form a basis for a finding that any of the claims of the
patents or patent applications owned or licensed by the
Company is unpatentable, unenforceable or invalid. Such
counsel is not aware of any pending U.S. or foreign patent
applications that, if issued, would limit or prohibit the
business now conducted or proposed to be conducted by the
Company as described in the Registration Statements and the
Prospectus, except as described therein. Such counsel does not
know of any pending or threatened action, suit, proceeding or
claim by others that the Company is infringing any patent that
could result in a Material Adverse Effect.
(iii) There are no legal or governmental proceedings pending
relating to the Patents, other than PTO review of pending
applications for patents, including appeal proceedings, and,
to the knowledge of such counsel, no such proceedings are
threatened or contemplated by governmental authorities or
others.
(iv) As to the sections of the Prospectus under the captions "Risk
Factors - - If we are not able to obtain and enforce patent
protection for our discoveries, our ability to develop and
commercialize our product candidates will be harmed and we may
not be able to operate our business profitably"; "Risk Factors
- - Litigation regarding patents, patent applications and
other proprietary rights may be expensive and time consuming.
If we are unsuccessful in litigation concerning patents or
patent applications owned or co-owned by us or licensed to us,
we may not be able to protect our product candidates from
competition or we may be precluded from selling our product
candidates. If we are involved in such litigation, it could
cause delays in bringing product candidates to market and harm
our ability to operate"; "Risk Factors - - We in-license a
significant portion of our principal proprietary technologies
and if we fail to comply with our obligations under any of the
related agreements, we could lose license rights that are
necessary to developing HMGB1 and our other product
candidates"; and "Business - - Patents and Proprietary
Rights," such counsel has no reason to believe that such
sections, at the time the Initial Registration Statement
became effective or at any time subsequent thereto up to and
as of such Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(v) To such counsel's knowledge, the Company owns, is licensed to
use, or otherwise possesses legally enforceable rights in all
patents, patent applications, trademarks, trademark
registrations, service marks, service xxxx registrations,
trade names, domain names, domain name registrations,
copyrights, licenses, inventions, trade secrets and rights
necessary for the Company and the Securities Sub to conduct
the business as currently conducted or as presently
contemplated to be conducted as described in the Prospectus
(collectively, the "Intellectual Property"). To such counsel's
knowledge and other than as described in the Prospectus (A)
there are no third parties who have any rights in the
Intellectual Property that could preclude the Company from
conducting its business as currently conducted or as presented
contemplated to be conducted as described in the Prospectus,
(B) there are no pending or threatened actions, suits,
proceedings, investigations or claims by others challenging
the rights of the Company or, if the Intellectual Property is
licensed to the Company, in respect of any third party
20
licensor, and (C) the Company has not and, to the extent any
Intellectual Property is licensed to the Company, no third
party licensor has, infringed, or received any notice of
infringement of or conflict with, any rights of others with
respect to the Intellectual Property.
(f) The Representatives shall have received from Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Underwriters may reasonably require, and the Company shall have furnished
to such counsel such documents as they request for enabling them to pass
upon such matters.
(g) At the time of the execution of this Agreement, the Representatives
shall have received from Deloitte & Touche LLP a letter, addressed to the
Underwriters and dated such date, in form and substance satisfactory to
the Representatives (i) confirming that they are independent certified
public accountants with respect to the Company and the Securities Sub
within the meaning of the Securities Act and the Rules and Regulations and
(ii) stating the conclusions and findings of such firm with respect to the
financial statements and certain financial information contained or
incorporated by reference in the Prospectus.
(h) On the Closing Date, the Representatives shall have received a letter
(the "bring-down letter") from Deloitte & Touche LLP addressed to the
Underwriters and dated the Closing Date confirming, as of the date of the
bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus as of a date not more than three
business days prior to the date of the bring-down letter), the conclusions
and findings of such firm with respect to the financial information and
other matters covered by its letter delivered to the Representatives
concurrently with the execution of this Agreement pursuant to Section
6(g).
(i) The Company shall have furnished to the Representatives a certificate,
dated the Closing Date, of its Chairman of the Board, its President or a
Vice President and its chief operating officer delivered in their capacity
as officers of the Company and stating that (i) such officers have
carefully examined the Registration Statements and the Prospectus and, in
their opinion, the Registration Statements as of their respective
effective dates and the Prospectus, as of its date, did not include any
untrue statement of a material fact and did not omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) since the effective date of the Initial
Registration Statement no event has occurred which should have been set
forth in a supplement or amendment to the Registration Statements or the
Prospectus, (iii) to the best of their knowledge after reasonable
investigation, as of the Closing Date, the representations and warranties
of the Company in this Agreement are true and correct and the Company has
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to the Closing Date, and
(iv) subsequent to December 31, 2003, there has been no material adverse
change in the financial position or results of operation of the Company
and the Securities Sub, or any change, or any development including a
prospective change which could reasonably be expected to be materially
adverse, in or affecting the condition (financial or otherwise), results
of operations, business or prospects of the Company and the Securities Sub
taken as a whole, except as set forth in the Prospectus.
(j) Neither the Company nor the Securities Sub shall have sustained since
the date of the latest audited financial statements included in the
Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set
21
forth or contemplated in the Prospectus and since such date there shall
not have been any change in the capital stock or long-term debt of the
Company or the Securities Sub or any change, or any development involving
a prospective change, in or affecting the business, general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and the Securities Sub, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any such
case described in this paragraph (j), is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Stock on the terms
and in the manner contemplated in the Prospectus.
(k) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Stock or materially and adversely affect or potentially
materially and adversely affect the business or operations of the Company;
and no injunction, restraining order or order of any other nature by any
federal or state court of competent jurisdiction shall have been issued as
of the Closing Date which would prevent the issuance or sale of the Stock
or materially and adversely affect or potentially materially and adversely
affect the business or operations of the Company.
(l) Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum or maximum prices or maximum range for prices shall
have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities or a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States, (iii) the United States shall
have become engaged in hostilities, or the subject of an act of terrorism,
or there shall have been an escalation in hostilities involving the United
States, or there shall have been a declaration of a national emergency or
war by the United States or (iv) there shall have occurred a material
adverse change in general economic, political or financial conditions (or
in the effect of international conditions on the financial markets in the
United States) which event shall make it, in the judgment of the
Representatives, impracticable or inadvisable to proceed with the sale or
delivery of the Stock on the terms and in the manner contemplated in the
Prospectus.
(m) Nasdaq shall have approved the Stock for inclusion, subject only to
official notice of issuance and evidence of satisfactory distribution.
(n) XX Xxxxx shall have received the written agreements, substantially in
the form of Exhibit I hereto, of each officer, director and shareholder of
the Company.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
7. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers, employees, representatives and agents and each person, if any,
who controls any Underwriter within the meaning of the Securities Act
(collectively the "Underwriter Indemnified Parties" and , each an
"Underwriter Indemnified Party") against any loss, claim, damage or
liability, joint or
22
several, or any action in respect thereof, to which that Underwriter
Indemnified Party may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Prospectus ,
either of the Registration Statements or the Prospectus or in any
amendment or supplement thereto, (ii) the omission or alleged omission to
state in any Preliminary Prospectus, either of the Registration Statements
or the Prospectus or in any amendment or supplement thereto a material
fact required to be stated therein or necessary to make the statements
therein not misleading and shall reimburse each Underwriter Indemnified
Party promptly upon demand for any legal or other expenses reasonably
incurred by that Underwriter Indemnified Party in connection with
investigating or preparing to defend or defending against or appearing as
a third party witness in connection with any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based
upon (i) an untrue statement or alleged untrue statement in or omission or
alleged omission from the Preliminary Prospectus, either of the
Registration Statements or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of
any Underwriter specifically for use therein, which information the
parties hereto agree is limited to the Underwriter's Information (as
defined in Section 16), provided, further however, that the foregoing
indemnification agreement with respect to the Preliminary Prospectus shall
not inure to the benefit of any Underwriter from which the person
asserting any such loss, claim, damage or liability purchased Stock, or
any officers, employees, representatives, agents or controlling persons of
such Underwriter, if (i) a copy of the Prospectus (as then amended or
supplemented) was required by law to be delivered to such person at or
prior to the written confirmation of the sale of Stock to such person,
(ii) a copy of the Prospectus (as then amended or supplemented) was not
sent to or given to such person by or on behalf of such Underwriter and
such failure was not due to non-compliance by the Company with Section
4(d) hereof, and (iii) the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability.
The Company shall indemnify and hold harmless the Designated Underwriter
and its officers, employees, representatives and agents and each person,
if any, who controls the Designated Underwriter within the meaning of the
Securities Act (collectively, the "Designated Underwriter Indemnified
Parties," and each a "Designated Underwriter Indemnified Party") against
any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which that Designated Underwriter Indemnified Party
may become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or with the consent of the Company
for distribution to Participants in connection with the Directed Share
Program, (ii) the omission or alleged omission to state in any material
prepared by or with the consent of the Company for distribution to
Participants in connection with the Directed Share Program of a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, (iii) the failure of any Participant to pay for and accept
delivery of Directed Shares that the Participant agreed to purchase; or
(iv) any other loss, claim, damage or liability, or any action in respect
of, related to, arising out of, or in connection with the Directed Share
Program, other than such losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the willful misconduct or gross negligence of the Designated
Underwriter.
23
This indemnity agreement is not exclusive and will be in addition to any
liability which the Company might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity to
each Underwriter Indemnified Party.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company its officers, employees, representatives and agents,
each of its directors and each person, if any, who controls the Company
within the meaning of the Securities Act (collectively the "Company
Indemnified Parties" and each a "Company Indemnified Party") against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company Indemnified Parties may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained
in the Preliminary Prospectus, either of the Registration Statements or
the Prospectus or in any amendment or supplement thereto or (ii) 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, but in each case only to the extent that the untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of that Underwriter
specifically for use therein, and shall reimburse the Company Indemnified
Parties promptly upon demand for any legal or other expenses reasonably
incurred by such parties in connection with investigating or preparing to
defend or defending against or appearing as third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided that the parties hereto hereby agree that
such written information provided by the Underwriters consists solely of
the Underwriter's Information. This indemnity agreement is not exclusive
and will be in addition to any liability which the Underwriters might
otherwise have and shall not limit any rights or remedies which may
otherwise be available at law or in equity to the Company Indemnified
Parties.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 7
except to the extent it has been materially prejudiced by such failure;
and, provided, further, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 7. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that any indemnified
party shall have the right to employ separate counsel in any such action
and to participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i)
the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the indemnifying party and in the reasonable judgment of such counsel
it is advisable for such indemnified party to employ separate counsel or
(iii) the
24
indemnifying party has failed to assume the defense of such action and
employ counsel reasonably satisfactory to the indemnified party, in which
case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar
or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time for
all such indemnified parties, which firm shall be designated in writing by
XX Xxxxx, if the indemnified parties under this Section 7 consist of any
Underwriter Indemnified Party, or by the Company if the indemnified
parties under this Section 8 consist of any Company Indemnified Parties.
Each indemnified party, as a condition of the indemnity agreements
contained in Sections 7(a) and 7(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. Subject to the provisions of Section 7(d) below, no indemnifying
party shall be liable for any settlement of any such action effected
without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding anything contained herein to the contrary, if indemnity
may be sought pursuant to the penultimate paragraph in Section 7(a) hereof
in respect of such action or proceeding, then in addition to such separate
firm for the indemnified parties, the indemnifying party shall be liable
for the reasonable fees and expenses of not more than one separate firm
(in addition to any local counsel) for the Designated Underwriter for the
defense of any losses, claims, damages and liabilities arising out of the
Directed Share Program, and all persons, if any, who control the
Designated Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act.
(d) If at any time an indemnified party shall have requested that an
indemnifying party reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by this Section 7 effected without
its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the request for
reimbursement, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request (other
than for fees and expenses that the indemnifying party is contesting in
good faith) prior to the date of such settlement.
(e) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under Section 7(a)
or, 7(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one hand
and the Underwriters on the other from the offering of the Stock or 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
the Company on the one hand and the Underwriters on the other with respect
to the statements or omissions which resulted in such loss, claim, damage
or liability, or action 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 with respect to such
25
offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters with
respect to the Stock purchased under this Agreement, in each case as set
forth in the table on the cover page of the Prospectus. The 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 the Company on the one hand or the Underwriters on the other, the
intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission;
provided that the parties hereto agree that the written information
furnished to the Company through the Representatives by or on behalf of
the Underwriters for use in any Preliminary Prospectus, either of the
Registration Statements or the Prospectus consists solely of the
Underwriter's Information. The Company and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section
8(f) 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 herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(f) shall be
deemed to include, for purposes of this Section 8(f), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(f), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Stock underwritten by it and distributed to the public were
offered to the public less the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations to contribute as provided in this Section
7(f) are several in proportion to their respective underwriting obligations and
not joint.
8. Termination. The obligations of the Underwriters hereunder may be terminated
by XX Xxxxx, in its absolute discretion by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 6(j), 6(k) or 6(l) have occurred
or if the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
9. Reimbursement of Underwriters' Expenses. If (a) this Agreement shall have
been terminated pursuant to Section 8 or 10, (b) the Company shall fail to
tender the Stock for delivery to the Underwriters for any reason not permitted
under this Agreement, or (c) the Underwriters shall decline to purchase the
Stock for any reason permitted under this Agreement the Company shall reimburse
the Underwriters for the fees and expenses of their counsel and for such other
out-of-pocket expenses as shall have been reasonably incurred by them in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company shall pay the full amount thereof to XX Xxxxx. If this
Agreement is terminated pursuant to Section 10 by reason of the default of one
or more Underwriters, the Company shall not be obligated to reimburse any
defaulting Underwriter on account of those expenses.
10. Substitution of Underwriters. If any Underwriter or Underwriters shall
default in its or their obligations to purchase shares of Stock hereunder and
the aggregate number of shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of shares underwritten, the other Underwriters shall be obligated
severally, in
26
proportion to their respective commitments hereunder, to purchase the shares
which such defaulting Underwriter or Underwriters agreed but failed to purchase.
If any Underwriter or Underwriters shall so default and the aggregate number of
shares with respect to which such default or defaults occur is more than ten
percent (10%) of the total number of shares underwritten and arrangements
satisfactory to the Representatives and the Company for the purchase of such
shares by other persons are not made within forty-eight (48) hours after such
default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 10, (i) the Company
shall have the right to postpone the Closing Dates for a period of not more than
five (5) full business days in order that the Company may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
numbers of shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 11 shall be without liability on the part of
any non-defaulting Underwriter or the Company, except expenses to be paid or
reimbursed pursuant to Sections 5 and 9 and except the provisions of Section 7
shall not terminate and shall remain in effect.
11. Successors; Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the several Underwriters, the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the Underwriter Indemnified Parties, and the
indemnities of the several Underwriters shall also be for the benefit of the
Company Indemnified Parties. It is understood that the Underwriter's
responsibility to the Company is solely contractual in nature and the
Underwriters do not owe the Company, or any other party, any fiduciary duty as a
result of this Agreement.
12. Survival of Indemnities, Representations, Warranties, etc. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the several Underwriters, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Company or any person controlling any of them and shall
survive delivery of and payment for the Stock.
13. Notices. All statements, requests, notices and agreements hereunder shall be
in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to XX Xxxxx Securities Corporation, 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity Capital Markets
(Fax: 000-000-0000), with a copy to the same address, Attention: Legal
Department (Fax: 000-000-0000);
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to Critical Therapeutics, Inc., 00 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000,
27
Attention: Xxxx X. Xxxxx, M.D. (Fax: 000-000-0000), with a copy to Xxxx
and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx X.
Xxxxxx, Esq. (Fax: 000-000-0000);
provided, however, that any notice to an Underwriter pursuant to Section 7
shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto
by the Representatives upon request. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof.
14. Definition of Certain Terms. For purposes of this Agreement, (a) "business
day" means any day on which the New York Stock Exchange, Inc. is open for
trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. Underwriters' Information. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the "Underwriters' Information" consists
solely of the following information in the Prospectus: the last paragraph on the
front cover page and the statements concerning the Underwriters contained in the
third paragraph under the heading "Underwriting."
17. Authority of the Representatives. In connection with this Agreement, you
will act for and on behalf of the several Underwriters, and any action taken
under this Agreement by the Representatives, will be binding on all the
Underwriters.
18. Partial Unenforceability. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or
enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. General. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and the Representatives.
20. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
28
If the foregoing is in accordance with your understanding of the agreement
between the Company, and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
CRITICAL THERAPEUTICS, INC.
By:
-------------------------------
Name:
Title:
Accepted as of the
date first above written:
XX XXXXX & CO., LLC
CIBC WORLD MARKETS
XXXXX XXXXXXX & CO.
LEERINK XXXXX & COMPANY
Acting on their own behalf and
as Representatives of several
Underwriters referred to in the
foregoing Agreement.
By: XX XXXXX & CO., LLC
By:
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Head of Equity Capital Markets
29
SCHEDULE A
Number Number of
of Firm Optional
Shares Shares
to be to be
Name Purchased Purchased
---- --------- ---------
XX Xxxxx & Co., LLC
CIBC World Markets
Xxxxx Xxxxxxx & Co.
Leerink Xxxxx & Company
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Total
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30
SCHEDULE C
[list of shareholders subject to Section 4(h)]
31
EXHIBIT I
LOCK-UP AGREEMENT
Xxxxx 00, 0000
XX Xxxxx Securities Corporation
CIBC World Markets
Xxxxx Xxxxxxx & Co.
Leerink Xxxxx & Company
As representatives of the
several Underwriters
c/o XX Xxxxx Securities Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Critical Therapeutics, Inc. Shares of Common Stock
Dear Sirs:
In order to induce XX Xxxxx Securities Corporation ("XX Xxxxx"), CIBC
World Markets, Xxxxx Xxxxxxx & Co., and Leerink Xxxxx & Company (together with
XX Xxxxx, the "Representatives"), to enter into a certain underwriting agreement
with Critical Therapeutics, Inc., a Delaware corporation (the "Company"), with
respect to the initial public offering (the "Offering") of shares of the
Company's Common Stock, par value $.001 per share ("Common Stock"), the
undersigned hereby agrees that for a period of 180 days following the date of
the final prospectus filed by the Company with the Securities and Exchange
Commission in connection with such public offering (the "Restricted Period"),
the undersigned will not, without the prior written consent of XX Xxxxx,
directly or indirectly, (i) offer, sell, assign, transfer, pledge, contract to
sell, or otherwise dispose of, any shares of Common Stock (including, without
limitation, Common Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations promulgated under the
Securities Act of 1933, as the same may be amended or supplemented from time to
time (such shares, the "Beneficially Owned Shares")) or securities convertible
into or exercisable or exchangeable in Common Stock, (ii) enter into any swap,
hedge or similar agreement or arrangement that transfers in whole or in part,
the economic risk of ownership of the Beneficially Owned Shares or securities
convertible into or exercisable or exchangeable for Common Stock or (iii) engage
in any short selling of the Common Stock.
The restrictions set forth herein shall not apply to any transfer or
disposition of any shares of Common Stock, any Beneficially Owned Shares or
securities convertible into or exercisable or exchangeable for Common Stock: (a)
as a bona fide gift or gifts; (b) as a distribution to partners, members or
stockholders of the undersigned; (c) to any trust, family limited partnership or
family limited liability company for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that any such
transfer shall not involve a disposition for value; or (d) by will or intestacy
to the undersigned's legal representative, heir or immediate family; provided
that, in each case, any transferee, distributee or donee thereof agrees in
writing to be bound by the terms of this Agreement. For purposes of this
agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin. Anything contained herein to the
contrary notwithstanding, any person to
32
whom shares of Common Stock or Beneficially Owned Shares are transferred from
the undersigned shall be bound by the terms of this Agreement.
In addition, the undersigned hereby waives, from the date hereof until the
expiration of the Restricted Period, any and all rights, if any, to request or
demand registration pursuant to the Securities Act of any shares of Common Stock
that are registered in the name of the undersigned or that are Beneficially
Owned Shares. In order to enable the aforesaid covenants to be enforced, the
undersigned hereby consents to the placing of legends and/or stop-transfer
orders with the transfer agent of the Common Stock with respect to any shares of
Common Stock or Beneficially Owned Shares.
This agreement, and the obligations of the undersigned set forth herein,
shall terminate and be of no further force or effect upon the earlier of (a) a
determination of XX Xxxxx or the Company to not proceed with the Offering and
(b) September 15, 2004 if the Offering has not been consummated by such date.
Very truly yours,
-----------------------------------
Name:
Address:
