Exhibit 1.1
12,250,000 Shares of Common Stock
La Jolla Pharmaceutical Company
Common Stock
Underwriting Agreement
January 28, 2005
Pacific Growth Equities, LLC
Xxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
La Jolla Pharmaceutical Company, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to you as the Underwriter (the "UNDERWRITER") an
aggregate of 12,250,000 shares of Common Stock, $0.01 par value per share (the
"COMMON STOCK"), of the Company (the "OFFERED SECURITIES") pursuant to the terms
of this Underwriting Agreement (this "UNDERWRITING AGREEMENT").
1. Representations and Warranties. The Company represents and warrants
to, and agrees with, the Underwriter as set forth below in this Section.
(a) A registration statement on Form S-3 (No. 333-101499) relating
to the Offered Securities, including a form of prospectus (the "INITIAL
REGISTRATION STATEMENT"), has been filed with the Securities and Exchange
Commission (the "COMMISSION") and has been declared effective under the
Securities Act of 1933, as amended (collectively, the "ACT"), and is not, as of
the date hereof, proposed to be amended. For purposes of this Underwriting
Agreement, "EFFECTIVE TIME" with respect to the initial registration statement
means the date and time that the initial registration statement was declared
effective by the Commission. "EFFECTIVE Date" with respect to the initial
registration statement means the date of the Effective Time thereof. The initial
registration statement, at its Effective Time, including all material
incorporated by reference therein, is hereinafter referred to as the
"REGISTRATION STATEMENT." After the execution of this Underwriting Agreement and
within the time required by Rule 424(b) under the Act ("RULE 424(B)"), the
Company will file with the Commission pursuant to Rule 424(b) a prospectus
supplement relating to the Offered Securities (the "PROSPECTUS SUPPLEMENT"),
together with the related prospectus dated December 12, 2002 (the "BASE
PROSPECTUS"). The Prospectus Supplement and the Base Prospectus will be in the
form furnished to the Underwriter prior to the date hereof, or, to the extent
not completed at the time of execution of this Underwriting Agreement, shall
contain only such specific additional information and other changes as the
Company has advised the Underwriter. The Prospectus Supplement and the Base
Prospectus, each in the form furnished to the Underwriter in accordance with the
foregoing sentence for use in connection with the offering of the Offered
Securities, including all material incorporated by reference therein, are
hereinafter referred to, collectively, as the "PROSPECTUS." No document has been
or will be prepared or distributed in
reliance on Rule 434 under the Act. References herein to amendments or
supplements to the Registration Statement or the Prospectus shall mean and
include any document filed with the Commission on or after the date of this
Underwriting Agreement that are incorporated or deemed to be incorporated by
reference in the Registration Statement or the Prospectus pursuant to the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"). The Company
meets the requirements for the use of Form S-3 under the Act.
(b) On the Effective Date of the Registration Statement, the
Registration Statement complied in all material respects with the requirements
of the Act and the rules and regulations of the Commission (the "RULES AND
REGULATIONS") and did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. On the date of this Underwriting
Agreement, the Registration Statement and the Base Prospectus comply, and at the
time of filing of the Prospectus Supplement pursuant to Rule 424(b), the
Registration Statement and the Prospectus will comply, in all material respects
with the requirements of the Act and the Rules and Regulations, and none of such
documents contains, or will contain, any untrue statement of a material fact or
omits, or will omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with information furnished herein or in writing
to the Company by or on behalf of the Underwriter for inclusion in the
Registration Statement or the Prospectus.
(c) Each of the Company and La Jolla Ltd. (the "SUBSIDIARY") has
been duly formed and is a validly existing corporation in good standing under
the laws of the jurisdiction in which it is chartered or organized, with full
power and authority (corporate and other) to own, lease and operate, as the case
may be, its properties and conduct its business as described in the Prospectus;
and is duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing might not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the financial condition, business,
prospects, properties, or results of operations of the Company (a "MATERIAL
ADVERSE EFFECT"). The Company has not received a written notification that any
proceeding has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification, and to the Company's knowledge, no proceeding has been instituted
in any such jurisdiction, revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification. The Company
is in possession of and operating in material compliance with all
authorizations, licenses, certificates, consents, orders and permits from state,
federal and other regulatory authorities that are material to the conduct of its
business, all of which are valid and in full force and effect. Neither the
Company nor the Subsidiary is (A) in violation of its charter or bylaws (or
comparable governing document), (B) in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness, or in any lease, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company or the Subsidiary is a party or by
which it or the Subsidiary or their respective properties may be bound, or (C)
in violation of any law, order, rule, regulation, writ, injunction, judgment or
decree of any court, government or governmental
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agency or body, domestic or foreign, having jurisdiction over the Company or the
Subsidiary or over their respective properties of which either has knowledge,
except, in the case of clauses (B) and (C), where such breaches, defaults or
violations might not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other than
the Subsidiary. The Subsidiary does not currently conduct any business, has no
employees, does not own any material assets and has no material liabilities.
(d) The Company has all requisite corporate power and authority to
enter into this Underwriting Agreement and perform the transactions contemplated
hereby. This Underwriting Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement on the part of the
Company, enforceable in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles. The performance of this Underwriting Agreement and the
consummation of the transactions herein contemplated will not result in (A) any
violation of the charter or bylaws (or comparable governing document) of the
Company or the Subsidiary or (B) a breach or violation of any of the terms and
provisions of, or constitute a default under (i) any bond, debenture, note or
other evidence of indebtedness, or under any lease, including without limitation
any sale and leaseback arrangement, contract, indenture, mortgage, deed of
trust, loan agreement, joint venture or other agreement or instrument to which
the Company or the Subsidiary is a party or by which it or the Subsidiary or
their respective properties may be bound or (ii) any law, order, rule,
regulation, writ, injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or the Subsidiary or over their respective properties, except in the
case of clauses (B)(i) and (B)(ii), such breaches, defaults or violations which
might not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or the Subsidiary or
over their respective properties is required for the execution and delivery of
this Underwriting Agreement and the consummation by the Company of the
transactions herein contemplated, except such consents (i) that will be obtained
prior to the Closing and (ii) as may be required under the Act, the Exchange Act
(if applicable), the Rules and Regulations or under state or other securities or
blue sky laws, all of which requirements will be satisfied in all material
respects at or prior to the Closing.
(e) Except as disclosed in the Registration Statement or the
Prospectus, there are no actions, suits, claims, investigations or proceedings
pending or, to the Company's knowledge, threatened to which the Company or, to
the Company's knowledge, the Subsidiary or any of their respective directors or
officers is a party or of which any of their respective properties is subject at
law or in equity, or before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency, which,
if adversely decided, would be reasonably likely to result in a judgment, decree
or order having a Material Adverse Effect or prevent consummation of the
transactions contemplated hereby. There are no agreements, contracts, leases or
documents of the Company or the Subsidiary of a character required to be
described or referred to in the Registration Statement or the Prospectus by the
Act,
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the Exchange Act or the Rules and Regulations which have not been accurately
described in all material respects in the Registration Statement or the
Prospectus.
(f) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, and have
not been issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities. The authorized and outstanding
capital stock of the Company as set forth in the Prospectus conforms in all
material respects to the statements relating thereto contained in the
Registration Statement and the Prospectus (and such statements correctly state
the substance of the instruments defining the capitalization of the Company).
The Offered Securities have been duly authorized for issuance and sale to the
Underwriter pursuant to this Underwriting Agreement and, when issued and
delivered by the Company against payment therefor in accordance with the terms
of this Underwriting Agreement, will be duly and validly issued and fully paid
and nonassessable, and will be sold free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest. No preemptive right, co-sale
right, registration right, right of first refusal or other similar right of
stockholders exists with respect to any of the Offered Securities or the
issuance and sale thereof, other than those that have been expressly waived
prior to the date hereof, those that will have been expressly waived prior to
the Closing Date (as defined in Section 2 below), and those that will
automatically expire upon or will not apply to the consummation of the
transactions contemplated on the Closing Date. No further approval or
authorization of any stockholder, the Board of Directors of the Company or
others is required for the issuance and sale or transfer of the Offered
Securities, except as may be required under state or other securities or blue
sky laws. Except as disclosed in the Prospectus or the financial statements of
the Company, and the related notes thereto, included or incorporated by
reference in the Prospectus, the Company does not have outstanding any options
to purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such options,
rights, registration rights, convertible securities or obligations. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised thereunder,
set forth in the Prospectus accurately and fairly presents, in all material
respects, the information required to be shown with respect to such plans,
arrangements, options and rights.
(g) Since January 1, 2002, the Company has duly filed on a timely
basis with the Commission all reports, registration statements and other
documents required by the Act, the Exchange Act, and the Rules and Regulations.
All of such reports, registration statements and other documents, when they were
filed with the Commission, conformed in all material respects to the
requirements of the Act, the Exchange Act, the Rules and Regulations, and the
provisions of the Xxxxxxxx-Xxxxx Act of 2002 (the "XXXXXXXX-XXXXX ACT") and
rules and regulations promulgated thereunder (to the extent that the provisions
of such act and rules and regulations promulgated thereunder were effective at
the time that such reports, registration statements and other documents were
filed), to the extent applicable. None of such reports, registration statements
or other documents 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.
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(h) Ernst & Young LLP, whose report on the financial statements of
the Company is filed with the Commission and is incorporated by reference in the
Registration Statement and the Prospectus, are independent public accountants as
required by the Act and the Rules and Regulations. Since May 6, 2003, except as
described in the Registration Statement and as preapproved in accordance with
the requirements set forth in Section 10A of the Exchange Act, Ernst & Young LLP
has not engaged in any "prohibited activities" (as defined in Section 10A of the
Exchange Act) on behalf of the Company.
(i) The financial statements of the Company, together with the
related schedules and notes, included in the Registration Statement and the
Prospectus: (i) present fairly, in all material respects, the financial position
of the Company as of the dates indicated and the results of operations and cash
flows of the Company for the periods specified; (ii) have been prepared in
compliance with requirements of the Act and the Rules and Regulations and in
conformity with generally accepted accounting principles in the United States
applied on a consistent basis during the periods presented and the schedules
included in the Registration Statement present fairly, in all material respects,
the information required to be stated therein; (iii) comply with the antifraud
provisions of the Federal securities laws; and (iv) describe accurately, in all
material respects, the controlling principles used to form the basis for their
presentation. There are no financial statements (historical or pro forma) that
are required to be included in the Registration Statement and the Prospectus
that are not included as required by the Act, the Exchange Act and/or the Rules
and Regulations.
(j) Subsequent to the dates as of which information is given in the
Prospectus, there has not been (i) any change, development or event that might
reasonably be expected to result in a Material Adverse Effect, (ii) any
transaction that is material to the Company, (iii) any obligation, direct or
contingent, that is material to the Company, incurred by the Company or the
Subsidiary, (iv) any change in the capital stock or outstanding indebtedness of
the Company that is material to the Company, (v) any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company, or (vi) any
loss or damage (whether or not insured) to the property of the Company that has
been sustained or will have been sustained that could reasonably be expected to
have a Material Adverse Effect.
(k) Except as set forth in the Registration Statement or the
Prospectus: (i) the Company has good and marketable title to all properties and
assets described in the Registration Statement and Prospectus as owned by it,
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest, other than such as might not reasonably be expected to have
a Material Adverse Effect; (ii) the agreements to which the Company is a party
described in the Registration Statement and the Prospectus are valid agreements,
enforceable by the Company, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles and, to the Company's knowledge, the other contracting
party or parties thereto are not in material breach or material default under
any of such agreements; and (iii) the Company has valid and enforceable leases,
including without limitation any leases that are the subject of any sale and
leaseback arrangement, for all properties described in the Registration
Statement and the Prospectus as leased by it, except as the enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights generally or by
general
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equitable principles. Except as set forth in the Registration Statement and the
Prospectus and for such property (real or personal) that may be required for the
commercial production of Riquent(R), if any, the Company owns or leases all such
properties as are necessary to its operations as now conducted or as proposed to
be conducted.
(l) The Company and the Subsidiary have timely filed all Federal,
state and foreign income and franchise tax returns required to be filed by the
Company and the Subsidiary on or prior to the date hereof, and have paid all
taxes shown thereon as due, and there is no tax deficiency that has been or, to
the Company's knowledge, might be asserted against the Company or the Subsidiary
that might reasonably be expected to have a Material Adverse Effect. All tax
liabilities are adequately provided for on the books of the Company.
(m) The Company has established and 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 in the United States 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.
(n) Except as described in the Prospectus, the Company's Board of
Directors has validly appointed an Audit Committee whose composition satisfies
the requirements of Rule 4350(d)(2) of the Rules of the National Association of
Securities Dealers, Inc. (the "NASD RULES") and the Board of Directors and/or
the Audit Committee has adopted a charter that satisfies the requirements of
Rule 4350(d)(1) of the NASD Rules. The Audit Committee has reviewed the adequacy
of its charter within the past twelve months.
(o) The Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15 and 15d-15 under the
Exchange Act). Such disclosure controls and procedures are designed to ensure
that material information relating to the Company, including its consolidated
subsidiary, is made known to the Company's principal executive officer and
principal financial officer by others within the Company. As of the end of the
Company's last completed third fiscal quarter, such disclosure controls and
procedures were effective to perform the functions for which they were
established, and the Company will use commercially reasonable efforts to ensure
that the Company's disclosure controls and procedures remain effective to
perform the functions for which they were established. Based on the evaluation
of such disclosure controls and procedures undertaken after completion of the
Company's third fiscal quarter, the Chief Executive Officer and the principal
financial officer advised the Company's independent auditor and the Audit
Committee of the Board of Directors of: (i) any significant deficiencies and
material weaknesses in the design or operation of internal controls over
financial reporting which were reasonably likely to adversely affect the
Company's ability to record, process, summarize, and report financial
information; and (ii) any fraud, whether or not material, that involved
management or other employees who had a significant role in the Company's
internal controls over financial reporting. As of the date hereof, to the actual
knowledge of the Chief Executive Officer and the principal financial officer,
since the date of the most recent evaluation of such disclosure controls and
procedures, there have been no
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changes in internal controls over financial reporting that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting. The principal executive officer and the
principal financial officer of the Company have made all certifications required
by the Xxxxxxxx-Xxxxx Act and any related rules and regulations promulgated by
the Commission, and the statements contained in any such certifications are
complete and correct. The Company is in compliance in all material respects with
all provisions of the Xxxxxxxx-Xxxxx Act that are effective and applicable to
the Company, except for the requirements of the Xxxxxxxx-Xxxxx Act which are not
yet required to be complied with by the Company. The Company has established
procedures to implement timely additional rules and regulations applicable to
the Company that may be promulgated by the Commission pursuant to the
Xxxxxxxx-Xxxxx Act.
(p) Based on the evaluation of its internal control over financial
reporting, the Company has no reason to believe that it will not be in material
compliance, on a timely basis, with Section 404, entitled "Management's
Assessment of Internal Controls," of the Xxxxxxxx-Xxxxx Act and the rules and
regulations promulgated thereunder, or any successor provisions.
(q) The Company maintains insurance with insurers of recognized
financial responsibility of the types and in the amounts generally deemed
adequate for its business and consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect;
within the last five (5) years, the Company has not been refused any insurance
coverage sought or applied for; and, unless the Company materially increases the
scope of its operations, the Company has no reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that might not reasonably be expected to have
a Material Adverse Effect.
(r) The Company has not sustained since the date of the latest
financial statements included in the Prospectus any losses or interferences 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 Registration
Statement and the Prospectus or other than any losses or interferences which
might not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(s) No labor dispute with employees of the Company exists or, to the
Company's knowledge, is imminent which might reasonably be expected to have a
Material Adverse Effect. No collective bargaining agreement exists with any of
the Company's employees and, to the Company's knowledge, no such agreement is
imminent.
(t) The Company owns or possesses adequate rights to use all
patents, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names, copyrights and other information (collectively,
"INTELLECTUAL PROPERTY") that are necessary to conduct its business as described
in the Registration Statement and the Prospectus. The Company has not received
any notice of, and has no knowledge of, (i) any infringement of or conflict with
asserted
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rights of the Company by others with respect to any Intellectual Property or
(ii) any infringement of or conflict with asserted rights of others by the
Company with respect to any Intellectual Property which, in either case,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, might reasonably be expected to have a Material Adverse
Effect. To the Company's knowledge, none of the patent rights owned or licensed
by the Company is unenforceable or invalid, except such unenforceability or
invalidity which, individually or in the aggregate, might not reasonably be
expected to result in a Material Adverse Effect. The Company has duly and
properly filed or caused to be filed with the U.S. Patent and Trademark Office
(the "PTO") and appropriate foreign and international patent authorities all
patent applications described or referred to in the Prospectus, and has complied
with the PTO's duty of candor and disclosure for each of the Company's U.S.
patent applications. The Company has no knowledge of any facts that would
preclude it from having clear title to its patent applications referenced in the
Prospectus. The Company has not licensed any patent rights to third parties.
(u) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on the Nasdaq National Market, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq National Market. Except as described in the Registration
Statement and the Prospectus, the Company has not received any notification that
the Commission or the National Association of Securities Dealers, Inc. (the
"NASD") is contemplating terminating such registration or listing.
(v) The Company is not and, after giving effect to the offering and
sale of the Offered Securities, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT").
(w) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the Offered
Securities, will not distribute, any offering materials in connection with the
offering and sale of the Offered Securities other than the Registration
Statement, the Prospectus or other materials, if any, permitted by the Act and
the Rules and Regulations.
(x) Neither the Company nor, to its knowledge, any of its affiliates
has taken, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Offered
Securities. The Company acknowledges that the Underwriter may engage in passive
market making transactions in the Offered Securities on the Nasdaq National
Market in accordance with Regulation M under the Exchange Act.
(y) The Company is in compliance in all respects with all currently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"), except where a failure to so comply might not reasonably be expected
to have a Material Adverse Effect; to the Company's knowledge, no unwaivable
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company would have any
liability; the
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Company has not incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder (the
"CODE"); and each "pension plan" for which the Company would have any 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.
(z) Except as set forth in the Registration Statement and
Prospectus, (i) the Company is in material compliance with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("ENVIRONMENTAL LAWS")
which are applicable to its business, (ii) the Company has received no notice
from any governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the Registration
Statement and Prospectus, (iii) the Company will not be required to make future
material capital expenditures to comply with Environmental Laws, unless it
materially increases the scope of its operations, including without limitation
in connection with the potential commercial production of its drug candidates if
any are approved, and (iv) no property that is owned, leased or occupied by the
Company has been designated a Superfund site pursuant to the Comprehensive
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section
9601, et seq.), or otherwise designated as a contaminated site under applicable
state or local law.
(aa) The Company has caused each executive officer and director
listed on Schedule I hereto to furnish to the Underwriter, on or prior to the
date of this Underwriting Agreement, a letter or letters, in form and substance
satisfactory to the Underwriter (the "LOCK-UP AGREEMENTS"), pursuant to which
such person shall agree not to, directly or indirectly, for a period commencing
on the date of this Underwriting Agreement and ending on the close of business
on the ninetieth (90th) day after the date of the Prospectus Supplement (the
"LOCK-UP PERIOD"), offer to sell, pledge, contract to sell, grant any option to
purchase, grant a security interest in, hypothecate or otherwise sell or dispose
of (each, a "DISPOSITION") any shares of Common Stock (including without
limitation, shares of Common Stock that may be deemed to be beneficially owned
by such person in accordance with the Rules and Regulations and shares of Common
Stock that may be issued upon the exercise of a stock option or warrant) or any
securities convertible into, derivative of or exchangeable or exercisable for
Common Stock (collectively, the "SECURITIES"), owned directly by such person or
as to which such person has the power of disposition, in any such case whether
owned as of the date of such letter or acquired thereafter, except for such
Dispositions that are expressly permitted by the Lock-Up Agreements. The
foregoing restriction has been expressly agreed to preclude the holder of the
Securities from engaging in any hedging or other transaction, as more fully
described in the Lock-up Agreements. Furthermore, such person has also agreed
and consented to the entry of stop transfer instructions with the Company's
transfer agent against the transfer of the Securities held by such person except
in compliance with this restriction. The Company has provided to counsel for the
Underwriter true, accurate and complete copies of all of the Lock-up Agreements
currently in effect or effected hereby. The Company hereby represents and
warrants that it will not release, prior to the expiration of the Lock-up
Period, any of its officers or directors from any Lock-up Agreements currently
existing or hereafter effected without the prior written consent of Pacific
Growth Equities, LLC.
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(bb) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
except as disclosed in the Registration Statement and the Prospectus.
(cc) To the Company's knowledge, other than Xxxxxxxxx Xxxxxxxx,
Columbia Xxxxxx Asset Management L.P. and Mazama Capital Management, Inc., there
are no affiliations or associations between any member of the NASD and any of
the Company's officers, directors or 5% or greater security holders, except as
set forth in the Registration Statement or the Prospectus.
(dd) The Company has not sold or issued any shares of Common Stock
during the six-month period preceding the date of the Prospectus, including any
sales pursuant to Rule 144A under, or Regulations D or S of, the Act, other than
shares issued in a public offering pursuant to a valid and effective
registration statement filed with the Commission or shares issued pursuant to
employee benefit plans, qualified stock option plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
(ee) To the Company's knowledge, after reasonable inquiry, the
clinical, pre-clinical and other studies and tests conducted by or on behalf of
or sponsored by the Company or in which the Company or its product candidates
have participated that are described in the Prospectus or the results of which
are referred to in the Prospectus were and, if still pending, are being
conducted in accordance with standard medical and scientific research
procedures. The descriptions in the Prospectus of the results of such studies
and tests are accurate and complete in all material respects and fairly present
the data derived from such studies and tests, and the Company has no knowledge
of any other "large well-controlled" studies or tests the aggregate results of
which are inconsistent with or otherwise call into question the results
described or referred to in the Prospectus. Except to the extent disclosed in
the Registration Statement and the Prospectus, the Company and the Subsidiary
have operated and currently are in compliance in all material respects with all
applicable rules, regulations and policies of the U.S. Food and Drug
Administration and comparable drug regulatory agencies outside of the United
States (collectively, the "REGULATORY AUTHORITIES"); and, except to the extent
disclosed in the Registration Statement and the Prospectus, the Company has not
received any notices or other correspondence from the Regulatory Authorities or
any other governmental agency requiring the termination, suspension or
modification of any clinical or pre-clinical studies or tests that are described
in the Prospectus or the results of which are referred to in the Prospectus.
Any certificate signed by any officer of the Company and delivered to the
Underwriter or counsel for the Underwriter pursuant to this Underwriting
Agreement on the Closing Date shall be deemed to be a representation and
warranty by the Company to the Underwriter as to the matters covered by such
certificate. The Company acknowledges that the Underwriter and, for purposes of
the opinions to be delivered to the Underwriter pursuant to Section 6 of this
Underwriting Agreement, counsel for the Company and counsel for the Underwriter
will rely upon the accuracy and truth of the foregoing representations, and the
Company hereby consents to such reliance.
10
2. 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 the
Underwriter, and the Underwriter agrees to purchase from the Company, at a
purchase price of $1.31600 per share, the Offered Securities.
The Company will deliver the Offered Securities to the Underwriter against
payment of the purchase price in cash by wire transfer of immediately available
funds to an account or accounts of the Company, which accounts have been
designated by the Company in writing at least one day prior to the Closing, at
the office of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0 Xxxx Xxxxx, Xxxxxx, Xxxxxxxxxx, at
7:00 A.M., Pacific Standard Time, on February 2, 2005, or at such other time not
later than seven full business days thereafter as the Underwriter and the
Company may mutually agree, such time being herein referred to as the "CLOSING
DATE." The certificates for the Offered Securities so to be delivered will be in
definitive form, in such denominations and registered in such names as the
Underwriter requests and (i) will be made available for checking and packaging
at the above office of Xxxxxx, Xxxx & Xxxxxxxx LLP, at least 24 hours prior to
the Closing Date or (ii) delivered through the facilities of the Depositary
Trust Company (DTC) for the account of the Underwriter.
3. Offering by Underwriter. It is understood that the Underwriter
proposes to offer the Offered Securities for sale to the public as set forth in
the Prospectus.
4. Certain Agreements of the Company. The Company agrees with the
Underwriter:
(a) (i) to furnish such information as may be required and otherwise
to cooperate in qualifying the Offered Securities for offering and sale under
the securities or blue sky laws of such states as the Underwriter may designate
and to maintain such qualifications in effect so long as required for the
distribution of the Offered Securities; provided that the Company shall not be
required to qualify as a foreign corporation or to consent to the service of the
process under the laws of any such jurisdiction (except service of process with
respect to the offering and sale of the Offered Securities); and (ii) to
promptly advise the Underwriter of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Offered
Securities for sale in any jurisdiction or the initiation or threat of any
proceeding for such purpose;
(b) to make available to the Underwriter, as soon as practicable
after the execution and delivery of this Underwriting Agreement, and thereafter
from time to time to furnish to the Underwriter, as many copies of the
Prospectus (or of the Prospectus as amended or supplemented if the Company shall
have made any amendments or supplements thereto after the effective date of the
Registration Statement) as the Underwriter may reasonably request for the
purposes contemplated by the Act; in case the Underwriter is required to deliver
a prospectus after the nine-month period referred to in Section 10(a)(3) of the
Act in connection with the sale of the Offered Securities, the Company will
prepare promptly upon request such amendment or amendments to the Registration
Statement and such prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act;
11
(c) to advise the Underwriter promptly, confirming such advice in
writing (if requested by the Underwriter), (i) when any post-effective amendment
to the Registration Statement becomes effective and (ii) when the Prospectus is
filed with the Commission pursuant to Rule 424(b) under the Act (which the
Company agrees to file in a timely manner under such Rule);
(d) to advise the Underwriter promptly, confirming such advice in
writing (if requested by the Underwriter), of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information with respect thereto, or notice of institution of
proceedings for, or the entry of a stop order suspending the effectiveness of
the Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to make every
commercially reasonable effort to obtain the lifting or removal of such order as
soon as possible; to advise the Underwriter promptly of any proposal to amend or
supplement the Registration Statement or the Prospectus and, for so long as the
delivery of the Prospectus is required in connection with the offer or sale of
the Offered Securities, to file no such amendment or supplement to which the
Underwriter shall object in writing;
(e) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) of the Act;
(f) (i) to the extent not publicly filed, to furnish to the
Underwriter for a period of two (2) years from the date of this Underwriting
Agreement copies of any reports or other communications which the Company shall
send to its stockholders and (ii) such other information publicly disclosed by
the Company as the Underwriter may reasonably request regarding the Company, in
each case as soon as reasonably practicable after such reports, communications,
documents or information become available, or are requested by the Underwriter;
(g) to advise the Underwriter promptly of the happening of any event
known to the Company within the time during which a Prospectus relating to the
Offered Securities is required to be delivered under the Act which would require
the making of any change in the Prospectus then being used, so that the
Prospectus would not include an untrue statement of material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading and, during such
time, to prepare and furnish, at the Company's expense, to the Underwriter
promptly such amendments or supplements to such Prospectus as may be necessary
to reflect any such change and to furnish the Underwriter a copy of such
proposed amendments or supplements before filing any such amendment or
supplement with the Commission;
(h) to furnish the Underwriter five (5) conformed copies of the
Initial Registration Statement and of all amendments thereto (including all
exhibits thereto);
(i) to apply the net proceeds from the sale of the Offered
Securities in the manner set forth under the caption "Use of Proceeds" in the
Prospectus;
12
(j) to pay all costs, expenses, fees and taxes in connection with
(i) the preparation and filing of the Registration Statement, each preliminary
prospectus, if applicable, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriter (including costs of mailing and shipment), (ii) the registration,
issuance, sale and delivery of the Offered Securities, (iii) the printing of
this Underwriting Agreement, any Powers of Attorney and any closing documents
(including compilations thereof) and the reproduction and/or printing and
furnishing of copies of each thereof to the Underwriter (including costs of
mailing and shipment), (iv) the qualification of the Offered Securities for
offering and sale under state and foreign laws and the determination of their
eligibility for investment under state and foreign laws as aforesaid (including
associated filing fees and the reasonable legal fees and disbursements of
counsel for the Underwriter) and the printing and furnishing of copies of any
blue sky surveys or legal investment surveys to the Underwriter, (v) any listing
of the Offered Securities on any securities exchange or qualification of the
Offered Securities for quotation on the Nasdaq National Market and any
registration thereof under the Exchange Act, (vi) review of the public offering
of the Offered Securities by the NASD (including associated filing fees and the
reasonable legal fees and disbursements of counsel for the Underwriter), (vii)
the costs and expenses of the Company relating to presentations or meeting
undertaken in connection with the marketing of the offer and sale of the Offered
Securities to prospective investors and the Underwriter's sales force,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations, travel, lodging and other expenses
incurred by the officers of the Company and any such consultants, and the cost
of any aircraft chartered in connection with the road show and (viii) the
performance of the other obligations of the Company hereunder; provided,
however, that except as otherwise set forth in this Underwriting Agreement, the
Underwriter shall pay its own costs and expenses, including the costs and
expenses of counsel for the Underwriter;
(k) for so long as the delivery of the Prospectus is required in
connection with the offer or sale of the Offered Securities, to furnish to the
Underwriter a reasonable period of time before filing with the Commission a copy
of any document proposed to be filed pursuant to Section 13, 14 or 15(d) of the
Exchange Act and to not make any filing to which the Underwriter reasonably
objects;
(l) to not take, directly or indirectly, any action designed to or
which may constitute or which might reasonably be expected to cause or result,
under the Exchange Act or otherwise, in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Offered Securities;
(m) not to, during the Lock-Up Period, without the prior written
consent of Pacific Growth Equities, LLC, effect the Disposition of, directly or
indirectly, any Securities other than the sale of the Offered Securities
hereunder; provided that nothing in this Underwriting Agreement shall prevent
the Company's issuance of equity securities under the Company's currently
authorized equity incentive plans, including its employee stock purchase plan,
or upon exercise of outstanding equity awards;
(n) to file timely all reports and any definitive proxy or
information statement required to be filed by the Company with the Commission in
order to comply with the Exchange
13
Act and the Rules and Regulations subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in connection with the
offering or sale of the Offered Securities, and to promptly notify the
Underwriter of such filing;
(o) if, at the time this Underwriting Agreement is executed and
delivered, it is necessary for a post-effective amendment to the Registration
Statement or an additional registration statement to be declared effective
before the offering of the Offered Securities may commence, the Company will
endeavor to cause such post-effective amendment or additional registration
statement to become effective as soon as possible and will advise the
Underwriter promptly and, if requested by the Underwriter, will confirm such
advice in writing, when such post-effective amendment or additional registration
statement has become effective; and
(p) to use all commercially reasonable efforts to maintain the
quotation of the Offered Securities on the Nasdaq National Market and to file
with the Nasdaq National Market all documents and notices required by the Nasdaq
National Market of companies that have securities traded in the over-the-counter
market and quotations for which are reported by the Nasdaq National Market.
5. Reimbursement of Underwriter's Expenses. If the Offered Securities
are not delivered for any reason other than the termination of this Underwriting
Agreement pursuant to the second paragraph of Section 7 hereof or the default by
the Underwriter in its obligations hereunder, the Company agrees, in addition to
paying the amounts described in Section 4(j) hereof, to reimburse the
Underwriter for all of its reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of its counsel.
6. Conditions of the Obligations of the Underwriter. The obligations of
the Underwriter to purchase and pay for the Offered Securities on the Closing
Date are subject to the accuracy of the representations and warranties on the
part of the Company herein as of the Closing Date, to the accuracy of the
statements of Company officers made pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Underwriter shall have received, on the Closing Date, a
comfort letter, dated as of the Closing Date addressed to the Underwriter, in
form and substance satisfactory to the Underwriter, from Ernst & Young LLP
confirming that they are independent public accountants within the meaning of
the Act and the related published Rules and Regulations, and containing such
other statements and information as are ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial and statistical information contained in or incorporated by
reference in the Registration Statements and the Prospectus.
(b) The Registration Statement shall have become effective under the
Act prior to the date of this Underwriting Agreement. The Prospectus shall have
been filed with the Commission in accordance with the Rules and Regulations and
Section 4(c) of this Underwriting Agreement. Prior to the Closing Date, no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have
14
been instituted or, to the knowledge of the Company or the Underwriter, shall be
contemplated by the Commission.
(c) Between the time of execution of this Underwriting Agreement and
the Closing Date (i) no change, development or event shall have occurred or
become known to the Company, that might be reasonably expected to result in a
Material Adverse Effect (other than as specifically described in the
Registration Statement and Prospectus) and (ii) no transaction which is material
to the Company and the Subsidiary shall have been entered into by the Company,
except as required or permitted by this Underwriting Agreement.
(d) The Underwriter shall have received, on the Closing Date, an
opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the Company, addressed to
the Underwriter, dated as of the Closing Date, and in form reasonably
satisfactory to Xxxxxx Xxxx Nemerovski Xxxxxx Xxxx & Xxxxxx, A Professional
Corporation, counsel for the Underwriter, stating that:
1. The Company is a validly existing corporation in good standing
under the laws of the State of Delaware with the requisite corporate power
and authority to own its properties and conduct its business as described
in the Company's Registration Statement on Form S-3 (Registration No.
333-101499) filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
2. To such counsel's knowledge, other than La Jolla Ltd., the
Company does not own or control, directly or indirectly, any corporation,
association or entity.
3. The Company has an authorized capitalization as set forth in the
Prospectus as of the date set forth therein. The Offered Securities being
issued in the transaction have been duly authorized and, when issued and
delivered to and paid for by the Underwriters in accordance with the terms
of this Underwriting Agreement, will be validly issued and fully paid and
nonassessable. The issuance of the Offered Securities is not subject to
any preemptive right, co-sale right, registration right which applies to
the transactions contemplated by this Underwriting Agreement, right of
first refusal or similar right contained in an agreement listed on an
exhibit to such opinion (each, an "Agreement").
4. The Company has the corporate power and authority to execute and
deliver this Underwriting Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Underwriting
Agreement by the Company have been duly authorized by all necessary
corporate action. This Underwriting Agreement has been duly executed and
delivered by the Company.
5. The execution, delivery and performance by the Company of this
Underwriting Agreement: (i) do not and will not violate the charter or
bylaws of the Company; and (ii) do not and will not breach the terms of
(a) any Agreement or (b) to our knowledge any order, judgment or decree of
any court or other agency of government identified to us in a certificate
(attached hereto) of the Company as constituting all orders, judgments or
decrees binding on the Company, in either case based solely upon our
review of such agreements, orders, judgments or decrees.
15
6. The execution and delivery by the Company of this Underwriting
Agreement and the issuance by the Company of the Offered Securities to the
Underwriters: (i) do not and will not violate any law, rule or regulation
currently in effect of the State of Delaware or the United States of
America applicable to the Company and (ii) do not and will not require any
filing with or approval of any governmental authority or regulatory body
of the State of Delaware or the United States of America under any law or
regulation of the State of Delaware or the United States of America
applicable to the Company or the Delaware General Corporation Law, except
for such filings or approvals as already have been made or obtained under
the Securities Act of 1933, as amended (the "Securities Act"). Other than
the last clause of the preceding sentence, such counsel shall express no
opinion in this paragraph regarding federal or state securities laws.
7. Insofar as the statements in the Prospectus under the captions
"Description of Capital Stock" and "Underwriting" constitute a summary of
the documents referred to therein, such statements fairly present in all
material respects the information required to be disclosed under the
Securities Act and the rules and regulations of the Securities and
Exchange Commission relating to registration statements on Form S-3 and
prospectuses.
8. Any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424 under the Securities Act has been made in the manner
and within the time period required by such Rule 424.
9. The Company is not, and after giving effect to the sale of the
Offered Securities, will not be an "investment company" that is required
to be registered under the Investment Company Act. For purposes of this
opinion, "investment company" shall have the meaning ascribed to such term
in the Investment Company Act.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the independent auditors of the Company, representatives of
the Underwriter and Underwriter's counsel at which the contents of the
Prospectus Supplement and related matters were discussed. Because the purpose of
such counsel's professional engagement is not to establish or confirm factual
matters and because the scope of its examination of the affairs of the Company
does not permit it to verify the accuracy, completeness or fairness of the
statements set forth in the Registration Statement or the Prospectus, it is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus except insofar as such statements specifically
relate to it and except as expressly stated in opinion number 7 above. On the
basis of the foregoing, and except for the financial statements and schedules,
statistical information and other information of an accounting or financial
nature included or incorporated by reference therein, as to which such counsel
shall express no opinion or belief, such counsel shall state that no facts have
come to its attention that led it to believe: (a) that the Registration
Statement, at the time it became effective (which, for purposes of this letter,
shall have the meaning set forth in Rule 158(c) under the Securities Act), or
the Prospectus, as of its date or as of the Closing Date, were not appropriately
responsive in all
16
material respects to the requirements of the Securities Act and the applicable
rules and regulations of the Commission thereunder; or (b)(i) that the
Registration Statement, at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein, or necessary to make the statements therein not misleading or
(ii) that the Prospectus, as of its date or as of the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(e) The Underwriter shall have received, on the Closing Date, the
following opinion of Xxxxxxxx & Xxxxxxxx, patent counsel for the Company, dated
as of the Closing Date, addressed to the Underwriter and in form reasonably
satisfactory to Xxxxxx Xxxx Nemerovski Xxxxxx Xxxx & Xxxxxx, A Professional
Corporation, counsel for the Underwriter, stating that: (1) such counsel has
acted as patent counsel to the Company in the preparation, filing and/or
prosecution of the patents and patent applications owned by the Company (the
"PATENT RIGHTS" or the "COMPANY'S PATENTS") and (2) in connection with such
counsel's opinion, it has examined (i) the statements in the Prospectus
Supplement under the caption "Risk Factors - Our success in developing and
marketing our drug candidates depends significantly on our ability to obtain
patent protection for Riquent and any other developed products. In addition, we
will need to successfully preserve our trade secrets and operate without
infringing on the rights of others" and (ii) the statements in the Company's
annual report on Form 10-K for the period ended December 31, 2003, filed with
the Commission on March 15, 2004 (the "FORM 10-K"), under the captions "Item 1.
Business -- Patents and Proprietary Technologies" and "Risk Factors - Our
success in developing and marketing our drug candidates depends significantly on
our ability to obtain patent protection for Riquent, LJP 1082 and any other
developed products. In addition, we will need to successfully preserve our trade
secrets and operate without infringing on the rights of others" (all such
statements being collectively referred to as the "PATENT Paragraphs"). Based
upon and subject to the foregoing, such counsel is of the opinion that:
(1) To such counsel's knowledge, (A) the Company has not
received any notice of infringement of or conflict with the patent rights of
others, and (B) there is no third party infringement of the Patent Rights;
(2) To such counsel's knowledge, no third party, including any
academic or governmental organization, possesses or has the ability to obtain
rights to any of the Patent Rights;
(3) To such counsel's knowledge, (A) there are no errors or
disputes with respect to ownership of patent rights of the Company, (B) there
are no liens against any of the patents within the Patent Rights, (C) there are
no material defects of form in the preparation, filing, or prosecution of any of
the patent applications within the Patent Rights, (D) the patent applications
within the Patent Rights are being prosecuted diligently, subject to ordinary
business practices; (E) the Company has been recorded or is in the process of
being recorded on the records of the PTO or appropriate foreign patent offices
as the sole assignee of record of the patents within the Patent Rights;
17
(4) To such counsel's knowledge, the Company has complied with
its obligations pursuant to 37 C.F.R Section 1.56 in connection with its filing
with the PTO of the pending U.S. patent applications within the Patent Rights
and the issued U.S. patents within the Patent Rights;
(5) To such counsel's knowledge, none of the Company's U.S.
patents or patent applications is subject to an interference proceeding. To such
counsel's knowledge, none of the Company's U.S. patents is subject to a
reexamination, reissue examination or declaratory action;
(6) To such counsel's knowledge, none of the Company's
non-U.S. patents is subject to an opposition, national invalidation proceeding
or national court proceeding;
(7) To such counsel's knowledge, there are no pending or
threatened actions, suits, proceedings or claims by governmental authorities or
others challenging the validity, enforceability or scope of the Company's
patents or patent applications, other than prosecution of the patent
applications themselves;
(8) The statement "As of December 31, 2004, we owned 100
issued patents and 85 pending patent applications covering various technologies
and drug candidates, including Riquent" in the Prospectus Supplement under the
heading "Risk Factors - Our success in developing and marketing our drug
candidates depends significantly on our ability to obtain patent protection for
Riquent and any other developed products. In addition, we will need to
successfully preserve our trade secrets and operate without infringing on the
rights of others" is, to such counsel's knowledge, accurate and correct in all
material respects; and
(9) In addition, although such counsel has not independently
verified the accuracy, completeness or fairness of the statements contained in
the Patent Paragraphs, and based upon and subject to the foregoing, nothing has
come to such counsel's attention that leads it to believe that the Patent
Paragraphs, as of the date of the Prospectus Supplement or as of the Closing
Date, contained an untrue statement of a material fact with respect to the
Patent Rights or omitted to state a material fact with respect to the Patent
Rights necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(f) The Underwriter shall have received, on the Closing Date, the
opinion of Xxxxxx Xxxx Nemerovski Xxxxxx Xxxx & Rabkin, A Professional
Corporation, counsel for the Underwriter, dated as of the Closing Date, with
respect to the issuance and sale of the Offered Securities by the Company, the
Registration Statement, the Prospectus (together with any supplement thereto)
and other related matters as the Underwriter may require, and the Company shall
have furnished to such counsel such documents as they may have requested for the
purpose of enabling them to pass upon such matters.
(g) The Underwriter shall have received, on the Closing Date, a
certificate of the Chief Executive Officer and the Vice President of Finance and
Secretary of the Company, dated as of the Closing Date, in which such officers,
to their knowledge after reasonable investigation, shall state that: the
representations and warranties of the Company in this
18
Underwriting Agreement are true and correct in all material respects (if not
qualified by materiality or by a reference to a Material Adverse Effect) and in
all respects (if qualified by materiality or by reference to a Material Adverse
Effect); the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date; no stop order suspending the effectiveness of the
Registration Statement has been issued by the Commission and no proceedings for
that purpose have been instituted or are contemplated by the Commission; and,
subsequent to the respective date of the Company's most recent financial
statements in the Prospectus, there has been no Material Adverse Effect, nor any
change, development or event that might be reasonably likely to result in a
Material Adverse Effect, except as set forth in or contemplated by the
Prospectus.
(h) The Company shall have obtained and delivered to the Underwriter
the Lock-up Agreements referred to in Section 1(aa) hereof.
(i) The Company shall have furnished to the Underwriter a schedule,
in form reasonably satisfactory to the Underwriter, of its U.S. Patents, U.S.
Applications, Non-U.S. Patents and Non-U.S. Applications.
(j) The Company shall have furnished to the Underwriter such further
certificates and documents as the Underwriter shall reasonably request
(including certificates of officers of the Company), as to the accuracy and
completeness of the representations and warranties of the Company herein, as to
the performance by the Company of its obligations hereunder and as to the other
conditions concurrent and precedent to the obligations of the Underwriter
hereunder.
(k) At the Closing Date, the Offered Securities shall be eligible to
be traded on the Nasdaq National Market, subject to official notice of issuance,
if applicable.
7. Effective Date of Underwriting Agreement; Termination. This
Underwriting Agreement shall become effective when the parties hereto have
executed and delivered this Underwriting Agreement.
The obligations of the Underwriter hereunder shall be subject to
termination in the absolute discretion of Pacific Growth Equities, LLC if (x)
since the time of execution of this Underwriting Agreement or the earlier
respective dates as of which information is given in the Registration Statement
or Prospectus, there has been any material adverse change, or any development
involving a prospective material adverse change, in the business, operations,
properties, condition (financial or other), business or business prospects,
properties, or results of operations of the Company which would, in the judgment
of Pacific Growth Equities, LLC, make it impracticable or inadvisable to proceed
with the offering or delivery of the Offered Securities on the terms and in the
manner contemplated by the Prospectus or (y) at any time prior to the Closing
Date (i) trading in securities on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have suspended or limitations
or minimum prices shall have been established on the New York Stock Exchange,
the American Stock Exchange or the Nasdaq National Market, (ii) a general
moratorium on commercial banking activities shall have been declared by either
the Federal or New York State authorities or there shall have occurred a
material disruption in commercial banking or securities settlement or
19
clearance services in the United States, or (iii) there is an outbreak or
escalation of hostilities or acts of terrorism involving the United States or
the declaration by the United States of a national emergency or war or an
occurrence of any other calamity or crisis or any change in financial, political
or economic conditions in the United States or elsewhere, if the effect of any
such event in the judgment of Pacific Growth Equities, LLC makes it
impracticable or inadvisable to proceed with the offering or the delivery of the
Offered Securities on the terms and in the manner contemplated by the
Prospectus.
If the Underwriter elects to terminate this Underwriting Agreement as
provided in this Section 7, the Company shall be notified promptly by the
Underwriter in writing.
If the sale to the Underwriter of the Offered Securities, as contemplated
by this Underwriting Agreement, is not carried out by the Underwriter for any
reason permitted under this Underwriting Agreement or if such sale is not
carried out because the Company shall be unable to comply with any of the terms
of this Underwriting Agreement, the Company shall not be under any obligation or
liability under this Underwriting Agreement (except to the extent provided in
Sections 4(j), 5 and 8 hereof), and the Underwriter shall be under no obligation
or liability to the Company under this Underwriting Agreement (except to the
extent provided in Section 8 hereof).
8. Indemnification and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless the
Underwriter, its partners, directors and officers, and any person who controls
such Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, and the successors and assigns of all of the foregoing persons
from and against any loss, damage, expense, liability or claim (including but
not limited to reasonable attorneys' fees and any and all reasonable expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation) which, jointly or
severally, such Underwriter or any such person may incur under the Act, the
Exchange Act, the common law or otherwise, insofar as such loss, damage,
expense, liability or claim arises out of or is based on (i) any breach of any
representation, warranty, agreement or covenant of the Company herein contained
or (ii) any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus (if applicable), or
arises out of or is based on any omission or alleged omission to state a
material fact required to be stated in such Registration Statement, the
Prospectus, any amendment or supplement thereto or any related preliminary
prospectus (if applicable), or necessary to make the statements therein not
misleading, except insofar as any such loss, damage, expense, liability or claim
arises out of or is based on any untrue statement or alleged untrue statement of
a material fact contained in and in conformity with information furnished in
writing by or on behalf of the Underwriter to the Company expressly for use with
reference to such Underwriter in such Registration Statement, such Prospectus,
or any amendment or supplement thereto or any related preliminary prospectus (if
applicable), or arises out of or is based on any omission or alleged omission to
state a material fact in connection with such information required to be stated
in such Registration Statement, such Prospectus, or any
20
amendment or supplement thereto or any related preliminary prospectus (if
applicable) or necessary to make such information not misleading.
(b) The Underwriter agrees to indemnify, defend and hold harmless
the Company, its directors and officers, and any person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and the successors and assigns of all of the foregoing persons from and against
any loss, damage, expense, liability or claim (including but not limited to
reasonable attorneys' fees and any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation) which the Company or any such person
may incur under the Act, the Exchange Act, the common law or otherwise, insofar
as such loss, damage, expense, liability or claim arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained in
and in conformity with information furnished in writing by or on behalf of the
Underwriter to the Company expressly for use with reference to such Underwriter
in the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus (if applicable), or arises out of
or is based on any omission or alleged omission to state a material fact in
connection with such information required to be stated in such Registration
Statement, such Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus (if applicable), or necessary to make such
information not misleading.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action in respect of which
indemnity could be sought under this Section 8, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party in writing of the
commencement thereof, but the failure to notify the indemnifying party will not
relieve the indemnifying party from any liability which it may have to any
indemnified party, except to the extent (but only to the extent) such
indemnifying party is prejudiced thereby. In case any such action is brought
against any indemnified party and the indemnified party notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party for separate
counsel retained by the indemnified party in connection with the defense thereof
other than reasonable costs of investigation. Notwithstanding the foregoing, the
indemnified party shall have the right to employ one separate counsel, and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel, if (i) the use of the counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or the other indemnified parties which are
inconsistent with those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party
21
to represent the indemnified party within a reasonable time after notice of the
institution of such action, or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the indemnifying
party. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless such
settlement (i) includes an unconditional release of such indemnified party from
all liability on any claims that are the subject matter of such action and (ii)
does not include a statement as to, or an admission of, fault, culpability or a
failure to act by or on behalf of an indemnified party.
(d) If for any reason the indemnification provided for in this
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriter on the other from
the offering of the Offered Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriter on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriter on the other shall be deemed to be in the
same respective proportions as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriter, in each case as reflected
on the cover page of the Prospectus Supplement. 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 or the
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Underwriter agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take into account the equitable considerations
referred to above. The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which the Underwriter
has otherwise been required to pay by reason of such 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 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have; and the
obligations of the Underwriter under this Section shall be in addition to any
liability which the Underwriter may otherwise have.
22
(f) The indemnity and contribution agreements contained in this
Section 8 and the covenants, warranties and representations of the Company
contained in this Underwriting Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of the Underwriter, its
partners, directors or officers or any person (including each partner, officer
or director of such person) who controls such Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of
the Company, its directors or officers or any person who controls any of the
foregoing within the meaning of Section 15 of the Act, Section 20 of the
Exchange Act, and shall survive the termination of this Underwriting Agreement
or the issuance and delivery of the Offered Securities. The Company and the
Underwriter agree promptly to notify each other of the commencing of any action
in respect of indemnity against it and against any of the officers or directors
of the Company in connection with the issuance and sale of the Offered
Securities, or in connection with the Registration Statement or Prospectus.
9. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to the
Underwriter shall be mailed, delivered, telegraphed (and confirmed by letter) or
telecopied (and confirmed by letter) to the Underwriter c/o Pacific Growth
Equities, LLC, Xxx Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000,
telecopier number (000) 000-0000, Attention: Xxxxxx Xxxxxxxxx, Director of
Compliance, with a copy to Xxxxxx X. Xxxxxxxxxx, Esq., Three Xxxxxxxxxxx Xxxxxx,
Xxxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, telecopier number (415)
217-5910; if sent to the Company, such notice shall be mailed, delivered,
telegraphed (and confirmed by letter) or telecopied (and confirmed by letter) to
0000 Xxxxx Xxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, telecopier number (858)
452-6893, Attention: Xxxxxx X. Xxxxx, Chairman and Chief Executive Officer, with
a copy to Xxxx X. Xxxxxxxxx, Esq., Xxxxxx Xxxx & Xxxxxxxx LLP, 0 Xxxx Xxxxx,
Xxxxxx, Xxxxxxxxxx 00000, telecopier number (000) 000-0000.
10. Information Furnished by the Underwriter. The statements set forth
in the last paragraph of the cover of the Prospectus Supplement and in the
third, ninth and eleventh paragraphs under the caption "Underwriting" in the
Prospectus Supplement constitute the only information furnished by or on behalf
of the Underwriter as such information is referred to in Sections 3 and 8
hereof.
11. Parties at Interest. This Underwriting Agreement has been and is
made solely for the benefit of the Underwriter, the Company and, to the extent
provided in Section 8 hereof, the controlling persons, directors and officers
referred to in such Section, and their respective successors, assigns, heirs,
personal representatives and executors and administrators. No other person,
partnership, association or corporation (including a purchaser, as such
purchaser, from the Underwriter) shall acquire or have any right under or by
virtue of this Underwriting Agreement.
12. Applicable Law. This Underwriting Agreement shall be governed by,
and construed in accordance with, the laws of the State of California, without
regard to principles of conflicts of laws.
13. Successors and Assigns. This Underwriting Agreement shall be binding
upon the Underwriter and the Company and their respective successors and assigns
and any successor
23
assign of any substantial portion of the Company's and any of the Underwriter's
business and/or assets.
14. Counterparts. This Underwriting Agreement may be signed by the
parties in one or more counterparts which together shall constitute one and the
same agreement among the parties.
24
If the foregoing correctly sets forth the understanding between the
Company and the Underwriter, please so indicate in the space provided below for
the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement between the Company and the Underwriter.
Very truly yours,
LA JOLLA PHARMACEUTICAL COMPANY
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman and Chief Executive Officer
Accepted and agreed to as of the date first above written:
PACIFIC GROWTH EQUITIES, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
SCHEDULE I
SCHEDULE OF LOCK-UP AGREEMENTS
1. Xxxxxx X. Xxxxx, Ph.D.
2. Xxxxxx X. Xxxxx
3. Xxxxxx X. Xxxxxx, Ph.D.
4. Xxxxxxx X. Xxxxxx
5. Xxxxx X. Xxxxx, M.D.
6. Xxxxxxx X. Xxxxxxx
7. Xxxxxxx X. Xxxxxx, Ph.D.
8. Xxxxxxx X. Xxxxxxxxx, M.D.
9. Xxxxxxx X. Xxxxx
10. Xxxx X. Jenn, Ph.D.
11. Xxxxx X. Xxxxxxx, Xx.
12. Xxxxxxxx Xxxxxx
13. Xxxxxx Xxxxxxx, Ph.D.
14. Xxxx X. Xxxxx
15. Xxxxxxxx X. Xxxxxxx
