Draft of December 8, 1997
2,500,000 Shares
APOLLON, INC.
Common Stock
UNDERWRITING AGREEMENT
December __, 1997
Xxxxx Xxxxxx Inc.
Genesis Merchant Group Securities LLC
Cruttenden Xxxx Incorporated
As Representatives of the Several Underwriters
c/o Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Apollon, Inc., a Pennsylvania corporation (the "Company"), proposes
to issue and sell an aggregate of 2,500,000 shares (the "Firm Shares") of its
common stock, par value $.01 per share (the "Common Stock"), to the several
Underwriters named in Schedule I hereto (the "Underwriters"). In addition,
solely for the purpose of covering over-allotments, the Company proposes to sell
to the Underwriters, upon the terms and conditions set forth in Section 2
hereof, up to an additional 375,000 shares (the "Additional Shares") of Common
Stock. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "Shares."
The Company wishes to confirm as follows its agreement with you
(the "Representatives") and the other several Underwriters on whose behalf you
are acting, in connection with the several purchases of the Shares by the
Underwriters.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-1 under the Act
(the "registration statement"), including a prospectus subject to completion,
relating to the Shares. The term "Registration Statement" as used in this
Agreement means the registration statement (including all financial schedules
and exhibits) as amended at the time it becomes effective or, if the
registration statement became effective prior to the execution of this
Agreement, as supplemented or amended prior to the execution of this Agreement.
If it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration
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statement will be filed and must be declared effective before the offering of
the Shares may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said post-effective
amendment. If an abbreviated registration statement relating to the offering of
the Shares is prepared and filed with the Commission in accordance with Rule
462(b) under the Act (an "Abbreviated Registration Statement"), the term
"Registration Statement" as used in this Agreement includes the Abbreviated
Registration Statement. The term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement, or, if the
prospectus included in the Registration Statement omits information in reliance
on Rule 430A under the Act and such information is included in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form included
in the Registration Statement as supplemented by the addition of the Rule 430A
information contained in the prospectus filed with the Commission pursuant to
Rule 424(b). The term "Prepricing Prospectus" as used in this Agreement means
the prospectus subject to completion in the form included in the registration
statement at the time of the initial filing of the registration statement with
the Commission and as such prospectus shall have been amended from time to time
prior to the date of the Prospectus.
2. Agreements to Sell and Purchase. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of $ per share (the
"purchase price per share"), the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto (or such number of Firm Shares
increased as set forth in Section 10 hereof).
The Company also agrees, subject to all the terms and conditions
set forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Underwriters shall
have the right to purchase from the Company, at the purchase price per share,
pursuant to an option (the "over-allotment option") which may be exercised at
any time and from time to time prior to 9:00 p.m., New York City time, on the
30th day after the date of the Prospectus (or, if such 30th day shall be a
Saturday or Sunday or a holiday, on the next business day thereafter when the
New York Stock Exchange is open for trading), up to an aggregate of 375,000
Additional Shares from the Company. Additional Shares may be purchased solely
to cover over-allotments made in connection with the offering of the Firm
Shares. Upon any exercise of the over-allotment option, each Underwriter,
severally and not jointly, agrees to purchase from the Company the number of
Additional Shares (subject to such adjustments as you may determine in order to
avoid fractional shares) which bears the same proportion to the number of
Additional Shares to be purchased by the Underwriters as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or
such number of Firm Shares increased as set forth in Section 10 hereof) bears to
the aggregate number of Firm Shares.
3. Terms of Public Offering. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the offices of
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
A.M., New York City time, on December __, 1997 (the "Closing Date"). The place
of closing for the Firm Shares and the Closing Date may be varied by agreement
between you and
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the Company.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at the aforementioned
offices of Xxxxx Xxxxxx Inc. at such time on such date (the "Option Closing
Date"), which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor earlier than two nor later than ten business
days after the giving of the notice hereinafter referred to, as shall be
specified in a written notice from you on behalf of the Underwriters to the
Company of the Underwriters' determination to purchase a number, specified in
such notice, of Additional Shares. The place of closing for any Additional
Shares and the Option Closing Date for such Shares may be varied by agreement
between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to
be purchased hereunder shall be registered in such names and in such
denominations as you shall request by written notice, it being understood that a
facsimile transmission shall be deemed written notice, prior to 9:30 A.M., New
York City time, on the second business day preceding the Closing Date or any
Option Closing Date, as the case may be. Such certificates shall be made
available to you in New York City for inspection and packaging not later than
9:30 A.M., New York City time, on the business day next preceding the Closing
Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and any Additional Shares to be purchased hereunder
shall be delivered to you on the Closing Date or the Option Closing Date, as the
case may be, against payment of the purchase price therefor in immediately
available funds.
5. Agreements of the Company. The Company agrees with the
several Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the registration statement or a post-effective amendment
thereto or any Abbreviated Registration Statement to be declared or, in the case
of an Abbreviated Registration Statement, to become effective before the
offering of the Shares may commence, the Company will endeavor to cause the
Registration Statement or such post-effective amendment or Abbreviated
Registration Statement to become effective as soon as possible and will advise
you promptly and, if requested by you, will confirm such advice in writing, when
the Registration Statement or such post-effective amendment or Abbreviated
Registration Statement has become effective.
(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of the happening
of any event, which makes any statement of a material fact made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Registration Statement or the Prospectus (as then amended or supplemented) in
order to state a material fact required by the Act or the regulations thereunder
to be stated therein or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Prospectus (as then
amended or supplemented) to comply with the Act or any other law. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable effort to
obtain the withdrawal of such
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order at the earliest possible time.
(c) The Company will furnish to you, without charge, two signed
copies of the Registration Statement as originally filed with the Commission and
of each amendment thereto, including financial statements and all exhibits to
the Registration Statement and will also furnish to you, without charge, such
number of conformed copies of the Registration Statement as originally filed and
of each amendment thereto, but without exhibits, as you may request.
(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus of
which you shall not previously have been advised or to which you shall object
after being so advised or (ii) so long as, in the opinion of counsel for the
Underwriters, a prospectus is required to be delivered in connection with sales
by any Underwriter or dealer, file any information, documents or reports
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), without delivering a copy of such information, documents or reports to
you, as Representatives of the Underwriters, prior to or concurrently with such
filing.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to you, without charge, in such quantities
as you have requested or may hereafter request, copies of each form of the
Prepricing Prospectus. The Company consents to the use, in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several Underwriters and by
dealers, prior to the date of the Prospectus, of each Prepricing Prospectus so
furnished by the Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the Act to be delivered
in connection with sales by any Underwriter or dealer, the Company will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
you may request. The Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by all dealers to whom Shares
may be sold, both in connection with the offering and sale of the Shares and for
such period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If during such
period of time any event shall occur that in the judgment of the Company or in
the opinion of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus to comply with the Act or any other law, the Company will
forthwith prepare and, subject to the provisions of paragraph (d) above, file
with the Commission an appropriate supplement or amendment thereto and will
expeditiously furnish copies thereof to the Underwriters and dealers in such
quantities as you shall request. In the event that the Company and you, as
Representatives of the several Underwriters, agree that the Prospectus should be
amended or supplemented, the Company, if requested by you, will promptly issue a
press release announcing or disclosing the matters to be covered by the proposed
amendment or supplement.
(g) The Company will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided,
however, that in no event shall the Company be
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obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to service of process in
suits, other than those arising out of the offering or sale of the Shares, in
any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its security
holders an earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as practicable
after the end of such period, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act.
(i) During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to shareholders or filed with the Commission, and (ii) from time to time
such other information concerning the Company as you may reasonably request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating this
Agreement pursuant to Section 10 or Section 11 hereof), or if this Agreement
shall be terminated by the Underwriters because of any failure or refusal on the
part of the Company to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse the Representatives for all
out-of-pocket expenses (including fees and expenses of counsel for the
Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of the
Shares substantially in accordance with the description set forth in the
Prospectus.
(l) If Rule 430A of the Act is employed, the Company will timely
file the Prospectus pursuant to Rule 424(b) under the Act and will advise you of
the time and manner of such filing.
(m) The Company will not (and will not announce or otherwise
disclose any intention to) offer to sell, contract to sell, sell or otherwise
transfer or dispose of, or grant any option or warrant to purchase, any shares
of Common Stock (or any securities convertible into or exercisable or
exchangeable for Common Stock) for a period of 180 days after the date of the
Prospectus (the "Lock-up Period") without the prior written consent of Xxxxx
Xxxxxx Inc. except for (i) the sale of the Shares to the Underwriters pursuant
to this Agreement, (ii) the issuance of shares of Common Stock in connection
with the Conversion and AHP Financing described in the Prospectus, (iii) the
issuance of shares of Common Stock upon exercise of options or warrants
disclosed to be outstanding in the Prospectus and (iv) the grant pursuant to
stock option plans described in the Prospectus of stock options not exercisable
during the Lock-up Period.
(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current officers and directors and each of its stockholders designated by you.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have the Common Stock
approved for quotation on The Nasdaq Stock Market's National Market prior to or
concurrently with the effectiveness of
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the registration statement.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus.
(b) The registration statement in the form in which it became or
becomes effective, and also in such form as it may be when any post-effective
amendment thereto or any Abbreviated Registration Statement shall become
effective, and the Prospectus and any supplement or amendment thereto when filed
with the Commission under Rule 424(b) under the Act, complied or will comply in
all material respects with the provisions of the Act and did not or will not at
any such times contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except that this representation and warranty does not
apply to statements in or omissions from the registration statement or the
Prospectus made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by or on behalf of such
Underwriter through you expressly for use therein.
(c) All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and nonassessable,
are free of any preemptive or similar rights (other than such rights as shall
terminate upon completion of, and be inapplicable to, the offering contemplated
hereby) and have been issued and sold in compliance with all Federal and state
securities laws. The Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and free of
any preemptive or similar rights. The capital stock of the Company conforms to
the description thereof in the Registration Statement and the Prospectus.
(d) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify would not have
a material adverse effect on the condition (financial or other), business,
prospects, properties or results of operations of the Company and the Subsidiary
(as defined herein), taken as a whole (a "Material Adverse Effect").
(e) The Company's subsidiary (as defined in the Act) is listed in
an exhibit to the Registration Statement and is referred to herein as the
"Subsidiary." The Subsidiary is a corporation duly organized, validly existing
and in good standing in the jurisdiction of its incorporation, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration,
except where the failure so to register or qualify would not have a Material
Adverse Effect. All the outstanding shares of capital stock of the Subsidiary
have been duly authorized and validly issued, are fully paid and nonassessable
and are wholly-owned by the Company directly, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance, except as
disclosed in the Registration Statement and the Prospectus (or any
6
amendment or supplement thereto).
(f) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened, against the Company or the Subsidiary,
or to which the Company or the Subsidiary or either of their respective
properties is subject, that are required to be described in the Registration
Statement or the Prospectus but are not described as required. There are no
agreements, contracts, indentures, leases or other instruments that are required
to be described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement that are not described or filed as
required by the Act. Neither the Company nor the Subsidiary is involved in any
strike, job action or labor dispute, and to the Company's best knowledge no such
action or dispute is threatened.
(g) Neither the Company nor the Subsidiary is (i) in violation of
its articles or certificate of incorporation or by-laws or other organizational
documents, or of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or the Subsidiary or of any decree of any
court or governmental agency or body having jurisdiction over the Company or the
Subsidiary, or (ii) in default in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any agreement, indenture, lease or other instrument to which
the Company or the Subsidiary is a party or by which either of them or any of
their respective properties may be bound.
(h) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby (i) requires any consent,
approval, authorization or other order of, or registration or filing with, any
court, regulatory body, administrative agency or other governmental body, agency
or official (except such as may be required for the registration of the Shares
under the Act and the Exchange Act, all of which have been or will be effected
in accordance with this Agreement, and compliance with the securities or Blue
Sky laws of various jurisdictions) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the articles or
certificate of incorporation or bylaws, or other organizational documents, of
the Company or the Subsidiary or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, any indenture,
bond, note, lease or other agreement or instrument to which the Company or the
Subsidiary is a party or by which the Company or the Subsidiary or either of
their respective properties may be bound, or violates or will violate any
statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or the Subsidiary or either of their respective
properties, or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or the Subsidiary
pursuant to the terms of any agreement or instrument to which either of them is
a party or by which either of them may be bound or to which either of their
respective property or assets are subject.
(i) The accountants, Xxxxxxx & Xxxxxxx L.L.P., who have reported
on certain of the financial statements filed or to be filed as part of the
Registration Statement or the Prospectus (or any amendment or supplement
thereto), are independent public accountants as required by the Act.
(j) The financial statements, together with the related schedules
and notes forming part of the Registration Statement and the Prospectus (and any
amendment or supplement thereto), comply with the requirements of the Act and
present fairly in all material respects the financial position, results of
operations and changes in stockholders' equity and cash flows of the Company and
the Subsidiary on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed
7
therein; the pro forma financial information included in the Registration
Statement and Prospectus (and any amendment or supplement thereto) has been
prepared in accordance with the requirements of the Act and the rules and
regulations of the Commission with respect to pro forma financial information
(including Article 11 of Regulation S-X) and have been properly computed on the
basis described therein, and the assumptions used in the preparation of the pro
forma financial statements and other pro forma financial information included in
the Registration Statement and the Prospectus (or any amendment or supplement
thereto) are reasonable, and the adjustments used therein are reasonably
appropriate to give effect to the transactions or circumstances referred to
therein; and the other financial and statistical information and data set forth
in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) are accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company and
otherwise on the basis stated in the Registration Statement and Prospectus.
(k) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement. The execution and
delivery of, and the performance by the Company of its obligations under, this
Agreement have been duly and validly authorized by the Company. This Agreement
has been duly executed and delivered by the Company and constitutes the valid
and legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or principles of
public policy and subject to the qualification that the enforceability of the
Company's obligations hereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equitable principles.
(l) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor the Subsidiary has incurred any liability or obligation, direct
or contingent, or entered into any transaction that is material to the Company
and the Subsidiary, taken as a whole, and there has not been any change in the
capital stock, or material increase in the consolidated short-term or long-term
debt, of the Company and the Subsidiary, or any material adverse change, or any
development involving or which may reasonably be expected to involve a
prospective material adverse change, in the condition (financial or other),
business, prospects, properties or results of operations of the Company and the
Subsidiary taken as a whole.
(m) Each of the Company and the Subsidiary has good and marketable
title to all property (real and personal) described in the Prospectus as being
owned by it, free and clear of all liens, claims, security interests or other
encumbrances except such as are described in the Registration Statement and the
Prospectus. All the property described in the Prospectus as being held under
lease by the Company or the Subsidiary is held by it under valid, subsisting and
enforceable leases.
(n) The Company has not distributed and, prior to the later to
occur of the Closing Date and completion of the distribution of the Shares, will
not distribute any offering material in connection with the offering and sale of
the Shares other than the Registration Statement, the Prepricing Prospectus, the
Prospectus or other materials, if any, permitted by the Act and state securities
or Blue Sky laws.
(o) Each of the Company and the Subsidiary has such permits,
licenses, franchises, authorizations and clearances ("Permits") of governmental
or regulatory authorities, including, without limitation, the Food and Drug
Administration (the "FDA") of the U.S. Department of Health and Human Services
and/or any committee thereof, as are necessary to own, lease and operate its
properties and to
8
conduct its business in the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus; subject to such
qualifications as may be set forth in the Prospectus, each of the Company and
the Subsidiary has fulfilled and performed all its material obligations with
respect to the Permits, and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any Permit, subject
in each case to such qualification as may be set forth in the Prospectus.
Except as described in the Prospectus, none of the Permits contains any
restriction that is materially burdensome to the Company or the Subsidiary.
(p) Except to the extent disclosed in the Registration Statement
and the Prospectus (or any amendment or supplement thereto), 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 the Company's product
candidates under development 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 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 or tests, and the Company has no knowledge of
any other studies or tests the 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 (or any amendment or supplement thereto), the Company has
operated and currently is in compliance in all material respects with all
applicable FDA rules, regulations and policies. Except to the extent disclosed
in the Registration Statement and the Prospectus (or any amendment or supplement
thereto), the Company has not received any notices or other correspondence from
the FDA 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.
(q) Neither the Company nor the Subsidiary has received nor is it
aware of any communication (written or oral) relating to the termination or
modification or threatened termination or modification of the agreements
described or referred to in the Prospectus under the Caption "Business-Strategic
Alliances and Collaborations" nor is it aware of any communication (written or
oral) relating to any determination or threatened determination not to renew or
extend any agreement described or referred to under such caption at the end of
the current term of any such agreement.
(r) Except as set forth in the Registration Statement, the
properties, assets and operations of the Company and its Subsidiary are in
compliance with all applicable federal, state, local and foreign laws
(including, without limitation, common law), rules and regulations, orders,
decrees, judgments, permits and licenses relating to worker health and safety,
and to the protection and clean-up of the natural environment and to the
protection or preservation of natural resources, including, without limitation,
those relating to the processing, manufacturing, generation, handling, disposal,
transportation or release of hazardous materials (collectively, "Environmental
Laws"), except where the failure to comply has not and will not, individually or
in the aggregate, have a Material Adverse Effect. With respect to such
properties, assets and operations, there are no events, conditions,
circumstances, activities, practices, incidents, actions or plans of the
Company, or its Subsidiary, of which the Company is aware that may interfere
with or prevent compliance or continued compliance in all material respects with
applicable Environmental Laws or otherwise result in liability to the Company or
its Subsidiary pursuant to applicable Environmental Law. Except as set forth in
the Registration Statement, (A) to the Company's knowledge, none of the Company
or its Subsidiary is the subject of any federal, state, local or foreign
investigation pursuant to Environmental Laws, (B) neither the Company nor its
Subsidiary has received any written notice or claim pursuant to Environmental
Laws and (C) there are no pending, or, to the knowledge of the Company, overtly
threatened
9
actions, suits or proceedings against the Company or its Subsidiary or their
properties, assets or operations, in connection with any Environmental Laws.
The term "hazardous materials" shall mean those substances that are regulated by
or pursuant to any applicable Environmental Laws.
(s) Each of the Company and the Subsidiary is insured by insurers
of recognized financial responsibility against such losses and risks and in such
amount as are customary in the business in which it is engaged. All policies of
insurance insuring the Company and the Subsidiary or their respective business,
assets, employees, officers and directors are in full force and effect, and the
Company and the Subsidiary is in compliance with the terms of such policies in
all material respects. There are no claims by the Company or the Subsidiary
under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause.
(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific 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.
(u) Neither the Company nor the Subsidiary nor, to the Company's
best knowledge, any employee or agent of the Company or the Subsidiary has
made any payment of funds of the Company or the Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which
payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(v) Each of the Company and the Subsidiary has filed all federal,
state, local and foreign tax returns and tax forms required to be filed, such
returns and forms are complete and correct in all material respects, and all
taxes shown by such returns or otherwise assessed that are due or payable have
been paid, except such taxes as are being contested in good faith and as to
which adequate reserves have been provided. All payroll withholdings required
to be made by the Company or the Subsidiary with respect to employees have been
made. The charges, accruals and reserves on the books of the Company and the
Subsidiary in respect of any tax liability for any year not finally determined
are adequate to meet any assessments or reassessments for additional taxes.
There have been no tax deficiencies asserted and, to the best knowledge of the
Company, no tax deficiency might be reasonably asserted or threatened against
the Company or the Subsidiary that could, individually or in the aggregate, have
a Material Adverse Effect.
(w) No holder of any security of the Company has any right (other
than rights that have been validly waived) to require registration of shares of
Common Stock or any other security of the Company because of the filing of the
registration statement or the consummation of the transactions contemplated by
this Agreement and, except as disclosed in the Prospectus, no person has the
right to require registration under the Act of any shares of Common Stock or
other securities of the Company. No person has the right, contractual or
otherwise, to cause the Company to permit such person to underwrite the sale of
any of the Shares other than such rights which have been given effect. Except
as described in or contemplated by the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue, any shares of capital stock of the
Company or the Subsidiary or any security convertible into or exchangeable or
exercisable for capital stock of the Company or the Subsidiary.
(x) Each of the Company and the Subsidiary owns or has obtained
valid and
10
enforceable licenses for the patents, patent applications, inventions,
technology, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, trade secrets and rights described in
the Prospectus as being owned or used by or licensed to it or necessary for the
conduct of its business (collectively, the "intellectual property"). Except as
set forth in the Prospectus (i) there are no rights of third parties to any such
intellectual property; (ii) to the Company's best knowledge there is no
infringement by third parties of any such intellectual property; (iii) there is
no pending or, to the Company's best knowledge, threatened action, suit,
proceeding or claim by others challenging the Company's or the Subsidiary's
rights in or to any such intellectual property, and the Company is unaware of
any facts which would form a reasonable basis for any such claim; (iv) there is
no pending or, to the Company's best knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any such
intellectual property, and the Company is unaware of any facts which would form
a reasonable basis for any such claim; (v) there is no pending or, to the
Company's best knowledge, threatened action, suit, proceeding or claim by others
that the Company or the Subsidiary infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any facts which would form a reasonable basis for any
such claim; (vi) to the Company's best knowledge there is no patent or patent
application which contains claims that dominate or may dominate any intellectual
property described in the Prospectus as being owned by or licensed to the
Company or the Subsidiary or that is necessary for the conduct of its business
or that interferes with the issued or pending claims of any such intellectual
property; and (vii) there is no prior art of which the Company is aware that may
render any patent held by the Company or the Subsidiary invalid or any patent
application held by the Company or the Subsidiary unpatentable which has not
been disclosed to the U.S. Patent and Trademark Office.
(y) The Company is not, and, upon the sale of the Shares to be
issued and sold by it hereunder and application of the net proceeds from such
sale as described in the Prospectus under the caption "Use of Proceeds," will
not be an "investment company" within the meaning of the Investment Company Act
of 1940, as amended.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or in
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information relating to such Underwriter furnished in writing to the Company by
or on behalf of such Underwriter through you expressly for use in connection
therewith; provided, however, that the indemnification contained in this
paragraph (a) with respect to any Prepricing Prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of Shares by such Underwriter to any person if (i) a copy
of the Prospectus shall not have been delivered or sent to such person within
the time required by the Act and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus and (ii) the Company
delivered the Prospectus to the several Underwriters in requisite quantity on a
timely basis to permit such delivery or sending. The foregoing
11
indemnity agreement shall be in addition to any liability which the Company may
otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company, and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses,
(ii) the Company has failed, within 30 days after the Company has been so
notified, to assume the defense and employ counsel or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the Company and such
Underwriter or such controlling person shall have been advised by its counsel
that representation of such indemnified party and the Company by the same
counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the Company shall not have the right to assume the defense of such action,
suit or proceeding on behalf of such Underwriter or such controlling person).
It is understood, however, that the Company shall, in connection with any one
such action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Underwriters and controlling persons not
having actual or potential differing interests with you or among themselves,
which firm shall be designated in writing by Xxxxx Xxxxxx Inc., and that all
such fees and expenses shall be reimbursed as they are incurred. The Company
shall not be liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless any Underwriter
and any such controlling person, to the extent provided in the preceding
paragraph, from and against any loss, claim, damage, liability or expense by
reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with respect to information relating to such Underwriter furnished in writing to
the Company by or on behalf of such Underwriter through you expressly for use in
the Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer or any such
controlling person based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect of
which indemnity may be sought against any Underwriter pursuant to this paragraph
(c), such Underwriter shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Company, its directors, any such officer, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above.
The foregoing indemnity agreement shall be in addition to any liability which
the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an
12
indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the
offering of the Shares, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and the
Underwriters on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages, liabilities or expenses, 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
hand shall be deemed to be in the same proportion 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
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus; provided that, in the event that the Underwriters shall have
purchased any Additional Shares hereunder, any determination of the relative
benefits received by the Company and the Underwriters from the offering of
the Shares shall include the net proceeds (before deducting expenses)
received by the Company, and the underwriting discounts and commissions
received by the Underwriters, from the sale of such Additional Shares, in
each case computed on the basis of the respective amounts set forth in the
notes to the table on the cover page of the Prospectus. The relative fault
of the Company on the one hand and the Underwriters on the other hand 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 by the Underwriters on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined
by a pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price of the Shares underwritten by it and distributed to the
public exceeds the amount of any damages which such 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. The Underwriters' obligations to contribute
pursuant to this Section 7 are several in proportion to the respective
numbers of Firm Shares set forth opposite their names in Schedule I hereto
(or such numbers of Firm Shares increased as set forth in Section 10 hereof)
and not joint.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding 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 includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party
13
is entitled to indemnification or contribution under this Section 7 shall be
paid by the indemnifying party to the indemnified party as such losses,
claims, damages, liabilities or expenses are incurred. The indemnity and
contribution agreements contained in this Section 7 and the representations
and warranties of the Company set forth in this Agreement shall remain
operative and in full force and effect, regardless of (i) any investigation
made by or on behalf of any Underwriter or any person controlling any
Underwriter, the Company, its directors or officers or any person controlling
the Company, (ii) acceptance of any Shares and payment therefor hereunder and
(iii) any termination of this Agreement. A successor to any Underwriter or
any person controlling any Underwriter, or to the Company, its directors or
officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the registration statement or a post-effective amendment
thereto or an Abbreviated Registration Statement to be declared effective
before the offering of the Shares may commence, the registration statement or
such post-effective amendment or Abbreviated Registration Statement shall
have become effective not later than 5:30 P.M., New York City time, on the
date hereof, or at such later date and time as shall be consented to in
writing by you, and all filings, if any, required by Rules 424 and 430A under
the Act shall have been timely made.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, prospects, properties or results of operations of the Company or
the Subsidiary not contemplated by the Prospectus, which in your opinion, as
Representatives of the several Underwriters, would materially, adversely
affect the market for the Shares, or (ii) any event or development relating
to or involving the Company or the Subsidiary, or any officer or director of
the Company or the Subsidiary, which makes any statement made in the
Prospectus untrue or which, in the opinion of the Company and its counsel or
the Underwriters and their counsel, requires the making of any addition to or
change in the Prospectus in order to state a material fact required by the
Act or any other law to be stated therein or necessary in order to make the
statements therein not misleading, if amending or supplementing the
Prospectus to reflect such event or development would, in your opinion, as
Representatives of the several Underwriters, materially, adversely affect the
market for the Shares.
(c) You shall have received on the Closing Date an opinion of
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, counsel for the Company, dated the Closing
Date and addressed to you, as Representatives of the several Underwriters,
that:
(i) The Company is a corporation duly incorporated and
subsisting under the laws of the State of Pennsylvania with full corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and the Prospectus
(and any amendment or supplement thereto);
(ii) The Subsidiary is a corporation duly incorporated and
validly existing and in good standing under the laws of the jurisdiction of
its organization, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto); and all the outstanding shares of capital stock of the Subsidiary
have been duly authorized and validly issued,
14
are fully paid and nonassessable and are owned of record by the Company
directly, free and clear of any security interest perfected under Article 9
of the Uniform Commercial Code or, to such counsel's knowledge, any other
lien, adverse claim, equity or other encumbrance, except as disclosed in
the Registration Statement and the Prospectus (or any amendment or
supplement thereto);
(iii) The authorized capital stock of the Company is as set
forth under the caption "Capitalization" in the Prospectus, and the
authorized capital stock of the Company conforms in all material respects
as to legal matters to the description contained in the Prospectus under
the caption "Description of Capital Stock";
(iv) All the shares of capital stock of the Company
outstanding prior to the issuance of the Shares have been duly authorized
and validly issued, are fully paid and nonassessable and were issued and
sold in compliance with all applicable federal and state securities laws;
(v) The Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with
the terms hereof, will be validly issued, fully paid and nonassessable and
free of (A) any preemptive rights arising under the Company's articles of
incorporation or the Pennsylvania Business Corporation Law or (B) to the
knowledge of such counsel, similar rights that entitle or will entitle any
person to acquire any shares of capital stock of the Company upon the
issuance and sale of the Shares by the Company;
(vi) The form of certificate for the Shares conforms to the
requirements of the Pennsylvania Business Corporation Law;
(vii) Such counsel has been advised by the staff of the
Securities and Exchange Commission (the "Staff") that the Registration
Statement and all post-effective amendments, if any, have become effective
under the Act and, to the knowledge of such counsel (and after being
advised by the Staff to such effect), no stop order suspending the
effectiveness of the Registration Statement has been issued; to such
counsel's knowledge no proceedings for that purpose are pending before or
contemplated by the Commission; and any required filing of the Prospectus
pursuant to Rule 424(b) has been made in accordance with Rule 424(b);
(viii) The Company has the corporate power and authority to
enter into this Agreement and to issue, sell and deliver the Shares to the
Underwriters as provided herein, and this Agreement has been duly
authorized, executed and delivered by the Company and is a valid, legal and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement of rights to indemnity and
contribution hereunder may be limited by federal or state securities laws
or principles of public policy and subject to the qualification that the
enforceability of the Company's obligations hereunder may be limited by
bankruptcy, fraudulent transfer, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and by
general equitable principles;
(ix) Such counsel shall confirm that it has no knowledge of
any violation by the Company or the Subsidiary of its articles of
incorporation or bylaws, or other organizational documents, or in default
in the performance of any material obligation, agreement or condition
contained in any bond, debenture, note or other evidence of indebtedness,
or in any agreement, indenture, lease or other instrument to which the
Company or the Subsidiary is a party or by which
15
any of them or any of their respective properties may be bound, in each
case that is filed as an exhibit to the Registration Statement;
(x) Neither the offer, sale or delivery of the Shares, the
execution, delivery or performance of this Agreement, compliance by the
Company with the provisions hereof nor consummation by the Company of the
transactions contemplated hereby (i) violates the provisions of the
articles or certificate of incorporation or bylaws, or other organizational
documents, of the Company or the Subsidiary or (ii) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default
under, or, to the knowledge of such counsel, will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or the Subsidiary, under any, indenture, bond, note, lease
or other agreement or instrument to which the Company or the Subsidiary is
a party or by which the Company or the Subsidiary or any of their
respective properties is bound that is filed as an exhibit to the
Registration Statement, nor will any such action result in any violation of
any existing law, regulation, ruling (assuming compliance with all
applicable state securities or Blue Sky laws), judgment, injunction, order
or decree known to such counsel and applicable to the Company or the
Subsidiary or any their respective properties;
(xi) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency, or official is required on the
part of the Company or the Subsidiary (except as have been obtained under
the Act and the Exchange Act or such as may be required under state
securities or Blue Sky laws governing the purchase and distribution of the
Shares) for the valid issuance and sale of the Shares to the Underwriters
as contemplated by this Agreement;
(xii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and
the notes thereto and the schedules and other financial and statistical
data included therein, as to which such counsel need not express any
opinion) comply as to form in all material respects with the requirements
of the Act;
(xiii) Such counsel shall confirm that it has no knowledge of
(A) any legal or governmental proceedings pending or threatened against the
Company or the Subsidiary, or to which the Company or the Subsidiary or
either of their respective properties is subject, which are required to be
described in the Registration Statement or Prospectus (or any amendment or
supplement thereto) that are not described as required and (B) any
agreements, contracts, indentures, leases or other instruments that are
required to be described in the Registration Statement or the Prospectus
(or any amendment or supplement thereto) or to be filed as an exhibit to
the Registration Statement that are not described or filed as required, as
the case may be;
(xiv) To the knowledge of such counsel, neither the Company nor
the Subsidiary is in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or the
Subsidiary, the violation of which would have a Material Adverse Effect, or
of any decree of any court or governmental agency or body having
jurisdiction over the Company or the Subsidiary;
(xv) To the knowledge of such counsel, the Company and the
Subsidiary have all necessary Permits (except where the failure to so have
any such Permits, individually or in the aggregate, would not have a
Material Adverse Effect) to own their properties and to conduct their
business as now being conducted as described in the Prospectus;
16
(xvi) The statements in the Registration Statement and
Prospectus, insofar as they are descriptions of contracts, agreements or
other legal documents, or refer to statements of law or legal conclusions
(exclusive of the statements under the captions "Risk Factors-Government
Regulation; No assurance of FDA Approval" and "Business-Government
Regulation" and "Risk Factors-Patents and Proprietary Rights; Access to
Proprietary Genes and Proteins" and "Business-Patents and Proprietary
Rights"), are accurate and present fairly the information purported to be
shown;
(xvii) Except as described in the Prospectus, such counsel does
not know of any holder of any securities of the Company or any other person
who has the right, contractual or otherwise, to cause the Company to sell
or otherwise issue to them, or to permit them to underwrite the sale of,
any of the Shares or the right to have any Common Stock or other securities
of the Company included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to require the Company
to register under the Act any shares of Common Stock or other securities of
the Company, and any registration rights in connection with the offering
contemplated hereby have been validly waived; and
(xviii) The Company is not an "investment company" or a person
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
In addition, such counsel shall state that although such counsel
has not undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Registration Statement, such
counsel has participated in the preparation of the Registration Statement and
the Prospectus, including review and discussion of the contents thereof, and
nothing has come to the attention of such counsel that has caused it to believe
that the Registration Statement, at the time the Registration Statement became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as of its date and as
of the Closing Date or the Option Closing Date, as the case may be, 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, or that any
amendment or supplement to the Prospectus, as of its date, and as of the Closing
Date or the Option Closing Date, as the case may be, 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 light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and the
notes thereto and the schedules and other financial and statistical data
included in the Registration Statement or the Prospectus).
In rendering their opinion as aforesaid, counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the federal laws
of the United States, except patent laws, or the laws of the Commonwealth of
Pennsylvania, provided, however that (1) each such local counsel is acceptable
to the Representatives, (2) such reliance is expressly authorized by each
opinion so relied upon and a copy of each such opinion is delivered to the
Representatives and is, in form and substance, satisfactory to them and counsel
for the Underwriters and (3) counsel shall state in their opinion that they
believe that they and the Underwriters are justified in relying thereon. In
rendering their opinion, Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx may rely as to
matters of New York law upon the opinion of Xxxxx Xxxxxxxxxx LLP.
(d) You shall have received on the Closing Date an Opinion of Xxxxxx
& Xxxxxxx,
17
patent counsel for the Company, dated the Closing Date and addressed to you, as
representatives of the several underwriters, that:
(i) To the knowledge of such counsel after reasonable inquiry,
each of the Company and the Subsidiary owns or has obtained licenses for
all patents and patent applications relating to the intellectual property
described in the Prospectus as being owned or used by or licensed to it;
(ii) To the knowledge of such counsel after reasonable
inquiry (a) except as described in the Prospectus, there are no rights
of third parties to any intellectual property described in the
Prospectus as being owned by or licensed to the Company or the
Subsidiary or that is necessary for the conduct of their respective
businesses; (b) there is no infringement by third parties of any such
intellectual property; (c) there is no pending or threatened action,
suit, proceeding or claim by others challenging the rights of the
Company or the Subsidiary in or to such intellectual property, and such
counsel is unaware of any facts which would form a reasonable basis for
any such claim; (d) there is no pending or threatened action, suit,
proceeding or claim by others challenging the validity or scope of such
intellectual property, and such counsel is unaware of any facts which
would form a reasonable basis for any such claim; (e) there is no
pending or threatened action, suit, proceeding or claim by others that
the Company or the Subsidiary infringes or otherwise violates any
patent, trademark, copyright, trade secret or other proprietary right of
others, and such counsel is unaware of any facts which would form a
reasonable basis for any such claim; (f) there is no patent or patent
application which contains claims that dominate or may dominate any
intellectual property described in the Prospectus as being owned or used
by or licensed to the Company or the Subsidiary or that is necessary for
the conduct of their respective businesses or that interferes with the
issued or pending claims of any such intellectual property; and (g)
there is no prior art that may render any patent held by the Company or
the Subsidiary invalid or any patent application held by the Company or
the Subsidiary unpatentable which has not been disclosed to the U.S.
Patent and Trademark Office; and
(iii) The statements in the Prospectus under the Captions
"Risk Factors --Patents and Proprietary Rights; Access to Proprietary
Genes and Proteins" and "Business--Patents and Proprietary Rights" and
other references therein to patent and licensing matters, insofar as
such statements constitute a summary of legal matters, documents or
proceedings, are accurate and present fairly the information purported
to be shown.
(e) You shall have received on the Closing Date an opinion of Xxxxx &
Xxxxxxx, L.L.P., special FDA regulatory Counsel for the Company, dated the
Closing Date and addressed to you, as representatives of the several
underwriters, to the effect that:
(i) The information in the Prospectus under the captions
"Risk Factors-Government Regulation; No Assurance of FDA Approval" and
"Business-Government Regulation," insofar as such statements purport to
summarize applicable provisions of the Federal Food, Drug and Cosmetic
Act and the regulations promulgated thereunder, are accurate summaries
in all material respects of the provisions purported to be summarized
under such captions in the Prospectus;
In addition to the foregoing opinion, such counsel shall state
that, during the course of preparation of the Registration Statement, such
counsel participated in certain discussions with officers of the Company as
to the FDA regulatory matters dealt with under the captions "Risk
18
Factors-Government Regulation; No Assurance of FDA Approval" and
"Business-Government Regulation" in the Registration Statement and Prospectus
(the "FDA Sections"). While they have not undertaken to determine
independently, and do not assume any responsibility for the accuracy,
completeness, or fairness of the statements in the Registration Statement and
Prospectus in the FDA Sections, on the basis of these discussions no facts
have come to their attention which cause them to believe that the statements
in the FDA Sections in the Registration Statement insofar as such statements
relate to FDA regulatory matters, at the time the Registration Statement
became effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the statements in the FDA
Sections in the Prospectus, as of its date and as of the Closing Date or the
Option Closing Date, as the case may be, 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, or that the
statements in the FDA Sections contained in any amendment or supplement to
the Prospectus, as of its date, and as of the Closing Date or the Option
Closing Date, as the case may be, 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 light of the circumstances under
which they were made, not misleading (it being understood that such counsel
need express no opinion with respect to the financial statements and the
notes thereto and the schedules and other financial and statistical data
included in the Registration Statement or the Prospectus).
(f) You shall have received on the Closing Date an opinion of Xxxxx
Xxxxxxxxxx LLP, counsel for the Underwriters, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, with respect
to the matters referred to in clauses (v) (other than subclause (B) thereof),
(vii), (viii), (xii) and the penultimate paragraph of Section 8(c) hereof and
such other related matters as you may request. In rendering their opinion,
Xxxxx Xxxxxxxxxx LLP may rely as to matters of Pennsylvania law upon the opinion
of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx.
(g) You shall have received letters addressed to you and dated the
date hereof and the Closing Date from Coopers & Xxxxxxx L.L.P., independent
certified public accountants, substantially in the forms heretofore approved by
you.
(h) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company,
contemplated by the Commission at or prior to the Closing Date and any request
of the Commission for additional information (to be included in the registration
statement or the prospectus or otherwise) shall have been complied with; (ii)
there shall not have been any change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company and the
Subsidiary, taken as a whole, from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be described or
stated in the Registration Statement and Prospectus (or any amendment or
supplement thereto), any material adverse change in the condition (financial or
other), business, prospects, properties, results of operations of the Company
and the Subsidiary, taken as a whole; (iv) neither the Company nor the
Subsidiary shall have any liabilities or obligations, direct or contingent
(whether or not in the ordinary course of business), that are material to the
Company and the Subsidiary, taken as a whole, other than those reflected in or
contemplated by the Registration Statement or the Prospectus (or any amendment
or supplement thereto); and (v) all the representations and warranties of the
Company contained in this Agreement shall be true and correct in all
19
material respects on and as of the date hereof and on and as of the Closing Date
as if made on and as of the Closing Date, and you shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company (or such other officers as are
acceptable to you), as to the matters set forth in this Section 8(h) and in
Section 8(i) hereof.
(i) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(j) The Shares shall have been approved for quotation subject to
notice of issuance on The Nasdaq Stock Market's National Market.
(k) The Company shall not have received notices of termination
relating to the Company's contracts with its collaborators, the termination of
which, individually or in the aggregate, would have a Material Adverse Effect.
(l) The Company shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you, as Representatives of the several Underwriters, and
counsel for the Underwriters.
Any certificate or document signed by any officer of the Company and
delivered to you, as Representatives of the several Underwriters, or to counsel
for the Underwriters, shall be deemed a representation or warranty by the
Company to each Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (h) and paragraph (l) shall be
dated the Option Closing Date in question and the opinions called for by
paragraphs (c), (d), (e) and (f) shall be revised to reflect the sale of
Additional Shares.
9. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus,
and each amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the registration statement, each
Prepricing Prospectus, the Prospectus, and all amendments or supplements to any
of them as may be reasonably requested for use in connection with the offering
and sale of the Shares; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Shares, including any stamp taxes
in connection with the offering of the Shares; (iv) the printing (or
reproduction) and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda and all other agreements or documents printed (or reproduced)
and delivered in connection with the offering of the Shares; (v) the
registration of the Common Stock under the Exchange Act and the listing of the
Shares on the Nasdaq National Market; (vi) the registration or qualification of
the Shares for offer and sale under the securities or Blue Sky laws of the
several states as provided in Section 5(g) hereof (including the reasonable
fees, expenses and
20
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental Blue
Sky Memoranda and such registration and qualification); (vii) the filing fees
and the reasonable fees and expenses of counsel for the Underwriters in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. in connection with the offering; (viii) the
transportation and other expenses incurred by or on behalf of representatives of
the Company in connection with presentations to prospective purchasers of the
Shares; (ix) the fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the Company; and
(x) the performance by the Company of its other obligations under this
Agreement.
10. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto;
or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment
thereto or an Abbreviated Registration Statement to be declared or become
effective before the offering of the Shares may commence, when notification
of the effectiveness of the registration statement or such post-effective
amendment has been released by the Commission or such Abbreviated
Registration Statement has, pursuant to the provisions of Rule 462 under the
Act, become effective. Until such time as this Agreement shall have become
effective, it may be terminated by the Company, by notifying you, or by you,
as Representatives of the several Underwriters, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they have agreed to purchase hereunder, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares which the Underwriters are obligated to purchase
on the Closing Date, each non-defaulting Underwriter shall be obligated,
severally, in the proportion which the number of Firm Shares set forth
opposite its name in Schedule I hereto bears to the aggregate number of Firm
Shares set forth opposite the names of all non-defaulting Underwriters or in
such other proportion as you may specify in accordance with Section 20 of the
Master Agreement Among Underwriters of Xxxxx Xxxxxx, Xxxxxx Xxxxx & Co.
Incorporated (predecessor of Xxxxx Xxxxxx Inc.), to purchase the Shares which
such defaulting Underwriter or Underwriters agreed, but failed or refused, to
purchase. If any Underwriter or Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase on the Closing
Date and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares which the
Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you
and the Company are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company. In any such case which does not result in
termination of this Agreement, either you or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and
the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed
in Schedule I hereto who, with your approval and the approval of the Company,
purchases Shares which a defaulting Underwriter agreed, but failed or
refused, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy
or telephone but shall be subsequently confirmed by letter.
21
11. Termination of Agreement. This Agreement shall be subject
to termination in your absolute discretion, without liability on the part of any
Underwriter to the Company, by notice to the Company, if following the execution
of this Agreement and prior to the Closing Date or any Option Closing Date (if
different from the Closing Date and then only as to the Additional Shares), as
the case may be, (i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York shall have been declared by either federal or
state authorities, or (iii) there shall have occurred any outbreak or escalation
of hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the Shares
at the offering price to the public set forth on the cover page of the
Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters. Notice of such termination may be given by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriters. The statements
set forth in the third and last paragraphs on the cover page, the stabilization
legend on the inside front cover page and the statements in the first, third,
sixth and ninth paragraphs under the caption "Underwriting" in any Prepricing
Prospectus and in the Prospectus constitute the only information furnished by or
on behalf of the Underwriters through you as such information is referred to in
Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5,
10 and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, at the office of the
Company at Xxx Xxxxx Xxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxxxx 19355, Attention:
Xxxxxxx X. Xxxxxxxx, Xx., Ph.D., President and Chief Executive Officer, with a
copy to Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, 0000 Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxx Xxxxxxx, Xx., Esq.; or
(ii) if to you, as Representatives of the several Underwriters, care of Xxxxx
Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Manager,
Investment Banking Division, with a copy to Xxxxx Xxxxxxxxxx LLP, 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxx, Esq.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors, its officers who sign the
Registration Statement and the controlling persons referred to in Section 7
hereof and, to the extent provided herein, their respective successors and
assigns and no other person shall acquire or have any right under or by virtue
of this Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from any
Underwriter of any of the Shares in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
22
Very truly yours,
APOLLON, INC.
By:
Xxxxxxx X. Xxxxxxxx, Xx., Ph.D.
President and Chief Executive Officer
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
Xxxxx Xxxxxx Inc.
Genesis Merchant Group Securities LLC
Cruttenden Xxxx Incorporated
As Representatives of the Several Underwriters
By: Xxxxx Xxxxxx Inc.
By:
Managing Director
23
SCHEDULE I
APOLLON, INC.
Number of
Underwriter Firm Shares
----------- ------------
Xxxxx Xxxxxx Inc.
Genesis Merchant Group Securities LLC
Cruttenden Xxxx Incorporated
------------
Total 2,500,000.00
------------
------------
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