EXHIBIT 1.1
5,000,000 SHARES
BARRIER THERAPEUTICS, INC.
COMMON STOCK, PAR VALUE $0.0001 PER SHARE
UNDERWRITING AGREEMENT
__________, 2004
_____________, 2004
Xxxxxx Xxxxxxx & Co. Incorporated
Banc of America Securities LLC
X.X. Xxxxxx Securities Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
BARRIER THERAPEUTICS, INC., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "UNDERWRITERS") 5,000,000 shares of its common stock, par value
$0.0001 per share (the "FIRM SHARES"). The Company also proposes to issue and
sell to the several Underwriters not more than an additional 750,000 shares of
common stock, par value $0.0001 per share, of the Company (the "ADDITIONAL
SHARES") if and to the extent that you, as Managers of the offering, shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such shares of common stock granted to the Underwriters in Section 2 hereof. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "SHARES." The shares of common stock, par value $0.0001 per share, of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the "COMMON STOCK."
The Company has filed with the Securities and Exchange Commission
(the "COMMISSION") a registration statement on Form S-1 (File No. 333-112539),
including a prospectus, relating to the Shares. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), is hereinafter referred to as the "REGISTRATION STATEMENT";
the prospectus in the form first used to confirm sales of Shares is hereinafter
referred to as the "PROSPECTUS." If the Company has filed an abbreviated
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"),
then any reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement.
Xxxxxx Xxxxxxx & Co. Incorporated ("XXXXXX XXXXXXX") has agreed to
reserve a portion of the Shares to be purchased by it under this Agreement for
sale to the Company's directors, officers, employees and business associates and
other parties related to the Company (collectively, "PARTICIPANTS"), as set
forth in the Prospectus under the heading "Underwriters" (the "DIRECTED SHARE
PROGRAM"). The Shares to be sold by Xxxxxx Xxxxxxx and its affiliates pursuant
to the Directed Share Program are referred to hereinafter as the "DIRECTED
SHARES." Any Directed Shares not confirmed for purchase
by any Participant by the end of the business day on which this Agreement is
executed will be offered to the public by the Underwriters as set forth in the
Prospectus.
1. Representations and Warranties. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the
Company's knowledge, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any 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, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iii) the
Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph
do not apply to statements or omissions in the Registration Statement or
the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the
Company and the Subsidiary (as defined below), taken as a whole (a
"Material Adverse Effect").
(d) The Company's only subsidiary is Barrier Therapeutics, N.V., a
company incorporated under the laws of Belgium (the "Subsidiary"). The
Subsidiary is not a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X. The Subsidiary has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would
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not have a Material Adverse Effect. All of the issued shares of capital
stock of the Subsidiary have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly by the Company,
free and clear of all liens, encumbrances, equities or claims. There are
no outstanding securities convertible into or exchangeable for, or
warrants, rights or options to purchase from the Company or the
Subsidiary, or obligations of the Company or the Subsidiary to issue, any
shares of capital stock of the Subsidiary.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock outstanding prior to the issuance of
the Shares have been duly authorized and are validly issued, fully paid
and non-assessable. No person is entitled to preemptive or similar rights
to acquire any securities of the Company, other than rights that are not
triggered by the issuance of the Shares hereunder and that are included in
agreements that terminate upon the Closing Date (as defined herein). There
are no outstanding securities convertible into or exchangeable for, or
warrants, rights or options to purchase from the Company, or obligations
of the Company to issue, any shares of its Common Stock or any other class
of shares of capital stock of the Company, except as set forth in the
Prospectus.
(h) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of (i) applicable law, (ii) the certificate
of incorporation or by-laws of the Company, (iii) any agreement or other
instrument binding upon the Company that is material to the Company, or
(iv) any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company except, with respect to clauses
(i), (iii) and (iv), for any contraventions which would not, alone or in
the aggregate, result in a Material Adverse Effect. No consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement, except (i) such as have been obtained or made under
the Securities Act, (ii) such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of
the Shares or (iii) such as may be required by the National Association of
Securities Dealers, Inc. in connection with the purchase and distribution
of the Shares.
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(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and the Subsidiary, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or the Subsidiary
is a party or to which any of the properties of the Company or the
Subsidiary is subject that are required to be described in the
Registration Statement or the Prospectus pursuant to the Securities Act or
the rules and regulations promulgated thereunder and are not so described
or any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement, in each case
pursuant to the Securities Act or the rules and regulations promulgated
thereunder, that are not described or filed as required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder.
(m) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as
described in the Prospectus will not be, required to register as an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended.
(n) The Company and the Subsidiary (i) are in compliance with all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly or
in the aggregate, have a Material Adverse Effect.
(o) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a Material Adverse
Effect.
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(p) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company. No person has any right to require the Company to include any
securities of the Company with the Shares registered pursuant to the
Registration Statement.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company
and the Subsidiary, taken as a whole, have not incurred any material
liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (ii) the
Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind
on its capital stock, except, in each case, as described in the Prospectus
and other than ordinary and customary dividends; and (iii) there has not
been any material change in the capital stock, short-term debt or
long-term debt of the Company and the Subsidiary, except in each case as
described in the Prospectus.
(r) The Company and the Subsidiary do not own any real property. The
Company and the Subsidiary have good and marketable title to all personal
property owned by them which is material to the business of the Company
and the Subsidiary, taken as a whole, free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the Company and the Subsidiary; and any real property and buildings held
under lease by the Company and the Subsidiary are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and the Subsidiary, in each
case except as described in the Prospectus.
(s) The Company and the Subsidiary own or have valid, binding and
enforceable licenses or other rights to use the patents and patent
applications, inventions, copyrights, trademarks, service marks, trade
names, service names, technology and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary rights and excluding
generally commercially available "off the shelf" software programs
licensed pursuant to shrink wrap or "click and accept" licenses) necessary
to conduct the business of the Company and the Subsidiary in the manner
described in the Prospectus (collectively, the "COMPANY INTELLECTUAL
PROPERTY") and the absence of which, individually or in the aggregate,
would not have a Material Adverse Effect. Neither the Company nor the
Subsidiary is obligated to pay a royalty, grant a license, or provide
other consideration to any third party in connection with the Company
Intellectual Property other than as disclosed in the Prospectus. Except as
disclosed in the Prospectus or as would not have a Material Adverse
Effect, (i) neither the Company nor the Subsidiary has received any notice
of infringement or conflict with asserted rights of others with respect to
any Company Intellectual Property,
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(ii) the conduct of the business of the Company in the manner described in
the Prospectus does not and will not, to the knowledge of the Company,
infringe, interfere or conflict with any valid issued patent claim or
other Intellectual Property right of any third party, or any claim of a
patent application filed by any third party, which patent application has
been published by the PTO (as defined below) or other similar foreign
authority or is otherwise known to the Company, and (iii) no third party,
including any academic or governmental organization, possesses or could
obtain rights to the Company Intellectual Property which, if exercised,
could enable such party to develop products competitive to those of the
Company and the Subsidiary.
(t) The Company and the Subsidiary have duly and properly filed or
caused to be filed with the United States Patent and Trademark Office (the
"PTO") and applicable foreign and international patent authorities all
patent applications owned by the Company or the Subsidiary (the "COMPANY
PATENT APPLICATIONS"). To the knowledge of the Company, the Company and
the Subsidiary have complied with the PTO's duty of candor and disclosure
for the Company Patent Applications and have made no material
misrepresentation in the Company Patent Applications; the Company and the
Subsidiary are not aware of any facts material to a determination of
patentability regarding the Company Patent Applications not called to the
attention of the PTO; the Company and the Subsidiary are not aware of any
facts not called to the attention of the PTO or similar foreign authority
which would preclude the grant of a patent for the Company Patent
Applications; and the Company and the Subsidiary have no knowledge of any
facts which would preclude them from having clear title to the Company
Patent Applications.
(u) No material labor dispute with the employees of the Company or
the Subsidiary exists, except as described in the Prospectus or, to the
knowledge of the Company or the Subsidiary, is imminent; and the Company
is not aware of any existing, threatened or imminent labor disturbance by
the employees of any of its principal suppliers, manufacturers or
contractors that would have a Material Adverse Effect on the Company and
the Subsidiary, taken as a whole.
(v) The Company and the Subsidiary are insured by insurance in such
amounts as the Company reasonably believes are adequate for the conduct of
its business and the value of its properties and as are customary in the
businesses in which they are engaged; neither the Company nor the
Subsidiary has been refused any insurance coverage sought or applied for;
and neither the Company nor the Subsidiary has any 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 would not have
a Material Adverse Effect on the Company and the Subsidiary, taken as a
whole, except as described in the Prospectus.
(w) Except as described in the Prospectus, the Company and the
Subsidiary possess all certificates, authorizations and permits issued by
the
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appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses as currently conducted, including
without limitation all such certificates, authorizations and permits
required by the United States Food and Drug Administration (the "FDA") or
any other federal, state or foreign agencies or bodies engaged in the
regulation of pharmaceuticals or biohazardous materials, except where the
failure to so possess such certificates, authorizations, and permits,
singly or in the aggregate, would not result in a Material Adverse Effect.
Except as described in the Prospectus, neither the Company nor the
Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect.
(x) The studies, tests and preclinical and clinical trials conducted
by the Company or on behalf of the Company by third parties specifically
engaged by the Company to conduct such studies and tests that are
described in the Registration Statement and the Prospectus were and, if
still pending, are being, conducted in all material respects in accordance
with experimental protocols, procedures and controls pursuant to, where
applicable, accepted professional and scientific standards; the
descriptions of the results of such studies, tests and trials contained in
the Registration Statement and the Prospectus are accurate in all material
respects; and the Company has not received any notices or correspondence
from the FDA or any foreign, state or local governmental body exercising
comparable authority requiring the termination, suspension or material
modification of any studies, tests or preclinical or clinical trials
conducted by or on behalf of the Company which termination, suspension or
material modification would reasonably be expected to have a Material
Adverse Effect.
(y) The Company and the Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals; and the
Company is otherwise in compliance in all material respects with all
applicable effective provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the
rules and regulations issued thereunder by the Commission.
(z) The consolidated financial statements of the Company and the
Subsidiary (in each case, together with the related notes thereto)
included in the Registration Statement and the Prospectus present fairly
the consolidated financial position and results of the operations of the
respective companies as of the respective dates indicated and for the
respective periods specified; and such consolidated financial statements
(together with the related notes thereto) have been prepared in conformity
with generally accepted accounting principles,
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consistently applied throughout the periods involved except as otherwise
stated therein. The selected financial data included in the Registration
Statement and the Prospectus present fairly, on the basis stated in the
Registration Statement and the Prospectus, the information shown therein
and have been compiled on a basis consistent with that of the audited
consolidated financial information included in the Registration Statement
and the Prospectus.
(aa) Each material contract, agreement and license to which the
Company or the Subsidiary is bound is legal, valid, binding, enforceable,
and in full force and effect against the Company or the Subsidiary, and to
the knowledge of the Company and the Subsidiary, each other party thereto,
except to the extent such enforceability is subject to (i) laws of general
application relating to bankruptcy, insolvency, moratorium and the relief
of debtors and (ii) the availability of specific performance, injunctive
relief and other equitable remedies. Neither the Company or the Subsidiary
nor, to the Company's and the Subsidiary's knowledge, any other party is
in material breach or default with respect to any such contract, agreement
and license, and, to the Company's and the Subsidiary's knowledge, no
event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under any such contract, agreement or license. No party has
repudiated any material provision of any such contract, agreement or
license.
(bb) The Registration Statement, the Prospectus and any preliminary
prospectus comply, and any amendments or supplements thereto will comply,
with any applicable laws or regulations of foreign jurisdictions in which
the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, were or will be distributed in connection with the Directed
Share Program.
(cc) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency, other than those
obtained, those as may be required by the securities laws of the various
states and those as may be required by the National Association of
Securities Dealers, Inc., is required in connection with the offering of
the Directed Shares in any jurisdiction where the Directed Shares are
being offered.
(dd) The Company has not offered, or caused Xxxxxx Xxxxxxx or its
affiliates to offer, Shares to any person pursuant to the Directed Share
Program with the intent to unlawfully influence (i) a customer or supplier
of the Company or the Subsidiary to alter the customer's or supplier's
level or type of business with the Company or the Subsidiary, or (ii) a
trade journalist or publication to write or publish favorable information
about the Company or the Subsidiary or their products.
(ee) All persons who hold options to purchase shares of capital
stock of the Company acquired through exercise of such options have either
executed or
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are otherwise subject to agreements that contain (i) "lock-up" provisions
with transfer restrictions substantially similar to those set forth in the
agreement attached as Exhibit A hereto or (ii) provisions whereby such
holders agree, if requested by the Underwriters, to execute "lock-up"
agreements with transfer restrictions substantially similar to those set
forth in the agreement attached as Exhibit A hereto.
2. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective number of Firm Shares set forth in Schedule I hereto
opposite its name at $______ a share (the "PURCHASE PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to 750,000 Additional Shares at
the Purchase Price. You may exercise this right on behalf of the Underwriters in
whole or from time to time in part by giving written notice of each election to
exercise the option not later than 30 days after the date of this Agreement. Any
exercise notice shall specify the number of Additional Shares to be purchased by
the Underwriters and the date on which such shares are to be purchased. Each
purchase date must be at least one business day after the written notice is
given and may not be earlier than the closing date for the Firm Shares nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. On each
day, if any, that Additional Shares are to be purchased (an "OPTION CLOSING
DATE"), each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the total number
of Additional Shares to be purchased on such Option Closing Date as the number
of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the period
ending 180 days after the date of the Prospectus, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the Shares to
be sold hereunder, (B) the issuance by the Company of shares of Common Stock
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof that is described in the
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Prospectus or of which the Underwriters have been advised in writing, (C) the
grant of any stock option or stock purchase right pursuant to the Company's 2004
Stock Incentive Plan or 2004 Employee Stock Purchase Plan and the issuance by
the Company of any shares of Common Stock upon the exercise of such stock option
or stock purchase right, provided that, prior to the grant of any such stock
option or stock purchase right, the Company shall cause the recipients of such
grants to execute and deliver to Xxxxxx Xxxxxxx "lock-up" agreements, each
substantially in the form of Exhibit A hereto or (D) the issuance of any shares
of Common Stock in connection with acquisition, licensing, collaboration or
similar strategic arrangements, provided that, prior to the issuance of any such
shares of Common Stock, the Company shall cause the recipients of such shares to
execute and deliver to you "lock-up" agreements, each substantially in the form
of Exhibit A hereto.
3. Terms of Public Offering. The Company is 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. The Company is further
advised by you that the Shares are to be offered to the public initially at
$_____________ a share (the "PUBLIC OFFERING PRICE") and to certain dealers
selected by you at a price that represents a concession not in excess of $______
a share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $_____ a share, to any
Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares shall be made
to the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on ____________, 2004, or at
such other time on the same or such other date, not later than _________, 2004,
as shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
corresponding notice described in Section 2 or at such other time on the same or
on such other date, in any event not later than _______, 2004, as shall be
designated in writing by you.
Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
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5. Conditions to the Underwriters' Obligations. The obligations of
the Company to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than [_____] (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the Company and the Subsidiary, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate of the Company, dated the Closing Date and signed by an
executive officer on behalf of the Company, to the effect set forth in
Section 5(a)(i) above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and correct
as of the Closing Date and that the Company has complied in all material
respects with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied hereunder on or before the Closing
Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxx, Xxxxx & Xxxxxxx LLP, outside counsel for the Company,
dated the Closing Date, to the effect that:
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(i) The Company has been duly incorporated and is a
corporation validly existing and in good standing under the laws of
the State of Delaware, with the requisite 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;
(ii) The Company is duly qualified and is in good standing as
a foreign corporation authorized to do business as a foreign
corporation in the State of New Jersey;
(iii) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(iv) The Shares have been duly authorized by the Company and,
when issued and sold by the Company, and delivered by the Company
to, and paid for by, the Underwriters in accordance with the terms
of the Underwriting Agreement, will be validly issued, fully paid
and non-assessable. The issuance of the Shares is free of statutory
and, to such counsel's knowledge, contractual preemptive rights;
(v) The Company has authorized and issued capital stock as set
forth in the Registration Statement and the Prospectus, and the
outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable;
(vi) All of the issued and outstanding shares of capital stock
of the Subsidiary are, to such counsel's knowledge, owned of record
by the Company;
(vii) The statements set forth under the caption "Description
of Capital Stock" in the Prospectus, insofar as such statements
purport to summarize certain provisions of the certificate of
incorporation and by-laws of the Company, provide a fair summary of
such provisions in all material respects;
(viii) No consent, authorization, approval or order of or
filing or qualification with any federal or state governmental or
regulatory commission, board, body, authority or agency is required
to be obtained or made by the Company in connection with the
issuance and sale of the Shares, and the consummation by the Company
of the transactions contemplated by the Underwriting Agreement,
other than such as have previously been obtained, including, without
limitation, registration of the Shares under the Securities Act and
of the Common Stock under the Exchange Act; provided, however, that
such counsel expresses no opinion as to (a) state securities or blue
sky laws or foreign securities laws of the various jurisdictions in
which the Shares are being offered by the underwriters thereof, and
(b) the approval by the National
12
Association of Securities Dealers, Inc. of the terms and conditions
of the Underwriting Agreement;
(ix) The execution, delivery and performance of the
Underwriting Agreement by the Company, and the consummation by the
Company of the transactions contemplated thereby, do not and will
not result in any breach of, or constitute a default under (nor
constitute any event that, with notice, lapse of time, or both,
would result in any breach of or default under), or conflict with
any provision of the certificate of incorporation or by-laws of the
Company, or any provision of any agreement or instrument filed as an
exhibit to the Registration Statement, the Delaware General
Corporation Law, or any U.S. federal or New York state law, rule or
regulation or, to such counsel's knowledge, any decree, judgment or
order of any court;
(x) To such counsel's knowledge, there are no contracts,
licenses, agreements, leases or documents of a character which are
required to be filed as exhibits to the Registration Statement, or
to be summarized or described in the Prospectus, which have not been
so filed, summarized, or described as required;
(xi) To such counsel's knowledge, there are no actions, suits,
claims, investigations or proceedings pending or threatened to which
the Company or the Subsidiary is subject, or by which any of their
respective properties are bound, before or by any federal or state
governmental or regulatory commission, board, body, authority or
agency which are required to be described in the Registration
Statement or the Prospectus, or any statutes or regulations that are
required to be described in the Registration Statement or the
Prospectus, and which are not so described as required;
(xii) The Company is not and, after giving effect to the
offering and sale of the Shares, and the application of the proceeds
thereof as described in the Prospectus, will not be, an "investment
company," as such term is defined in the Investment Company Act of
1940, as amended;
(xiii) Such counsel has read the statements in the Prospectus
under the captions "Risk Factors - If we fail to comply with our
obligations in the agreements under which we license development or
commercialization rights to products or technology from third
parties, we could lose license rights that are important to our
business."; "Risk Factors - Various aspects of our Xxxxxxx & Xxxxxxx
license agreements may adversely affect our business."; "Risk
Factors - We may not receive regulatory approvals for our product
candidates or approvals may be delayed, either of which could
materially harm our business."; "Risk Factors - We may not be able
to obtain or maintain orphan drug
13
exclusivity for our product candidates for the treatment of rare
dermatological diseases, and our competitors may obtain orphan drug
exclusivity prior to us, which could significantly harm our
business."; "Risk Factors - If we fail to comply with regulatory
requirements, regulatory agencies may take action against us, which
could significantly harm our business."; "Risk Factors - New federal
legislation will increase the pressure to reduce price of
pharmaceutical products paid for by Medicare, which will adversely
affect our revenues, if any."; "Risk Factors - Provisions in our
certificate of incorporation and bylaws and under Delaware law may
prevent or frustrate a change in control or a change in management
that stockholders believe is desirable."; "Business - Product
Development Pipeline - Later Stage Product Candidates - Hyphanox -
Xxxxxxx Option"; "Business - Xxxxxxx & Xxxxxxx License Agreements";
"Business - Xxxxxx Development and Supply Agreement"; "Business -
Patent Protection and Intellectual Property; Orphan Drug;
Xxxxx-Xxxxxx Act; Pediatric Treatment Exclusivity - Orphan Drug
Designation"; "Business - Patent Protection and Intellectual
Property; Orphan Drug; Xxxxx-Xxxxxx Act; Pediatric Treatment
Exclusivity - The Xxxxx-Xxxxxx Act"; "Business - Patent Protection
and Intellectual Property; Orphan Drug; Xxxxx-Xxxxxx Act; Pediatric
Treatment Exclusivity - Pediatric Treatment Exclusivity"; "Business
- Government Regulation - United States Government Regulation";
"Business - Third Party Reimbursement and Pricing Controls";
"Description of Capital Stock" and "Underwriters" (only with respect
to the description of the Underwriting Agreement) and Items 14 and
Item 15 of Part II of the Registration Statement, and insofar as
such statements constitute summaries of legal matters, contracts,
agreements, documents or proceedings referred to therein, or refer
to statements of law or legal conclusions, such statements are
accurate in all material respects and fairly present the information
purported to be shown;
(xiv) To such counsel's knowledge, no person is entitled to
require the Company to register shares of capital stock or other
securities of the Company under the Securities Act in connection
with the offering contemplated by the Registration Statement;
(xv) The Registration Statement, as of the Effective date, and
the Prospectus, as of the date thereof (except for the financial
statements, including the notes and schedules thereto, other
financial and accounting data and information and statistical data
derived from the financial statements included therein or omitted
therefrom, as to which such counsel expresses no view) comply as to
form in all material respects to the requirements of the Securities
Act and the applicable rules and regulations of the Commission
thereunder; and
(xvi) No fact has come to such counsel's attention that has
led them to believe that the Registration Statement, as of the time
it was
14
declared effective, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, or that the Prospectus, as of its date and at the date
hereof, contained or contains any untrue statement of a material
fact, or omitted or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need not express
any belief with respect to the financial statements, schedules,
notes or other financial, statistical, and accounting data included
in the Registration Statement or the Prospectus).
(d) The Underwriters shall have received on the Closing Date an
intellectual property opinion from Xxxxxx, Xxxxx & Xxxxxxx LLP, special
patent counsel to the Company, dated the Closing Date, to the effect that:
(i) the Company and the Subsidiary own, possess or have
adequate rights to use the patents and patent applications,
inventions, technology and know-how (the "Company Intellectual
Property") reasonably necessary to develop, manufacture, market and
sell Sebazole, Zimycan, Hyphanox, Liarozole and Rambazole in the
manner described in the Registration Statement and the Prospectus,
except to the extent that the failure to own or possess or have
adequate rights to use such Company Intellectual Property would not,
individually or in the aggregate, have a material adverse effect on
the Company and the Subsidiary taken as a whole;
(ii) other than as set forth or contemplated in the
Registration Statement and the Prospectus, neither the Company nor
its Subsidiary has received any notice of infringement of, or
conflict with, and such counsel has no knowledge of any such
infringement of, or conflict with, asserted rights of a third party
with respect to the Company Intellectual Property except as would
not, individually or in the aggregate, have a material adverse
effect on the Company and the Subsidiary taken as a whole;
(iii) other than as set forth or contemplated in the
Registration Statement and the Prospectus or as would not have a
material adverse effect on the Company and the Subsidiary taken as a
whole, the conduct of the current and future business of the Company
or the Subsidiary in the manner described in the Prospectus does not
and will not infringe, interfere or conflict with any valid claim in
an issued patent or other intellectual property right of any third
party;
(iv) other than as set forth or contemplated in the
Registration Statement and the Prospectus, no third party, including
any academic or governmental organization, possesses or could obtain
rights to the
15
patents, patent applications or patent rights of the Company or the
Subsidiary, which, if exercised would allow such third party to
develop products competitive with those of the Company and the
Subsidiary and would, individually or in the aggregate, have a
material adverse effect on the Company and the Subsidiary taken as a
whole;
(v) all information material to patentability has been
disclosed, or will be disclosed in a timely manner to the U.S.
Patent and Trademark Office or similar foreign authority during the
prosecution of the Company's patents and patent applications and no
misrepresentation was made to, or material fact withheld from, the
U.S. Patent and Trademark Office or similar foreign authority during
such prosecution;
(vi) the statements relating to legal matters, documents or
proceedings included in the Prospectus under the captions "Risk
Factors - There are limitations on our patent rights relating to our
product candidates that may affect our ability to exclude third
parties from competing against us if we receive approval to market
these product candidates"; "Risk Factors - If we are unable to
obtain and maintain patent protection for our intellectual property,
our competitors could develop and market products similar or
identical to ours, which may reduce demand for our product
candidates"; "Risk Factors - If we are unable to protect the
confidentiality of our proprietary information and know-how, the
value of our technology may be adversely affected"; "Risk Factors -
If the development of our product candidates infringes the
intellectual property of our competitors or other third parties, we
may be required to pay license fees or cease our development
activities and pay damages, which could significantly harm our
business"; "Business - Product Development Pipeline - Later Stage
Product Candidates - Sebazole - Proprietary Rights"; Business -
Product Development Pipeline - Later Stage Product Candidates -
Zimycan - Proprietary Rights"; "Business - Product Development
Pipeline - Later Stage Product Candidates - Hyphanox - Proprietary
Rights"; "Business - Product Development Pipeline - Later Stage
Product Candidates - Liarozole - Proprietary Rights"; "Business -
Patents and Intellectual Property; Orphan Drug; Xxxxx-Xxxxxx Act;
Pediatric Treatment Exclusivity"; "Business - Trademarks"; fairly
summarize in all material respects such matters, documents or
proceedings; and
(vii) the Company's patents are valid and enforceable and are
entitled to a statutory presumption of validity and of ownership by
the assignee; there are no asserted or unasserted claims of any
persons relating to the scope or ownership of any of the Company's
patents; and there are no liens which have been filed against any of
the Company's patents.
16
(e) The Underwriters shall have received on the Closing Date an
opinion of Xxxx and Xxxx LLP, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 5(c)(iii),
5(c)(iv), 5(c)(xiii) (but only as to the statements in the Prospectus
under "Description of Capital Stock" and "Underwriters"), 5(c)(xv) and
5(c)(xvi) above.
With respect to Section 5(c)(xv), Section 5(c)(xvi) and Section 5(e) (with
respect to the matters in Sections 5(c)(xv) and 5(c)(xvi) only) above,
such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified.
The opinions of Xxxxxx, Xxxxx & Bockius LLP described in Sections 5(c) and
(d) above shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(f) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the
Underwriters, from Ernst & Young LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(g) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain stockholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the
Closing Date.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, four signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, as soon
as practicable following
17
the date of this Agreement and in no event later than 4 p.m. New York City
time on the business day next succeeding the date of this Agreement and
during the period mentioned in Section 6(c) below, as many copies of the
Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which Shares may have been sold by you on behalf of the Underwriters and
to any other dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law. The costs of
complying with this Section 6(c) shall be borne by the Company with
respect to any amendment of supplement required during the nine-month
period after the date of this Agreement and by the Underwriters
thereafter.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending ________, 2005 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) Except as otherwise provided herein, whether or not the
transactions contemplated in this Agreement are consummated or this
Agreement is terminated, to pay or cause to be paid all expenses incident
to the performance of its obligations under this Agreement, including: (i)
the fees, disbursements and expenses of the Company's counsel and the
Company's accountants in connection with the registration and delivery of
the Shares under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the
18
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters, including any transfer or
other taxes payable thereon, (iii) the cost of printing or producing any
Blue Sky or Legal Investment memorandum in connection with the offer and
sale of the Shares under state securities laws and all expenses in
connection with the qualification of the Shares for offer and sale under
state securities laws as provided in Section 6(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with
the Blue Sky memorandum, (iv) all filing fees and the reasonable fees and
disbursements of counsel to the Underwriters incurred in connection with
the review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., including any counsel fees
incurred on behalf of or disbursements by Xxxxxx Xxxxxxx in its capacity
as a "qualified independent underwriter," (v) all fees and expenses in
connection with the preparation and filing of the registration statement
on Form 8-A relating to the Common Stock and all costs and expenses
incident to listing the Shares on the NASDAQ National Market, (vi) the
cost of printing certificates representing the Shares, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the costs
and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering of
the Shares, 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 with
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, (ix)
document production charges and expenses associated with printing this
Agreement, (x) all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other takes, if any, incurred by the
Underwriters in connection with the Directed Share Program, (xi) all
expenses incurred in connection with any offer and sale of the Shares
outside of the United States, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with
offers and sales of the Shares outside of the United States and (xii) all
other costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
Section, Section 7 entitled "Indemnity and Contribution," Section 8
entitled "Directed Share Program Indemnification," and the last paragraph
of Section 10 below, the Underwriters will pay all of their costs and
expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
19
(g) To place stop transfer orders on any Directed Shares that have
been sold to Participants who are subject to the three month restriction
on sale, transfer, assignment, pledge or hypothecation imposed by NASD
Regulation, Inc. under its Interpretative Material 2110-1 on free-riding
and withholding to the extent necessary to ensure compliance with the
three month restrictions.
(h) To comply with all applicable securities and other applicable
laws, rules and regulations in each jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program.
(i) To enforce the Company's rights under the agreements referred to
in Section 1(ee) above (i) to restrict the transfer of securities during
the 180-day period following the Closing Date and (ii) to obtain executed
copies of "lock-up" agreements in the form of Exhibit A hereto from each
option holder who exercises an option during the 180-day period following
the Closing Date.
7. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and each
affiliate of any Underwriter within the meaning of Rule 405 under the
Securities Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
any amendment thereof, any preliminary prospectus or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by 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 or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein,
provided, however, that the foregoing indemnity agreement with respect to
any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased Shares, any person controlling such
Underwriter, or any affiliate of such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses,
claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 6(a) hereof. The Company also
agrees to indemnify
20
and hold harmless Xxxxxx Xxxxxxx and each person, if any, who controls
Xxxxxx Xxxxxxx within the meaning of either Section 15 of the Securities
Act, or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities and judgments incurred as a result of
Xxxxxx Xxxxxxx'x participation as a "qualified independent underwriter"
within the meaning of Rule 2720 of the National Association of Securities
Dealers' Conduct Rules in connection with the offering of the Shares of
Common Stock, except for any losses, claims, damages, liabilities, and
judgments resulting from Xxxxxx Xxxxxxx'x, or such controlling person's,
willful misconduct.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from
the Company to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or
supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Section 7(a) or 7(b), such
person (the "INDEMNIFIED PARTY") shall promptly notify the person against
whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is
understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel)
for all such indemnified parties and that all such fees and expenses shall
be reimbursed as they are incurred. Such firm shall be designated in
writing by Xxxxxx Xxxxxxx in the case of parties indemnified pursuant to
Section 7(a), and by the Company, in the case of parties indemnified
pursuant to Section 7(b). The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, the
21
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered
into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to
the date of such settlement (other than reimbursement for fees and
expenses that the indemnifying party is contesting in good faith). No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
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 proceeding. Notwithstanding anything contained herein to the
contrary, if indemnity may be sought pursuant to Section 7(a) hereof in
respect of such action or proceeding, then in addition to such separate
firm for the indemnified parties, the indemnifying party shall be liable
for the reasonable fees and expenses of not more than one separate firm
(in addition to any local counsel) for Xxxxxx Xxxxxxx in its capacity as a
"qualified independent underwriter" and all persons, if any, who control
Xxxxxx Xxxxxxx within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act; provided, that, the retention of
such counsel meets the conditions set forth in clauses (i) or (ii) of the
second sentence of this Section 7(c).
(d) To the extent the indemnification provided for in Section 7(a)
or 7(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (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 7(d)(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 7(d)(i) above but also the
relative fault of the Company on the one hand and of the Underwriters on
the other hand in connection with the statements or omissions that
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 Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Shares (before deducting expenses) received by the Company and the total
underwriting
22
discounts and commissions received by the Underwriters, in each case as
set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. 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 or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 7(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph 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 or defending any such action or
claim. 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 at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of
any damages that 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 Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7 are not
exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter or by or
on behalf of the Company, its officers or directors, or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
8. Directed Share Program Indemnification.
(a) The Company agrees to indemnify and hold harmless Xxxxxx Xxxxxxx
and its affiliates within the meaning of Rule 405 under the Securities Act
and each person, if any, who controls Xxxxxx Xxxxxxx or its affiliates
within the
23
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act ("XXXXXX XXXXXXX ENTITIES"), from and against any and all
losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) (i) caused by any
untrue statement or alleged untrue statement of a material fact contained
in any material prepared by or with the consent of the Company for
distribution to Participants in connection with the Directed Share
Program, or caused by 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; (ii) caused by the failure of any
Participant to pay for and accept delivery of Directed Shares that the
Participant has agreed to purchase; or (iii) related to, arising out of,
or in connection with the Directed Share Program other than losses,
claims, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of the Xxxxxx Xxxxxxx Entities.
(b) In case any proceeding (including any governmental
investigation) shall be instituted involving any Xxxxxx Xxxxxxx Entity in
respect of which indemnity may be sought pursuant to Section 8(a), the
Xxxxxx Xxxxxxx Entity seeking indemnity shall promptly notify the Company
in writing and the Company, upon request of the Xxxxxx Xxxxxxx Entity,
shall retain counsel reasonably satisfactory to the Xxxxxx Xxxxxxx Entity
to represent the Xxxxxx Xxxxxxx Entity and any other indemnified party the
Company may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Xxxxxx Xxxxxxx Entity shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the
expense of such Xxxxxx Xxxxxxx Entity unless (i) the Company shall have
agreed to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include both the Company
and the Xxxxxx Xxxxxxx Entity and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. The Company shall not, in respect of the legal
expenses of the Xxxxxx Xxxxxxx Entities in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the fees
and expenses of more than one separate firm (in addition to any local
counsel) for all Xxxxxx Xxxxxxx Entities. Any such firm for the Xxxxxx
Xxxxxxx Entities shall be designated in writing by Xxxxxx Xxxxxxx. The
Company shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there
be a final judgment for the plaintiff, the Company agrees to indemnify the
Xxxxxx Xxxxxxx Entities from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if
at any time a Xxxxxx Xxxxxxx Entity shall have requested the Company to
reimburse it for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the Company agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days
after receipt by the Company of the aforesaid request and
24
(ii) the Company shall not have reimbursed the Xxxxxx Xxxxxxx Entity in
accordance with such request prior to the date of such settlement (other
than reimbursement for fees and expenses that the Company is contesting in
good faith). The Company shall not, without the prior written consent of
Xxxxxx Xxxxxxx, effect any settlement of any pending or threatened
proceeding in respect of which any Xxxxxx Xxxxxxx Entity is or could have
been a party and indemnity could have been sought hereunder by such Xxxxxx
Xxxxxxx Entity, unless such settlement includes an unconditional release
of the Xxxxxx Xxxxxxx Entities from all liability on claims that are the
subject matter of such proceeding.
(c) To the extent the indemnification provided for in Section 8(a)
is unavailable to a Xxxxxx Xxxxxxx Entity or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then the
Company, in lieu of indemnifying the Xxxxxx Xxxxxxx Entity thereunder,
shall contribute to the amount paid or payable by the Xxxxxx Xxxxxxx
Entity as a result of such losses, claims, damages or liabilities (i) in
such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Xxxxxx Xxxxxxx Entities on
the other hand from the offering of the Directed Shares or (ii) if the
allocation provided by clause 8(c)(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 8(c)(i) above but also the relative fault
of the Company on the one hand and of the Xxxxxx Xxxxxxx Entities on the
other hand in connection with the statements or omissions that 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 of the Xxxxxx Xxxxxxx Entities on the other hand in
connection with the offering of the Directed Shares shall be deemed to be
in the same respective proportions as the net proceeds from the offering
of the Directed Shares (before deducting expenses) and the total
underwriting discounts and commissions received by the Xxxxxx Xxxxxxx
Entities for the Directed Shares, bear to the aggregate Public Offering
Price of the Shares. If the loss, claim, damage or liability is caused by
an untrue or alleged untrue statement of a material fact, the relative
fault of the Company on the one hand and the Xxxxxx Xxxxxxx Entities on
the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement or the omission or alleged
omission relates to information supplied by the Company or by the Xxxxxx
Xxxxxxx Entities and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(d) The Company and the Xxxxxx Xxxxxxx Entities agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Xxxxxx Xxxxxxx Entities
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 Section 8(c). The amount paid or payable by the Xxxxxx
Xxxxxxx Entities as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by the Xxxxxx Xxxxxxx Entities in
connection with
25
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Xxxxxx Xxxxxxx Entity shall be required
to contribute any amount in excess of the amount by which the total price
at which the Directed Shares distributed to the public were offered to the
public exceeds the amount of any damages that such Xxxxxx Xxxxxxx Entity
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The remedies provided
for in this Section 8 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any Xxxxxx Xxxxxxx Entity at
law or in equity.
(e) The indemnity and contribution provisions contained in this
Section 8 shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by
or on behalf of any Xxxxxx Xxxxxxx Entity or the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of
and payment for any of the Directed Shares.
9. Termination. The Underwriters may terminate this Agreement by
notice given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the NASDAQ National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or
(v) there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the
terms and in the manner contemplated in the Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, 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 the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Shares
26
that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you and the Company for
the purchase of such Firm Shares are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case 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 in the Prospectus or in any other documents or
arrangements may be effected. If, on an Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing Date or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
27
Very truly yours,
BARRIER THERAPEUTICS, INC.
By:____________________________
Name:
Title:
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Banc of America Securities LLC
X.X. Xxxxxx Securities Inc.
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:
-------------------------------
Name:
Title:
SCHEDULE I
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated...................
Banc of America Securities LLC......................
X.X. Xxxxxx Securities Inc..........................
--------------
Total ......... 5,000,000
==============
I-1
Exhibit A
[FORM OF LOCK-UP LETTER]
Xxxxxx Xxxxxxx & Co. Incorporated
Banc of America Securities LLC
X.X. Xxxxxx Securities Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Barrier Therapeutics, Inc., a Delaware
corporation (the "COMPANY"), providing for the initial public offering (the
"PUBLIC OFFERING") by the several underwriters, including Xxxxxx Xxxxxxx (the
"UNDERWRITERS"), of shares (the "SHARES") of the Common Stock, $0.0001 par value
per share, of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement, (b) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering or (c) the exercise of
options to purchase shares of Common Stock; provided, that, the shares of Common
Stock acquired upon exercise of such options remain subject to this Lock-up
Agreement.
A-1
Furthermore, this Lock-Up Agreement shall not apply to (1) bona fide gifts
of securities, (2) transfers of securities to "affiliates" of the transferor if
the transfers do not involve a public distribution or public offering, or (3)
transfers of participation interests in the Company's securities held by the
undersigned to affiliates of the undersigned; provided, that: (i) the recipient
of any gift described in clause (1) or the transferee of any transfer in clause
(2) or (3) agrees in writing as a condition precedent to such transfer to be
bound by the terms hereof; and (ii) in the case of any gift or transfer
described in clause (1), (2) or (3), no filing by the undersigned or any other
party to such gift or transfer under Section 16(a) of the Securities Exchange
Act of 1934, as amended, shall be required or shall be made voluntarily in
connection with such gift or transfer (other than a filing on a Form 5 made
after the expiration of the 180-day period referred to above). The term
"affiliate" shall have the meaning given such term in Rule 144(a) under the
Securities Act of 1933, as amended.
In addition, the undersigned agrees that, without the prior written
consent of Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 180 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the undersigned's share of Common
Stock except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up Agreement
is irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters. This Lock-Up Agreement
shall automatically terminate upon the earliest to occur, if any, of: (a) if the
Underwriting Agreement is not executed prior to July 31, 2004; (b) either Xxxxxx
Xxxxxxx, on the one hand, or the Company, on the other hand, advising the other
in writing, prior to the execution of the Underwriting Agreement, that it has
determined not to proceed with the Public Offering; or (c) termination of the
Underwriting Agreement before the sale of any shares to the Underwriters.
Very truly yours,
-----------------------------
(Name)
-----------------------------
(Address)
A-2
