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EXHIBIT 1.1
Draft Date: 2/11/99
2,000,000 Shares
CERUS CORPORATION
Common Stock
$.001 par value
UNDERWRITING AGREEMENT
____________, 1999
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____________, 1999
Morgan Stanley & Co. Incorporated
BT Alex. Brown Incorporated
SG Cowen Securities Corporation
as Representatives of the several Underwriters
named in Schedule I hereto
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Ladies and Gentlemen:
Cerus Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters"), an aggregate of 2,000,000 shares of its common
stock ($.001 per share par value) (the "Firm Shares").
The Company also proposes to issue and sell to the several
Underwriters not more than an additional 300,000 shares of its common stock
($.001 per share par value) (the "Additional Shares"), if and to the extent that
you, as managers of the offering, shall have determined to exercise, on behalf
of the Underwriters, the right to purchase such shares of common stock granted
to the Underwriters in Article II hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares." The shares of
common stock, ($.001 per share par value), 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, including a prospectus, relating to
the Shares. The registration statement as amended at the time it becomes
effective, including all information incorporated by reference therein and 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 files a registration
statement to register a portion of the Shares and relies on Rule 462(b) under
the Securities Act for such registration statement to become effective upon
filing with the Commission (the "Rule 462 Registration Statement"), then any
reference to the "Registration Statement" shall be deemed to refer to both the
registration statement referred to above (Commission File No.
333-_______) and the Rule 462 Registration Statement, in each case as amended
from time to time.
I.
The Company represents and warrants to each of the Underwriters
that:
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(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 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 in order 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 (b) 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.
(d) The Company does not own or control, directly or indirectly, any
interest in any other corporation, association, or other business entity.
(e) The Company has good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by it
which is material to the business of the Company, in each case 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 any real property and buildings held under lease by the Company are
held by it under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and currently
proposed to be made of such property and buildings by the Company except as
described in or contemplated by the Prospectus.
(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 to be sold by the Company have been duly authorized and are validly
issued, fully paid and non-assessable. Except as set forth in the Prospectus,
the Company does not have outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, rights, convertible securities
or obligations. All outstanding shares of capital stock and options and other
rights to acquire capital stock have been issued in compliance with the
registration and qualification provisions of all applicable securities laws and
were not issued in violation of any preemptive rights, rights of first refusal
or other similar rights.
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(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 rights, rights of first refusal or similar rights which have not
been waived or satisfied.
(i) This Agreement has been duly authorized, executed and delivered by
the Company.
(j) 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 applicable law or the certificate of incorporation or bylaws of the
Company, or any agreement or other instrument binding upon the Company that is
material to the Company, taken as a whole, or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the Company, and
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 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 under the rules and regulations of the National
Association of Securities Dealers, Inc. with respect to the clearance of the
underwriting arrangements.
(k) 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 from that set forth in the Prospectus.
(l) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) the Company has not
incurred any material liability or obligation, direct or contingent, nor entered
into any material transaction in each case not in the ordinary course of
business; (ii) the Company has not purchased any of its outstanding capital
stock other than unvested shares from former employees, directors or consultants
nor declared, paid or otherwise made any dividend or distribution of any kind on
its capital stock 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, except in each case as described in or
contemplated by the Prospectus.
(m) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company is a party or to which any
of the properties of the Company is subject that are required to be described in
the Registration Statement or the Prospectus 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 that are not described or filed as
required.
(n) The Company has all necessary consents, authorizations, approvals,
orders, certificates and permits of and from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own, lease,
license and use its properties and assets and to conduct its business in the
manner described in the Prospectus, except to the extent that the failure to
obtain or file would not have a material adverse effect on the Company.
(o) 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 or Rule 462 under the Securities Act,
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complied as to form when so filed in all material respects with the Securities
Act and the rules and regulations of the Commission thereunder.
(p) 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.
(q) There is no owner of any securities of the Company who has any
rights, not effectively satisfied or waived, to require registration of any
shares of capital stock of the Company in connection with the filing of the
Registration Statement or the sale of any shares thereunder.
(r) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which it is engaged; the Company has not been
refused any insurance coverage sought or applied for; and the Company has no
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not materially and adversely affect the condition, financial or otherwise,
or the earnings, business or operations of the Company, except as described in
or contemplated by the Prospectus.
(s) The Company (i) is in compliance with any and 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 (collectively, "Environmental
Laws"), (ii) has received all permits, licenses or other approvals required of
it under applicable Environmental Laws to conduct its business and (iii) is 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 on the Company.
(t) To the best of the Company's knowledge, costs and liabilities
associated with its compliance with Environmental Laws as currently in effect
(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) would not, singly or in the
aggregate, reasonably be expected to have a material adverse effect on the
Company.
(u) The Company owns or possesses adequate licenses or other rights to
use all patents, copyrights, trademarks, service marks, trade names, technology
and know-how necessary (in any material respect) to conduct its business in the
manner described in the Prospectus, the Company is not obligated to pay a
royalty, grant a license, or provide other consideration to any third party in
connection with its patents, copyrights, trademarks, service marks, trade names,
or technology other than pursuant to agreements with Baxter Healthcare
Corporation ("Baxter"), the Consortium for Plasma Services, LLC, the Auckland
Division Cancer Society of New Zealand, Inc., Miles Inc. and Diamond Scientific
Corporation, and as disclosed in the Prospectus, and, except as disclosed in the
Prospectus, the Company has not received any notice of infringement or conflict
with (and the Company does not know of any infringement or conflict with)
asserted rights of others with respect to any patents, copyrights, trademarks,
service marks, trade names, technology or know-how which could reasonably be
expected to result in any material adverse effect upon the Company and, except
as disclosed in the Prospectus, the discoveries, inventions, products or
processes of the Company referred to in the Prospectus do not, to the best
knowledge of the Company, infringe or conflict with any
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right or patent of any third party, or any discovery, invention, product or
process which is the subject of a patent application filed by any third party,
known to the Company which could reasonably be expected to have a material
adverse effect on the Company. Other than Baxter, the Consortium of Plasma
Services, LLC and the U.S. Government as summarized in the Prospectus under the
caption "Business -- Research Grants," no third party, including any academic or
governmental organization, possesses rights to the Company's patents,
copyrights, trademarks, service marks, trade names, or technology which, if
exercised, could enable such third party to develop products competitive to
those of the Company or could have a material adverse effect on the ability of
the Company to conduct its business in the manner described in the Prospectus.
(v) The Company possesses all consents, approvals, orders, certificates,
authorizations and permits issued by and has made all declarations and filings
with, all appropriate federal, state or foreign governmental or self-regulatory
authorities and all courts and other tribunals necessary to conduct its business
and to own, lease, license and use its properties in the manner described in the
Prospectus, and the Company has not received any notice of proceedings related
to the revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of any unfavorable
decision, ruling or finding, or failure to obtain or file would result in a
material adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Company, except as described in or
contemplated by the Prospectus.
(w) The Company maintains 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 appropriate action is taken with respect to any
differences.
(x) No material labor dispute with the employees of the Company exists,
except as described in or contemplated by the Prospectus, or, to the best
knowledge of the Company, 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 could result in any
material adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Company.
(y) All outstanding shares of Common Stock and all securities
convertible into or exercisable or exchangeable for Common Stock owned by the
Company's directors, executive officers and certain existing stockholders of the
Company, who own in the aggregate approximately _______ shares of Common Stock
or securities convertible into or exchangeable for Common Stock, are subject to
valid, binding and enforceable agreements (collectively, the "Lock-up
Agreements") that restrict the holders thereof from (1) offering, pledging,
selling, contracting to sell, selling any option or contract to purchase,
purchasing any option or contract to sell, granting any option, right, or
warrant for the purchase of, or otherwise transferring or disposing of, directly
or indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or (2) entering into any swap or
similar agreement that transfers, in whole or in part, the economic risk of
ownership of 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, otherwise than (i) as a bona fide gift or
gifts, (ii) by will or intestacy to the holder's immediate family or to a trust
the beneficiaries of which are exclusively the holder and/or a member or members
of the holder's immediate family, (iii) as a distribution to limited partners or
shareholders of the holder, or (iv) with the prior written consent of Morgan
Stanley; provided that a gift, transfer or distribution
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pursuant to clause (i), (ii) or (iii) above shall be conditioned upon such
donee, transferee or distributee executing and delivering a copy of a Lock-up
Agreement to Morgan Stanley and further that such holders will not 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 prior to the expiration of 90 days after the date of the
Prospectus.
(z) The Common Stock is listed on the Nasdaq National Market. The
Company has filed with the Nasdaq National Market a Notification Form for
Listing of Additional Shares with respect to the Shares.
(aa) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida), relating to issuers doing
business with Cuba.
II.
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 (subject to such adjustments to eliminate fractional shares as you may
determine) set forth in Schedule I hereto opposite the name of such Underwriter
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 hereby agrees to
issue and sell to the Underwriters the Additional Shares, and the Underwriters
shall have a one-time right to purchase, severally and not jointly, up to
300,000 Additional Shares at the purchase price. Additional Shares may be
purchased as provided in Article IV hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, 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 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
Morgan Stanley on behalf of the Underwriters, it will not, during the period
ending 90 days after the date of 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, 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 similar arrangement that transfers,
in whole or in part, 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, other than (i) the Shares to be sold hereunder, (ii) any shares of
Common Stock sold by the Company upon the exercise of an option or warrant or
other right to acquire shares of the Company or the conversion of a security
outstanding on the date hereof described in the Prospectus, or any securities
sold or issued to Baxter Healthcare Corporation pursuant to contractual
provisions or rights existing as of the date hereof, (iii) any options or other
rights to purchase or acquire any shares of Common Stock or any shares of Common
Stock issuable upon exercise of such options or other rights granted in
connection with any compensatory arrangement with a director, officer, employee,
consultant or advisor, or (iv) any shares of Common Stock or
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other right to acquire shares of the Company issued pursuant to equipment or
lease financing activities entered into in the ordinary course of the Company's
business.
III.
The Company is advised by you that the Underwriters propose to make a
public offering 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.
IV.
Payment for the Firm Shares shall be made 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 __________, 1999, or at such other time on the same or such other
date, not later than ___________, 1999, as shall be designated in writing by
you. The time and date of each 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 such date (which may be the
same as the Closing Date but shall in no event be earlier than the Closing Date
nor later than ten business days after the giving of the notice hereinafter
referred to) as shall be designated in a written notice from you to the Company
of your determination, on behalf of the Underwriters, to purchase a number,
specified in said notice, of Additional Shares, or on such other date, in any
event not later than __________, 1999 as shall be designated in writing by you.
The time and date of such payment are hereinafter referred to as the "Option
Closing Date." The notice of the determination to exercise the option to
purchase Additional Shares and of the Option Closing Date may be given at any
time within 30 days after the date of this Agreement.
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the 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.
V.
The obligations of the Company and the several obligations of the
Underwriters hereunder are subject to the condition that the Registration
Statement shall have become effective not later than the date hereof.
The several obligations of the Underwriters hereunder are subject to the
following further conditions:
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(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 received by the Company 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 from that
set forth in the Registration Statement 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, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company, to the effect set forth in
clause (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 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 officers signing and delivering such certificate may rely upon the
best of their knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date an opinion of Cooley
Godward LLP, counsel for the Company, dated the Closing Date, to the effect that
(i) 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 California and, to the knowledge of such
counsel, 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;
(ii) to such counsel's knowledge the Company does not own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity;
(iii) the authorized capital stock of the Company conforms in
all material respects as to legal matters to the description thereof contained
in the Prospectus under the caption "Description of Capital Stock as of the date
stated therein;"
(iv) the shares of Common Stock outstanding prior to the
issuance of the Shares to be sold by the Company have been duly authorized and
are validly issued, non-assessable and fully paid;
(v) the Shares to be sold by the Company have been duly
authorized, and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued and non-assessable, and to such counsel's
knowledge, fully paid, and the issuance of such Shares will not be subject to
any preemptive rights, or, to such counsel's knowledge, rights of first refusal
or similar rights;
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(vi) the Company has corporate power and authority to enter into
this Agreement and to issue, sell and deliver to the Underwriters the Shares to
be issued and sold by the Company. This Agreement has been duly authorized,
executed and delivered by the Company;
(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement (other than
performance of the Company's indemnification and contribution obligations
thereunder, concerning which such counsel need not express an opinion) will not
contravene any provision of applicable law, other than the securities or Blue
Sky laws of the various states and jurisdictions, or the certificate of
incorporation or bylaws of the Company or, to such counsel's knowledge, any
agreement or other instrument binding upon the Company that is material to the
Company, taken as a whole, or, to such counsel's knowledge, any judgment, order
or decree of any governmental body, agency or court having jurisdiction over the
Company, and no consent, approval, authorization or order of or qualification
with any governmental body or governmental agency in the United States having
jurisdiction over the Company or over any of its properties or operations is
required for the performance by the Company of its obligations under this
Agreement, except such as have been obtained under the Securities Act or may be
required by the securities or Blue Sky laws of the various states and
jurisdictions in connection with the offer and sale of the Shares;
(viii) the information (1) in the Prospectus under the captions
"Risk Factors - Shares of our common stock that may be sold in the future could
affect the market price," "Business -- Alliance with Baxter" describing the
Platelet Agreement and amendments thereto, the Red Blood Cell/Fresh Frozen
Plasma (RBC/FFP) Agreement and amendments thereto and "Description of Capital
Stock" and (2) in the Registration Statement in Item 15, in each case insofar as
such statements constitute summaries of the legal conclusions or documents or
proceedings referred to therein, fairly present the information called for under
the Securities Act and the rules and regulations promulgated thereunder (the
"Rules") with respect to such legal conclusions, documents and proceedings and
fairly summarize the matters referred to therein required under the Securities
Act and Rules;
(ix) to such counsel's knowledge there is no legal, regulatory
or governmental proceeding pending or threatened to which the Company is a party
or to which any of the properties of the Company is subject that are required by
the Securities Act and Rules to be described in the Registration Statement or
the Prospectus and are not so described or of 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 that are not described or filed as required;
(x) the Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xi) to the knowledge of such counsel, except as set forth in
the Registration Statement, there is no legal or beneficial owner of any
securities of the Company who has any rights, not effectively satisfied or
waived, to require registration of any shares of capital stock of the Company in
connection with the filing of the Registration Statement;
(xii) to the knowledge of such counsel: (1) the Registration
Statement has become effective under the Securities Act, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Securities Act; and (2) any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period required
by such Rule 424(b);
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(xiii) the Company has filed with the Nasdaq National Market a
Notification Form for Listing of Additional Share covering the Shares to be sold
under this Agreement to the Underwriters are duly authorized for quotation on
the Nasdaq National Market; and
(xiv) such counsel shall also state that (i) they believe that
the Registration Statement and the Prospectus (except for financial statements
and schedules, other financial information and statistical data derived
therefrom, as to which they need express no belief) as of the effective date
complied as to form in all material respects with the requirements of the
Securities Act and the Rules and (ii) they confirm that they have no reason to
believe that (except for financial statements and schedules, other financial
information and statistical data derived therefrom, as to which they need
express no belief) the Registration Statement as of its effective date,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that (except for financial statements and schedules, other
financial data and statistical data derived therefrom, as to which they need
express no belief) the Prospectus, as of the date of the Prospectus and such
date or dates as such opinion is delivered, contained or contains any 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.
(d) You shall have received on the Closing Date an opinion of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, counsel for the
Underwriters, dated the Closing Date, covering the matters referred to in
subparagraphs (v), the last sentence of subparagraph (vi), (viii) (but only as
to the statements in the Prospectus under "Description of Capital Stock"),
stating that such counsel has read the first five and the last two paragraphs of
the portion of the Registration Statement and the Prospectus entitled
"Underwriters" (the "Underwriter Portion") and (xiv) of paragraph (c) above and
to the effect that the statements in the Underwriter Portion, insofar as such
statements constitute a summary of this Agreement, fairly present the
information called for with respect to such Agreement.
With respect to subparagraph (xiv) of paragraph (c) above, Cooley
Godward LLP and Wilson Sonsini Goodrich & Rosati, Professional Corporation, 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.
(e) You shall have received on the Closing Date an opinion of Morrison &
Foerster LLP, intellectual property counsel for the Company, dated the Closing
Date, to the effect that:
(i) such counsel represents the Company in certain matters
relating to intellectual property, including patents, trade secrets and certain
trademark matters;
(ii) such counsel is familiar with the technology used by the
Company in its business and the manner of its use and has read the portions of
the Registration Statement and the Prospectus entitled "Risk Factors -- Patent
and License Uncertainties," "Risk Factors -- Product Liability" and "Business --
Patents, Licenses, and Proprietary Rights" (collectively, the "Intellectual
Property Portion");
(iii) the Intellectual Property Portion contains accurate
descriptions of the Company's patent applications, issued and allowed patents,
and patents licensed to the Company and fairly summarizes the legal matters,
documents and proceedings relating thereto;
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(iv) based upon a review of the third party rights made known to
counsel and discussions with Company scientific personnel, such counsel is not
aware of any valid United States or foreign patent, including but not limited to
certain patents assigned to Johnson & Johnson which were the subject of a letter
to Baxter, dated May 24, 1994, that is or would be infringed by the activities
of the Company in the manufacture, use or sale of any presently proposed
product, the technologies employed by the Company or the method of their use in
any presently proposed product, each as described in the Prospectus;
(v) such counsel has reviewed United States Patent Number
5,399,719 and the claims made therein (the "719 Patent"), which 719 Patent is
owned by the Company, and we are familiar with the S-59 compound developed by
the Company and described in the Prospectus. To such counsel's knowledge, the
S-59 compound falls within the composition of matter claims of the 719 Patent;
(vi) such counsel has reviewed the Company's patent applications
filed in the United States and outside the United States (the "Applications")
and which Applications are described in the Intellectual Property Portion and in
the opinion of such counsel the Applications have been properly prepared and
filed on behalf of the Company, and are being diligently pursued by the Company;
the inventions described in the Applications are assigned or licensed to the
Company; to such counsel's knowledge, no other entity or individual has any
right or claim in any of the inventions, Applications, or any patent to be
issued therefrom, and in such counsel's opinion each of the Applications
discloses patentable subject matter;
(vii) such counsel is aware of no pending or threatened judicial
or governmental proceedings relating to patents or proprietary information to
which the Company is a party or of which any property of the Company is subject
and such counsel is not aware of any pending or threatened action, suit or claim
by others that the Company is infringing or otherwise violating any patent
rights of others that has not been disclosed in the Prospectus, based upon
review of the Applications such counsel is not aware of any rights of third
parties to any of the Company's inventions described in the Applications,
issued, approved or licensed patents which could reasonably be expected to
materially affect the ability of the Company to conduct its business as
described in the Prospectus, including the commercialization of its products
currently under development; and
(viii) such counsel has no reason to believe that the
information contained in the Intellectual Property Portion of the Registration
Statement or the Prospectus at the time it became effective contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that, at the Closing Date, the information contained in the Intellectual
Property Portion of the Prospectus or any amendment or supplement to the
Intellectual Property Portion of the Prospectus contains any untrue statement of
a material fact 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.
(f) You shall have received on the Closing Date an opinion of Medlen &
Carroll, intellectual property counsel for the Company, dated the Closing Date,
to the effect that:
(i) such counsel represents the Company in certain matters
relating to intellectual property, including patents, trade secrets and certain
trademark matters;
(ii) such counsel is familiar with the technology used by the
Company in its business and the manner of its use and has read the portions of
the Registration Statement and the Prospectus entitled
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"Risk Factors -- Patent and License Uncertainties," "Risk Factors -- Product
Liability" and "Business -- Patents, Licenses, and Proprietary Rights"
(collectively, the "Intellectual Property Portion");
(iii) such counsel has reviewed the Company's patent
applications filed in the United States and outside the United States (the
"Applications") and which Applications are described in the Intellectual
Property Portion and in the opinion of such counsel the Applications have been
properly prepared and filed on behalf of the Company, and are being diligently
pursued by the Company; the inventions described in the Applications are
assigned or licensed to the Company; to such counsel's knowledge, no other
entity or individual has any right or claim in any of the inventions,
Applications, or any patent to be issued therefrom, and in such counsel's
opinion each of the Applications discloses patentable subject matter;
(iv) such counsel is aware of no pending or threatened judicial
or governmental proceedings relating to patents or proprietary information to
which the Company is a party or of which any property of the Company is subject
and such counsel is not aware of any pending or threatened action, suit or claim
by others that the Company is infringing or otherwise violating any patent
rights of others that has not been disclosed in the Prospectus, based upon
review of the Applications such counsel is not aware of any rights of third
parties to any of the Company's inventions described in the Applications,
issued, approved or licensed patents which could reasonably be expected to
materially affect the ability of the Company to conduct its business as
described in the Prospectus, including the commercialization of its products
currently under development; and
(v) such counsel has no reason to believe that the information
contained in the Intellectual Property Portion of the Registration Statement or
the Prospectus at the time it became effective contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that, at
the Closing Date, the information contained in the Intellectual Property Portion
of the Prospectus or any amendment or supplement to the Intellectual Property
Portion of the Prospectus contains any untrue statement of a material fact 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.
(g) You shall have received on the Closing Date an opinion of Buc &
Beardsley, special regulatory counsel to the Company dated the Closing Date, to
the effect that:
(i)in connection with this offering, such counsel represents the
Company with respect to United States Food and Drug Administration ("FDA")
regulatory matters;
(ii) such counsel has read the portions of the Registration
Statement and the Prospectus entitled "Risk Factors -- Government Regulation,"
"Business -- Government Regulation" (the "Regulatory Portion"), and in such
counsel's opinion, the Regulatory Portion, insofar as such statements summarize
provisions of the United States Federal Food, Drug, and Cosmetic Act (the "FFDC
Act") and the Public Health Service Act (the "PHSA") and implementing
regulations, are correct in all material respects and do not omit to summarize
applicable provisions of the FFDC Act and PHSA or implementing regulations
necessary to make those statements not misleading; and
(iii) nothing has come to such counsel's attention that leads it
to believe that the statements contained in the Regulatory Portion, with the
exception of the last two paragraphs of "Business -- Government Regulation"
concerning European and environmental laws, as to which such counsel need not
opine, of the Registration Statement or the Prospectus at the time it became
effective contained any untrue
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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, at the Closing Date, the information contained in the Regulatory Portion
of the Prospectus or any amendment or supplement to the Regulatory Portion of
the Prospectus contains any untrue statement of a material fact 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.
The opinion of Cooley Godward LLP described in paragraph (c) above, the
opinion of Morrison & Foerster LLP described in paragraph (e) above, the opinion
of Medlen & Carroll described in paragraph (f) above and the opinion of Buc &
Beardsley described in paragraph (g) above shall each be rendered to you at the
request of the Company, and shall so state therein.
(h) You 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 you, 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.
(i) The Lock-up Agreements between you and certain stockholders,
officers and directors of the Company relating to sales of shares of Common
Stock of the Company or any securities convertible into or exercisable or
exchangeable for such Common Stock, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
(j) The Company shall have filed with the Nasdaq National Market
a Notification Form for Listing of Additional Shares.
(k) The Company shall have complied with the provisions of
paragraph (a) of Section VI hereof with respect to the furnishing of
Prospectuses on the business day next succeeding the date of this Agreement in
such quantities as you may reasonably request.
(n) All the agreements, opinions, certificates and letters
mentioned above or elsewhere in this Agreement shall be deemed in compliance
with the provisions hereof only if Wilson Sonsini Goodrich & Rosati,
Professional Corporation, counsel for the Underwriters, shall be reasonably
satisfied that they comply in form and scope.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the 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, other matters related to the issuance of the Additional Shares and an
opinion or opinions of Cooley Godward LLP, Morrison & Foerster LLP, Medlen &
Carroll and Buc & Beardsley in form and substance reasonably satisfactory to
Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the
Underwriters.
VI
In further consideration of the agreements of the Underwriters herein
contained, the Company covenants as follows:
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(a) To furnish to you, without charge, four (4) 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, during the period mentioned in paragraph (c) below, as
many copies of the Prospectus and any supplements and amendments thereto or to
the Registration Statement as you may reasonably request. In the case of the
Prospectus, to furnish copies of the Prospectus in New York City, prior to 5:00
p.m., on the business day following the date of this Agreement, in such
quantities as you 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 to file no such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, 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 your counsel, it is
necessary to amend or supplement the Prospectus to comply with law, forthwith to
prepare, file with the Commission and furnish, at its own expense, 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.
(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 and to pay all expenses (including reasonable fees and disbursements of
counsel) in connection with such qualification and in connection with any review
of the offering of the Shares by the National Association of Securities Dealers,
Inc.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earnings statement covering the
twelve-month period ended December 31, 1998 that satisfies the provisions of
Section 11(a) of the Securities Act and the Rules (including Rule 158).
(f) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports to its stockholders and (ii) all reports, financial statements and proxy
or information statements filed by the Company with the Commission or any
national securities exchange.
(g) The Company will apply the proceeds from the sale of the
Shares substantially as set forth under in "Use of Proceeds" in the Prospectus.
(h) The Company will use its best efforts to obtain and its
reasonable best efforts maintain in effect the quotation of the Shares on the
Nasdaq National Market and will take all necessary steps to cause the Shares to
be included on the Nasdaq National Market as promptly as practicable and to
maintain such inclusion for a period of three years after the date hereof or
until such earlier date as the Shares shall be listed for regular trading
privileges on the Nasdaq National Market or another national securities exchange
or trading system approved by you, which approval shall not be unreasonably
withheld.
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(i) The Company will comply with all registration, filing and
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which may from time to time be applicable to the Company.
(j) The Company will comply with all provisions of all
undertakings contained in the Registration Statement, Part II, Item 17.
(k) Prior to the Closing Date or the Option Closing Date, as the
case may be, the Company will not, directly or indirectly, issue any press
release or other public communication directly or indirectly and will not hold
any press conference with respect to the Company, or its financial condition,
results of operations, business, properties, assets or prospects, or this
offering, without your prior written consent (which consent will not be
unreasonably withheld).
(m) The Company agrees: (i) to exert its best efforts to help
enforce each Lock-up Agreement, between certain of its stockholders and Morgan
Stanley & Co., Incorporated, (ii) upon request of Morgan Stanley, to issue
stop-transfer instructions to the transfer agent for the Common Stock with
respect to any transaction or contemplated transaction that would constitute a
breach of or default under the applicable Lock-up Agreement, and (iii) upon
written request of Morgan Stanley, to release from the Lock-up Agreements those
shares of Common Stock held by those holders set forth in such request. In
addition, except with the prior written consent of Morgan Stanley, the Company
agrees (i) not to amend or terminate, or waive any right under, any Lock-up
Agreement or take any other action that would directly or indirectly have the
same effect as an amendment or termination, or waiver of any right under, any
Lock-up Agreement that would permit any holder of shares of Common Stock, or
securities convertible into or exercisable or exchangeable for Common Stock, to
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, make any short sale of, grant any
option, right, or warrant for the purchase of, enter into any swap or similar
agreement that transfers, in whole or in part, the economic risk of ownership of
Common Stock, or otherwise transfer or dispose of, directly or indirectly, any
of such shares of Common Stock or other securities prior to the expiration of 90
days after the date of the Prospectus, (ii) not to release any such
stop-transfer instruction as described in (ii) above prior to the expiration of
90 days after the date of the Prospectus, and (iii) not to consent to any sale,
short sale, grant of an option for the purchase of, or other disposition or
transfer of shares of Common Stock, or securities convertible into or
exercisable or exchangeable for Common Stock, subject to a Lock-up Agreement.
VII
The Company agrees to pay all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including,
but not limited to, all expenses incident to (i) the preparation and filing of
the Registration Statement (including all exhibits thereto) and the Prospectus
and all amendments and supplements thereto, (ii) the preparation, issuance and
delivery of the Shares, including any transfer taxes payable in connection with
the transfer and sale of the Shares to the Underwriters, (iii) the fees and
disbursements of the Company's counsel and accountants, (iv) the qualification
of the Shares under state securities or Blue Sky laws in accordance with the
provisions of paragraph (d) of Article VI hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of any Blue Sky or Legal
Investment Memoranda, (v) the printing and delivery to the Underwriters, in
quantities as hereinabove stated, of copies of the Registration Statement
(including all exhibits thereto) and all
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amendments thereto and of each preliminary prospectus and the Prospectus and any
amendments or supplements thereto, (vi) the printing and delivery to the
Underwriters of copies of this Agreement or any Blue Sky or Legal Investment
Memoranda, (vii) the filing fees and expenses, if any, incurred with respect to
any filing with the National Association of Securities Dealers, Inc., made in
connection with the offering of the Shares, (viii) any expenses incurred by the
Company in connection with a "road show" presentation to potential investors and
(ix) the listing of the Shares on the Nasdaq National Market.
VIII
The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, or is under common control with, or is controlled by, any Underwriter, 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 or any person controlling such
Underwriter, from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares, 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
loss, claim, damage or liability.
Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the directors of the Company, the officers of the
Company 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 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, 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.
In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to any of the three preceding paragraphs, such person (the
"Indemnified Party") shall promptly notify the person against whom such
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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 (a) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and (b) the fees and expenses
of more than one separate firm (in addition to any local counsel) for the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the Underwriters and such
control persons of Underwriters, such firm shall be designated in writing by
Morgan Stanley. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. 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 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 by certified mail addressed to an Indemnifying Party to
reimburse the Indemnified Party for the reasonable 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 45 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. 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.
If the indemnification provided for in the first three paragraphs
of this Article VIII 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 Indemnifying Party or parties on the one hand and the
Indemnified Party or parties 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 Indemnifying Party or parties on the one hand and of the Indemnified Party
or parties 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
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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 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 Article VIII are several in proportion to the respective number
of Shares they have purchased hereunder, and not joint.
The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Article VIII 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 the immediately preceding paragraph.
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 Article VIII, 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 Article VIII 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.
The indemnity and contribution provisions contained in this
Article VIII and the representations and warranties 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 or any person controlling any Underwriter, or the
Company, its officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Shares.
IX
This Agreement shall be subject to termination by notice given by
you to the Company, if (a) 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 National Association of Securities
Dealers, Inc., 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 general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities, or
(iv) there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in your sole
judgment, is
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material and adverse and (b) in the case of any of the events specified in
clauses (a)(i) through (iv), such event singly or together with any other such
event makes it, in your sole judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
X
This Agreement shall become effective upon execution and delivery
hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case
may be, any one or more of the Underwriters shall fail or refuse to purchase
Shares that it 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, however, that in no event
shall the number of Shares that any Underwriter has agreed to purchase pursuant
to Article II be increased pursuant to this Article X 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 or the Option Closing Date, as the case may
be, any Underwriter or Underwriters shall fail or refuse to purchase Shares and
the aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares to be purchased on such date,
and arrangements satisfactory to you and the Company for the purchase of such
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 or the Option Closing Date, as the case may be, 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. 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 because
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.
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.
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This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York.
Very truly yours,
Cerus Corporation
By________________________________________
Stephen T. Isaacs,
President and Chief Executive Officer
Accepted, __________, 1999
Morgan Stanley & Co. Incorporated
BT Alex. Brown Incorporated
SG Cowen Securities Corporation
Acting severally on behalf of themselves and the
several Underwriters named herein.
By: Morgan Stanley & Co. Incorporated
By__________________________________________
Katina Dorton,
Vice President
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SCHEDULE I
UNDERWRITER NUMBER OF FIRM SHARES
TO BE PURCHASED
Morgan Stanley & Co. Incorporated.......................................................
BT Alex. Brown Incorporated.............................................................
SG Cowen Securities Corporation. .......................................................
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Total....................................... 2,000,000
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