Exhibit 1.1
7,000,000 Shares
Common Stock
($0.01 Par Value)
UNDERWRITING AGREEMENT
February 18, 2005
UNDERWRITING AGREEMENT
February 18, 2005
UBS Securities LLC
J.P. Morgan Securities Inc.
Jefferies & Company, Inc.
c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171
Ladies and Gentlemen:
Neose Technologies, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the underwriters named in Schedule A annexed
hereto (the "UNDERWRITERS"), for whom you are acting as representative, an
aggregate of 7,000,000 shares (the "FIRM SHARES") of Common Stock, $0.01 par
value (the "COMMON STOCK"), of the Company. In addition, solely for the purpose
of covering over-allotments, the Company proposes to grant to the Underwriters
the option to purchase from the Company up to an additional 1,050,000 shares of
Common Stock (the "ADDITIONAL SHARES"). The Firm Shares and the Additional
Shares are hereinafter collectively sometimes referred to as the "SHARES." The
Shares are described in the Prospectus which is referred to below.
The Company has prepared and filed, in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (collectively, the "SECURITIES ACT"), with the Securities
and Exchange Commission (the "COMMISSION") a registration statement on Form S-3
(File No. 333-121112) under the Securities Act (the "REGISTRATION STATEMENT").
Amendments to such registration statement, if necessary or appropriate, have
been similarly prepared and filed with the Commission. Such registration
statement, as so amended, has been declared by the Commission to be effective
under the Securities Act. The Company has filed with the Commission a Prepricing
Prospectus (as defined and referred to below) pursuant to Rule 424(b) under the
Securities Act, describing the Shares and the offering thereof, in such form as
has been provided to or discussed with, and approved by, the Underwriters. The
Company will next file with the Commission pursuant to Rule 424(b) under the
Securities Act a Prospectus (as defined and referred to below), describing the
Shares and the offering thereof, in such form as will be provided to or
discussed with, and approved by, the Underwriters.
The term "REGISTRATION STATEMENT" as used in this Agreement means
the registration statement, as amended at the time it became effective and as it
may be subsequently supplemented or amended, including (i) all financial
schedules and exhibits thereto and (ii) all documents incorporated by reference
or deemed to be incorporated by reference therein. If an abbreviated
registration statement is prepared and filed with the Commission in accordance
with Rule 462(b) under the Securities Act (an "ABBREVIATED
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REGISTRATION STATEMENT"), the term "REGISTRATION STATEMENT" includes the
Abbreviated Registration Statement. The term "BASIC PROSPECTUS" as used in this
Agreement means the basic prospectus dated as of January 10, 2005 and filed with
the Commission pursuant to Rule 424(b) for use in connection with the offer
and/or sale of Shares pursuant to this Agreement. The term "PREPRICING
PROSPECTUS" as used in this Agreement means any form of preliminary prospectus
used in connection with the marketing of the Shares, including the preliminary
prospectus supplement dated as of February 7, 2005 and filed with the Commission
on February 7, 2005 pursuant to Rule 424 under the Securities Act and any basic
prospectus (whether or not in preliminary form) used with any such preliminary
prospectus supplement in connection with the marketing of the Shares, in each
case as any of the foregoing may be amended or supplemented by the Company. The
term "PROSPECTUS SUPPLEMENT" as used in this Agreement means any final
prospectus supplement specifically relating to the Shares, in the form filed
with, or transmitted for filing to, the Commission pursuant to Rule 424 under
the Securities Act. The term "PROSPECTUS" as used in this Agreement means the
Basic Prospectus together with and as supplemented by the Prospectus Supplement
except that if such Basic Prospectus is amended or supplemented on or prior to
the date on which the Prospectus Supplement was first filed pursuant to Rule
424, the term "Prospectus" shall refer to the Basic Prospectus as so amended or
supplemented and as supplemented by the Prospectus Supplement. Any reference
herein to the registration statement, the Registration Statement, the Basic
Prospectus, any Prepricing Prospectus, any Prospectus Supplement or the
Prospectus shall be deemed to refer to and include (i) the documents
incorporated by reference therein pursuant to Form S-3 (the "INCORPORATED
DOCUMENTS") and (ii) the copy of the Registration Statement, the Basic
Prospectus, the Prepricing Prospectus, the Prospectus Supplement, the Prospectus
or the Incorporated Documents filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"). Any
reference herein to the terms "amend," "amendment" or "supplement" with respect
to the Registration Statement, the Basic Prospectus, any Prepricing Prospectus,
the Prospectus Supplement or the Prospectus shall be deemed to refer to and
include the filing of any document under the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (collectively, the "EXCHANGE
ACT") after the effective date of the Registration Statement, or the date of the
Prospectus, as the case may be, deemed to be incorporated therein by reference.
As used herein, "business day" shall mean a day on which the New York Stock
Exchange is open for trading.
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the representations and
warranties and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company the
respective number of Firm Shares set forth opposite the name of such Underwriter
in Schedule A attached hereto, subject to adjustment in accordance with Section
8 hereof, in each case at a purchase price of $3.76 per Share. The Company is
advised by you that the Underwriters intend (i) to make a public offering of
their respective
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portions of the Firm Shares as soon after the execution of this Agreement as in
your judgment is advisable and (ii) initially to offer the Firm Shares upon the
terms set forth in the Prospectus. You may from time to time increase or
decrease the public offering price after the initial offering of the Shares to
the public by the Underwriters to such extent as you may determine.
In addition, the Company hereby grants to the several Underwriters
the option to purchase, and upon the basis of the representations and warranties
and subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company, ratably
in accordance with the number of Firm Shares to be purchased by each of them,
all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised by UBS Securities LLC ("UBS") on
behalf of the several Underwriters, at any time and from time to time on or
before the thirtieth day following the date hereof, by written notice to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the date and time when the
Additional Shares are to be delivered (such date and time being herein referred
to as the "ADDITIONAL TIME OF PURCHASE"); provided, however, that the additional
time of purchase shall not be earlier than the time of purchase (as defined
below) nor earlier than the second business day after the date on which the
option shall have been exercised nor later than the tenth business day after the
date on which the option shall have been exercised. The number of Additional
Shares to be sold to each Underwriter shall be the number which bears the same
proportion to the aggregate number of Additional Shares being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto bears to the total number of Firm Shares (subject, in each
case, to such adjustment as you may determine to eliminate fractional shares),
subject to adjustment in accordance with Section 8 hereof.
2. Payment and Delivery. Payment of the purchase price for the Firm
Shares shall be made to the Company by Federal funds wire transfer, against
delivery of the certificates for the Firm Shares to you through the facilities
of The Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on February 24, 2005 (unless another time shall be agreed to by you
and the Company or unless postponed in accordance with the provisions of Section
8 hereof). The time at which such payment and delivery are to be made is
hereinafter sometimes called "THE TIME OF PURCHASE." Electronic transfer of the
Firm Shares shall be made to you at the time of purchase in such names and in
such denominations as you shall specify.
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Payment of the purchase price for the Additional Shares shall be
made at the additional time of purchase in the same manner and at the same
office as the payment for the Firm Shares. Electronic transfer of the Additional
Shares shall be made to you at the additional time of purchase in such names and
in such denominations as you shall specify.
Deliveries of the documents described in Section 6 hereof with
respect to the purchase of the Shares shall be made at the offices of Willkie
Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY 10019, at 9:00 A.M., New
York City time, on the date of the closing of the purchase of the Firm Shares or
the Additional Shares, as the case may be.
3. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) the Registration Statement has been declared effective under the
Securities Act; no stop order of the Commission preventing or suspending
the use of the Basic Prospectus, the Prepricing Prospectus or the
Prospectus or the effectiveness of the Registration Statement has been
issued and no proceedings for such purpose have been instituted or, to the
Company's knowledge, are contemplated by the Commission; each Prepricing
Prospectus, at the time of filing thereof, complied in all material
respects to the requirements of the Securities Act and the last Prepricing
Prospectus distributed in connection with the offering of the Shares did
not, as of its date, and does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; the Registration
Statement complied when it became effective, complies and will comply, at
the time of purchase and any additional time of purchase, in all material
respects with the requirements of the Securities Act and the Prospectus
will comply, as of its date and at the time of purchase and any additional
times of purchase, in all material respects with the requirements of the
Securities Act and 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 have
been and will be so described or filed; the conditions to the use of Form
S-3 have been satisfied; the Registration Statement did not when it became
effective, does not and will not, at the time of purchase and any
additional time of purchase, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and the Prospectus
will not, as of its date and at the time of purchase and any additional
time of purchase, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes
no warranty or representation with respect to any statement contained in
the Prepricing Prospectus, the Registration Statement or the Prospectus in
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reliance upon and in conformity with information concerning an Underwriter
and furnished in writing by or on behalf of such Underwriter through you
to the Company expressly for use in the Prepricing Prospectus, the
Registration Statement or the Prospectus; the documents incorporated by
reference in the Prepricing Prospectus, the Registration Statement and the
Prospectus, at the time they became effective or were filed with the
Commission, complied in all material respects with the requirements of the
Exchange Act and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading; and the Company has not distributed and
will not distribute any offering material in connection with the offering
or sale of the Shares other than the Registration Statement, the
Prepricing Prospectus and the Prospectus;
(b) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
has full corporate power and corporate authority to own or lease its
properties and conduct its business as described in the Registration
Statement, the Prospectus and the Prepricing Prospectus and as now being
conducted, and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property owned
or leased or the nature of the business transacted by it makes
qualification necessary, except where failure to be so qualified,
individually or in the aggregate, would not have a material adverse effect
on the business, properties, prospects, financial condition or results of
operations of the Company (a "MATERIAL ADVERSE EFFECT"). The Company has
no subsidiaries and has never had any operating subsidiaries;
(c) the Shares have been duly and validly authorized and, when
issued and paid for in accordance with the terms of this Agreement, will
be duly and validly issued, fully paid and nonassessable and free of any
preemptive or similar rights (except those that have been waived by the
holder thereof) and will conform to the description thereof contained in
the Registration Statement, the Prospectus and the Prepricing Prospectus;
(d) the authorized, issued and outstanding capital stock of the
Company at September 30, 2004 is as set forth in the Prospectus in the
column entitled "Actual" under the caption "Capitalization" and upon
consummation of the sale of the Firm Shares would have been at September
30, 2004 as set forth in the Prospectus in the column entitled "As
Adjusted" under the caption "Capitalization"; the certificates for the
Shares are in due and proper form and the holders of the Shares will not
be subject to personal liability by reason of being such holders; all of
the issued and outstanding shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Registration Statement, the Prospectus and the Prepricing Prospectus
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and, except as set forth in the Registration Statement, the Prospectus and
the Prepricing Prospectus and except for options granted under any of the
Company's stock option plans described therein, no options, warrants or
other rights to purchase, agreements or other obligations to issue, or
rights to convert any obligations into or exchange any securities for,
shares of capital stock of, or ownership interests in, the Company are
outstanding;
(e) the Company has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
herein and this Agreement has been duly authorized and validly executed
and delivered by the Company;
(f) none of the execution and delivery of this Agreement, the
issuance and sale of the Shares by the Company hereunder, the fulfillment
of the terms of this Agreement or the consummation of the transactions
contemplated herein, will (i) violate any law, rule, regulation, judgment,
injunction, decree, determination, award or order of any court or
governmental agency or instrumentality, domestic or foreign, or (ii)
conflict with or result in any breach of any of the terms of or constitute
a default (with or without the giving of notice or the passage of time or
otherwise) under, or result in the termination of or the creation or
imposition of any mortgage, lien, security interest or other charge or
encumbrance of any nature under the terms of: (A) any contract or
agreement to which the Company is a party or by which the Company or any
of the assets and properties of the Company is bound, other than any such
conflict, breach or default which, individually or in the aggregate, would
not have a Material Adverse Effect; or (B) the Company's Third Amended and
Restated Certificate of Incorporation (the "CERTIFICATE OF INCORPORATION")
or the Company's Second Amended and Restated Bylaws (the "BYLAWS"). None
of the execution and delivery of this Agreement, the issuance and sale of
the Shares by the Company hereunder, the fulfillment of the terms of this
Agreement or the consummation of the transactions contemplated herein
requires any consent, approval, order or authorization of, or registration
or filing with, or the giving of notice to, any governmental or public
body or authority or any other person, except for such notices, consents
or approvals which have previously been given or obtained or which will be
given or obtained on or before the time of purchase and notices and
filings that may be required under applicable state securities and blue
sky laws;
(g) there is no franchise, legal or governmental proceeding,
affiliate transaction, off-balance sheet transaction, license, contract,
lease, instrument or other document of a character required by the
Securities Act to be described in the Registration Statement, the
Prospectus and the Prepricing Prospectus, or to be filed as an exhibit to
the Registration Statement, which is not described or filed as required;
and all statements summarizing any such franchises, legal or governmental
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proceedings, affiliate transactions, off-balance sheet transactions,
licenses, contracts, leases, instruments or other documents contained in
the Registration Statement are accurate and complete in all material
respects;
(h) all existing minute books of the Company, including all existing
records of all meetings and actions of the board of directors (including,
Audit, Compensation and Corporate Governance Committees) and stockholders
of the Company through the date of the latest meeting and action
(collectively, the "CORPORATE RECORDS"), have been made available to the
Underwriters and counsel for the Underwriters. All such Corporate Records
are complete and all approved minutes accurately reflect, in all material
respects, all transactions referred to in such Corporate Records. There
are no material transactions, agreements or other actions that have been
consummated by the Company that are not properly approved and/or recorded
in the Corporate Records;
(i) except as set forth in the Registration Statement, the
Prospectus and the Prepricing Prospectus, (i) no person or entity has the
right, contractual or otherwise, to cause the Company to issue or sell to
it any shares of Common Stock or shares of any other capital stock or
other equity interests of the Company, (ii) no person or entity has any
preemptive rights, resale rights, rights of first refusal or other rights
to purchase any shares of Common Stock or shares of any other capital
stock or other equity interests of the Company, and (iii) no person or
entity has the right to act as an underwriter or as a financial advisor to
the Company in connection with the offer and sale of the Shares, in the
case of each of the foregoing clauses (i), (ii) and (iii), whether as a
result of the filing or effectiveness of the Registration Statement or the
sale of the Shares as contemplated thereby or otherwise; no person or
entity has the right to require registration of shares of Common Stock or
other securities of the Company because of the filing or effectiveness of
the Registration Statement or otherwise, and the Company is not required
under the terms and conditions of any existing agreement to which the
Company is a party or otherwise bound to file any registration statement
for the registration of any securities of any person or register any such
securities pursuant to any other registration statement filed by the
Company under the Securities Act for a period of at least 180 days after
the date hereof;
(j) the financial statements included or incorporated by reference
in the Registration Statement, the Prospectus and the Preliminary
Propsectus, together with the related notes and schedules, present fairly
in all material respects the financial position of the Company as of the
dates indicated and the results of operations and cash flows of the
Company for the periods specified (subject, in the case of unaudited
statements, to normal year-end audit adjustments that are not material)
and have been prepared in compliance with the requirements of the
Securities Act and in conformity with generally accepted accounting
principles applied on a consistent basis during the
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periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
statements, to the extent they may not include footnotes); the other
financial and statistical data set forth in the Registration Statement and
the Prospectus are accurately presented and prepared on a basis consistent
with the financial statements and books and records of the Company; there
are no financial statements (historical or pro forma) that are required to
be included in the Registration Statement, the Prospectus and the
Prepricing Prospectus that are not included as required; and the Company
does not have any material liabilities or obligations, direct or
contingent (including any off-balance sheet obligations), not disclosed in
the Registration Statement, the Prospectus and the Prepricing Prospectus;
(k) except as set forth in the Registration Statement, the
Prospectus and the Prepricing Prospectus, there is no material legal or
governmental action, suit or proceeding pending or, to the knowledge of
the Company, threatened, to which the Company or any of its directors or
officers is a party or of which the business or property of the Company is
subject at law or in equity, before or by any federal, state, local or
foreign court or governmental or regulatory commission, board, body,
authority or agency. There are no requests for confidential treatment of
information currently pending before the Commission. There is no
investigation, inquiry or proceeding by the Commission or any other
federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency of or against the Company currently
pending, and, to the Company's knowledge, no such investigation, inquiry
or proceeding has been threatened;
(l) except as set forth in Schedule 3(l), the Company has good and
marketable title to its properties, free and clear of all material
security interests, mortgages, pledges, liens, charges, encumbrances and
claims of record and the properties of the Company are, in the aggregate,
in good repair (reasonable wear and tear excepted), and suitable for their
respective uses; to the Company's knowledge, any real property held under
lease by the Company is held under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with
the conduct of the business of the Company; the Company owns or leases all
such properties as are necessary to its business or operations as now
conducted;
(m) the Company is not (i) in violation of its Certificate of
Incorporation, Bylaws or other organizational documents, (ii) in violation
of any law, administrative regulation, ordinance or order of any court or
governmental agency, arbitration panel or authority applicable to the
Company, which violation, individually or in the aggregate, would have a
Material Adverse Effect, or (iii) in default (and there exists no
condition which, with or without the passage of time or giving of notice
or otherwise, would constitute a default) in the performance of any bond,
debenture, note
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or any other evidence of indebtedness in any indenture, mortgage, deed of
trust or any other agreement or instrument to which the Company is a party
or by which the Company is bound or by which the property of the Company
is bound, which, individually or in the aggregate, would have a Material
Adverse Effect;
(n) the Company has not engaged in any unfair labor practice, and
except for matters which would not, individually or in the aggregate, have
a Material Adverse Effect, (i) there is (A) no unfair labor practice
complaint pending or, to the Company's knowledge, threatened against the
Company before the National Labor Relations Board, and no grievance or
arbitration proceeding arising out of or under collective bargaining
agreements is pending or, to the Company's knowledge, threatened, (B) no
strike, labor dispute, slowdown or stoppage pending or, to the Company's
knowledge, threatened against the Company and (C) no union representation
dispute currently existing concerning the employees of the Company, and
(ii) to the Company's knowledge, (A) no union organizing activities are
currently taking place concerning the employees of the Company and (B)
there has been no violation of any federal, state, local or foreign law
relating to discrimination in the hiring, promotion or pay of employees,
any applicable wage or hour laws or any provision of the Employee
Retirement Income Security Act of 1974 ("ERISA") or the rules and
regulations promulgated thereunder concerning the employees of the
Company;
(o) the Company has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of ERISA and the regulations and
published interpretations thereunder with respect to each "plan" (as
defined in Section 3(3) of ERISA and such regulations and published
interpretations) in which employees of the Company are eligible to
participate and each such plan is in compliance in all material respects
with the presently applicable provisions of ERISA and such regulations and
published interpretations. No "prohibited transaction" (as defined in
Section 406 of ERISA, or Section 4975 of the Internal Revenue Code of
1986, as amended from time to time (the "CODE")) has occurred with respect
to any employee benefit plan which, individually or in the aggregate,
would have a Material Adverse Effect. The Company has not incurred any
unpaid liability to the Pension Benefit Guaranty Corporation (other than
for the payment of premiums in the ordinary course) or to any such plan
under Title IV of ERISA. Each "pension plan" (as defined in ERISA) for
which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred whether by action or by failure to act,
which could cause the loss of such qualification;
(p) the Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as the
Company reasonably believes are prudent and customary in the business in
which it is engaged; to the Company's knowledge, all policies of insurance
and fidelity or surety bonds
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insuring the Company and its business, assets, employees, officers and
directors are in full force and effect; to the Company's knowledge, the
Company is in compliance with the terms of such policies and instruments
in all material respects; and there are no claims by the Company under any
such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause; since January
1, 2000, 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 at the then
prevailing rates;
(q) the Company has made all filings, applications and submissions
required by, and possesses all approvals, licenses, certificates,
certifications, clearances, consents, exemptions, orders, permits and
other authorizations required to be issued by, the appropriate federal,
state or foreign regulatory authorities in order for the Company to
conduct its business (collectively, "PERMITS"), except for such Permits
which the failure to obtain, individually or in the aggregate, would not
have a Material Adverse Effect, and is in compliance in all material
respects with the terms and conditions of all such Permits; all of such
Permits held by the Company are valid and in full force and effect; there
is no pending or, to the knowledge of the Company, threatened action,
suit, claim or proceeding which may cause any such Permit to be limited,
revoked, cancelled, suspended, modified or not renewed and the Company has
not received any notice of proceedings relating to the limitation,
revocation, cancellation, suspension, modification or non-renewal of any
such Permit which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of
business, except as described in the Registration Statement, the
Prospectus and the Prepricing Prospectus.
(r) KPMG LLP, who have certified certain financial statements of the
Company and delivered its report with respect to the audited financial
statements and schedules included in the Prospectus, the Prepricing
Prospectus and the Registration Statement, or incorporated by reference
therein, are independent registered public accountants with respect to the
Company within the meaning of the Securities Act;
(s) the Company has filed all material tax returns required to be
filed, which returns are true and correct in all material respects, and
the Company is not in default in the payment of any taxes, including
penalties and interest, assessments, fees and other charges, shown thereon
due or otherwise assessed, other than those being contested in good faith
and for which adequate reserves have been provided or those currently
payable without interest that were payable pursuant to said returns or any
assessments with respect thereto;
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(t) the Company maintains a system of internal accounting controls
that are 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 accountability of assets; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(u) neither the Company nor any of its officers or directors, or, to
the Company's knowledge, any of their affiliates (as such term is defined
in Rule 405 under the Securities Act), has taken or will take, directly or
indirectly, any action designed or intended to stabilize or manipulate the
price of any security of the Company, or which caused or resulted in, or
which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of the Common Stock;
(v) except as would not, individually or in the aggregate, have a
Material Adverse Effect: (i) the Company is in compliance with all
applicable Environmental Laws (as defined below), (ii) the Company has all
permits, authorizations and approvals required under any applicable
Environmental Laws and is in compliance with the requirements of such
permits, authorizations and approvals and (iii) there are no past, present
or, to the Company's knowledge, reasonably anticipated future events,
conditions, circumstances, activities, practices, actions, omissions or
plans that could reasonably be expected to interfere with or prevent
compliance by the Company with Environmental Laws; except as would not,
individually or in the aggregate, have a Material Adverse Effect, the
Company (i) is not the subject of any investigation, (ii) has not received
any notice or claim, (iii) is not a party to or affected by any pending or
threatened action, suit or proceeding, (iv) except as set forth in
Schedule 3(1), is not bound by any judgment, decree or order, (v) has
arranged for the disposal of any Hazardous Material (as defined below) at,
or transported any Hazardous Material to, any site for which the Company
is or may be liable, (vi) is not bound by any lien, nor is any lien
reasonably expected to be recorded on the property, (vii) does not own or
lease any property that contains or includes any asbestos, polychlorinated
biphenyls, or any underground storage tanks, piping, or sumps (or other
underground structures which contain Hazardous Materials, or (viii) has
not entered into any agreement relating to any alleged violation of any
Environmental Law or any actual or alleged release or threatened release
or cleanup at any location of any Hazardous Materials (as used herein,
"ENVIRONMENTAL LAW" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, order, decree, judgment, injunction,
permit, license, authorization or other binding requirement, or common
law, relating to health,
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safety or the protection, cleanup or restoration of the environment or
natural resources, including, but not limited to, those relating to the
distribution, processing, generation, treatment, storage, disposal,
transportation, other handling or release or threatened release of
Hazardous Materials, and "HAZARDOUS MATERIALS" means any material
(including, without limitation, pollutants, contaminants, hazardous or
toxic substances or wastes, asbestos, mold or fungi) that is regulated by
or may give rise to liability under any Environmental Law); the Company
has provided you copies of all environmental studies, investigations,
reports or assessments concerning the Company, or any currently or
previously owned or leased properties within its possession or control;
(w) the Company has ownership or license or legal rights to use all
inventions, patent applications, patents, copyrights, trade secrets,
trademarks (both registered and unregistered), customer lists, designs,
manufacturing or other processes, computer software, systems, data
compilation, research results or other proprietary rights described in the
Registration Statement, the Prospectus and the Prepricing Prospectus as
being owned or licensed by it or used in the business of the Company and
material to the Company (collectively, "INTELLECTUAL PROPERTY") other than
Intellectual Property generally available on commercial terms from other
sources. All of such patents, registered trademarks and registered
copyrights owned by the Company have been duly registered in, filed in or
issued by the United States Patent and Trademark Office, the United States
Register of Copyrights or the corresponding offices of other jurisdictions
and have been maintained and renewed in accordance with all applicable
provisions of law and administrative regulations in the United States and
all such other jurisdictions, except where the failure to do so,
individually or in the aggregate, would not have a Material Adverse
Effect. All material licenses or other material agreements under which (i)
the Company is granted rights in Intellectual Property, other than
Intellectual Property generally available on commercial terms from other
sources, or (ii) the Company has granted rights to others in Intellectual
Property owned or licensed by the Company, are, to the knowledge of the
Company, in full force and effect and there is no default by the Company
thereto that, individually or in the aggregate, would have a Material
Adverse Effect. The Company believes it has taken all steps required in
accordance with sound business practice and business judgment to establish
and preserve its ownership of or rights to all material Intellectual
Property. To the knowledge of the Company, the present business,
activities and products of the Company do not infringe any intellectual
property of any other person, except where such infringement, individually
or in the aggregate, would not have a Material Adverse Effect. Except as
described in the Prepricing Prospectus, the Prospectus and the
Registration Statement, no proceeding charging the Company with
infringement of any adversely held Intellectual Property has been filed.
To the knowledge of the Company, the Company is not making unauthorized
use of any confidential information or trade secrets of any person. To
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the Company's knowledge, there are no third parties who have or will be
able to establish rights to any Intellectual Property, except for the
ownership rights of the owners of the Intellectual Property which is
licensed to the Company or third party licensees of the Company's
Intellectual Property. To the Company's knowledge, there is no
infringement by third parties of any Intellectual Property, there is no
pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the Company's rights in or to
any Intellectual Property or the validity or scope of any Intellectual
Property, and the Company is unaware of any facts which could form a
reasonable basis for any such claim. There is no patent or patent
application that contains claims that interfere with the issued or pending
claims of any of the Intellectual Property that, individually or in the
aggregate, would have a Material Adverse Effect. There is no prior act by
the Company or, to the Company's knowledge, any third party that may
render any patent application owned by the Company of the Intellectual
Property unpatentable that has not been disclosed to the U.S. Patent and
Trademark Office. Neither the Company nor, to the knowledge of the
Company, any of its employees has any agreements or arrangements with any
persons other than the Company related to confidential information or
trade secrets of such persons other than such agreements that would not
materially restrict the Company from conducting its business as currently
conducted.
(x) the Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on The NASDAQ National Market (the "NASDAQ
STOCK MARKET"), and the Company has taken no action designed to, or likely
to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the NASDAQ Stock
Market. The Shares are duly listed and admitted and authorized for
trading, subject to official notice of issuance, on the NASDAQ Stock
Market;
(y) since becoming subject to the periodic reporting requirements of
the Exchange Act, the Company has made all required filings pursuant to
the rules and regulations promulgated thereunder, and all such filings, as
may have been amended, complied in all material respects with the Exchange
Act and such rules and regulations promulgated thereunder as of the date
filed with the Commission. There is, to the best of the Company's
knowledge, no fact, other than general biotechnology information or other
information which is in the public domain and not specific to the Company
or its business, which materially and adversely affects the business,
prospects, condition, affairs or operations of the Company or any of its
properties or assets which has not been disclosed orally to the
Underwriters or in the Registration Statement, the Prospectus and the
Prepricing Prospectus;
(z) except as disclosed in the Registration Statement, the
Prospectus or the Prepricing Prospectus, the Company is not indebted,
either directly or indirectly, to
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any present or former stockholder, officer or director, or to any of their
respective spouses or children or any of their respective Affiliates (as
such term is defined in Rule 405 under the Securities Act), in any amount
whatsoever, including, without limitation, any amounts due under any
deferred compensation plan, other than for payment of consulting fees or
salaries (but not deferred fees or salaries) for services rendered,
employee benefits and reasonable expenses incurred on the Company's
behalf. Except as disclosed in the Registration Statement, the Prospectus
and the Prepricing Prospectus, no present or former officer, director or
stockholder of the Company (nor any person in the immediate family of any
such officer, director or stockholder) nor any of their respective
Affiliates is indebted to the Company or has any material direct or
indirect ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a material business
relationship or which competes with the Company. The Company has provided
you true, correct, and complete copies of all documentation pertaining to
any extension of credit in the form of a personal loan made, directly or
indirectly, by the Company to any director or executive officer of the
Company, or to any family member or affiliate of any director or executive
officer of the Company; and since July 30, 2002, the Company has not,
directly or indirectly: (i) extended credit, arranged to extend credit, or
renewed any extension of credit, in the form of a personal loan, to or for
any director or executive officer of the Company, or to or for any family
member or affiliate of any director or executive officer of the Company;
or (ii) made any material modification, including any renewal thereof, to
any term of any personal loan to any director or executive officer of the
Company, or any family member or affiliate of any director or executive
officer, which loan was outstanding on July 30, 2002. Except as disclosed
in the Registration Statement, the Prospectus and the Prepricing
Prospectus, to the Company's knowledge, no officer, director or holder of
any of its capital stock or any member of their immediate families or any
of their respective Affiliates, is, directly or indirectly, interested in
any material contract with the Company. The Company is not a guarantor or
indemnitor of any indebtedness of any person, firm or corporation. To the
Company's knowledge, there are no affiliations or associations between any
member of the NASD and any of the Company's officers, directors or 5% or
greater securityholders, except as set forth in the Registration
Statement, the Prospectus and the Prepricing Prospectus;
(aa) except as required by this Agreement and as described in the
Registration Statement, the Prospectus and the Prepricing Prospectus,
there are no agreements or arrangements between the Company and any of the
Company's stockholders, or to the Company's knowledge, between or among
any of the Company's stockholders, which grant special rights with respect
to any shares of the Company's capital stock or which in any way affect
any stockholder's ability or right freely to alienate or vote such shares;
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(bb) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT");
(cc) except as disclosed in the Registration Statement, the
Prospectus and the Prepricing Prospectus (excluding, for purposes of this
paragraph, any exhibits thereto), since September 30, 2004 there has not
been (i) any change, or any development involving a prospective change in
the Company's business, that would have a Material Adverse Effect, (ii)
any transaction which is material to the Company (other than loans for
equipment financing that do not exceed $1,450,000 in the aggregate), (iii)
any obligation, direct or contingent (including any off-balance sheet
obligations), incurred by the Company, which is material to the Company
(iv) any change in the capital stock (except for any changes related to
the granting or exercise of stock options, stock option modifications that
are not material, amortization of deferred compensation and purchases
under the Company's employee stock purchase plan, in each case in the
ordinary course consistent with past practice) or outstanding indebtedness
(other than loans for equipment financing that do not exceed $1,450,000 in
the aggregate and payments under existing loans) of the Company; (v) any
dividend or distribution of any kind declared, paid or made on the capital
stock of the Company; or (vi) any loss or damage (whether or not insured)
to the physical property of the Company which has been sustained which has
had a Material Adverse Effect;
(dd) the Company has obtained for the benefit of the Underwriters
the agreement (a "LOCK-UP AGREEMENT"), in the form set forth as Exhibit A
hereto, of each of its executive officers and substantially all of its
directors;
(ee) the Company has not sent or received any communication
regarding termination of, or intent not to renew, any of the contracts or
agreements referred to or described in, or filed as an exhibit to, the
Registration Statement, and no such termination or non-renewal has been
threatened by the Company or, to the Company's knowledge, any other party
to any such contract or agreement;
(ff) the Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15 and 15d-15 under
the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company is made known to
the Company's Chief Executive Officer and its Chief Financial Officer by
others within the Company and such disclosure controls and procedures are
effective to perform the functions for which they were established; the
Company's auditors and the Audit Committee of the Board of Directors have
been advised of: (i) any significant deficiencies in the design or
operation of internal controls which could adversely affect the Company's
ability to record, process, summarize, and report financial data; and (ii)
any fraud, whether or
-16-
not material, that involves management or other employees who have a role
in the Company's internal controls; any material weaknesses in internal
controls have been identified for the Company's auditors; and since the
date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls or
in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies
and material weaknesses;
(gg) any statistical and market-related data included in the
Registration Statement, the Prospectus and the Prepricing Prospectus are
based on or derived from sources that the Company believes to be reliable
and accurate, and the Company has obtained the written consent to the use
of such data from such sources to the extent required;
(hh) neither the Company nor, to the Company's knowledge, any
employee or agent of the Company has made any payment of funds of the
Company or received or retained any funds in violation of any law, rule or
regulation, which payment, receipt or retention of funds is of a character
required to be disclosed in the Registration Statement, the Prospectus and
the Prepricing Prospectus;
(ii) the Company and the officers and directors of the Company, in
their capacities as such, are in compliance in all material respects with
the provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder;
(jj) the pre-clinical and other studies and tests conducted by or on
behalf of or sponsored by the Company that are described in the
Registration Statement, Prospectus or Prepricing Prospectus or the results
of which are referred to in the Registration Statement, Prospectus or
Prepricing Prospectus were and, if still pending, are being conducted in
all material respects in accordance with all foreign, federal, state or
local statutes, laws, rules and regulations, as applicable. The
descriptions in the Registration Statement, Prospectus and Prepricing
Prospectus of the results of such studies and tests are accurate and
complete in all material respects and fairly present the data derived from
such studies and tests, and the Company has no knowledge of any other
studies or tests the results of which are inconsistent with or otherwise
call into question the results described or referred to in the Prospectus;
(kk) the Company has not failed to file with the applicable
regulatory authorities (including, without limitation, the Food and Drug
Administration ("FDA") or any foreign, federal, state or local
governmental or regulatory authority performing functions similar to those
performed by the FDA) any material required filing, declaration, listing,
registration, report or submission; all such filings, declarations,
listings, registrations, reports or submissions were in material
compliance with applicable laws when filed and, except as referred to or
described in the Prospectus or
-17-
the Prepricing Prospectus, no deficiencies have been asserted by any
applicable regulatory authority (including, without limitation, the FDA or
any foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA) with respect
to any such filings, declarations, listings, registrations, reports or
submissions; and
(ll) no forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in
the Registration Statement and the Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good faith.
In addition, any certificate signed by any officer of the Company
and delivered to the Underwriters or counsel for the Underwriters in connection
with the offering of the Shares shall be deemed to be a representation and
warranty by the Company as to the matters covered thereby, to each Underwriter.
4. Certain Covenants of the Company. The Company hereby agrees:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states or other jurisdictions as you
may designate and to maintain such qualifications in effect so long as you
may request for the distribution of the Shares; provided that the Company
shall not be required to qualify as a foreign corporation or to consent to
the service of process under the laws of any such jurisdiction (except
service of process with respect to the offering and sale of the Shares);
and to promptly advise you of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose;
(b) to make available to the Underwriters in New York City, as soon
as practicable after the execution of this Agreement, and thereafter from
time to time to furnish to the Underwriters, as many copies of the
Prospectus (or of the Prospectus as amended or supplemented if the Company
shall have made any amendments or supplements thereto after the execution
of this Agreement) as the Underwriters may request for the purposes
contemplated by the Securities Act; in case any Underwriter is required to
deliver a prospectus after the nine-month period referred to in Section
10(a)(3) of the Securities Act in connection with the sale of the Shares,
the Company will prepare, at its expense, promptly upon request such
amendment or amendments to the Registration Statement and the Prospectus
as may be necessary to permit compliance with the requirements of Section
10(a)(3) of the Securities Act;
(c) if, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or any post-effective amendment
thereto to be declared
-18-
effective before the Shares may be sold, the Company will endeavor to
cause the Registration Statement or such post-effective amendment to
become effective as soon as possible and the Company will advise you
promptly and, if requested by you, will confirm such advice in writing,
(i) when the Registration Statement and any such post-effective amendment
thereto has and (ii) if Rule 430A under the Securities
Act is used, when the Prospectus is filed with the Commission pursuant to
Rule 424(b) under the Securities Act (which the Company agrees to file in
a timely manner under such Rule);
(d) to advise you promptly, confirming such advice in writing, of
any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information
with respect thereto, or of notice of institution of proceedings for, or
the entry of a stop order, suspending the effectiveness of the
Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to use its
best efforts to obtain the lifting or removal of such order as soon as
possible; to advise you promptly of any proposal to amend or supplement
the Registration Statement or the Prospectus, including by filing any
documents that would be incorporated therein by reference, and to provide
you and Underwriters' counsel copies of any such documents for review and
comment a reasonable amount of time prior to any proposed filing and to
file no such amendment or supplement to which you shall object in writing;
(e) subject to Section 4(d) hereof, to file promptly all reports and
any definitive proxy or information statement required to be filed by the
Company with the Commission in order to comply with the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery
of a prospectus is required in connection with the offering or sale of the
Shares; to provide you with a copy of such reports and statements and
other documents to be filed by the Company pursuant to Section 13, 14 or
15(d) of the Exchange Act during such period a reasonable amount of time
prior to any proposed filing, and to promptly notify you of such filing;
(f) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) under the Securities Act;
(g) to advise the Underwriters promptly of the happening of any
event within the time during which a prospectus relating to the Shares is
required to be delivered under the Securities Act which could require the
making of any change in the Prospectus then being used so that the
Prospectus would not include an untrue statement of material fact or omit
to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they are made, not misleading, and,
during such time, subject to Section 4(d) hereof, to prepare and furnish,
at the Company's expense, to the Underwriters promptly such amendments or
supplements to such Prospectus as may be necessary to reflect any such
change;
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(h) to make generally available to its security holders an earnings
statement of the Company (which will satisfy the provisions of Section
11(a) of the Securities Act) covering a period of at least twelve months
beginning after the effective date of the Registration Statement (as
defined in Rule 158(c) of the Securities Act) as soon as is reasonably
practicable and consistent with past practices after the termination of
such period;
(i) to furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet, a
statement of operations, a statement of stockholders' equity and
comprehensive loss, and a statement of cash flows of the Company for such
fiscal year, accompanied by a copy of the certificate or report thereon of
an independent public accountant registered with the Public Company
Accounting Oversight Board);
(j) to furnish to you four copies of the Registration Statement, as
initially filed with the Commission, and of all amendments thereto
(including all exhibits thereto and documents incorporated by reference
therein) and sufficient copies of the foregoing (other than exhibits) for
distribution of a copy to each of the other Underwriters; provided,
however, that in no case shall the Company be required to furnish
materials pursuant to this paragraph that are filed and publicly
accessible via the EDGAR database;
(k) to furnish to you promptly and, upon request, to each of the
other Underwriters for a period of two years from the date of this
Agreement (i) copies of any reports or other communications which the
Company shall send to its stockholders or shall from time to time publish
or publicly disseminate, (ii) copies of all annual, quarterly and current
reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such
other similar forms as may be designated by the Commission, (iii) copies
of documents or reports filed with any national securities exchange on
which any class of securities of the Company is listed, and (iv) such
other information as you may reasonably request regarding the Company;
provided, however, that in no case shall the Company be required to
furnish materials pursuant to this paragraph that are filed and publicly
accessible via the EDGAR database;
(l) to furnish to you as early as practicable prior to the time of
purchase and any additional time of purchase, as the case may be, but not
later than two business days prior thereto, a copy of the latest available
unaudited interim and monthly financial statements, if any, of the Company
which have been read by the Company's independent registered public
accountants, as stated in their letter to be furnished pursuant to Section
6(d) hereof;
(m) to apply the net proceeds from the sale of the Shares in the
manner set forth under the caption "Use of Proceeds" in the Prospectus;
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(n) to pay all costs, expenses, fees and taxes in connection with
(i) the preparation and filing of the Registration Statement, each
Prepricing Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment),
(ii) the registration, issue, sale and delivery of the Shares including
any stock or transfer taxes and stamp or similar duties payable upon the
sale, issuance or delivery of the Shares to the Underwriters, (iii) the
producing, word processing and/or printing of this Agreement, any
Agreement Among Underwriters, any dealer agreements, any Powers of
Attorney and any closing documents (including compilations thereof) and
the reproduction and/or printing and furnishing of copies of each thereof
to the Underwriters and (except closing documents) to dealers (including
costs of mailing and shipment), (iv) the qualification of the Shares for
offering and sale under state or foreign laws and the determination of
their eligibility for investment under state or foreign law as aforesaid
(including up to $10,000 for the legal fees and filing fees and other
disbursements of counsel for the Underwriters) and the printing and
furnishing of copies of any blue sky surveys or legal investment surveys
to the Underwriters and to dealers, (v) any listing of the Shares on any
securities exchange or qualification of the Shares for quotation on the
NASDAQ Stock Market and any registration thereof under the Exchange Act,
(vi) any filing for review of the public offering of the Shares by the
NASD, including the legal fees and filing fees and other disbursements of
counsel to the Underwriters, (vii) the fees and disbursements of any
transfer agent or registrar for the Shares, (viii) the costs and expenses
of the Company relating to presentations or meetings undertaken in
connection with the marketing of the offering and sale of the Shares to
prospective investors and the Underwriters' sales forces, including,
without limitation, expenses associated with the production of road show
slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations, travel, lodging and other
expenses incurred by the officers of the Company and any such consultants,
and the cost of any aircraft chartered in connection with the road show,
and (ix) the performance of the Company's other obligations hereunder;
(o) not to sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of
or agree to dispose of, directly or indirectly, any Common Stock or
securities convertible into or exchangeable or exercisable for Common
Stock or warrants or other rights to purchase Common Stock or any other
securities of the Company that are substantially similar to Common Stock,
or file or cause to be declared effective a registration statement under
the Securities Act relating to the offer and sale of any shares of Common
Stock or securities convertible into or exercisable or exchangeable for
Common Stock or other rights to purchase Common Stock or any other
securities of the Company that are substantially similar to Common Stock
for a period of 90 days after the date hereof (the "LOCK-UP PERIOD"),
without the prior written consent of UBS, except for (i) the
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registration of the Shares and the sales to the Underwriters pursuant to
this Agreement, (ii) issuances of Common Stock upon the exercise of
options or warrants disclosed as outstanding in the Registration Statement
and the Prospectus, (iii) the issuance of employee stock options not
exercisable during the Lock-Up Period pursuant to stock option plans
described in the Registration Statement and the Prospectus and (iv) the
issuance of options to directors of the Company in connection with the
Company's annual meeting consistent with past practices; provided,
however, that if (x) during the period that begins on the date that is 15
calendar days plus 3 business days before the last day of the Lock-up
Period and ends on the last day of the Lock-up Period, the Company issues
a earnings release or material news or a material event relating to the
Company occurs, or (y) prior to the expiration of the Lock-up Period, the
Company announces that it will release earnings results during the 16-day
period beginning on the last day of the Lock-up Period, the restrictions
set forth in this Section 4(o) shall continue to apply until the
expiration of the date that is 15 calendar days plus three (3) business
days after the date on which the issuance of the earnings release or the
material news or material event occurs;
(p) to use its best efforts to cause the Common Stock to be listed
for quotation on the NASDAQ Stock Market; and
(q) to maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar for the Common
Stock.
5. Reimbursement of Underwriters' Expenses. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to the fifth paragraph of Section 8 hereof or the default by one or more of the
Underwriters in its or their respective obligations hereunder, the Company
shall, in addition to paying the amounts described in Section 4(n) hereof,
reimburse the Underwriters for all of their out-of-pocket expenses, including
the fees and disbursements of their counsel.
6. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Company on the date hereof, at the time of
purchase and, if applicable, at the additional time of purchase, the performance
by the Company of its obligations hereunder and to the following additional
conditions precedent:
(a) The Company shall furnish to you at the time of purchase and, if
applicable, at the additional time of purchase, an opinion of Pepper
Hamilton LLP, counsel for the Company, addressed to the Underwriters, and
dated the time of purchase or the additional time of purchase, as the case
may be, with reproduced copies for each of the other Underwriters and in
form and substance satisfactory to Willkie Farr & Gallagher LLP, counsel
for the Underwriters, stating that:
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(i) the Company is validly existing as a corporation in good
standing under the laws of the State of Delaware, is duly qualified to do
business and is in good standing as a foreign corporation in the
Commonwealth of Pennsylvania and the State of California and has all
corporate authority necessary to own or hold its properties and to conduct
the business in which it is engaged as described in the Prospectus and the
Prospectus Supplement;
(ii) the Company has the authorized capitalization as set forth in
the Prospectus, and the Shares, when issued and delivered to and paid for
by the Underwriters as contemplated by this Agreement, will be duly and
validly authorized and issued, fully paid and non-assessable, and the
capital stock of the Company will conform to the description thereof
contained in the Prospectus;
(iii) the Shares have been issued in compliance with Section 5 of
the Securities Act;
(iv) other than such rights as have been waived by the holders
thereof, there are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any of the
Shares pursuant to the Company's Certificate of Incorporation or Bylaws or
any agreement or other instrument known to such counsel; the form of
certificate used to evidence the Shares complies in all material respects
with all applicable statutory requirements, any applicable requirements of
the Company's Certificate of Incorporation and Bylaws and the requirements
of the NASDAQ Stock Market; and the holders of the Shares will not be
subject to personal liability by reason of being such holders;
(v) all documents related to the offering of the Shares have been
duly authorized, executed and delivered by the Company;
(vi) the execution, delivery and performance of the documents
related to the offering of the Shares by the Company and the consummation
by the Company of the transactions contemplated thereby will not result in
any violation of (A) the provisions of the Certificate of Incorporation or
Bylaws of the Company, (B) to knowledge of such counsel, any judgment,
order or decree of any court or governmental agency or body having
jurisdiction over the Company or any of its properties or assets, or (C)
to knowledge of such counsel, any indenture, mortgage, deed of trust, bank
loan, credit agreement or other evidence of indebtedness, license, lease,
contract or other agreement or instrument to which the Company is a party
or by which it or any of its properties may be bound or affected that is
included as an exhibit to the Registration Statement or to any report
incorporated by reference in the Registration Statement;
-23-
(vii) the Registration Statement was declared effective under the
Securities Act as of January 10, 2005, the Prepricing Prospectus was filed
with the Commission pursuant to subparagraph (5) of Rule 424(b) under the
Securities Act on February 7, 2005 and the Prospectus was filed with the
Commission pursuant to subparagraph (5) of Rule 424(b) under the
Securities Act on February 18, 2005 and no stop order suspending the
effectiveness of the Registration Statement has been issued and, to our
knowledge, no proceeding for that purpose is pending or threatened by the
Commission;
(viii) except for the registration of the Shares or other filings
under the Securities Act, the listing of the Shares by the NASDAQ Stock
Market, and such filings, consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act
and applicable state securities laws in connection with the purchase and
distribution of the Shares, no consent, approval, authorization or order
of, or filing or registration with, any court, governmental agency or
governmental body is required for the execution, delivery and performance
of the documents related to the offering of the Shares by the Company and
the consummation by the Company of the transactions contemplated thereby;
(ix) to the knowledge of such counsel, no person or entity has the
right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness of the
Registration Statement, the completion of the offering of the Shares or
otherwise;
(x) such counsel has reviewed (A) the statements in the Prospectus
(other than the financial statements and related schedules and other
financial and statistical data derived from such financial statements
contained in the Prepricing Prospectus or Prospectus, as applicable, as to
which such counsel expresses no opinion) under the headings "Risk factors"
(which are specifically listed on a schedule to such counsel's opinion),
"Plan of distribution" and "Description of capital stock," (B) the
statements in Item 15 of Part II of the Registration Statement and (C) the
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2003 under Item 1, "Business" and under Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Factors Affecting the Company's Prospects" which are specifically listed
on a schedule to such counsel's opinion, and such statements, to the
extent that they constitute summaries of matters of law or regulation or
legal conclusions, fairly summarize the matters described therein in all
material respects;
(xi) such counsel has reviewed the statements in the Registration
Statement, Prepricing Prospectus and Prospectus that are descriptions of
contracts, agreements or other legal documents that are included as an
exhibit
-24-
to the Registration Statement or to any report incorporated by reference
in the Registration Statement and such statements fairly summarize the
matters described therein in all material respects;
(xii) to the knowledge of such counsel and other than as set forth
in the Prepricing Prospectus and the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or of
which any property or asset of the Company is the subject which,
singularly or in the aggregate, if determined adversely to the Company,
would prevent or adversely affect the ability of the Company to perform
its obligations under the documents related to the offering of the Shares;
and, to the knowledge of such counsel, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others;
(xiii) the Registration Statement, the Prepricing Prospectus and the
Prospectus (except as to the financial statements and schedules and other
financial and statistical data derived from such financial statements and
contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Securities Act, the conditions to the use of Form S-3 have been satisfied,
and the documents incorporated by reference in the Registration Statement,
the Prepricing Prospectus and the Prospectus (except as to the financial
statements and schedules and other financial and statistical data derived
from such financial statements and contained therein, as to which such
counsel need express no opinion), at the time they became effective or
were filed with the Commission, complied as to form in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the case may be; and
(xiv) the Company is not and, immediately after giving effect to the
offering and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined
in the Investment Company Act.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the independent registered public accountants of the Company
and representatives of the Underwriters at which the contents of the
Registration Statement and the Prospectus were discussed and, although such
counsel is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (except as and to the extent stated in subparagraphs
(ii), (x) and (xi) above), on the basis of the foregoing nothing has come to the
attention of such counsel that causes them to believe that either the
Registration Statement or any amendments thereto, at the time the Registration
Statement or any such amendments became effective, contained
-25-
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any supplement thereto at the date of such
Prospectus or such supplement, and at the time of purchase or the additional
time of purchase, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and schedules and
other financial and statistical data derived from such financial statements
included in the Registration Statement or the Prospectus).
(b) The Company shall furnish to you at the time of purchase and, if
applicable, at the additional time of purchase, an opinion of Morgan,
Lewis & Bockius LLP, special counsel to the Company with respect to
patents and proprietary rights, addressed to the Underwriters, and dated
the time of purchase or the additional time of purchase, as the case may
be, with reproduced copies for each of the other Underwriters and in form
and substance satisfactory to Willkie Farr & Gallagher LLP, counsel for
the Underwriters, stating that:
(i) to such counsel's knowledge, the statements in the
Registration Statement, the Basic Prospectus (under the captions
"Who We Are" and "Risks Related to Intellectual Property") and the
Prospectus Supplement (under the captions "Prospectus Supplement
Summary" and "Risks Related to Intellectual Property")
(collectively, the "IP PORTIONS"), as they relate to the United
States Patents (the "PATENTS") and United States Patent Applications
(the "APPLICATIONS") for which such counsel is responsible (which
Patents and Applications are listed on the Company's docket, dated
January 26, 2005, reviewed by counsel to the Underwriters and
maintained in Morgan, Lewis & Bockius LLP's files), in so far as
such statements constitute matters of law or summaries of legal
matters or proceedings relating to the Patents and the Applications,
are complete and accurate in all material aspects and present fairly
the information purported to be shown;
(ii) to such counsel's knowledge, no material action, suit,
claim or proceeding relating to the Patents or the Applications,
owned by or affecting the business or operations of the Company, are
pending or threatened against the Company;
(iii) nothing in such counsel's files leads such counsel to
believe that the Company is not the Assignee, Co-Assignee or
Licensor of the Patents and Applications. To such counsel's
knowledge, there are no claims of third parties, other than those of
a Co-Assignee or Licensor, to any ownership interest with respect to
any of the Patents or Applications. Such counsel is not aware of any
material defect in form in the preparation or filing of the
Applications on
-26-
behalf of the Company. To such counsel's knowledge, the Company
owns as its sole property, or joint property with a Co-Assignee, the
Patents and the Applications. To such counsel's knowledge, the
Applications are being pursued by the Company;
(iv) to such counsel's knowledge, the Company licenses or owns
as its sole property, or joint property with a Co-Proprietor, the
foreign patents listed on the Company's docket, dated January 26,
2005, for which such counsel is responsible (the "FOREIGN PATENTS"),
and each of the foreign patent applications listed on this docket
for which such counsel is responsible (the "FOREIGN APPLICATIONS").
A copy of this docket was reviewed by counsel to the Underwriters
and is maintained in Morgan, Lewis & Bockius LLP's files. To such
counsel's knowledge, there are no claims of third parties, other
than those of a Co-Proprietor or Licensor, to any ownership interest
with respect to the Foreign Patents or Foreign Applications. Such
counsel is not aware of any material defect of form in the
preparation or filing of the Foreign Applications on behalf of the
Company. To such counsel's knowledge, the Foreign Applications are
being pursued by the Company;
(v) such counsel knows of no reason why the Patents or Foreign
Patents are not valid as issued. Such counsel does not have
knowledge of any reason why any patent to be issued as a result of
any Application or Foreign Application would not be valid or would
not afford the Company useful patent protection with respect
thereto. With regard to the Patents that have matured out of the
Applications filed in the United States Patent and Trademark Office
by such counsel, such counsel is unaware of any reason why the
Patents would be found unenforceable due to their being obtained
through inequitable conduct on the part of such counsel, the
Company, or its employees. Moreover, with regard to Applications
filed in the United States Patent and Trademark Office by such
counsel, such counsel is unaware of any reason why a patent that may
mature from any of such Applications would be found unenforceable
due to its being obtained through inequitable conduct on the part of
such counsel, the Company, or its employees; and
(vi) such counsel knows of no reason why the preclinical drug
development activities of the Company, as set forth in the
Prepricing Prospectus and the Prospectus, are not reasonably related
to the development of data for submission to the FDA, and are not of
a character to fall within the "Safe Harbor Provision" of 35 U.S.C.
Section 271(e)(1).
In addition, such counsel shall state that such counsel has reviewed
the Registration Statement and those portions of the Basic Prospectus under the
captions "Who We Are" and "Risks Related to Intellectual Property" and those
portions of the Prospectus
-27-
Supplement under the captions "Prospectus Supplement Summary" and "Risks Related
to Intellectual Property," and although such counsel did not participate in the
preparation of the Registration Statement, the Prepricing Prospectus or the
Prospectus or in any conferences with officers or other representatives of the
Company or with the Underwriters or their counsel relating thereto and such
counsel has not independently verified, and accordingly is not confirming and
assumes no responsibility for the accuracy, completeness or fairness of any
statements contained in the Registration Statement or the Prospectus, except to
the extent otherwise stated in such opinion, nevertheless, in the course of such
counsel's work in the preparation of its opinion, nothing has come to such
counsel's attention which leads such counsel to believe that (i) the IP Portions
of the Registration Statement or any amendments thereto, at the time the
Registration Statement or any such amendments became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or (ii) the IP Portions of the Prospectus or any supplement thereto at the date
of such Prospectus or such supplement, and at the time of purchase or the
additional time of purchase, as the case may be, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) You shall have received from the Company certificates of the
Company's Chief Financial Officer dated, respectively, the date of this
Agreement, the time of purchase and, if applicable, the additional time of
purchase, in the form attached hereto as Exhibit B.
(d) You shall have received from KPMG LLP letters dated,
respectively, the date of this Agreement, the time of purchase and, if
applicable, the additional time of purchase, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the
forms heretofore approved by UBS.
(e) You shall have received at the time of purchase and, if
applicable, at the additional time of purchase, the favorable opinion of
Willkie Farr & Gallagher LLP, counsel for the Underwriters, dated the time
of purchase or the additional time of purchase, as the case may be, as to
the matters referred to in subparagraphs (ii) (with respect to the Shares
only), (v), (vii) and (xiii) and the last subparagraph of paragraph (a) of
this Section 6.
(f) No Prospectus or amendment or supplement to the Registration
Statement or the Prospectus, including documents deemed to be incorporated
by reference therein, shall have been filed to which you objected in
writing.
-28-
(g) The Prospectus Supplement shall have been filed with the
Commission pursuant to Rule 424(b) under the Securities Act at or before
5:30 P.M. New York City time, no later than the second full business day
after the date of this Agreement.
(h) Prior to the time of purchase, and, if applicable, the
additional time of purchase, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under
the Securities Act or proceedings initiated under Section 8(d) or 8(e) of
the Securities Act; (ii) the Registration Statement and all amendments
thereto shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and (iii) the Prospectus and
all amendments or supplements thereto shall not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they are made, not misleading.
(i) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, no
material adverse change or any development involving a prospective
material adverse change in the business, properties, management, financial
condition or results of operations of the Company shall occur or become
known.
(j) The Company will, at the time of purchase and, if applicable, at
the additional time of purchase, deliver to you a certificate of its Chief
Executive Officer and its Chief Financial Officer in the form attached as
Exhibit C hereto.
(k) You shall have received signed Lock-up Agreements referred to in
Section 3(dd) hereof.
(l) The Company shall have furnished to you such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the time of purchase and,
if applicable, the additional time of purchase, as you may reasonably
request.
(m) The Shares shall have been approved for listing on the NASDAQ
Stock Market, subject only to notice of issuance at or prior to the time
of purchase or the additional time of purchase, as the case may be.
7. Effective Date of Agreement; Termination. This Agreement shall
become effective when the parties hereto have executed and delivered this
Agreement.
The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of UBS or any group of
Underwriters (which may include UBS) which has agreed to purchase in the
aggregate at least 50% of the Firm Shares, if (x) since the time of execution of
this Agreement or the earlier respective dates as of which
-29-
information is given in the Registration Statement and the Prospectus, there has
been any material adverse change or any development involving a prospective
material adverse change in the business, properties, management, financial
condition or results of operation of the Company, which would, in UBS' judgment
or in the judgment of such group of Underwriters, make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares on
the terms and in the manner contemplated in the Registration Statement and the
Prospectus, or (y) since the time of execution of this Agreement there shall
have occurred: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
NASDAQ Stock Market; (ii) a suspension or material limitation in trading in the
Company's securities listed for quotation on the NASDAQ Stock Market; (iii) a
general moratorium on commercial banking activities declared by either federal
or New York State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; (iv) an
outbreak or escalation of hostilities or acts of terrorism involving the United
States or a declaration by the United States of a national emergency or war; or
(v) any other calamity or crisis or any change in financial, political or
economic conditions in the United States or elsewhere, if the effect of any such
event specified in clause (iv) or (v) in UBS' judgment or in the judgment of
such group of Underwriters makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares on the terms and in the manner
contemplated in the Registration Statement and the Prospectus, or (z) since the
time of execution of this Agreement there shall have occurred any downgrading,
or any notice or announcement shall have been given or made of (i) any intended
or potential downgrading or (ii) any watch, review or possible change that does
not indicate an affirmation or improvement, in the rating accorded any
securities of or guaranteed by the Company by any "nationally recognized
statistical rating organization," as that term is defined in Rule 436(g)(2)
under the Securities Act.
If UBS or any group of Underwriters elects to terminate this
Agreement as provided in this Section 7, the Company and each other Underwriter
shall be notified promptly in writing.
If the sale to the Underwriters of the Shares, as contemplated by
this Agreement, is not carried out by the Underwriters for any reason permitted
under this Agreement or if such sale is not carried out because the Company
shall be unable to comply with any of the terms of this Agreement, the Company
shall not be under any obligation or liability under this Agreement (except to
the extent provided in Sections 4(n) and 9 hereof), and the Underwriters shall
be under no obligation or liability to the Company under this Agreement (except
to the extent provided in Section 7 hereof) or to one another hereunder.
8. Increase in Underwriters' Commitments. Subject to Sections 6 and 7
hereof, if any Underwriter shall default in its obligation to take up and pay
for the Firm Shares to be
-30-
purchased by it hereunder (otherwise than for a failure of a condition set forth
in Section 6 hereof or a reason sufficient to justify the termination of this
Agreement under the provisions of Section 7 hereof) and if the number of Firm
Shares which all Underwriters so defaulting shall have agreed but failed to take
up and pay for does not exceed 10% of the total number of Firm Shares, the
non-defaulting Underwriters shall take up and pay for (in addition to the
aggregate number of Firm Shares they are obligated to purchase pursuant to
Section 1 hereof) the number of Firm Shares agreed to be purchased by all such
defaulting Underwriters, as hereinafter provided. Such Shares shall be taken up
and paid for by such non-defaulting Underwriters in such amount or amounts as
you may designate with the consent of each Underwriter so designated or, in the
event no such designation is made, such Shares shall be taken up and paid for by
all non-defaulting Underwriters pro rata in proportion to the aggregate number
of Firm Shares set forth opposite the names of such non-defaulting Underwriters
in Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Firm Shares hereunder unless all of the Firm Shares are purchased
by the Underwriters (or by substituted Underwriters selected by you with the
approval of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and the
Prospectus and other documents may be effected.
The term "UNDERWRITER" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Firm Shares which the defaulting
Underwriter or Underwriters agreed to purchase exceeds 10% of the total number
of Firm Shares which all Underwriters agreed to purchase hereunder, and if
neither the non-defaulting Underwriters nor the Company shall make arrangements
within the five business day period stated above for the purchase of all the
Firm Shares which the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall terminate without further act or deed and
without any liability on the part of the Company to any non-defaulting
Underwriter and without any liability on the part of any non-defaulting
Underwriter to the Company. Nothing in this paragraph, and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
9. Indemnity and Contribution.
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(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who
controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and the successors and
assigns of all of the foregoing persons, from and against any loss,
damage, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, any such Underwriter or any
such person may incur under the Securities Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability
or claim arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Company) or in a Prospectus (the
term Prospectus for the purpose of this Section 9 being deemed to include
any Prepricing Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), or arises out of or is based upon any
omission or alleged omission to state a material fact required to be
stated in either such Registration Statement or such Prospectus or
necessary to make the statements made therein not misleading, except
insofar as any such loss, damage, expense, liability or claim arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information concerning
such Underwriter furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use in such Registration
Statement or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with
such information required to be stated in such Registration Statement or
such Prospectus or necessary to make such information not misleading, (ii)
any untrue statement or alleged untrue statement made by the Company in
Section 3 hereof or the failure by the Company to perform when and as
required any agreement or covenant contained herein, or (iii) any untrue
statement or alleged untrue statement of any material fact contained in
any audio or visual materials provided by the Company or based upon
written information furnished by or on behalf of the Company including,
without limitation, slides, videos, films or tape recordings used in
connection with the marketing of the Shares; provided, however, that,
solely with regard to clause (i), the foregoing indemnity agreement with
respect to any Prospectus or Prepricing Prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting such losses,
claims, damages, expenses or liabilities purchased Shares, or any person
controlling such Underwriter, if copies of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) were timely delivered to such Underwriter and a copy
of such Prospectus was not given or sent to such person, if such
Prospectus was required by law to have been delivered, at or prior to the
written confirmation of the sale of the Shares to such person, and if such
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages, expenses or liabilities.
-32-
If any action, suit or proceeding (each, a "PROCEEDING") is brought
against an Underwriter or any such person in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such Underwriter
or such person shall promptly notify the Company in writing of the institution
of such Proceeding and the Company shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that the omission
to so notify the Company shall not relieve the Company from any liability which
the Company may have to any Underwriter or any such person or otherwise, except
to the extent the Company shall not have otherwise learned of such Proceeding
and such failure results in the forfeiture by the Company of material rights or
defenses. Such Underwriter or such person shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Underwriter or of such person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such Proceeding or the Company shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from, additional to or in conflict
with those available to the Company (in which case the Company shall not have
the right to direct the defense of such Proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the Company and paid as incurred (it being understood, however, that the
Company shall not be liable for the expenses of more than one separate counsel
(in addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties who
are parties to such Proceeding). The Company shall not be liable for any
settlement of any Proceeding effected without its written consent but if settled
with the written consent of the Company, the Company agrees to indemnify and
hold harmless any Underwriter and any such person from and against any loss or
liability by reason of such settlement. 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 sentence of this paragraph, then 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 60 business days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall not have fully reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. 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 and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
-33-
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, its directors and officers and any person who
controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and the successors and assigns of
all of the foregoing persons, from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which,
jointly or severally, the Company or any such person may incur under the
Securities Act, the Exchange Act, the common law or otherwise, insofar as
such loss, damage, expense, liability or claim arises out of or is based
upon any untrue statement or alleged untrue statement of a material fact
contained in and in conformity with information concerning such
Underwriter furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use in the Registration Statement
(or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus, or arises out of or
is based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make such
information not misleading.
If any Proceeding is brought against the Company or any such person
in respect of which indemnity may be sought against any Underwriter pursuant to
the foregoing paragraph, the Company or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such Underwriter shall not relieve such Underwriter from any liability
which such Underwriter may have to the Company or any such person or otherwise,
except to the extent such Underwriter shall not have otherwise learned of such
Proceeding and such failure results in the forfeiture by such Underwriter of
material rights or defenses. The Company or such person shall have the right to
employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Company or such person unless the
employment of such counsel shall have been authorized in writing by such
Underwriter in connection with the defense of such Proceeding or such
Underwriter shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to defend such Proceeding or such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to or in conflict
with those available to such Underwriter (in which case such Underwriter shall
not have the right to direct the defense of such Proceeding on behalf of the
indemnified party or parties, but such Underwriter may employ counsel and
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of such Underwriter), in any of which events such fees
and expenses shall be borne by such Underwriter and paid as incurred (it being
understood, however, that such Underwriter shall not be liable for the expenses
of more than one separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such
-34-
Proceeding effected without the written consent of such Underwriter but if
settled with the written consent of such Underwriter, such Underwriter agrees to
indemnify and hold harmless the Company and any such person from and against any
loss or liability by reason of such settlement. 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 sentence of this paragraph, then 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 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. 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.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 or insufficient to hold an indemnified party harmless in respect
of any losses, damages, expenses, liabilities or claims referred to
therein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, damages, expenses, liabilities or claims (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other hand from the offering of
the Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and of the
Underwriters on the other in connection with the statements or omissions
which resulted in such losses, damages, expenses, liabilities or claims,
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 shall be deemed to be in the same respective proportions as the
total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and the
total underwriting discounts and commissions received by the Underwriters,
bear to the aggregate public offering price of the Shares. The relative
fault of the Company on the one hand and of the Underwriters on the other
shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or
omission or alleged omission 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 amount paid or
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payable by a party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
party in connection with investigating, preparing to defend or defending
any Proceeding.
(d) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 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 subsection
(c) above. Notwithstanding the provisions of this Section 9, 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 such
Underwriter and distributed to the public were offered to the public
exceeds the amount of any damage which such Underwriter has otherwise been
required to pay by reason of such untrue statement or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of the Company
contained in this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of any Underwriter,
its partners, directors or officers or any person (including each partner,
officer or director of such person) who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, or by or on behalf of the Company, its directors or officers
or any person who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, and shall survive
any termination of this Agreement or the issuance and delivery of the
Shares. The Company and each Underwriter agree promptly to notify each
other of the commencement of any Proceeding against it and, in the case of
the Company, against any of the Company's officers or directors, as the
case may be, in connection with the issuance and sale of the Shares, or in
connection with the Registration Statement or the Prospectus.
10. Information Furnished by the Underwriters. The statements set forth in
the second and third sentences of the first paragraph and the penultimate and
last paragraphs under the caption "Underwriting" in the Prospectus, the
statements set forth in the first paragraph under the caption "Underwriting -
Commissions and Discounts" in the Prospectus and the statements set forth under
the caption "Underwriting - Price Stabilization, Short Positions, Passive Market
Making" in the Prospectus constitute the only information
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furnished by or on behalf of the Underwriters as such information is referred to
in Sections 3 and 9 hereof.
11. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
UBS Securities LLC, 299 Park Avenue, New York, N.Y. 10171-0026, Attention:
Syndicate Department; if to the Company, shall be sufficient in all respects if
delivered or sent to the Company at the offices of the Company at Neose
Technologies, Inc., 102 Witmer Road, Horsham, P.A. 19044, Attention: General
Counsel.
12. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("CLAIM"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
13. Submission to Jurisdiction. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company
consents to the jurisdiction of such courts and personal service with respect
thereto. The Company hereby consents to personal jurisdiction, service and venue
in any court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against UBS or any indemnified party.
Each of UBS and the Company (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) waives all right
to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The Company agrees that a final judgment in any such action,
proceeding or counterclaim brought in any such court shall be conclusive and
binding upon the Company and may be enforced in any other courts to the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
14. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters and the Company and to the
extent provided in Section 9 hereof the controlling persons, directors and
officers referred to in such section, and their respective successors, assigns,
heirs, personal representatives and executors and administrators. No other
person, partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
15. Counterparts; Facsimile Signature. This Agreement may be executed in
any number of counterparts (including facsimile signature) 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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16. Successors and Assigns. This Agreement shall be binding upon the
Underwriters and the Company and their successors and assigns and any successor
or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
17. Miscellaneous. UBS, an indirect, wholly owned subsidiary of UBS AG, is
not a bank and is separate from any affiliated bank, including any U.S. branch
or agency of UBS AG. Because UBS is a separately incorporated entity, it is
solely responsible for its own contractual obligations and commitments,
including obligations with respect to sales and purchases of securities.
Securities sold, offered or recommended by UBS are not deposits, are not insured
by the Federal Deposit Insurance Corporation, are not guaranteed by a branch or
agency, and are not otherwise an obligation or responsibility of a branch or
agency.
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If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this agreement and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
NEOSE TECHNOLOGIES, INC.
By: /s/ A. Brian Davis
---------------------------
Title: Senior Vice President and
Chief Financial Officer
Accepted and agreed to as of the
date first above written, on
behalf of itself
and the other several Underwriters
named in Schedule A
UBS SECURITIES LLC
By: UBS SECURITIES LLC
By: /s/ M. Robert DiGia
--------------------------
Title: Managing Director
By: /s/ David Lessen
--------------------------
Title: Executive Director
SCHEDULE A
Number of
Underwriter Firm Shares
- ----------- -----------
UBS SECURITIES LLC 3,150,000
J.P. MORGAN SECURITIES INC. 2,450,000
JEFFERIES & COMPANY, INC. 1,400,000
-----------
Total................... 7,000,000
===========
SCHEDULE 3(l)
Security Interests, Mortgages, Pledges, Liens, Charges and Encumbrances
- - Certain equipment is subject to a lien in favor of General Electric
Capital Corporation pursuant to a Master Security Agreement dated December
19, 2002 between General Electric Capital Corporation and Neose
Technologies, Inc.
- - All assets are subject to a lien in favor of Brown Brothers Harriman & Co.
pursuant to the Credit Agreement dated January 30, 2004 between Brown
Brothers Harriman & Co. and Neose Technologies, Inc.
- - All assets are subject to a lien in favor of Brown Brothers Harriman & Co.
pursuant to the Financing Agreement between Montgomery County Industrial
Development Authority, Neose Technologies, Inc. and Brown Brothers
Harriman & Co. dated February 23, 2004.
- - The real property at 102 Witmer Road, Horsham, Pennsylvania is subject to
a mortgage interest in favor of Brown Brothers Harriman & Co. pursuant to
the Credit Agreement dated January 30, 2004 between Brown Brothers
Harriman & Co. and Neose Technologies, Inc.
- - The real property at 102 Witmer Road, Horsham, Pennsylvania is subject to
a mortgage interest in favor of Brown Brothers Harriman & Co. pursuant to
the Financing Agreement between Montgomery County Industrial Development
Authority, Neose Technologies, Inc. and Brown Brothers Harriman & Co.
dated February 23, 2004.
- - The property at 102 Witmer Road, Horsham, Pennsylvania is subject to a
restrictive use covenant pursuant to the Declaration of Use Restriction
Covenant dated December 11, 2001 by Neose Technologies, Inc.
- - Certain equipment is subject to a lien in favor of Hewlett Packard
Financial Services pursuant to a Business Lease Agreement dated November
16, 2002 between Hewlett Packard Financial Services and Neose
Technologies, Inc.
- - Certain equipment is subject to a lien in favor of VAResources pursuant to
a Master Lease Agreement # 150120 dated April 1, 2003 between VAResources
and Neose Technologies, Inc.
- - Certain equipment is subject to a lien in favor of Thermo Lab Systems
pursuant to a Lease Agreement dated May 27, 2003 between Thermo Lab
Systems and Neose Technologies, Inc.
- - Certain equipment is subject to a lien in favor of Vendor Lease Management
Group pursuant to a Rental Agreement dated June 11, 2003 between Vendor
Lease Management Group and Neose Technologies, Inc.
- - Certain equipment is subject to a lien in favor of DeLage Landen Financial
Services pursuant to a Master Lease Agreement dated May 7, 2003 between
DeLage Landen Financial Services and Neose Technologies, Inc.
- - Certain equipment is subject to a lien in favor of Thermo Electron
Financial Services pursuant to a Lease Agreement dated December 29, 2003
between Thermo Electron Financial Services and Neose Technologies, Inc.
EXHIBIT A
Neose Technologies, Inc.
Common Stock
($0.01 Par Value)
[Date]
UBS Securities LLC
As Representative of the several Underwriters
c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171
Ladies and Gentlemen:
This Lock-Up Letter Agreement is being delivered to you in
connection with the proposed Underwriting Agreement (the "UNDERWRITING
AGREEMENT") to be entered into by Neose Technologies, Inc. (the "COMPANY") and
you, as Representative of the several Underwriters named therein, with respect
to the public offering (the "OFFERING") of Common Stock, par value $0.01 per
share, of the Company (the "COMMON STOCK").
In order to induce you to enter into the Underwriting Agreement, the
undersigned agrees that for a period of 90 days after the date of the final
prospectus supplement relating to the Offering (the "LOCK-UP PERIOD") the
undersigned will not, without the prior written consent of UBS Securities LLC,
(i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant
any option to purchase or otherwise dispose of or agree to dispose of, directly
or indirectly, or file (or participate in the filing of) a registration
statement with the Securities and Exchange Commission (the "COMMISSION") in
respect of, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission promulgated thereunder with respect to, any Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
warrants or other rights to purchase Common Stock, (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 Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or warrants or other
rights to purchase Common Stock, whether any such transaction is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise, or
(iii) publicly announce an intention to effect any transaction specified in
clause (i) or (ii). The
foregoing sentence shall not apply to (a) the registration of or sale to the
Underwriters of any Common Stock pursuant to the Offering and the Underwriting
Agreement, (b) bona fide gifts, provided the recipient thereof agrees in writing
with the Underwriters to be bound by the terms of this Lock-Up Letter Agreement
and, if such recipient was already a party to a Lock-Up Letter Agreement in
connection with this Offering, such recipient confirms that he, she or it has
been in compliance with the terms of such Lock-Up Letter Agreement or (c)
dispositions to any trust, partnership, limited liability company or other
entity for the direct or indirect benefit of the undersigned and/or the
immediate family of the undersigned, provided that such trust, partnership,
limited liability company or other entity agrees in writing with the
Underwriters to be bound by the terms of this Lock-Up Letter Agreement and, if
such recipient was already a party to a Lock-Up Letter Agreement in connection
with this Offering, such recipient confirms that it has been in compliance with
the terms of such Lock-Up Letter Agreement.
If (a) during the period that begins on the date that is 15 calendar
days plus three (3) business days before the last day of the Lock-up Period and
ends on the last day of the Lock-up Period, the Company issues an earnings
release or material news or a material event relating to the Company occurs or
(b) prior to the expiration of the Lock-up Period, the Company announces that it
will release earnings results during the 16-day period beginning on the last day
of the Lock-up Period, the restrictions imposed by this letter shall continue to
apply until the expiration of the date that is 15 calendar days plus three (3)
business days after the date on which the issuance of the earnings release or
the material news or material event occurs.
In addition, the undersigned hereby waives any rights the
undersigned may have to require registration of Common Stock in connection with
the filing of a registration statement relating to the Offering. The undersigned
further agrees that, for a period of 90 days after the date of the final
prospectus supplement relating to the Offering, the undersigned will not,
without the prior written consent of UBS Securities LLC, make any demand for, or
exercise any right with respect to, the registration of Common Stock of the
Company or any securities convertible into or exercisable or exchangeable for
Common Stock, or warrants or other rights to purchase Common Stock.
If (i) the Company notifies you in writing that it does not intend
to proceed with the Offering, (ii) the registration statement filed with the
Securities and Exchange Commission with respect to the Offering is withdrawn or
(iii) for any reason the Underwriting Agreement shall be terminated prior to the
"time of purchase" (as defined in the Underwriting Agreement), this Lock-Up
Letter Agreement shall be terminated and the undersigned shall be released from
its obligations hereunder.
Yours very truly,
___________________________
Name:
EXHIBIT B
OFFICER'S CERTIFICATE
Reference is made to the Underwriting Agreement by and among Neose
Technologies, Inc. (the "COMPANY") and UBS Securities LLC, on its own behalf
and on behalf of the parties listed on Schedule A thereto, dated February __,
2005 (the "UNDERWRITING AGREEMENT"). Capitalized terms used herein without
definition have the meanings assigned to them in the Underwriting Agreement.
The undersigned, A. Brian Davis, Senior Vice President and Chief
Financial Officer of the Company, in his capacity as an officer of the Company
and not individually, pursuant to Section 6(c) of the Underwriting Agreement,
does hereby certify that:
Based on my knowledge and without any independent investigation,
with respect to the financial information for the year ended December 31, 2001
included in or incorporated by reference into the Prospectus:
(i) the balance sheet, statement of operations, statement of
stockholders' equity and comprehensive loss and statement of cash flows have
each been prepared in accordance with generally accepted accounting principles
in effect at the time such financial statements were prepared, except as
disclosed therein or in the notes thereto; and
(ii) any other financial and statistical information and data
(including summaries of any of the financial statements listed in (i) above)
are, in all material respects, accurately presented and prepared on a basis
consistent with such financial statements listed in (i) above and with the books
and records of the Company.
IN WITNESS WHEREOF, the undersigned has caused this Officer's
Certificate to be executed on the __ day of February, 2005
By: ______________________________
Name: A. Brian Davis
Title: Senior Vice President and
Chief Financial Officer
EXHIBIT C
OFFICERS' CERTIFICATE
1. I have reviewed the Registration Statement and the Prospectus.
2. The representations and warranties of the Company as set forth in this
Agreement are true and correct as of the time of purchase and, if
applicable, the additional time of purchase.
3. The Company has performed all of its obligations under this Agreement as
are to be performed at or before the time of purchase and at or before the
additional time of purchase, as the case may be.
4. The conditions set forth in paragraphs (h) and (i) of Section 6 of this
Agreement have been met.
5. The financial statements and other financial information included in the
Registration Statement and the Prospectus fairly present in all material
respects the financial condition, results of operations, and cash flows of
the Company as of, and for, the periods presented in the Registration
Statement.