EXHIBIT 1.1
EXECUTION COPY
3,750,000 Shares
NEUROCRINE BIOSCIENCES, INC.
COMMON STOCK, PAR VALUE $0.001 PER SHARE
UNDERWRITING AGREEMENT
September 11, 2003
September 11, 2003
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Deutsche Bank Securities Inc.
UBS Securities LLC
Bear, Stearns & Co. Inc.
CIBC World Markets Corp.
Banc of America Securities LLC
Credit Suisse First Boston LLC
As Representatives of the
several Underwriters listed
on Schedule I hereto
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Trade Center
New York, NY 10281-1209
Dear Sirs and Mesdames:
Neurocrine Biosciences, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters (the "Underwriters")
listed on Schedule I hereto, for whom you are acting as the representatives (the
"Representatives"), 3,750,000 shares of its common stock, par value $0.001 per
share (the "Firm Shares"). The Company also proposes to issue and sell to the
Representatives not more than an additional 562,500 shares of its common stock,
par value $0.001 per share (the "Additional Shares", and, together with the Firm
Shares, the "Shares"), if and to the extent that the Representatives shall have
determined to exercise the right to purchase such shares of common stock granted
to the Underwriters in Section 2 hereof. The shares of common stock, par value
$0.001 per share, of the Company to be outstanding after giving effect to the
sales contemplated hereby are hereinafter referred to as the "Common Stock." The
Shares will have attached thereto rights (the "Rights") to purchase Series A
Participating Preferred Stock ("Series A Preferred Stock"). The Rights have been
and will be issued pursuant to an Amended and Restated Preferred Shares Rights
Agreement (the "Rights Agreement") dated as of January 11, 2002 between the
Company and American Stock Transfer & Trust Company. To the extent there are no
additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the terms
Representatives and Underwriters shall mean either the singular or plural as the
context requires.
1. Representations and Warranties. The Company represents and warrants to
and agrees with each of the Representatives that:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission"), in accordance with the provisions
of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (collectively, the "Securities Act") a registration
statement on Form S-3 (File No. 333-105917), including a prospectus,
relating to the Shares, the Rights and certain other securities (the "Base
Prospectus"). Such registration statement, as amended, including exhibits
and schedules thereto, in the form in which they were declared effective
by the Commission under the Securities Act, including all documents
incorporated or deemed to be incorporated by reference therein and any
information deemed to be a part thereof at the time of effectiveness
pursuant to Rule 430A under the Securities Act or the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder
(collectively, the "Exchange Act"), is called the "Registration
Statement". The Company has filed with, or transmitted for filing to, or
shall promptly hereafter file with or transmit for filing to, the
Commission, a prospectus supplement (the "Prospectus Supplement")
specifically relating to the Shares pursuant to Rule 424 under the
Securities Act. The term "Prospectus" means the Base Prospectus together
with the Prospectus Supplement. The term "Preliminary Prospectus" means a
preliminary prospectus supplement specifically relating to the Shares,
together with the Base Prospectus. As used herein, the terms "Base
Prospectus", "Prospectus" and "Preliminary Prospectus" shall include in
each case the documents, if any, incorporated by reference therein. Any
registration statement filed by the Company pursuant to Rule 462(b) under
the Securities Act is called the "Rule 462(b) Registration Statement", and
from and after the date and time of filing of the Rule 462(b) Registration
Statement the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a
Preliminary Prospectus, or the Prospectus, or any amendments or
supplements to any of the foregoing, shall include any copy thereof filed
with the Commission pursuant to its Electronic Data Gathering, Analysis
and Retrieval System ("EDGAR"). All references in this Agreement to
financial statements and schedules and other information which is
"contained," "included" or "stated" in the Registration Statement, the
Rule 462(b) Registration Statement, a Preliminary Prospectus, or the
Prospectus, or any amendments or supplements to any of the foregoing (and
all other references of like import) shall be deemed to mean and include
all such financial statements and schedules and other information which is
or is deemed to be incorporated by reference in the Registration
Statement, the Rule 462(b) Registration Statement, a Preliminary
Prospectus, or the Prospectus, or
2
any amendments or supplements to any of the foregoing, as the case may be.
All references in this Agreement to amendments or supplements to the
Registration Statement, the Rule 462(b) Registration Statement, a
Preliminary Prospectus, or the Prospectus shall be deemed to mean and
include the filing of any document under the Exchange Act which is or is
deemed to be incorporated by reference in the Registration Statement, the
Rule 462(b) Registration Statement, a Preliminary Prospectus, or the
Prospectus, of the foregoing, as the case may be. Each Preliminary
Prospectus and the Prospectus, when filed, complied in all material
respects with the Securities Act and, if filed by electronic transmission
pursuant to EDGAR, was identical in all material respects to the copy
thereof delivered to the Underwriters for use in connection with the offer
and sale of the Securities.
(b) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement. Each of
Neurocrine International LLC and Science Park Center LLC (collectively,
the "Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement. The Subsidiaries are the only subsidiaries, direct or indirect,
of the Company. The Company and each of the Subsidiaries are duly
qualified to transact business in all jurisdictions in which the conduct
of their business requires such qualification, except to the extent that
the failure to be so qualified would not have a material adverse effect on
the Company and the Subsidiaries, taken as a whole. The outstanding
membership interests of each of the Subsidiaries have been duly authorized
and validly issued. All of the membership interests of Neurocrine
International LLC and 51% of the membership interests of Science Park
Center LLC are owned by the Company or another Subsidiary free and clear
of all liens, encumbrances and equities and claims, other than such liens
as are not, individually or in the aggregate, material to the Company and
the Subsidiaries, taken as a whole; and no options, warrants or other
rights to purchase, agreements or other obligations to issue or rights to
convert any obligations into shares of capital stock or ownership
interests in the Subsidiaries are outstanding. No Subsidiary is
prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distribution on such Subsidiary's capital
stock, from repaying to the Company any loans or advances to such
Subsidiary from the Company or from transferring any of such Subsidiary's
property or assets to the Company or any other Subsidiary.
3
(c) The outstanding shares of Common Stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable;
the Shares to be issued and sold by the Company have been duly authorized
and reserved for issuance and when issued and paid for as contemplated
herein will be validly issued, fully paid and non-assessable; and no
preemptive rights or any similar rights to subscribe for securities of the
Company exist with respect to any of the Shares or the issue and sale
thereof. The Rights Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by equitable principles relating to enforceability; and the
Rights attached to the outstanding Common Stock have been, and when issued
upon issuance of the Shares to be sold by the Company hereunder, the
Rights attached to the Shares will have been, duly authorized by the
Company, and the Series A Preferred Stock has been duly authorized by the
Company and validly reserved for issuance upon the exercise of the Rights
in accordance with the terms of the Rights Agreement, and upon such
issuance will be validly issued, fully paid and non-assessable. Neither
the filing of the Registration Statement nor the offering or sale of the
Shares as contemplated by this Agreement gives rise to any rights, other
than those which have been waived or satisfied, for or relating to the
registration of any shares of Common Stock or other securities of the
Company. Except as set forth in the Registration Statement, and except for
options that have been granted to employees or directors of the Company
since June 30, 2003, no securities of the Company convertible or
exchangeable into or evidencing the right to purchase or subscribe for any
shares of capital stock of the Company and 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 any securities convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of capital
stock of, or ownership interests in the Company are authorized or
outstanding.
(d) The information set forth under the caption "Capitalization" in
the Prospectus is true and correct. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the corporate law of the
jurisdiction of the Company's incorporation.
(e) The Registration Statement has become effective; no stop order
issued by the Commission suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Prospectus or any
Preliminary Prospectus relating to the proposed offering
4
of the Shares is in effect, and, to the Company's knowledge, no
proceedings for such purpose are pending before or threatened by the
Commission. The Registration Statement when it became effective did not
contain, and the Prospectus, any Preliminary Prospectus and any amendments
or supplements thereto will contain, as of the date of such Prospectus,
Preliminary Prospectus or any amendment or supplement, all statements
which are required to be stated therein by, and will conform, in all
material respects, to the requirements of the Securities Act. The
documents incorporated, or to be incorporated, by reference in the
Prospectus, at the time filed with the Commission conformed or will
conform in all respects to the requirements of the Exchange Act, or the
Securities Act, as applicable, and the rules and regulations of the
Commission thereunder. The Registration Statement when it became effective
did not contain, and as amended will not contain as of the date of such
amendment, any untrue statement of a material fact, and does not omit and
will not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus,
any Preliminary Prospectus do not contain, and any amendments and
supplements thereto will not contain, any untrue statement of material
fact and do not omit and will not omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties
as to information contained in or omitted from the Registration Statement
or the Prospectus, or any such amendment or supplement, in reliance upon,
and in conformity with, written information furnished to the Company by or
on behalf of any Underwriters through the Representatives, specifically
for use therein. There is no contract or other document of a character
required to be described in the Registration Statement, or to be filed as
an exhibit thereto, which is not described or filed as required.
(f) The consolidated financial statements of the Company and the
Subsidiaries, together with the related notes and schedules, as set forth
or incorporated by reference in the Registration Statement, present fairly
in all material respects the financial position and the results of
operations and cash flows of the Company and the consolidated
Subsidiaries, at the indicated dates and for the indicated periods. Such
financial statements and related notes and schedules have been prepared in
accordance with generally accepted accounting principles, consistently
applied throughout the periods involved, except as disclosed therein, and
all adjustments necessary for a fair presentation of results for such
periods have been made. The summary and selected financial data included
or incorporated by reference in the Registration Statement presents fairly
the information shown therein and such data has been compiled on a basis
consistent with
5
the financial statements and the related notes and schedules presented
therein and the books and records of the Company.
(g) Ernst & Young LLP, who have certified certain of the financial
statements, the related notes and schedules, filed with the Commission as
part of, or incorporated by reference in, the Registration Statement, are
independent public accountants as required by the Securities Act.
(h) Except as described in the Prospectus, there is no action, suit,
claim or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of the Subsidiaries before any court
or administrative agency or otherwise which if determined adversely to the
Company or any of its Subsidiaries could reasonably be expected to result
in any material adverse change in the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise)
or prospects of the Company and of the Subsidiaries taken as a whole or
prevent the consummation of the transactions contemplated hereby, except
as set forth in the Registration Statement.
(i) The Company and the Subsidiaries have good and marketable title
to all of the properties and assets reflected in the consolidated
financial statements, the related notes and schedules, hereinabove
described or described in the Registration Statement, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except those reflected
in such financial statements or described in the Registration Statement or
which are not material in amount. The Company and the Subsidiaries occupy
their leased properties under valid and binding leases (with such
exceptions as are not material and do not materially interfere with the
use made or proposed to be made of such real property), and such leases
conform in all material respects to the description thereof set forth in
the Registration Statement.
(j) The Company and the Subsidiaries have filed all Federal, state,
local and foreign tax returns which have been required to be filed and
have paid all taxes indicated by such returns and all assessments received
by them or any of them and any other assessment, fine or penalty levied
against them or any of them to the extent that any of the foregoing have
become due, except for such tax returns or tax payments which, if not
filed or made, as the case may be, would not have a material adverse
effect on the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company
and of the Subsidiaries taken as a whole. All material tax liabilities
have been adequately provided for in the financial statements of the
Company, and the Company does not know of any actual or proposed
additional material tax assessments.
6
(k) Since the respective dates as of which information is given in
the Registration Statement, as it may be amended or supplemented, there
has not been any material adverse change or any development involving a
prospective material adverse change in the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise)
or prospects of the Company and its Subsidiaries taken as a whole, whether
or not occurring in the ordinary course of business, and there has not
been any material transaction entered into or any material transaction
that is probable of being entered into by the Company or the Subsidiaries,
other than transactions in the ordinary course of business and changes and
transactions described in the Registration Statement, as it may be amended
or supplemented. The Company and the Subsidiaries have no material
contingent obligations which are not disclosed in the Company's financial
statements, or the related notes or schedules, which are included or
incorporated in the Registration Statement. Except as described in the
Registration Statement, there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(l) Neither the Company nor any of the Subsidiaries is or with the
giving of notice or lapse of time or both, will be, in violation of or in
default under (i) its certificate of incorporation or by-laws, (ii) except
as described in the Prospectus, any agreement, mortgage, deed of trust,
lease, contract, indenture or other instrument or obligation to which it
is a party or by which it, or any of its properties, is bound and (iii)
any law, order, rule or regulation, judgment, order, writ or decree
applicable to the Company or any Subsidiary of any court or of any
government, regulatory body or administrative agency or other governmental
body having jurisdiction and, solely with respect to clauses (ii) and
(iii), which violation or default would have a material adverse effect on
the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company
and the Subsidiaries taken as a whole. The execution and delivery of this
Agreement and the consummation of the transactions herein contemplated and
the fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, (X) any agreement, mortgage, deed of trust, lease, contract,
indenture or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of
their respective properties is bound, (Y) the certificate of incorporation
or by-laws of the Company, or (Z) any law, order, rule or regulation,
judgment, order, writ or decree applicable to the Company or any
Subsidiary of any court or of any government, regulatory body or
administrative agency or other governmental body having jurisdiction, and
solely with respect to clauses (X) and (Z), which violation or default
would have a material adverse effect on the earnings, business,
management, properties, assets, rights,
7
operations, condition (financial or otherwise) or prospects of the Company
and the Subsidiaries, taken as a whole.
(m) The execution and delivery of, and the performance by the
Company of its obligations under, this Agreement have been duly and
validly authorized by all necessary corporate action on the part of the
Company, and this Agreement has been duly executed and delivered by the
Company.
(n) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions
herein contemplated (except such additional steps as may be required by
the Commission, the National Association of Securities Dealers, Inc. (the
"NASD") or such additional steps as may be necessary to qualify the Shares
for public offering by the Underwriters under state securities or Blue Sky
laws) has been obtained or made and is in full force and effect.
(o) Except as disclosed in the Prospectus, (i) the Company and each
of the Subsidiaries hold all material licenses, certificates and permits
from governmental authorities which are necessary to the conduct of their
businesses; (ii) the Company and the Subsidiaries each own or possess the
right to use all patents, patent rights, trademarks, trade names, service
marks, service names, copyrights, license rights, know-how (including
trade secrets and other unpatented and unpatentable proprietary or
confidential information, systems or procedures) and other intellectual
property rights (the "Intellectual Property") necessary to carry on their
business as described in the Prospectus; and (iii) neither the Company nor
any of the Subsidiaries has infringed, and none of the Company nor the
Subsidiaries have received notice of conflict with, any Intellectual
Property of any other person or entity. Each of the Company and the
Subsidiaries has taken all reasonable steps necessary to secure interests
in such Intellectual Property from its contractors. There are no material
outstanding options, licenses or agreements of any kind relating to the
Intellectual Property of the Company or the Subsidiaries that are required
to be described in the Prospectus and are not described in all material
respects. Neither the Company nor any Subsidiary is a party to or bound by
any options, licenses or agreements with respect to the Intellectual
Property of any other person or entity that are required to be set forth
in the Prospectus and are not described in all material respects. To the
Company's knowledge, none of the technology employed by the Company or any
Subsidiary has been obtained or is being used by the Company or any
Subsidiary in violation of any contractual obligation binding on the
Company, any Subsidiary or any of their respective officers, directors or
employees or otherwise in violation of the rights of any persons. Neither
8
the Company nor any Subsidiary has received any written communication
alleging that the Company or any Subsidiary has violated, infringed or
conflicted with, any of the Intellectual Property of any other person or
entity. The Company knows of no infringement by others of Intellectual
Property owned by or licensed to the Company or any Subsidiary.
(p) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of the shares of Common Stock to facilitate the sale or resale
of the Shares. The Company acknowledges that the Underwriters may engage
in passive market making transactions in the Shares on the Nasdaq National
Market in accordance with Regulation M under the Exchange Act.
(q) Neither the Company nor any Subsidiary is or, after giving
effect to the offering and sale of the Shares contemplated hereunder and
the application of the net proceeds from such sale as described in the
Prospectus Supplement, will be required to register as an "investment
company" within the meaning of such term under the Investment Company Act
of 1940, as amended (the "1940 Act"), and the rules and regulations of the
Commission thereunder.
(r) The Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements, and the related notes and
schedules, in conformity with generally accepted accounting principles and
to maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(s) The Company and each of its Subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is adequate in
the Company's reasonable judgment for the conduct of their respective
businesses and the value of their respective properties and as is
customary for companies engaged in similar businesses. All policies of
insurance and fidelity or surety bonds insuring the Company or any of the
Subsidiaries or their respective businesses, assets, employees, officers
and directors are in full force and effect; the Company and the
Subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; there are no claims by the Company
or any of the Subsidiaries under any such policy or instrument as to which
any
9
insurance company is denying liability or defending under a reservation of
rights clause; neither the Company nor any Subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not result in any material adverse change in
the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company
and of the Subsidiaries taken as a whole, except as described in the
Registration Statement.
(t) The Company and each Subsidiary is in compliance in all material
respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company and each
Subsidiary would have any liability; the Company and each Subsidiary has
not incurred and does not expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Company or
any Subsidiary would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(u) No labor dispute with the employees of the Company or any of the
Subsidiaries exists or, to the knowledge of the Company, is imminent and
the Company is not aware of any existing or imminent labor disturbance by
the employees of the Company's or the Subsidiaries' principal suppliers,
contractors or customers that could reasonably be expected to result in
any material adverse change in the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise)
or prospects of the Company and of the Subsidiaries taken as a whole.
(v) 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 security holders, except as set forth
in the Registration Statement.
(w) Except as set forth in the Registration Statement, the Company
(i) does not have any material lending or other relationship with any bank
or lending affiliate of any Underwriter and (ii) does not intend to
10
use any proceeds from the sale of the Shares hereunder to repay any
outstanding debt owed to any Underwriters or any affiliate thereof.
(x) There are no transfer taxes or other similar fees or charges
under Federal, state, local or foreign law required to be paid in
connection with the execution and delivery of this Agreement or the
issuance by the Company or sale by the Company of the Shares.
(y) Except as set forth in the Registration Statement, neither the
Company nor any of the Subsidiaries is in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "Environmental Laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate result in any material adverse
change in the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company
and of the Subsidiaries taken as a whole; and the Company is not aware of
any pending investigation which could reasonably be expected to lead to
such a claim.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedule I hereto
opposite its name at $50.085 a share (the "Purchase Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to 562,500 Additional Shares at
the Purchase Price. You may exercise this right on behalf of the Underwriters in
whole or from time to time in part by giving written notice not later than 30
days after the date of this Agreement. Any exercise notice shall specify the
number of Additional Shares to be purchased by the Underwriters and the date on
which such shares are to be purchased. Each purchase date must be at least two
business days after the written notice is given and may not be earlier than the
closing date for the Firm Shares nor later than ten business days after the date
of such notice. Additional Shares may be purchased as provided in Section 4
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. On each day, if any, that Additional
Shares are to be purchased (an
11
"Option Closing Date"), each Underwriter agrees, severally and not jointly, to
purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Additional Shares to be purchased on such Option Closing
Date as the number of Firm Shares set forth in Schedule I hereto opposite the
name of such Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of each
of Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce, Fenner & Smith
Incorporated on behalf of the Underwriters, it will not, during the period
ending 90 days after the date of the Prospectus, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the Shares to
be sold hereunder, (B) the issuance by the Company of shares of Common Stock
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof, (C) the grant of options to purchase Common
Stock under the Company's stock option plans, (D) the issuance by the Company of
shares of Common Stock under the Company's employee stock purchase plan, or (E)
the issuance by the Company of shares of Common Stock under the Rights Agreement
in accordance with its terms.
3. Terms of Public Offering. The Company is advised by you that the Underwriters
proposes to make a public offering of the Shares as soon after this Agreement
has become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
$53.00 per share (the "Public Offering Price") and to certain dealers selected
by the Underwriters at a price that represents a concession not in excess of
$1.89 per share under the Public Offering Price.
4. Payment and Delivery. Payment for the Firm Shares shall be made to the
Company in Federal or other funds immediately available in New York City against
delivery of such Firm Shares for the account of the Underwriters at the offices
of Latham & Watkins LLP, 12636 High Bluff Drive, Suite 300, San Diego,
California at 10:00 a.m., New York City time, on September 17, 2003 or at such
other time on the same or such other date, not later than September 24, 2003 as
shall be designated in writing by the Underwriters. The time and date of such
payment are hereinafter referred to as the "Closing Date."
Payment for any Additional Shares shall be made to the Company in Federal
or other funds immediately available in New York City against delivery
12
of such Additional Shares for the respective accounts of the several
Underwriters at the offices of Latham & Watkins LLP, 12636 High Bluff Drive,
Suite 300, San Diego at 10:00 a.m., New York City time, on the date specified in
the corresponding notice described in Section 2 or at such other time on the
same or on such other date, in any event not later than October 24, 2003, as
shall be designated in writing by you.
Certificates for the Firm Shares and Additional Shares shall be registered
in such names and in such denominations as you shall request in writing not
later than two full business days prior to the Closing Date or the applicable
Option Closing Date, as the case may be. The Firm Shares and Additional Shares
shall be delivered to the Underwriters on the Closing Date or an Option Closing
Date, as the case may be, for the respective accounts of the several
Underwriters, with any transfer taxes payable in connection with the transfer of
the Shares to the Underwriters duly paid, against payment of the Purchase Price
therefor.
5. Conditions to the Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Shares on the Closing Date, or an
Option Closing Date, as the case may be, are subject to the following
conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date or Option Closing Date, as the case may be:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date or
Option Closing Date, as the case may be, a certificate, dated the Closing
Date or applicable Option Closing Date and signed by an executive officer
of the Company, to the effect set forth in Section 5(a)(i) above and to
the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date or
applicable
13
Option Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be performed
or satisfied hereunder on or before the Closing Date or applicable Option
Closing Date.
The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date or
Option Closing Date, as the case may be, an opinion and a negative
assurances letter of Latham & Watkins llp, outside counsel for the
Company, dated the Closing Date or the Option Closing Date, as the case
may be, in the form set forth as Exhibit A-1 and Exhibit A-2,
respectively.
(d) The Representatives shall have received on the Closing Date or
Option Closing Date, as the case may be, the opinion of the general
counsel for the Company, dated the Closing Date or the Option Closing
Date, as the case may be, in the form set forth as Exhibit A-3:
(e) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinions of Seed
Intellectual Property Law Group pllc, patent counsel for the Company,
dated the Closing Date or the Option Closing Date, as the case may be, in
the form set forth as Exhibit A-4.
(f) The Underwriters shall have received on the Closing Date an
opinion of Davis Polk & Wardwell, counsel for the Underwriters, dated the
Closing Date, covering such matters as are customarily covered in
transactions of this type.
The opinions described in Section 5(c), (d), and (e) above shall be
rendered to the Underwriters at the request of the Company and shall so
state therein.
(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date or Option Closing Date, as the case may be, a letter
dated the date hereof or the Closing Date or Option Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
Ernst & Young llp, independent public accountants, containing statements
and information of the type ordinarily included in accountants' "comfort
letters" to Underwriters with respect to the financial statements and
certain financial information contained in or incorporated by reference
into the Registration Statement and the Prospectus; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof, and the letter delivered on any Option
Closing Date shall use a "cut-off date" not earlier than three business
days prior to the Option Closing Date.
14
(h) The "lock-up" agreements, each substantially in the form of
Exhibit B hereto, between you and officers and directors of the Company
relating to sales and certain other dispositions of shares of Common Stock
or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
6. Covenants of the Company. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To furnish to you, without charge, 9 signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
the Underwriters a conformed copy of the Registration Statement (without
exhibits thereto but including documents incorporated by reference) and to
furnish to you in New York City, without charge, prior to 10:00 a.m. New
York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in paragraph (c) below, as many
copies of the Prospectus, any documents incorporated by reference and any
supplements and amendments thereto or to the Registration Statement as you
may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriters or dealer, any event shall occur or condition exist as
a result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will
15
furnish to the Company) to which Shares may have been sold by you on
behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request, provided, however, that the Company shall not be required to
qualify as a foreign corporation or file a general consent to service of
process in any jurisdiction where it is not currently qualified or where
it would be subject to taxation as a foreign corporation.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earnings statement covering the
twelve-month period ending September 30, 2004 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of its obligations under
this Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of
the Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters, including any transfer or
other taxes payable thereon, (iii) the cost of printing or producing any
Blue Sky or Legal Investment memorandum in connection with the offer and
sale of the Shares under state securities laws and all expenses in
connection with the qualification of the Shares for offer and sale under
state securities laws as provided in Section 6(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with
the Blue Sky or Legal Investment memorandum (not to exceed $5,000 not
including applicable filing fees), (iv) all filing fees and the reasonable
fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares
by the National Association of Securities Dealers, Inc., (v) all costs and
expenses incident to listing the Shares on the Nasdaq National Market,
(vi) the cost of printing certificates
16
representing the Shares, (vii) the costs and charges of any transfer
agent, registrar or depositary, (viii) the costs and expenses of the
Company relating to investor presentations on any "road show" undertaken
in connection with the marketing of the offering of the Shares, including,
without limitation, expenses associated with the production of road show
slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers
of the Company and any such consultants, and the cost of any aircraft
chartered in connection with the road show, and (ix) all other reasonable,
out-of-pocket costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided
in this Section, Section 7 entitled "Indemnity and Contribution", and the
last paragraph of Section 9 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel,
stock transfer taxes payable on resale of any of the Shares by them and
any advertising expenses connected with any offers they may make.
7. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act and each
affiliate of any Underwriter within the meaning of Rule 405 under the Securities
Act from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriters furnished to the Company in writing by the Underwriters expressly
for use therein; provided, however, that the foregoing indemnity agreement with
respect to the Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such
17
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities.
(b) Each Underwriter will, severally and not jointly, indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to the Underwriters,
but only with reference to information relating to the Underwriters furnished to
the Company in writing by the Underwriters expressly for use in the Registration
Statement, the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 7(a) or 7(b), such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, in the case of parties indemnified pursuant
to Section 7(a), and by the Company, in the case of parties indemnified pursuant
to Section 7(b). The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. 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
18
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or 7(b)
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 7(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 7(d)(i) above but also the relative
fault of the Company on the one hand and of the Underwriters on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Shares (before deducting expenses) received by
the Company and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate Public Offering Price of the Shares. The
relative fault of the Company on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Underwriters' respective obligations to contribute pursuant to this Section
7 are several in proportion to the respective number of Shares they have
purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 7(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, the Underwriters shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that the Underwriters have otherwise
been required to pay by reason of
19
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 7 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in this Section 7
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of the Underwriters, any person controlling the Underwriters or
any affiliate of the Underwriters or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) acceptance
of and payment for any of the Shares.
8. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market,
(ii) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a material disruption in
securities settlement, payment or clearance services in the United States shall
have occurred, (iv) any moratorium on commercial banking activities shall have
been declared by Federal or New York State authorities or (v) there shall have
occurred any outbreak or escalation of hostilities, or any change in financial
markets or any calamity or crisis that, in your judgment, is material and
adverse and which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
with the offer, sale or delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to
20
purchase on such date; provided, however, that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 9 by an amount in excess of one-ninth of such
number of Shares without the written consent of such Underwriter. If, on the
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Firm Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares to
be purchased, and arrangements satisfactory to you and the Company for the
purchase of such Firm Shares are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on an Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing Date or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
If the sale of the Shares provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth in Section 5
hereof is not satisfied, because of any termination pursuant to Section 8 hereof
or because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering contemplated
hereunder.
10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
21
12. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
[Signatures Follow]
22
Very truly yours,
NEUROCRINE BIOSCIENCES, INC.
By:
/s/ MARGARET VALEUR-JENSEN
----------------------------------
Name: Margaret Valeur-Jensen
Title: Senior Vice President,
General Counsel and
Secretary
23
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEUTSCHE BANK SECURITIES INC.
UBS SECURITIES LLC
BEAR, STEARNS & CO. INC.
CIBC WORLD MARKETS CORP.
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON LLC
Acting severally on behalf of themselves and the several Underwriters named in
Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By: /s/ CHARLES NEWTON
----------------------------------------------------------------------
Name: Charles Newton
Title: Vice President
By: Merrill Lynch, Pierce, Fenner & Smith Incorporated
By: /s/ MARK ROBINSON
----------------------------------------------------------------------
Name: Mark Robinson
Title: Managing Director
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
to be Purchased
Morgan Stanley & Co. Incorporated...................................... 1,022,625
Merrill Lynch, Pierce, Fenner & Smith Incorporated..................... 852,375
Deutsche Bank Securities Inc........................................... 426,000
UBS Securities LLC..................................................... 426,000
Bear Stearns & Co. Inc................................................. 340,875
CIBC World Markets Corp................................................ 340,875
Banc of America Securities LLC......................................... 170,625
Credit Suisse First Boston LLC......................................... 170,625
---------
Total......................................................... 3,750,000
=========
2
EXHIBIT A-1
[FORM OF LATHAM & WATKINS LLP OPINION]
September , 2003
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporate
Deutsche Bank Securities Inc.
UBS Securities LLC
Bear, Stearns & Co. Inc.
CIBC World Markets Corp.
Banc of America Securities LLC
Credit Suisse First Boston LLC
c/o Morgan Stanley & Co. Incorporate
1585 Broadway
New York, New York 10036
Merrill Lynch, Pierce, Fenner & Smith Incorporate
North Tower
World Financial Trade Center
New York, NY 10281-1209
Re: Neurocrine Biosciences, Inc.
Ladies and Gentlemen:
We have acted as special counsel to Neurocrine Biosciences, Inc., a
Delaware corporation (the "Company"), in connection with the sale to you (the
"Underwriters") on the date hereof by the Company of 3,750,000 shares (the
"Share") of common stock of the Company, par value $0.001 per share (the
"Common Stock"), pursuant to a registration statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), filed with the
Securities and Exchange Commission (the "Commission") on June 6, 2003 (File No.
333-105917), as amended to date, but excluding the Incorporated Documents (as
defined below) (the "Base Registration Statement."), a registration statement
on Form S-3 filed pursuant to Rule 462(b) promulgated under the Securities Act,
filed with the Commission on September 11, 2003 (File No. 333-108726) (together
with the Base Registration Statement, the "Registration Statement"), a
Prospectus dated June 12, 2003, as supplemented by a Prospectus Supplement.
September ___, 2003
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Deutsche Bank Securities Inc.
UBS Securities LLC
Bear, Stearns & Co. Inc.
CIBC World Markets Corp.
Banc of America Securities LLC
Credit Suisse First Boston LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Trade Center
New York, NY 10281-1209
Re: Neurocrine Biosciences, Inc.
Ladies and Gentlemen:
We have acted as special counsel to Neurocrine Biosciences, Inc., a
Delaware corporation (the "Company"), in connection with the sale to you (the
"Underwriters") on the date hereof by the Company of 3,750,000 shares (the
"Shares") of common stock of the Company, par value $0.001 per share (the
"Common Stock"), pursuant to a registration statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), filed with the
Securities and Exchange Commission (the "Commission") on June 6, 2003 (File No.
333-105917), as amended to date, but excluding the Incorporated Documents (as
defined below) (the "Base Registration Statement"), a registration statement on
Form S-3 filed pursuant to Rule 462(b) promulgated under the Securities Act,
filed with the Commission on September 11, 2003 (File No. 333-108726) (together
with the Base Registration Statement, the "Registration Statement"), a
Prospectus dated June 12, 2003, as supplemented by a Prospectus Supplement
dated September 11, 2003 filed with the Commission pursuant to Rule 424(b) under
the Securities Act, but excluding the Incorporated Documents (collectively, the
"Prospectus"), and an underwriting agreement dated September 11, 2003 between
you and the Company (the "Underwriting Agreement"). This letter is being
furnished to you pursuant to Section 5(c) of the Underwriting Agreement.
As such counsel, we have examined such matters of fact and questions of
law as we have considered appropriate for purposes of this letter, except where
a specific fact confirmation procedure is stated to have been performed (in
which case we have with your consent performed the stated procedure), and except
where a statement is qualified as to knowledge or awareness (in which case we
have with your consent made no or limited inquiry as specified below). In our
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, and the conformity to authentic
original documents of all documents submitted to us as copies. We have examined,
among other things, the following:
(a) The Underwriting Agreement, the Registration Statement,
the Prospectus and the reports filed by the Company with
the Commission and incorporated in the Prospectus by
reference (the "Incorporated Documents");
(b) the agreements identified to us by an officer of the
Company as material to the Company or its Subsidiaries,
taken as a whole, and listed on Exhibit A attached
hereto (the "Material Agreements"); and
(c) the Certificate of Incorporation and Bylaws, as amended,
of the Company (the "Governing Documents").
As to facts material to the opinions, statements and assumptions
expressed herein, we have, with your consent, relied upon oral or written
statements and representations of officers and other representatives of the
Company and others, including the representations and warranties of the Company
in the Underwriting Agreement. We have not independently verified such factual
matters. In addition, we have obtained and relied upon such certificates and
assurances from public officials as we have deemed necessary.
Whenever a statement herein is qualified as to knowledge, awareness or
a similar phrase, it is intended to indicate that those attorneys in this firm
who have rendered legal services in connection with the transaction referenced
above do not have current actual knowledge of the inaccuracy of such statement.
However, except as otherwise expressly indicated, we have not undertaken any
independent investigation to determine the accuracy of such statement.
We are opining herein as to the effect on the subject transaction only
of the federal laws of the United States, the internal laws of the State of
California
and, in numbered paragraphs 1, 2, 3 and 4 of this letter, the Delaware General
Corporation Law (the "DGCL"), and we express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of Delaware, any other laws, or as to any matters
of municipal law or the laws of any local agencies within any state. We have
informed you that we have not been retained by the Company to represent the
Company in connection with, and we are not experts regarding, matters arising
under the Hatch/Waxman Patent Term Extension Act and the other patent laws of
the United States or the rules and regulations of the U.S. Patent and Trademark
Office, the Federal Food, Drug and Cosmetic Act, the Public Health Service Act,
the Food and Drug Administration Modernization Act, the Orphan Drug Act or the
rules and regulations of the Federal Food and Drug Administration, or any other
federal or California laws pertaining to the regulation of the development,
testing, manufacture or sale of drugs. Various issues concerning the Company are
addressed in the opinion of Margaret E. Valeur-Jensen, J.D., Ph.D., General
Counsel of the Company, which has been separately provided to you, and we
express no opinion with respect to those matters. Various issues concerning the
Company's intellectual property are addressed in the opinion of SEED
Intellectual Property Law Group pllc, which has been separately provided to you,
and we express no opinion with respect to those matters.
Our opinions set forth in paragraph 4 below are based upon our
consideration of only those statutes, rules and regulations which, in our
experience, are normally applicable to underwritten public offerings of common
equity securities. We express no opinion in paragraph 4 as to the application of
laws that by custom are understood to be excluded from such opinions, including
Section 548 of the federal Bankruptcy Code and comparable provisions of state
law, federal securities laws (certain aspects of which are addressed elsewhere
herein), state securities laws, antifraud laws, antitrust or trade regulation
laws, the Hatch/Waxman Patent Term Extension Act and the other patent laws of
the United States or the rules and regulations of the U.S. Patent and Trademark
Office, the Federal Food, Drug and Cosmetic Act, the Public Health Service Act,
the Food and Drug Administration Modernization Act, the Orphan Drug Act or the
rules and regulations of the Federal Food and Drug Administration, or any other
federal or California laws pertaining to the regulation of the development,
testing, manufacture or sale of drugs. We express no opinion as to any state or
federal laws or regulations applicable to the subject transaction because of the
nature or extent of the business of any parties to the Underwriting Agreement.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof:
1.The Company is a corporation under the General Corporation Law of the
State of Delaware, with corporate power and authority to own its properties and
to conduct its business as described in the Registration Statement and the
Prospectus. Based on certificates from public officials, we confirm that the
Company is validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in the State of California.
2. The Shares to be issued and sold by the Company pursuant to the
Underwriting Agreement have been duly authorized by all necessary corporate
action of the Company and, when issued to and paid for by you in accordance with
the terms of the Underwriting Agreement, will be validly issued, fully paid and
non-assessable and free of preemptive rights arising from the Governing
Documents or, with your consent based solely on a review of the Material
Agreements and a certificate from an officer of the Company, similar contractual
obligations of the Company.
3. The execution, delivery and performance of the Underwriting
Agreement have been duly authorized by all necessary corporate action of the
Company, and the Underwriting Agreement has been duly executed and delivered by
the Company.
4. The execution and delivery of the Underwriting Agreement and the
issuance and sale of the Shares by the Company to you pursuant to the
Underwriting Agreement on the date hereof do not:
(a) violate the Company's Governing Documents;
(b) result in the breach of or a default under any of the
Material Agreements;
(c) violate any federal or California statute, rule or
regulation applicable to the Company; or
(d) require any consents, approvals or authorizations to
be obtained by the Company, or any registrations,
declarations or filings to be made by the Company, in
each case, under any federal or California statute,
rule or regulation applicable to the Company, except
such that have been obtained under the Securities Act
and such that may be required under state securities
laws in connection with the purchase and distribution
of such Shares by the Underwriters.
5. The Registration Statement has become effective under the Securities
Act. With your consent, based solely on a telephonic confirmation by a member of
the Staff of the Commission on September ___, 2003, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Securities
Act and no proceedings therefor have been initiated by the Commission. Any
required filing of the Prospectus pursuant to Rule 424(b) under the Securities
Act has been made in accordance with Rules 424(b) and 430A under the Securities
Act.
6. The Registration Statement, as of the date it was declared
effective, and the Prospectus, as of its date, complied as to form in all
material respects with the requirements for registration statements on Form S-3
under the Securities Act and the rules and regulations of the Commission
thereunder; it being understood, however, that we express no opinion with
respect to Regulation S-T or the financial statements, schedules, or other
financial data, included in, incorporated by reference in, or omitted from, the
Registration Statement or the Prospectus. In passing upon the compliance as to
form of the Registration Statement and the Prospectus, we have assumed that the
statements made therein are correct and complete.
7. Each of the Incorporated Documents, as of its respective filing
date, complied as to form in all material respects with the applicable
requirements for reports on Forms 10-K, 10-Q and 8-K under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder; it being understood, however, that we express no opinion
with respect to Regulation S-T or the financial statements, schedules, or other
financial data, included in, incorporated by reference in, or omitted from, such
reports. In passing upon the compliance as to form of the Incorporated
Documents, we have assumed that the statements made therein are correct and
complete.
8. The statements set forth in the Prospectus under the caption
"Description of Capital Stock," insofar as they purport to constitute a summary
of the terms of the Company's capital stock and stockholder rights plan, are
accurate descriptions or summaries in all material respects.
9. With your consent, based solely on a certificate of an officer of
the Company as to factual matters, the Company is not, and immediately after
giving effect to the sale of the Shares in accordance with the Underwriting
Agreement and the application of the proceeds as described in the Prospectus
under the caption "Use of Proceeds," will not be required to be registered as an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
In rendering the opinions set forth in clause (b) of paragraph 4 above
insofar as they require interpretation of the Material Agreements, with your
consent, (a) we have assumed that courts of competent jurisdiction would enforce
such agreements in accordance with their plain meaning, (b) to the extent that
any questions of legality or legal construction have arisen in connection with
our review, we have applied the laws of the State of California in resolving
such questions, (c) we express no opinion with respect to the effect of any
action or inaction by the Company under the Material Agreements that may result
in a breach or default under any Material Agreement, and (d) we express no
opinion with respect to any matters that would require us to perform a
mathematical calculation or make a financial or accounting determination.
Because certain of the Material Agreements may be governed by laws other than
the laws of the
State of California, this opinion may not be relied upon as to whether a breach
or default would occur under the law actually governing such Material
Agreements.
This letter is furnished only to you in your capacity as underwriters
under the Underwriting Agreement and is solely for the benefit of the
Underwriters in connection with the transactions covered hereby. This letter may
not be relied upon by you or them for any other purpose, or furnished to,
assigned to, quoted to, or relied upon by any other person, firm or other entity
for any purpose (including any person, firm or other entity that acquires Shares
from you), without our prior written consent, which may be granted or withheld
in our sole discretion.
Very truly yours,
DRAFT
EXHIBIT A-2
[FORM OF LATHAM & WATKINS LLP
NEGATIVE ASSURANCES LETTER]
September ___, 2003
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Deutsche Bank Securities Inc.
UBS Securities LLC
Bear, Stearns & Co. Inc.
CIBC World Markets Corp.
Banc of America Securities LLC
Credit Suisse First Boston LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Trade Center
New York, NY 10281-1209
Re: Neurocrine Biosciences, Inc.
Ladies and Gentlemen:
We have acted as special counsel to Neurocrine Biosciences, Inc., a
Delaware corporation (the "Company"), in connection with the sale to you (the
"Underwriters") on the date hereof by the Company of 3,750,000 shares (the
"Shares") of common stock of the Company, par value $0.001 per share (the
"Common Stock"), pursuant to a registration statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), filed with the
Securities and Exchange Commission (the "Commission") on June 6, 2003 (File No.
333-105917), as amended to date, but excluding the Incorporated Documents (as
defined below) (the "Base Registration Statement"), a registration statement on
Form S-3 filed pursuant to Rule 462(b) promulgated under the Securities Act,
filed with the Commission on September 11, 2003 (File No. 333-108726) (together
with the Base Registration Statement, the "Registration Statement"), a
Prospectus dated June 12, 2003, as supplemented by a Prospectus Supplement dated
September 11, 2003 filed with the Commission pursuant to Rule 424(b)
under the Securities Act, but excluding the Incorporated Documents
(collectively, the "Prospectus"), and an underwriting agreement dated September
11, 2003 between you and the Company (the "Underwriting Agreement"). The reports
filed by the Company with the Commission and incorporated by reference in the
Prospectus by reference are herein called the "Incorporated Documents." This
letter is being furnished to you pursuant to Section 5(c) of the Underwriting
Agreement.
The primary purpose of our professional engagement was not to establish
or confirm factual matters or financial or quantitative information. Therefore,
we are not passing upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in, or incorporated by
reference in, the Registration Statement or the Prospectus (or the Incorporated
Documents) (except to the extent expressly set forth in the numbered paragraph 8
of our opinion letter to you of even date herewith), and have not made an
independent check or verification thereof (except as aforesaid). However, in the
course of acting as special counsel to the Company in connection with the
preparation by the Company of the Registration Statement and Prospectus, we
reviewed the Registration Statement, the Prospectus and the Incorporated
Documents, and participated in conferences and telephone conversations with
officers and other representatives of the Company, the independent public
accountants for the Company, your representatives, and your counsel, during
which conferences and conversations the contents of the Registration Statement
and the Prospectus (and portions of certain of the Incorporated Documents) and
related matters were discussed. We also reviewed and relied upon certain
corporate records and documents, letters from counsel and accountants, and oral
and written statements of officers and other representatives of the Company and
others as to the existence and consequence of certain factual and other matters.
Based on our participation, review and reliance as described above, we
advise you that no facts came to our attention that caused us to believe that
the Registration Statement, at the time it became effective, together with the
Incorporated Documents at that date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus,
as of the date of the Prospectus Supplement, or as of the date hereof (together
with the Incorporated Documents of that date), contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; it being understood that we express
no belief with respect to the financial statements, schedules, or other
financial data included or incorporated by reference in, or omitted from, the
Registration Statement or the Prospectus or the Incorporated Documents.
This letter is delivered only to you in your capacity as underwriters
under the Underwriting Agreement and is solely for the benefit of the
Underwriters in
connection with the transactions covered hereby. This letter may not be relied
upon by you or them for any other purpose, or furnished to, assigned to, quoted
to, or relied upon by any other person, firm or other entity for any purpose
(including any person, firm or other entity that acquires Shares from you)
without our prior written consent, which may be granted or withheld in our sole
discretion.
Very truly yours,
DRAFT
EXHIBIT A-3
[FORM OF VALEUR-JENSEN OPINION]
September __, 2003
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Deutsche Bank Securities Inc.
UBS Securities LLC
Bear, Stearns & Co. Inc.
CIBC World Markets Corp.
Banc of America Securities LLC
Credit Suisse First Boston LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Trade Center
New York, NY 10281-1209
Re: Neurocrine Biosciences, Inc.
Ladies and Gentlemen:
I am General Counsel to Neurocrine Biosciences, Inc., a Delaware
corporation (the "Company"), and render this opinion in connection with the sale
to you (the "Underwriters") on the date hereof by the Company of 3,750,000
shares (the "Shares") of common stock of the Company, par value $0.001 per share
(the "Common Stock"), pursuant to a registration statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), filed with the
Securities and Exchange Commission (the "Commission") on June 6, 2003 (File No.
333-105917), as amended to date, but excluding the Incorporated Documents (as
defined below) (the "Base Registration Statement"), a registration statement on
Form S-3 filed pursuant to Rule 462(b) promulgated under the Securities Act,
filed with the Commission on September 11, 2003 (File No. 333-108726) (together
with the Base Registration Statement, the "Registration Statement"), a
Prospectus dated June 12, 2003, as supplemented by a Prospectus Supplement dated
September 11, 2003 filed with the Commission pursuant to Rule 424(b) under the
Securities Act, but excluding the Incorporated Documents (collectively,
the "Prospectus"), and an underwriting agreement dated September 11, 2003
between you and the Company (the "Underwriting Agreement"). The reports filed by
the Company with the Commission and incorporated by reference in the Prospectus
are herein called the "Incorporated Documents." This letter is being furnished
to you pursuant to Section 5(d) of the Underwriting Agreement.
I have examined such matters of fact and questions of law as I have
considered appropriate for purposes of this opinion, except where a statement is
qualified as to knowledge or awareness (in which case with your consent I made
no or limited inquiry as specified below). In my examination, I have assumed the
genuineness of all signatures, the authenticity of all documents submitted to me
as originals, and the conformity to authentic original documents of all
documents submitted to me as copies.
As to facts material to the opinions, statements and assumptions expressed
herein, I have, with your consent, relied upon oral or written statements and
representations of officers and other representatives of the Company and others,
including the representations and warranties of the Company in the Underwriting
Agreement. I have not independently verified such factual matters. In addition,
I have obtained and relied upon such certificates and assurances from public
officials as I have deemed necessary.
Whenever a statement herein is qualified as to knowledge, awareness or a
similar phrase, it is intended to indicate that I do not have current actual
knowledge of the inaccuracy of such statement. However, except as otherwise
expressly indicated, I have not undertaken any independent investigation to
determine the accuracy of any such statement.
I am licensed to practice law in the State of New York and am generally
familiar with the General Corporation Law of the State of Delaware (the "DGCL").
I am opining herein as to the effect on the subject transaction only of the
federal laws of the United States and, in numbered paragraph 8 of this opinion,
the DGCL, and I express no opinion with respect to the applicability thereto, or
the effect thereon, of the laws of any other jurisdiction or, in the case of
Delaware, any other laws, or as to any matters of municipal law or the laws of
any local agencies within any state. Various issues concerning the Company's
intellectual property are addressed in the opinion of SEED Intellectual Property
Law Group pllc, which has been separately provided to you, and I express no
opinion with respect to those matters. Various issues concerning the Company are
addressed in the opinion of Latham & Watkins LLP, which has been separately
provided to you, and I express no opinion with respect to those matters.
Capitalized terms used herein without definition have the meanings
assigned to them in the Underwriting Agreement.
Subject to the foregoing and the other matters set forth herein, it is my
opinion that, as of the date hereof:
1. To my knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity, other than Neurocrine
International LLC and Science Park International LLC.
2. To my knowledge, the Shares to be issued by the Company on the
Closing Date or the Option Closing Date, as the case may be, pursuant to the
terms of the Underwriting Agreement, upon issuance and delivery against payment
therefor in accordance with the terms of the Underwriting Agreement, will not
have been issued in violation of or subject to any preemptive right, co-sale
right, right of first refusal or other similar right.
3. The statements set forth in the Prospectus under the headings
"Business -- Government Regulation" and "Business -- Legal Proceedings," insofar
as such statements constitute a summary of legal matters, and the application of
those legal matters to the Company and the Subsidiaries, are accurate summaries
in all material respects.
4. To my knowledge, there are no contracts or documents of a character
required to be described in the Registration Statement, the Prospectus or the
Incorporated Documents or to be filed as exhibits to the Incorporated Documents
or Registration Statement that are not described and filed as required, and such
contracts and documents that are summarized in the Registration Statement,
Prospectus and Incorporated Documents are fairly summarized in all material
respects.
5. The issuance and sale of the Shares by the Company pursuant to the
Underwriting Agreement will not result in (a) the violation by the Company of
the Federal Food, Drug and Cosmetic Act, the rules and regulations of the
Federal Food and Drug Administration, or any other federal laws known to me
pertaining to the regulation of the development, testing, manufacture or sale of
drugs, or (b) to my knowledge, the breach of or a default under any order, writ
or decree of any court or governmental agency having jurisdiction over the
Company or the Subsidiaries or over any of their respective properties or
operations.
6. To my knowledge, no consent, approval, authorization or order of, or
filing with, any federal court or governmental agency or body is required under
the patent laws of the United States or the rules and regulations of the Federal
Food, Drug and Cosmetic Act, the rules and regulations of the Federal Food and
Drug Administration, or any other federal laws pertaining to the regulation of
the development, testing, manufacture or sale of drugs, in connection with the
purchase and distribution of the Shares by the Underwriters.
7. To my knowledge, there are no legal or governmental proceedings
pending or threatened against the Company or any of the Subsidiaries of a
character required to be disclosed in the Registration Statement, the Prospectus
or the Incorporated Documents by the Securities Act or the Securities Exchange
Act of 1934, as amended, other than those described therein, except for such
proceedings as, if the subject of an unfavorable decision, would not
individually or in the aggregate result in a material adverse change in the
earnings, business, management, properties, assets, operations, condition
(financial or otherwise) or prospects of the Company and of the Subsidiaries,
taken as a whole, or prevent the consummation of the transactions contemplated
hereby.
8. To my knowledge, except as disclosed in the Prospectus, the Company
and each Subsidiary is not presently (a) in material violation of its
certificate of incorporation, bylaws or operating agreement, as applicable, or
(b) in material breach of any order, writ or decree of any court or governmental
agency or body having jurisdiction over the Company or such Subsidiary.
9. To my knowledge and assuming the accuracy of the information set
forth in a certificate delivered by Paul W. Hawran, Executive Vice President and
Chief Financial Officer of the Company, except as described in the Registration
Statement, no holder of any securities of the Company or any other person has
the right, contractual or otherwise, which has not been satisfied or effectively
waived, to cause the Company to sell or otherwise issue to them, or to permit
them to underwrite the sale of, any of the Shares or the right to have any
shares of Common Stock or other securities of the Company included in the
Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Securities Act of any
shares of Common Stock or other securities of the Company.
In addition, I have participated in conferences and telephone
conversations with officers and other representatives of the Company, the
independent public accountants for the Company, your representatives, and your
counsel, during which conferences and conversations the contents of the
Registration Statement and the Prospectus (and portions of the Incorporated
Documents) and related matters were discussed. Based in my participation, I
advise you that no facts came to my attention that caused me to believe that the
Registration Statement, at the time it became effective, together with the
Incorporated Documents at that date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus,
as of the date of the Prospectus Supplement, or as of the date hereof (together
with the Incorporated Documents), contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; it being understood that I express no belief with respect
to the financial statements, schedules, or other
financial data included or incorporated by reference in, or omitted from, the
Registration Statement or the Prospectus or the Incorporated Documents.
This letter is furnished only to you in your capacity as underwriters
under the Underwriting Agreement and is solely for your benefit in connection
with the transactions covered hereby. This opinion may not be relied upon by you
for any other purpose, or furnished to, assigned to, quoted to, or relied upon
by any other person, firm or entity for any purpose (including any person, firm
or other entity that acquires Shares from you), without my prior written
consent, which may be granted or withheld in my sole discretion.
Very truly yours,
DRAFT
Margaret E. Valeur-Jensen,
Ph.D., J.D.
Senior Vice President, General
Counsel and Secretary
EXHIBIT A-4
[FORM OF SEED IP LAW GROUP PLLC OPINION]
September __, 2003
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Deutsche Bank Securities Inc.
UBS Securities LLC
Bear, Stearns & Co. Inc.
CIBC World Markets Corp.
Banc of America Securities LLC
Credit Suisse First Boston LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Trade Center
New York, NY 10281-1209
Re: Opinion of Patent Counsel
Neurocrine Biosciences, Inc.
Registration Statement on Form S-3
Our File No. 690068.001
Ladies and Gentlemen:
We have been engaged as intellectual property counsel to Neurocrine Biosciences,
Inc. (the "Company") since 1994 with respect to certain patent matters referred
to us by the Company (see attached Exhibits 1 and 2). Such representation has
included the preparation of selected United States patent applications, and the
filing of selected international patent applications corresponding to certain of
these United States applications, as well as the prosecution of such
applications before the United States Patent and Trademark Office and
corresponding foreign governmental patent offices (the "Representation").
Our Representation involves only those matters for which we have been engaged to
give substantive attention on behalf of the Company in the form of legal
representation or consultation. We have not been authorized to investigate, nor
have we investigated, all legal matters and, therefore, we express no opinion on
the matters to which we have not devoted substantive attention. The Company has
previously retained other counsel on intellectual property matters, including
through the in-licensing of certain technology, and will periodically retain
other counsel on such matters. It should also be recognized that opinions of
patent counsel rely on certain determinations of factual issues and
determinations of complex issues of law and technology in an area where many
issues have yet to be resolved. Even though patent counsel renders such
opinions, the forums in which such issues may be raised are not bound by such
opinions.
We understand that the Company will be offering the Company's common stock
pursuant to a Registration Statement on Form S-3 filed with the Securities and
Exchange Commission on June 6, 2003 (File No. 333-105917) (the "Base
Registration Statement") and a registration statement on Form S-3 filed pursuant
to Rule 462(b) promulgated under the Securities Act, filed with the Commission
on September 11, 2003 (File No. 333-108726) (together with the Base Registration
Statement, the "Registration Statement"), pursuant to which the Company will
issue and sell shares of common stock in accordance with the terms and
conditions described in the Registration Statement and the prospectus supplement
and the accompanying prospectus (together, the "Prospectus"). This opinion
letter is given to you pursuant to Section 5(e) of the Underwriting Agreement
dated September 11, 2003 (the "Underwriting Agreement"), between the Company and
the Underwriters.
In connection with this opinion letter, we have reviewed the following portions
of the Prospectus entitled:
(i) "Risk Factors - Risks Related to Our Business - We may be
subject to claims that we or our employees have wrongfully
used or disclosed alleged trade secrets of their former
employers";
(ii) "Risk Factors - Risks Related to Our Industry - If we are
unable to protect our intellectual property, our competitors
could develop and market products based on our discoveries,
which may reduce demand for our products";
(iii) "Risk Factors - Risks Related to Our Industry - The
technologies we use in our research as well as the drug
targets we select may unintentionally infringe the patents or
violate the proprietary rights of third parties";
(iv) "Business - Products under Clinical Development -
Corticotropin-Releasing Factor", final sentence of fourth
paragraph;
(v) "Business - Intellectual Property"; and
(vi) "Business - Legal Proceedings", second paragraph.
The above-identified portions of the Prospectus are herein collectively referred
to as the "Intellectual Property Portion." Based on our review, and to the
extent it relates to our Representation, the Intellectual Property Portion does
not contain any untrue statement of a material fact or fail to state a material
fact which is necessary to make the statement provided therein not misleading.
In this regard, we do not consider the phrase "legal proceedings", as used in
the section entitled "Business - Legal Proceedings", to encompass patent matters
pending before the U.S. Patent Office or any foreign patent offices, including
but not limited to pending oppositions before the European Patent Office
In the course of our Representation and without any special inquiry, we provide
the following opinions.
1. We are not aware of any:
(i) pending or threatened actions, suits, proceedings, claims or
other legal actions or governmental proceedings of which the Company is aware or
has received notice, relating to (a) any Intellectual Property Rights owned or
licensed to the Company or any licensee of the Company, or (b) any third party
Intellectual Property Rights; or
(ii) claims asserted in writing, or to our knowledge orally,
against the Company that the Company infringes or otherwise may employ the
Intellectual Property Rights of a third party or that a third party has a right
to use Intellectual Property Rights claimed by the Company.
2. We believe the Company is the assignee of record and the sole owner
of all of the patents and patent applications listed in Exhibit 1 to this
opinion letter, with the exception of the pending U.S. application entitled
"Method for Treating of Multiple Sclerosis Using Peptide Analogues at Position
91 of Human Myelin Basic Protein" (docket no. 690068-412C1), and corresponding
pending foreign applications, which are co-assigned to Stanford University.
3. We are not aware of any material defects in the preparation, filing
and/or prosecution of any of the patents and patent applications listed in
Exhibits 1 and 2 that would render them invalid or unenforceable.
4. We are not aware of any errors or disputes with regard to the
inventorship of any of the patents and patent applications listed in Exhibits 1
and 2.
5. The Company has instructed us to actively prosecute the patent
applications listed in Exhibits 1 and 2, and we are acting in accordance with
the Company's instructions.
6. Based solely upon a review of matters which we have been engaged to
provide direct substantive attention and without independent investigation of
third party patent rights except where we have been specifically engaged to do
so, we do not have actual current knowledge of any valid and enforceable United
States or foreign patent that we believe is or would be infringed by any of the
current or, to the extent and within the scope such activities have been
described in the Prospectus, proposed activities or products of the Company.
This opinion letter is furnished to the several Underwriters, and is solely for
their benefit in connection with the offering of Common Stock of the Company.
This opinion letter is not to be used, circulated, quoted or otherwise referred
to for any other purpose, nor may it be used or relied upon by anyone other than
to whom this opinion letter is furnished.
Very truly yours,
Seed Intellectual Property Law Group PLLC
DRAFT
Karl R. Hermanns
EXHIBIT B
FORM OF LOCK-UP LETTER
[-], 2003
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Trade Center
New York, NY 10281-1209
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("Morgan Stanley") and Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with Neurocrine Biosciences, Inc., a Delaware
corporation (the "Company"), providing for the public offering (the "Public
Offering") by the several Underwriters, including Morgan Stanley and Merrill
Lynch (the "Underwriters"), of shares (the "Shares") of the Common Stock, par
value $0.001, of the Company (the "Common Stock").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of each of Morgan Stanley
and Merrill Lynch, on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the final
prospectus relating to the Public Offering (the "Prospectus"), (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (a) the sale of any Shares to the Underwriters pursuant to the Underwriting
Agreement, (b)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Public Offering. In
addition, the undersigned agrees that, without the prior written consent of each
of Morgan Stanley and Merrill Lynch, on behalf of the Underwriters, it will not,
during the period commencing on the date hereof and ending 90 days after the
date of the Prospectus, make any demand for or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock. The undersigned also
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of the undersigned's
shares of Common Stock except in compliance with the foregoing restrictions.
Notwithstanding the foregoing, the undersigned may transfer the
undersigned's shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock to a trust the beneficiaries of
which are exclusively the undersigned and/or a member or members of his or her
immediate family; provided, however, that (A) no such transfer may be made that
would require any filing with the Securities and Exchange Commission be made
until after expiration of the term hereof, (B) it shall be a condition to the
transfer that the transferee execute an agreement stating that the transferee is
receiving and holding the securities subject to the provisions of this letter
agreement, and (C) no such transfer may include a disposition for value.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up Agreement
is irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
It is understood that if the Public Offering does not occur prior to
December 31, 2003, the undersigned will be automatically released from the
obligations and restrictions contained in this Lock-Up Agreement.
Very truly yours,
---------------------------
(Name)
---------------------------
(Address)
2