1
EXHIBIT 1.1
LEXICON GENETICS INCORPORATED
[ ] Shares of Common Stock
Underwriting Agreement
[ ], 2000
J.P. Morgan Securities Inc.
Credit Suisse First Boston Corporation
CIBC World Markets Corp.
Dain Rauscher Incorporated
Punk, Ziegel & Company, L.P.
As Representatives of the several Underwriters
listed in Schedule I hereto
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Lexicon Genetics Incorporated., a Delaware corporation (the
"Company"), proposes to sell to the several Underwriters listed in Schedule I
hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), an aggregate of [ ] shares (the "Underwritten Shares") of
Common Stock, par value $0.001 per share, of the Company (the "Common Stock").
In addition, for the sole purpose of covering over-allotments in connection with
the sale of the Underwritten Shares, the Company proposes to issue and sell to
the Underwriters, at the option of the Underwriters, up to an additional [ ]
shares (the "Option Shares") of Common Stock. The Underwritten Shares and the
Option Shares are herein referred to as the "Shares."
As part of the offering contemplated by this Agreement, J.P.
Morgan Securities Inc. and Credit Suisse First Boston Corporation (the
"Designated Underwriters") have agreed to reserve out of the Underwritten Shares
purchased by them under this Agreement, up to five percent or 500,000 shares,
for sale to the Company's directors, officers, employees and other parties
associated with the Company (collectively, "Participants"), as set forth in the
Prospectus (as defined herein) under the heading "Underwriting" (the "Directed
Share Program"). The Underwritten Shares to be sold by the Designated
Underwriters pursuant to the Directed Share Program (the "Directed Shares") will
be sold by the Designated Underwriters pursuant
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to this Agreement at the public offering price. Any Directed Shares not orally
confirmed for purchase by a Participant by the end of the business day on which
this Agreement is executed will be offered to the public by the Underwriters as
set forth in the Prospectus.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement, including a prospectus, relating to the Shares. The registration
statement as amended at the time when it became or shall become effective,
including information (if any) deemed to be part of the registration statement
at the time of effectiveness pursuant to Rule 430A under the Securities Act, is
referred to in this Agreement as the "Registration Statement," and the
prospectus in the form first used to confirm sales of Shares is referred to in
this Agreement as the "Prospectus." If the Company has filed an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the
"Rule 462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.
1. The Company agrees to issue and sell the Underwritten
Shares to the several Underwriters as hereinafter provided, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase,
severally and not jointly, from the Company at a purchase price per share of $[
] (the "Purchase Price") the number of Underwritten Shares to be purchased by
such Underwriter as set forth opposite the name of such Underwriter in Schedule
I hereto.
In addition, the Company agrees to sell the Option Shares to
the several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company at the Purchase Price that portion of the number
of Option Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Option Shares by a fraction, the numerator of which is the
maximum number of Underwritten Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I hereto
and the denominator of which is the maximum number of Underwritten Shares which
all of the Underwriters are entitled to purchase hereunder, for the sole purpose
of covering over-allotments (if any) in the sale of Underwritten Shares by the
several Underwriters.
The Underwriters may exercise the option to purchase the
Option Shares at any time (but not more than once) on or before the thirtieth
day following the date of this Agreement, by written notice from the
Representatives to the Company. Such notice shall set forth the aggregate number
of Option Shares as to which the option is being exercised and the date
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and time when the Option Shares are to be delivered and paid for, which may be
the same date and time as the Closing Date (as hereinafter defined) but shall
not be earlier than the Closing Date nor later than the tenth full Business Day
(as hereinafter defined) after the date of such notice (unless such time and
date are postponed in accordance with the provisions of Section 9 hereof). Any
such notice shall be given at least two Business Days prior to the date and time
of delivery specified therein.
2. The Company understands that the Underwriters intend (i) to
make a public offering of the Shares as soon after (A) the Registration
Statement has become effective and (B) the parties hereto have executed and
delivered this Agreement, as in the judgment of the Representatives is advisable
and (ii) initially to offer the Shares upon the terms set forth in the
Prospectus.
3. Payment for the Shares shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Representatives, in the case of the Underwritten Shares, on [ ], 2000, or at
such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Representatives and the Company may agree upon
in writing, or, in the case of the Option Shares, on the date and time specified
by the Representatives in the written notice of the Underwriters' election to
purchase such Option Shares. The time and date of such payment for the
Underwritten Shares is referred to herein as the "Closing Date," and the time
and date for such payment for the Option Shares, if other than the Closing Date,
are herein referred to as the "Additional Closing Date." As used herein, the
term "Business Day" means any day other than a day on which banks are permitted
or required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or
the Additional Closing Date, as the case may be, shall be made against delivery
to the Representatives for the respective accounts of the several Underwriters
of the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the Underwriters of the Shares duly paid by the Company. The certificates for
the Shares will be made available for inspection and packaging by the
Representatives at the office of J.P. Morgan Securities Inc. set forth above not
later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date or the Additional Closing Date, as the case may be.
4. The Company represents and warrants to each Underwriter
that:
(a) no order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission, and each
preliminary prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or
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filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act, and did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided that the foregoing representations
and warranties shall not apply to any statements or omissions made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use therein;
(b) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Company,
threatened by the Commission; the Registration Statement and Prospectus
(as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) comply, or will comply, as the case
may be, in all material respects with the Securities Act and do not and
will not, as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the date of the
Prospectus and any amendment or supplement thereto, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus, as amended or supplemented,
if applicable, at the Closing Date or Additional Closing Date, as the
case may be, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that the foregoing representations and warranties
shall not apply to any statements or omissions in the Registration
Statement or the Prospectus made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly
for use therein;
(c) the financial statements, and the related notes thereto,
included in the Registration Statement and the Prospectus present
fairly the financial position of the Company as of the dates indicated
and the results of its operations and changes in its cash flows for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis, and the supporting schedules included in the
Registration Statement present fairly the information required to be
stated therein; and the pro forma financial information, and the
related notes thereto, included in the Registration Statement and the
Prospectus has been prepared in accordance with the applicable
requirements of the Securities Act and the Securities Exchange Act of
1934 (the "Exchange Act"), as applicable, and is based upon good faith
estimates and assumptions believed by the Company to be reasonable;
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(d) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change in the capital stock or long-term debt of the Company,
or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general
affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company, (a
"Material Adverse Change"), otherwise than as set forth or contemplated
in the Prospectus; and except as set forth or contemplated in the
Prospectus, the Company has not entered into any transaction or
agreement (whether or not in the ordinary course of business) material
to the Company;
(e) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have a
material adverse effect on the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company, (a "Material Adverse Effect");
(f) the Company has no subsidiaries;
(g) this Agreement has been duly authorized, executed and
delivered by the Company;
(h) the Company has an authorized capitalization as set forth
in the Prospectus and such authorized capital stock conforms as to
legal matters to the description thereof set forth in the Prospectus,
and all of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and
non-assessable and are not subject to any pre-emptive or similar
rights; and, except as described in or expressly contemplated by the
Prospectus, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital
stock or other equity interest in the Company, or any contract,
commitment, agreement, understanding or arrangement of any kind
relating to the issuance of any capital stock of the Company, any such
convertible or exchangeable securities or any such rights, warrants or
options;
(i) the Shares have been duly authorized, and, when issued and
delivered to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be duly issued and will be fully paid and
non-assessable and will conform to the
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descriptions thereof in the Prospectus; and the issuance of the Shares
is not subject to any preemptive or similar rights;
(j) the Company is not, nor with the giving of notice or lapse
of time or both would the Company be, in violation of or in default
under its certificate of incorporation or by-laws or any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which it or any of its
properties is bound, except for violations and defaults which would
not, individually or in the aggregate, have a Material Adverse Effect;
the performance by the Company of its obligations under this Agreement
and the consummation of the transactions contemplated herein and in the
Prospectus will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company is
bound or to which any of the property or assets of the Company are
subject, in each case except for such breaches or conflicts as would
not, individually or in the aggregate, have a Material Adverse Effect,
nor will any such action result in any violation of the provisions of
the certificate of incorporation or the by-laws of the Company or any
applicable law or statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or
any of its properties; and no consent, approval, authorization, order,
license, registration or qualification of or with any such court or
governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement and the
Prospectus, except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications as have been obtained under
the Securities Act and as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the
Shares by the Underwriters;
(k) other than as set forth in the Prospectus, there are no
legal or governmental investigations, actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its properties or to which the Company
is or may be a party or to which any property of the Company is or may
be the subject which, if determined adversely to the Company, could,
individually or in the aggregate, have, or reasonably be expected to
have, a Material Adverse Effect, and, to the Company's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others; and there are no statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed
as required;
(l) the Company has good and marketable title to all items of
real property and good and marketable title to all personal property
owned by it, in each case free and
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clear of all liens, encumbrances and defects except such as are
described or referred to in the Prospectus or such as do not materially
interfere with the use made or proposed to be made of such property by
the Company; and any real property and buildings held under lease by
the Company are held by them under valid, existing and enforceable
leases with such exceptions as are not material and do not materially
interfere with the use made or proposed to be made of such property and
buildings by the Company;
(m) no relationship, direct or indirect, exists between or
among the Company, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company, on the other hand,
which is required by the Securities Act to be described in the
Registration Statement and the Prospectus which is not so described;
(n) no person has the right to require the Company to register
any securities for offering and sale under the Securities Act by reason
of the filing of the Registration Statement with the Commission or, the
sale of the Shares pursuant hereto, except for rights which have been
waived;
(o) the Company is not, and after giving effect to the
offering and sale of the Shares, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended
(the "Investment Company Act");
(p) Arthur Andersen LLP ("Arthur Andersen"), who have
certified certain financial statements of the Company, are independent
public accountants as required by the Securities Act;
(q) the Company has filed all federal, state, local and
foreign tax returns which have been required to be filed and have paid
all taxes shown thereon and all assessments received by it to the
extent that such taxes have become due and are not being contested in
good faith; and, except as disclosed in the Registration Statement and
the Prospectus, no tax deficiency has been determined adversely to the
Company which has had, nor does the Company have any knowledge of any
tax deficiency, which if determined adversely to the Company or any
subsidiary might have a Material Adverse Effect;
(r) the Company has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Common Stock;
(s) the statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources which are believed by the Company to be reliable;
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(t) except as would not, individually or in the aggregate,
have a Material Adverse Effect, the Company owns, possesses or has
obtained all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations
and filings with, all federal, state, local and other governmental
authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals,
domestic or foreign, necessary to own or lease, as the case may be, and
to operate its properties and to carry on its business as conducted as
of the date hereof, and the Company has not received any actual notice
of any proceeding relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or other
authorization, except as described in the Registration Statement and
the Prospectus, and the Company is in compliance with all laws and
regulations relating to the conduct of its business as conducted as of
the date hereof;
(u) the Company owns, is licensed to use or otherwise
possesses adequate rights to use the patents, patent rights, licenses,
inventions, trademarks, service marks, trade names, copyrights and
know-how, including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems,
processes or procedures (collectively, the "Intellectual Property"),
reasonably necessary to carry on the business conducted by it, except
to the extent that the failure to own, be licensed to use or otherwise
possess adequate rights to use such Intellectual Property would not,
individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect; except as set forth in the Prospectus, the
Company has not received any notice of infringement of or conflict
with, and the Company has no knowledge of any infringement of or
conflict with, asserted rights of others with respect to its
Intellectual Property which could reasonably be expected to result in a
Material Adverse Effect; except as set forth in the Prospectus, the
discoveries, inventions, products or processes of the Company referred
to in the Registration Statement and the Prospectus do not, to the
knowledge of the Company, infringe or conflict with any right or patent
of any third party, or any discovery, invention, product or process
which is the subject of a patent application filed by any third party
which patent application has been published or is otherwise known to
the Company which could reasonably be expected to result in a Material
Adverse Effect; except as set forth in the Prospectus, the Company is
not obligated to pay a royalty, grant a license or provide other
consideration to any third party in connection with its patents, patent
rights, licenses, inventions, trademarks, service marks, trade names,
copyrights and know-how which could reasonably be expected to result in
a Material Adverse Effect; and no third party, including any academic
or governmental organization, possesses rights to the Intellectual
Property which, if exercised, could reasonably be expected to have a
Material Adverse Effect;
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(v) there are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company which are
likely to have a Material Adverse Effect;
(w) the Company carries, or is covered by, insurance in such
amounts and covering such risks as is customary for companies engaged
in similar businesses in similar industries;
(x) the Company (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, "Environmental Laws"), (ii) has received all permits,
licenses or other approvals required of it under applicable
Environmental Laws to conduct its businesses and (iii) is in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect;
(y) each employee benefit plan within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that is maintained, administered or contributed to by the
Company or any of its affiliates for employees or former employees of
the Company and its affiliates has been maintained in material
compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended ("Code"); no
prohibited transaction, within the meaning of Section 406 of ERISA or
Section 4975 of the Code, has occurred with respect to any such plan
excluding transactions effected pursuant to a statutory or
administrative exemption; for each such plan which is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA, no
"accumulated funding deficiency," as defined in Section 412 of the
Code, has been incurred, whether or not waived, and the fair market
value of the assets of each such plan that is subject to Title IV of
ERISA (excluding for these purposes accrued but unpaid contributions)
exceed the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions;
(z) (i) the Registration Statement, the Prospectus and any
preliminary prospectus comply, and any further amendments or
supplements thereto will comply, with any applicable laws or
regulations of foreign jurisdictions in which the Prospectus or any
preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the Directed Share Program, and (ii) no
authorization, approval, consent, license, order, registration or
qualification of or with any government,
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governmental instrumentality or court, other than such as have been
obtained, is necessary under the securities laws and regulations of
foreign jurisdictions in which the Directed Shares are offered outside
the United States; and
(aa) the Company has not offered, or caused the Underwriters
to offer, any Shares to any person pursuant to the Directed Share
Program with the specific intent to unlawfully influence (i) a customer
or supplier of the Company to alter the customer's or supplier's level
or type of business with the Company or (ii) a trade journalist or
publication to write or publish favorable information about the Company
or its products.
5. The Company covenants and agrees with each of the several
Underwriters as follows:
(a) if the Registration Statement is not already effective, to
use its best efforts to cause the Registration Statement to become
effective at the earliest possible time and, if required, to file the
final Prospectus with the Commission within the time periods specified
by Rule 424(b) and Rule 430A under the Securities Act and to furnish
copies of the Prospectus to the Underwriters in New York City prior to
2:00 p.m., New York City time, on the Business Day next succeeding the
date of this Agreement in such quantities as the Representatives may
reasonably request;
(b) to deliver, at the expense of the Company, to the
Representatives five signed copies of the Registration Statement (as
originally filed) and each amendment thereto, in each case including
exhibits, and to each other Underwriter a conformed copy of the
Registration Statement (as originally filed) and each amendment
thereto, in each case without exhibits and, during the period mentioned
in paragraph (e) below, to each of the Underwriters as many copies of
the Prospectus (including all amendments and supplements thereto) as
the Representatives may reasonably request;
(c) before filing any amendment or supplement to the
Registration Statement or the Prospectus, whether before or after the
time the Registration Statement becomes effective, to furnish to the
Representatives a copy of the proposed amendment or supplement for
review and not to file any such proposed amendment or supplement to
which the Representatives reasonably object unless advised by counsel
in writing that the filing of such amendment or supplement is required
by law;
(d) to advise the Representatives promptly, and to confirm
such advice in writing, (i) when the Registration Statement has become
effective, (ii) when any amendment to the Registration Statement has
been filed or becomes effective, (iii) when any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof, (iv) of any request by the
Commission
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for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for any additional information, (v) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus or the Prospectus
or the initiation or threatening of any proceeding for that purpose,
(vi) of the occurrence of any event, during the period mentioned in
paragraph (e) below, as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, and (vii) of
the receipt by the Company of any notification with respect to any
suspension of the qualification of the Shares for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose; and to use its best efforts to prevent the issuance of
any such stop order, or of any order preventing or suspending the use
of any preliminary prospectus or the Prospectus, or of any order
suspending any such qualification of the Shares, or notification of any
such order thereof, and, if issued, to obtain as soon as possible the
withdrawal thereof;
(e) if, during such period of time after the first date of the
public offering of the Shares as in the opinion of counsel for the
Underwriters a prospectus relating to the Shares is required by law to
be delivered in connection with sales by the Underwriters or any
dealer, any event shall occur as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements
therein, in light of the circumstances when the Prospectus is delivered
to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with law, forthwith to prepare and
furnish, at the expense of the Company, to the Underwriters and to the
dealers (whose names and addresses the Representatives will furnish to
the Company) to which Shares may have been sold by the Representatives
on behalf of the Underwriters and to any other dealers upon request,
such amendments or supplements to the Prospectus as may be necessary 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 will
comply with law;
(f) to endeavor to qualify the Shares for offer and sale under
the securities or blue sky laws of such jurisdictions as the
Representatives shall reasonably request and to continue such
qualification in effect so long as reasonably required for distribution
of the Shares; provided that the Company shall not be required to file
a general consent to service of process in any jurisdiction;
(g) to make generally available to its security holders and to
the Representatives as soon as practicable an earnings statement
covering a period of at least twelve
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months beginning with the first fiscal quarter of the Company occurring
after the effective date of the Registration Statement, which shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule
158 of the Commission promulgated thereunder;
(h) so long as the Shares are outstanding, to furnish or make
available to the Representatives copies of all reports or other
communications (financial or other) furnished to holders of the Shares,
and copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange;
(i) for a period of 180 days after the date of the initial
public offering of the Shares not to, (i) directly or indirectly,
offer, pledge, announce the intention to sell, sell, contract to sell,
sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any shares of Common Stock or any
securities of the Company which are substantially similar to the Common
Stock, including, but not limited to, any securities convertible into
or exercisable or exchangeable for, or that represent the right to
receive, Common Stock or any such substantially similar securities
(including, but not limited to, any securities which may be issued upon
exercise of a stock option or warrant) or (ii) enter into any swap,
option, future, forward or other agreement that transfers, in whole or
in part, any of the economic consequences of ownership of the Common
Stock or any such substantially similar securities, 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
without the prior written consent of J.P. Morgan Securities Inc., other
than any options granted or shares of Common Stock of the Company
issued upon the exercise of options granted or to be granted under the
Company's employee stock option plans existing on the date of the
Prospectus or shares of Common Stock issued upon exercise of warrants
existing on the date of the Prospectus;
(j) to use the net proceeds received by the Company from the
sale of the Shares pursuant to this agreement in the manner specified
in the Prospectus under the caption "Use of Proceeds";
(k) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all costs and expenses incident to the performance of
its obligations hereunder, including without limiting the generality of
the foregoing, all costs and expenses (i) incident to the preparation,
registration, transfer, execution and delivery of the Shares, (ii)
incident to the preparation, printing and filing under the Securities
Act of the Registration Statement, the Prospectus and any preliminary
prospectus, including in each case all exhibits,
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amendments and supplements thereto, (iii) incurred in connection with
the listing of the Shares on the Nasdaq National Market, (iv) related
to the filing with, and clearance of the offering by, the National
Association of Securities Dealers, Inc., (v) in connection with the
printing and delivery of this Agreement, any blue sky memoranda and the
furnishing to the Underwriters and dealers of copies of the
Registration Statement and the Prospectus, including mailing and
shipping, as herein provided, (vi) any expenses incurred by the Company
in connection with a "road show" presentation to potential investors,
(vii) the cost of preparing stock certificates, (viii) the cost and
charges of the Company's transfer agent and registrar and (ix) costs
and expenses (including all filing fees) incurred in connection with
the registration or qualification of the Shares under the laws of such
jurisdictions as the Representatives may designate (including
reasonable fees of counsel for the Underwriters and its disbursements
in connection therewith). It is understood, however, that, except as
otherwise agreed by the Company and the Underwriters and except as
provided in this Section 5, Section 7 and Section 10 hereof, the
Underwriters will pay all of their own costs and expenses, including
the fees of their counsel;
(l) in connection with the Directed Share Program, to ensure
that the Directed Shares will be restricted to the extent required by
the National Association of Securities Dealers, Inc. (the "NASD") or
the NASD rules from sale, transfer, assignment, pledge or hypothecation
for a period of three months following the date of the effectiveness of
the Registration Statement. The Designated Underwriters will notify the
Company as to which Participants will need to be so restricted. The
Company will direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time; and
(m) to pay all reasonable fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Shares
Program and stamp duties, similar taxes or duties or other taxes, if
any, incurred by the Underwriters in connection with the Directed Share
Program.
Furthermore, the Company covenants with the Underwriters that
the Company will comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in
which the Directed Shares are offered in connection with the Directed
Share Program.
6. The several obligations of the Underwriters hereunder to
purchase the Shares on the Closing Date or the Additional Closing Date, as the
case may be, are subject to the performance by the Company of its obligations
hereunder and to the following additional conditions:
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(a) the Registration Statement shall have become effective (or
if a post-effective amendment is required to be filed under the
Securities Act, such post-effective amendment shall have become
effective) not later than 5:00 P.M., New York City time, on the date
hereof; and no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission; the Prospectus shall have been filed with
the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and regulations under
the Securities Act; and all requests for additional information shall
have been complied with to the satisfaction of the Representatives;
(b) the representations and warranties of the Company
contained herein are true and correct on and as of the Closing Date or
the Additional Closing Date, as the case may be, as if made on the
Closing Date or the Additional Closing Date, as the case may be, and
the Company shall have complied with all agreements and all conditions
on its part to be performed or satisfied hereunder at or prior to the
Closing Date or the Additional Closing Date, as the case may be;
(c) since the respective dates as of which information is
given in the Prospectus, there shall not have been any material change
in the capital stock or long-term debt of the Company, or any Material
Adverse Change, otherwise than as set forth or contemplated in the
Prospectus, the effect of which in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares on the Closing Date or the
Additional Closing Date, as the case may be, on the terms and in the
manner contemplated in the Prospectus; and the Company has not
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus;
(d) the Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, (1) a
certificate of the Chief Executive Officer and Chief Financial Officer
of the Company, satisfactory to the Representatives, to the effect set
forth in subsections (a) through (d) (with respect to the respective
representations, warranties, agreements and conditions of the Company)
of this Section 6 and to the further effect that there has not occurred
any Material Adverse Change from that set forth or contemplated in the
Registration Statement;
(e) Andrews & Kurth L.L.P., counsel for the Company, shall
have furnished to the Representatives their written opinion, dated the
Closing Date or the Additional
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Closing Date, as the case may be, in form and substance satisfactory to
the Representatives, to the effect that:
(i) the Company has been duly incorporated 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 its properties and conduct its business as
described in the Prospectus;
(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each jurisdiction in which it owns
or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be
so qualified or in good standing would not have a Material
Adverse Effect;
(iii) other than as set forth or contemplated in the
Prospectus and to such counsel's knowledge, there are no legal
or governmental investigations, actions, suits or proceedings
pending or threatened against or affecting the Company or any
of its properties or to which the Company is or may be a party
or to which any property of the Company is or may be the
subject which, if determined adversely to the Company, could,
individually or in the aggregate, reasonably be expected to
have, a Material Adverse Effect, and, to such counsel's
knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others; and such
counsel does not know of any statutes, regulations, contracts
or other documents that are required to be described in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required;
(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(vi) all of the outstanding shares of capital stock
of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are free of
statutory and, to such counsel's knowledge, contractual
pre-emptive rights; and, except as described in or expressly
contemplated by the Prospectus and to such counsel's
knowledge, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for,
any shares of capital
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stock or other equity interest in the Company, or any
contract, commitment, agreement, understanding or arrangement
of any kind relating to the issuance of any capital stock of
the Company, any such convertible or exchangeable securities
or any such rights, warrants or options;
(vii) the Shares to be issued and sold by the
Company hereunder have been duly authorized, and when
delivered to and paid for by the Underwriters in accordance
with the terms of this Agreement, will be validly issued,
fully paid and non-assessable and the issuance of the Shares
is not subject to any pre-emptive of similar rights;
(viii) the statements in the Prospectus under
"Description of Capital Stock" and "Material U.S. Federal Tax
Considerations for Non-U.S. Holders of Common Stock" and in
the Registration Statement in Item 15, insofar as such
statements constitute a summary of the legal matters or
documents referred to therein, fairly summarize in all
material respects such matters or documents;
(ix) the Registration Statement and the Prospectus
and any supplement or amendment thereto (other than any
financial statements and related schedules and other financial
or statistical information therein as to which no belief is
expressed) comply as to form in all material respects with the
Securities Act;
(x) such counsel shall state that no facts have come
to their attention to cause them to believe that (A) the
Registration Statement and the prospectus included therein
(other than any financial statements and related schedules and
other financial or statistical information therein as to which
no belief is expressed) at its effective 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 contained therein not misleading or (B)
the Prospectus (other than any financial statements and
related schedules and other financial or statistical
information therein as to which no belief is expressed), as of
its date and as of the Closing Date or the Additional Closing
Date, as the case may be, contained or contains an untrue
statement of a material fact or omitted or omits to state a
material fact necessary to make the statements contained
therein, in the light of the circumstances under which they
were made, not misleading;
(xi) no consent, approval, authorization, order,
license, registration or qualification with any Texas,
Delaware or U.S. federal governmental body or agency is
required for the consummation by the Company of the
transactions contemplated by this Agreement and the
Prospectus, except such consents, approvals, authorizations,
orders, licenses, registrations or qualifications as have
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been obtained under the Securities Act and as may be required
under state securities or blue sky laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(xii) to such counsel's knowledge, no person has the
right to require the Company to register any securities for
offering and sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or,
the sale of the Shares pursuant hereto, except for rights
which have been waived;
(xiii) the Company is not and, after giving effect to
the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will not be
required to register as an "investment company" as such term
is defined in the Investment Company Act; and
(xiv) the execution, delivery and performance by the
Company of its obligations under this Agreement and the
consummation of the transactions contemplated herein will not
conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any contract,
agreement or instrument that is an exhibit to the Registration
Statement, nor will any such action result in any violation of
the provisions of the certificate of incorporation or the
by-laws of the Company or (a) any applicable Texas, Delaware
or U.S. federal law or statute or (b) to such counsel's
knowledge, any order of any court or governmental agency or
body having jurisdiction over the Company or any of its
properties, or any rule or regulation of any Texas, Delaware
or U.S. federal court or governmental agency or body having
jurisdiction over the Company or any of its properties, except
for such conflicts, breaches and defaults which would not,
individually or in the aggregate, have a Material Adverse
Effect, except that such counsel expresses no opinion with
respect to state securities or blue sky laws or with respect
to the rights to indemnity and contribution under this
Agreement.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the
United States and the State of Texas and the General Corporation Law of
the State of Delaware, to the extent such counsel deems proper and to
the extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to the
Underwriters' counsel) of other counsel reasonably acceptable to the
Underwriters' counsel, familiar with the applicable laws; and (B) as to
matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and certificates or
other written statements of officials of jurisdictions having custody
of documents respecting the
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corporate existence or good standing of the Company. The opinion of
such counsel for the Company shall state that the opinion of any such
other counsel upon which they relied is in form satisfactory to such
counsel and, in such counsel's opinion, the Underwriters and they are
justified in relying thereon. With respect to the matters to be covered
in subparagraph (xi) above, counsel may state their opinion and belief
is based upon their participation in the preparation of the
Registration Statement and the Prospectus and any amendment or
supplement thereto and review and discussion of the contents thereof
but is without independent check or verification except as specified.
The opinion of Andrews & Kurth L.L.P. described above shall be
rendered to the Underwriters at the request of the Company and shall so
state therein;
(f) [ ], patent counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in
form and substance satisfactory to the Representatives, to the effect
that:
(i) the Company owns, is licensed to use or otherwise
possesses or has adequate rights to use the Intellectual
Property reasonably necessary to carry on the business
conducted by it as of the date hereof, except to the extent
that the failure to own, be licensed to use or otherwise
possess or have adequate rights to use such Intellectual
Property would not, individually or in the aggregate, have a
Material Adverse Effect;
(ii) the statements in the Registration Statement and
the Prospectus under (A) "Risk Factors--Our ability to patent
our discoveries is uncertain because patent laws and their
interpretation are highly uncertain and subject to change,"
"--Our patent applications may not result in enforceable
rights," "--If other companies and institutions obtain
patents claiming the functional uses of genes and gene
products based upon gene sequence information and predictions
of gene function, we may be unable to obtain patents for our
discoveries of biological function in knockout mice," "--If
our potential products conflict with patents that competitors,
universities or others have obtained, then we may be unable to
commercialize those products," "--Issued patents may not
fully protect our discoveries, and our competitors may be able
to commercialize products similar to those covered by our
issued patents," "--Our rights to the use of technologies
licensed by third parties are not within our control," "--We
and our collaborators are subject to extensive and uncertain
government regulatory requirements, which could increase our
operating costs or adversely affect our ability to obtain
government approval of products based on genes that we
identify in a timely manner or at all," "Business--Government
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Regulation," insofar as such statements concern descriptions
of legal matters or documents, in each case, fairly summarize
in all material respects such matters or documents;
(iii) other than as set forth or contemplated in the
Prospectus, to the knowledge of such counsel, the Company has
not received any notice of infringement of or conflict with,
and such counsel has no knowledge of any infringement of or
conflict with, asserted rights of others with respect to the
Company's Intellectual Property which could reasonably be
expected to result in a Material Adverse Effect;
(iv) other than as set forth or contemplated in the
Prospectus, the discoveries, inventions, products or processes
of the Company referred to in the Registration Statement and
the Prospectus do not, to the knowledge of such counsel,
infringe or conflict with any rights of any third party, or
any discovery, invention, product or process which is the
subject of a patent application filed by any third party which
patent application has not been published or is otherwise
known to the Company except to the extent that any such
infringement, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect;
and
(v) other than as set forth or contemplated in the
Prospectus, no third party, including any academic or
governmental organization, possesses rights to the Company's
patents, patent applications or patent rights which, if
exercised, could reasonably be expected to have a Material
Adverse Effect;
In rendering such opinions, such counsel may rely as to
matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company.
The opinion of [ ], described above shall be rendered
to the Underwriters at the request of the Company and shall so state
therein;
(g) on the date hereof and the effective date of the most
recently filed post-effective amendment filed on or subsequent to the
date hereof to the Registration Statement and also on the Closing Date
or Additional Closing Date, as the case may be, Arthur Andersen shall
have furnished to you letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, containing
statements and information of the type customarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus;
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(h) the Representatives shall have received on and as of the
Closing Date or Additional Closing Date, as the case may be, an opinion
of Cahill Gordon & Reindel, counsel to the Underwriters, with respect
to the Registration Statement, the Prospectus and other related matters
as the Representatives may reasonably request, and such counsel shall
have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(i) the Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved
for quotation on the Nasdaq National Market, subject to official notice
of issuance;
(j) on or prior to the Closing Date or Additional Closing
Date, as the case may be, the Company shall have furnished to the
Representatives such further certificates and documents as the
Representatives shall reasonably request; and
(k) the "lock-up" agreements, each substantially in the form
of Exhibit A hereto, among you and the directors, executive officers
and certain shareholders 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 or Additional Closing Date,
as the case may be.
7. The Company agrees to indemnify and hold harmless each
Underwriter, each affiliate of any Underwriter which assists such Underwriter in
the distribution of Shares and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, the legal fees and other expenses
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, 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 untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use
therein; provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Underwriter
(or affiliate of such Underwriter which assists such Underwriter in the
distribution of Shares) from whom the persons asserting any such losses, claims,
damages, or liabilities purchased Shares, or any controlling such Underwriter,
if a copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or
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supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability, unless such failure to send or
give a copy of the Prospectus is the result of noncompliance by the Company with
Section 5(a) or (b) hereof.
The Company agrees to indemnify and hold harmless each of the
Designated Underwriters and each person, if any, who controls either Designated
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (the "Designated Entities"), from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by any untrue statement or
alleged untrue statement of a material fact contained in any material prepared
by or with the consent of the Company for distribution to Participants in
connection with the Directed Share Program or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) caused by the
failure of any Participant to pay for and accept delivery of Directed Shares
that the Participant agreed to purchase; or (iii) related to, arising out of, or
in connection with the Directed Share Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
the Designated Entities.
Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person who controls the Company within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act
to the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use in the Registration Statement, the Prospectus,
any amendment or supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to the preceding
paragraphs of this Section 7, such person (the "Indemnified Person") shall
promptly notify the person or persons against whom such indemnity may be sought
(each, an "Indemnifying Person") in writing, and such Indemnifying Persons, upon
request of the Indemnified Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Persons may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person
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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 Person and not the
Indemnifying Persons unless (i) the Indemnifying Persons and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both an Indemnifying Person and the
Indemnified Person 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 no Indemnifying Person shall, in connection with any
proceeding or related proceeding 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 Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriters,
each affiliate of any Underwriter which assists such Underwriter in the
distribution of the Shares and such control persons of Underwriters shall be
designated in writing by J.P. Morgan Securities Inc. and any such separate firm
for the Company, its directors, its officers who sign the Registration Statement
and such control persons of the Company shall be designated in writing by the
Company. Notwithstanding anything contained herein to the contrary, if indemnity
may be sought pursuant to the second paragraph of this Section 7 in respect of
such action or proceeding, then in addition to such separate firm for the
Indemnified Persons, the Indemnifying Person shall be liable for the reasonable
fees and expenses of not more than one separate firm (in addition to any local
counsel) for the Designated Underwriters for the defense of any losses, claims,
damages and liabilities arising out of the Directed Share Program, and all other
persons, if any, who control either of the Designated Underwriters within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act. No Indemnifying Person shall 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, each Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, such
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 90 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
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If the indemnification provided for in the first four
paragraphs of this Section 7 is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person 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 (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages 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 shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the total
underwriting discounts 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 Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purposes) or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person 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 incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I hereto,
and not joint.
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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.
The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement
(or the obligations of the several Underwriters with respect to the Option
Shares) may be terminated in the absolute discretion of the Representatives, by
notice given to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (or, in the case of the Option Shares,
prior to the Additional 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) a general moratorium on commercial banking activities in New York shall
have been declared by either federal or New York State authorities, or (iii)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment of
the Representatives, is material and adverse and which, in the judgment of the
Representatives, makes it impracticable to market the Shares being delivered at
the Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they have agreed to purchase hereunder on such date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Underwritten Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as the Representatives
may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase
25
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pursuant to Section 1 be increased pursuant to this Section 9 by an amount in
excess of one-tenth of such number of Shares without the written consent of such
Underwriter. If on the Closing Date or the Additional Closing Date, as the case
may be, any Underwriter or Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares to be purchased on such date,
and arrangements satisfactory to the Representatives for the purchase of such
Shares are not made within 36 hours after such default, this Agreement (or the
obligations of the several Underwriters to purchase the Option Shares, as the
case may be) shall terminate without liability on the part of any non-defaulting
Underwriter. In any such case the Representatives shall have the right to
postpone the Closing Date (or, in the case of the Option Shares, the Additional
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. 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.
10. If this Agreement shall be terminated by the Underwriters,
or any of them, other than pursuant to Section 8, because of any failure or
refusal on the part of the Company to comply with the terms or to fulfill any of
the conditions of this Agreement, or if for any reason the Company shall be
unable to perform its obligations under this Agreement or any condition of the
Underwriters' obligations cannot be fulfilled, the Company agrees to 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 expenses of its counsel) reasonably incurred by the Underwriter in
connection with this Agreement or the offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be
binding upon the Company, the Underwriters, any controlling persons referred to
herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No purchaser
of Shares from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by
the Representatives jointly or by J.P. Morgan Securities Inc. alone on behalf of
the Underwriters, and any such action taken by the Representatives jointly or by
J.P. Morgan Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
26
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Representatives, c/o J.P. Morgan Securities Inc., 60 Wall Street, New York, New
York 10260 (telefax: (212) 648-5705), Attention: Syndicate Department, copy to
Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005 (telefax:
212-269-5420), Attention: Gerald S. Tanenbaum, Esq. Notices to the Company shall
be given to it at its office, 4000 Research Forest Drive, The Woodlands, TX
77381 (telefax: 281-364-0155), Attention: Jeffrey L. Wade. Copies of notices to
the Company should be given to Andrews & Kurth L.L.P., 600 Travis, Suite 4200,
Houston, TX 77002 (telefax: 713-220-4285), Attention: David P. Oelman.
13. This Agreement may be signed in counterparts, each of
which shall be an original and all of which together shall constitute one and
the same instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF.
[Signature Pages Follow]
27
S-1
If the foregoing is in accordance with your understanding,
please sign and return five counterparts hereof.
Very truly yours,
LEXICON GENETICS
INCORPORATED
By:
--------------------------------------
Name:
Title:
28
S-2
Accepted: [ ], 2000
J.P. MORGAN SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC WORLD MARKETS CORP.
DAIN RAUSCHER INCORPORATED
PUNK, ZIEGEL & COMPANY, L.P.
Acting severally on behalf of themselves
and the several Underwriters listed
in Schedule I hereto.
By: J.P. MORGAN SECURITIES INC.
By:
----------------------------------------------
Name:
Title:
29
SCHEDULE I
Number of
Underwritten
Shares To Be
Underwriter Purchased
- ----------- ------------
J.P. Morgan Securities Inc.....................................
Credit Suisse First Boston Corporation.........................
CIBC World Markets Corp........................................
Dain Rauscher Incorporated.....................................
Punk, Ziegel & Company, L.P....................................
Total........................................ [ ]
============
30
EXHIBIT A
[Form of Lock-Up Agreement]