EXHIBIT 1.1
TOLERRX, INC.
_____Shares(1) of Common Stock
UNDERWRITING AGREEMENT
________________, 2003
J.P. Morgan Securities Inc.
SG Cowen Securities Corporation
Leerink Swann & Company, Inc.
As Representatives of the
several Underwriters listed
in Schedule 1 hereto
c/o J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
TolerRx, Inc., a Delaware corporation (the "COMPANY"), proposes to issue
and sell to the several Underwriters listed in Schedule 1 hereto (the
"UNDERWRITERS"), for whom you are acting as representatives (the
"REPRESENTATIVES"), an aggregate of _______ shares of common stock, par value
$.001 per share ("COMMON STOCK"), of the Company (the "UNDERWRITTEN SHARES")
and, at the option of the Underwriters, up to an additional ________ shares of
Common Stock of the Company (the "OPTION SHARES"). The Underwritten Shares and
the Option Shares are herein referred to as the "SHARES". The shares of Common
Stock of the Company to be outstanding after giving effect to the sale of the
Shares are herein referred to as the "STOCK". As part of the offering
contemplated by this Agreement, SG Cowen Securities Corporation (the "Designated
Underwriter") has agreed to reserve out of the Underwritten Shares purchased by
it under this Agreement, up to [___] shares, for sale to the Company's
[customers and business partners and friends and family of the Company's
officers, directors and employees] (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
Underwriter pursuant to the Directed Share Program (the "Directed Shares") will
be sold by the Designated Underwriter pursuant to this Agreement at the public
offering price. Any Directed Shares not subscribed for 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 hereby confirms its agreement with the several Underwriters
concerning the purchase and sale of the Shares, as follows:
1. REGISTRATION STATEMENT. The Company has prepared and filed with the
Securities and Exchange Commission (the "COMMISSION") under the Securities Act
of 1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "SECURITIES ACT"), a registration statement (Reg No.
333-108244) including a prospectus, relating to the Shares. Such
- --------
1 Plus an option to purchase from the Company up to an additional _______
shares to cover over-allotments.
registration statement, as amended at the time it becomes effective, including
the information, if any, deemed pursuant to Rule 430A under the Securities Act
to be part of the registration statement at the time of its effectiveness ("RULE
430A INFORMATION"), is referred to herein as the "REGISTRATION STATEMENT"; and
as used herein, the term "PRELIMINARY PROSPECTUS" means each prospectus included
in such registration statement (and any amendments thereto) before it becomes
effective, any prospectus filed with the Commission pursuant to Rule 424(a)
under the Securities Act and the prospectus included in the Registration
Statement at the time of its effectiveness that omits Rule 430A Information, and
the term "PROSPECTUS" means the prospectus in the form first used to confirm
sales of the Shares. 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.
2. PURCHASE OF THE SHARES BY THE UNDERWRITERS. (a) The Company agrees, subject
to and upon the terms and conditions set forth in this Agreement, to issue and
sell the Shares to the several Underwriters as provided in this Agreement, and
each Underwriter, on the basis of the representations, warranties and agreements
set forth herein and subject to the terms and conditions set forth herein,
agrees, severally and not jointly, to purchase from the Company the respective
number of Underwritten Shares set forth opposite such Underwriter's name in
Schedule 1 hereto at a price per share (the "PURCHASE PRICE") of $________.
In addition, the Company agrees, subject to and upon the terms and
conditions set forth in this Agreement, to issue and sell the Option Shares to
the several Underwriters as provided in this Agreement, and the Underwriters, on
the basis of the representations, warranties and agreements set forth herein and
subject to the terms and conditions set forth herein, shall have the option to
purchase, severally and not jointly, from the Company the Option Shares at the
Purchase Price.
If any Option Shares are to be purchased, the number of Option Shares to be
purchased by each Underwriter shall be the number of Option Shares which bears
the same ratio to the aggregate number of Option Shares being purchased as the
number of Underwritten Shares set forth opposite the name of such Underwriter in
Schedule 1 hereto (or such number increased as set forth in Section 9 hereof)
bears to the aggregate number of Underwritten Shares being purchased from the
Company by the several Underwriters, subject, however, to such adjustments to
eliminate any fractional Shares as the Representatives in their sole discretion
shall make.
The Underwriters may exercise the option to purchase the Option Shares at
any time in whole, or from time to time in part, 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 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
(b) The Company understands that the Underwriters intend to make a public
offering of the Shares as soon after the effectiveness of this Agreement as in
the judgment of the Representatives is advisable, and initially to offer the
Shares on the terms set forth in the Prospectus. The Company acknowledges and
agrees that the Underwriters may offer and sell Shares to or through any
affiliate of an Underwriter and that any such affiliate may offer and sell
Shares purchased by it to or through any Underwriter.
(c) The terms of the initial public offering by the Underwriters of the
Shares to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(d) 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, at the offices of Morgan, Lewis &
Bockius LLP, 101 Park Avenue, New York, New York 10178 at 10:00 A.M., New York
City time, on _____, 2003, or at such other time or place 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 at the time and place 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".
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 in definitive form 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 sale 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. 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.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to each Underwriter that:
(a) PRELIMINARY PROSPECTUS. No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, complied in all material
respects with the Securities Act and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED that the
Company makes
- -------------------------
2 Three business days (T+3) or, in the event the offering is priced after
4:30 P.M. Eastern Time, four business days after the date of the
Underwriting Agreement.
3
no representation and warranty with respect 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 in any Preliminary Prospectus.
(b) REGISTRATION STATEMENT AND PROSPECTUS. The Registration Statement has
been declared effective by the Commission. No order suspending the effectiveness
of the Registration Statement has been issued by the Commission and no
proceeding for that purpose has been initiated or threatened by the Commission;
as of the applicable effective date of the Registration Statement and any
amendment thereto, the Registration Statement complied and will comply in all
material respects with the Securities Act, and did not and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading; and as of the applicable filing date of the Prospectus and any
amendment or supplement thereto and as of the Closing Date and as of the
Additional Closing Date, as the case may be, the Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; PROVIDED
that the Company makes no representation and warranty with respect 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 in the Registration
Statement and the Prospectus and any amendment or supplement thereto.
(c) FINANCIAL STATEMENTS. The financial statements and the related notes
thereto of the Company and its consolidated subsidiaries included in the
Registration Statement and the Prospectus comply in all material respects with
the applicable requirements of the Securities Act and the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "EXCHANGE ACT"), as applicable, and present fairly
the financial position of the Company and its subsidiaries as of the dates
indicated and the results of their operations and the changes in their cash
flows for the periods specified; such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods covered thereby, and the supporting schedules
included in the Registration Statement present fairly the information required
to be stated therein; the other financial information included in the
Registration Statement and the Prospectus has been derived from the accounting
records of the Company and its subsidiaries and presents fairly the information
shown thereby; 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 Exchange Act, as applicable, and the assumptions underlying such PRO
FORMA financial information are reasonable and are set forth in the Registration
Statement and the Prospectus. Such PRO FORMA adjustments have been properly
applied to the historical amounts in the compilation of the information and such
information fairly presents, with respect to such entities, the financial
position, results of operations and other information purported to be shown
therein at the respective dates and for the respective periods specified.
(d) NO MATERIAL ADVERSE CHANGE. Since the date of the most recent financial
statements of the Company included in the Registration Statement and the
Prospectus, (i) there
4
has not been any change in the capital stock (except any changes relating to the
granting or exercise of stock options or equity awards pursuant to the Company's
2000 Equity Incentive Plan, as amended (the "EIP") or 2003 Employee Stock
Purchase Plan, as amended (the "ESPP") or increase in long-term debt of the
Company or any of its subsidiaries, or any dividend or distribution of any kind
declared, set aside for payment, paid or made by the Company on any class of
capital stock, or any material adverse change, or any development that would
reasonably be expected to cause a prospective material adverse change, in or
affecting the business, properties, management, financial position,
stockholders' equity, results of operations, earnings or prospects of the
Company and its subsidiaries taken as a whole; (ii) neither the Company nor any
of its subsidiaries has entered into any transaction or agreement that is
material to the Company and its subsidiaries taken as a whole or incurred any
liability or obligation, direct or contingent, that is material to the Company
and its subsidiaries taken as a whole; and (iii) neither the Company nor any of
its subsidiaries has sustained 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 disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority,
except in each case as otherwise disclosed in the Registration Statement and the
Prospectus.
(e) ORGANIZATION AND GOOD STANDING. The Company and each of its
subsidiaries have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each jurisdiction in
which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to be so
qualified or have such power or authority would not, individually or in the
aggregate, have a material adverse effect on the business, properties,
management, financial position, stockholders' equity, results of operations,
earnings or prospects of the Company and its subsidiaries taken as a whole (a
"MATERIAL ADVERSE EFFECT"). The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiary listed in Exhibit 21.1 to the Registration Statement.
(f) CAPITALIZATION. The Company has an authorized capitalization as set
forth in the Prospectus under the heading "Capitalization"; all the outstanding
shares of capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable and are not subject to any
pre-emptive or similar rights; 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 of its subsidiaries, or any contract,
commitment, agreement, understanding or arrangement of any kind relating to the
issuance of any capital stock of the Company or any such subsidiary, any such
convertible or exchangeable securities or any such rights, warrants or options;
the capital stock of the Company conforms in all material respects to the
description thereof contained in the Registration Statement and the Prospectus;
and all the outstanding shares of capital stock or other equity interests of
each subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly or indirectly by the
Company,
5
free and clear of any lien, charge, encumbrance, security interest, restriction
on voting or transfer or any other claim of any third party.
(g) DUE AUTHORIZATION. The Company has full right, power and authority to
execute and deliver this Agreement and to perform its obligations hereunder; and
all action required to be taken for the due and proper authorization, execution
and delivery of this Agreement and the consummation of the transactions
contemplated thereby has been duly and validly taken.
(h) UNDERWRITING AGREEMENT. This Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding agreement of
the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(i) THE SHARES. The Shares have been duly and validly authorized by the
Company and, when issued and delivered and paid for as provided herein, will be
duly and validly issued and will be fully paid and nonassessable and will
conform to the descriptions thereof in the Prospectus; and the issuance of the
Shares is not subject to any preemptive or similar rights.
(j) NO VIOLATION OR DEFAULT. Neither the Company nor any of its
subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority,
including, without limitation, the United States Food and Drug Administration
(the "FDA") or any comparable foreign, federal, state or local authority
performing similar functions, except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not, individually or in the
aggregate, have a Material Adverse Effect.
(k) NO CONFLICTS. The execution, delivery and performance by the Company of
this Agreement, the issuance and sale of the Shares and the consummation of the
transactions contemplated by this Agreement will not (i) conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries is
subject; (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or any of its
subsidiaries; or (iii) result in the violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority, except, in the case of clauses (i)
6
and (iii) above, for any such conflict, breach or violation that would not,
individually or in the aggregate, have a Material Adverse Effect.
(l) NO CONSENTS REQUIRED. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of this Agreement, the issuance and sale of the Shares and the
consummation of the transactions contemplated by this Agreement, except for the
registration of the Shares under the Securities Act and such consents,
approvals, authorizations, orders and registrations or qualifications as may be
required under applicable state securities laws in connection with the purchase
and distribution of the Shares by the Underwriters.
(m) LEGAL PROCEEDINGS. Except as described in the Prospectus, there are no
legal, governmental or regulatory investigations, actions, suits or proceedings
pending to which the Company or any of its subsidiaries is or may be a party or
to which any property of the Company or any of its subsidiaries is or may be the
subject that, individually or in the aggregate, if determined adversely to the
Company or any of its subsidiaries, could reasonably be expected to have a
Material Adverse Effect or materially and adversely affect the ability of the
Company to perform its obligations under this Agreement; no such investigations,
actions, suits or proceedings are threatened or, to the best knowledge of the
Company, contemplated by any governmental or regulatory authority or threatened
by others; and (i) there are no current or pending legal, governmental or
regulatory actions, suits or proceedings that are required under the Securities
Act to be described in the Prospectus that are not so described and (ii) there
are no statutes, regulations or contracts or other documents that are required
under the Securities Act to be filed as exhibits to the Registration Statement
or described in the Registration Statement or the Prospectus that are not so
filed or described.
(n) INDEPENDENT ACCOUNTANTS. PricewaterhouseCoopers LLP, who have certified
certain financial statements of the Company and its subsidiaries and delivered
their report with respect to the consolidated financial statements and schedules
included in the Prospectus are independent public accountants with respect to
the Company and its subsidiaries, as required by the Securities Act and, to the
knowledge of the Company, such accountants are in compliance with the auditor
independence requirements of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the "SARBANES-OXLEY ACT").
(o) TITLE TO REAL AND PERSONAL PROPERTY. The Company and its subsidiaries
own no real property and have good and marketable title to all personal property
owned by them which is material to the business of the Company and its
subsidiaries, or have valid, subsisting and enforceable rights to lease or
otherwise use, all items of real and personal property that are material to the
business of the Company and its subsidiaries, in each case free and clear of all
liens, encumbrances, claims and defects and imperfections of title except those
that (i) do not materially interfere with the use made and proposed to be made
of such property by the Company and its subsidiaries or (ii) could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(p) INTELLECTUAL PROPERTY. The Company and its subsidiaries own or possess
adequate rights to use all material patents, patent applications, trademarks,
service marks, trade names,
7
trademark registrations, service mark registrations, copyrights, inventions,
licenses and know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures)
("INTELLECTUAL PROPERTY Rights") necessary for the conduct of their respective
businesses, except to the extent disclosed in the Registration Statement or the
Prospectus. Without limiting the generality of the foregoing, there are no
limitations with respect to the Company's Intellectual Property Rights not
described in the Prospectus that would prevent it from (a) performing its
obligations under the Collaboration Agreement, dated December 23, 2002, between
Genentech, Inc. and the Company (the "GENENTECH AGREEMENT"), and (b) engaging in
activities contemplated by the Genentech Agreement, as described in the
Prospectus. Except to the extent disclosed in the Registration Statement or the
Prospectus, the conduct of business of the Company and its subsidiaries will not
conflict in any material respect with any Intellectual Property Rights of
others, and the Company and its subsidiaries have not received any notice of any
claim of infringement or conflict with any such rights of others. The Company
has taken usual and customary measures for a company of its size and resources
and in its line of business to protect the secrecy, confidentiality and value of
all of its Intellectual Property Rights in all material respects.
(q) NO UNDISCLOSED RELATIONSHIPS. No relationship, direct or indirect,
exists between or among the Company or any of its subsidiaries, on the one hand,
and the directors, officers, stockholders, customers or suppliers of the Company
or any of its subsidiaries, on the other hand, that is required by the
Securities Act to be described in the Registration Statement and the Prospectus
and that is not so described.
(r) INVESTMENT COMPANY ACT. 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" or an entity "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
(s) TAXES. The Company and its subsidiaries have paid all federal, state,
local and foreign taxes and filed all tax returns required to be paid or filed
through the date hereof; and except as otherwise disclosed in the Prospectus,
there is no tax deficiency that has been, or could reasonably be expected to be,
asserted against the Company or any of its subsidiaries or any of their
respective properties or assets which would reasonably be expected to have a
Material Adverse Effect.
(t) LICENSES AND PERMITS. The Company and its subsidiaries possess all
licenses, certificates, certifications, permits, consents, approvals and other
authorizations issued by, and have made all declarations and filings with, the
appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their respective
properties or the conduct of their respective businesses as described in the
Registration Statement and the Prospectus, except where the failure to possess
or make the same would not, individually or in the aggregate, have a Material
Adverse Effect; and except as described in the Prospectus, neither the Company
nor any of its subsidiaries has received notice of any revocation or
modification of any such license, certificate, permit, consent, approval or
authorization or has any reason to believe that any such license, certificate,
certification, permit or authorization will not be renewed in the ordinary
course, and no proceeding or administrative
8
action has been instituted or is pending or is contemplated or threatened, which
in any manner affects or draws into question the validity or effectiveness
thereof.
(u) REGULATORY SUBMISSIONS. Neither the Company nor any of its subsidiaries
has failed to file with the applicable regulatory authorities (including,
without limitation, the FDA or any foreign, federal, state or local governmental
or regulatory authority performing functions similar to those performed by the
FDA) any filing, declaration, listing, registration, report or submission which
is required to be filed. All such filings, declarations, listings,
registrations, reports or submissions were in compliance in all material
respects with applicable laws when filed and no deficiencies have been asserted
against the Company by any applicable regulatory authority (including, without
limitation, the FDA or any foreign, federal, state or local governmental or
regulatory authority performing functions similar to those performed by the FDA)
with respect to any such filings, declarations, listings, registrations, reports
or submissions.
(v) NON-CLINICAL AND CLINICAL STUDIES. The non-clinical and clinical
studies and tests (including, but without limitation, the animal studies and
human clinical trials) conducted by the Company or in which the Company has
participated and, to the Company's knowledge, such studies and tests that were
conducted for or on behalf of the Company were and, if still pending, are being
conducted in all material respects (i) in accordance with the protocols,
procedures and controls for such studies and tests of drug or biologic products,
as the case may be, and (ii) in accordance with all applicable laws, rules and
regulations, including, without limitation, administered by the FDA. The
descriptions of the results of such studies and tests contained in the
Registration Statement and Prospectus are accurate, complete and fairly present
the published data described, and the Company has no knowledge of any other
studies or tests, the results of which call into question in any material
respect the results described or referred to in the Registration Statement and
Prospectus. The Company has not received any notices or correspondence from the
FDA, any other U.S. or foreign, federal, state, local or other governmental
agency, Institutional Review Board or Ethics Board requiring the termination,
suspension or modification of any studies or tests conducted by, or on behalf
of, the Company or in which the Company has participated that are described in
the Registration Statement and Prospectus or the results of which are referred
to in the Registration Statement and Prospectus that would cause the Company to
change the descriptions in the Registration Statement or Prospectus.
(w) NO LABOR DISPUTES. No labor disturbance by or dispute with employees of
the Company or any of its subsidiaries exists or, to the knowledge of the
Company, is contemplated or threatened; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that could, individually
or in the aggregate, have a Material Adverse Effect.
(x) COMPLIANCE WITH ENVIRONMENTAL AND OCCUPATIONAL LAWS. Without limiting
the generality of (j) and (t) above, each of the Company and its subsidiaries:
(i) is in material compliance with any and all applicable foreign, federal,
state and local laws, rules, regulations, treaties, statutes and codes
promulgated by any and all governmental authorities relating to the protection
of human health and safety, the environment or toxic substances or wastes,
pollutants or contaminates ("ENVIRONMENTAL LAWS"); (ii) is in material
compliance with any and all applicable foreign, federal, state and local laws,
rules, regulations, treaties, statutes and codes
9
promulgated by any and all governmental authorities (including pursuant to the
Occupational Health and Safety Act) relating to the protection of human health
and safety in the workplace ("OCCUPATIONAL LAWS" and, together with
Environmental Laws, "ENVIRONMENTAL AND OCCUPATIONAL LAWS"); (iii) has received
all material permits, licenses or other approvals required of it under
applicable Environmental and Occupational Laws to conduct its business as
currently conducted; and (iv) is in compliance with all terms and conditions of
such permit, license or approval, except with respect to all such cases where
such noncompliance with the applicable Environmental and Occupational Laws or
failure to receive or act in compliance with the required permit, license or
other approval would not, individually or in the aggregate, have a Material
Adverse Effect. No action, proceeding, revocation proceeding, writ, injunction
or claim is pending or, to the Company's knowledge, threatened against the
Company relating to Environmental and Occupational Laws or to the Company's
activities involving Hazardous Materials. The term "HAZARDOUS MATERIALS" as used
in this Agreement means any material or substance that: (A) is prohibited or
regulated by any environmental law, rule, regulation, order, treaty, statute or
code promulgated by any governmental authority, or any amendment or modification
thereto; or (B) has been designated or regulated by any governmental authority
as radioactive, toxic, hazardous or otherwise a danger to health, reproduction
or the environment.
(y) HAZARDOUS MATERIALS. The Company is not or was not engaged in the
generation, use, manufacture, transportation or storage of any Hazardous
Materials on any of the Company's properties or former properties, except where
such use, manufacture, transportation or storage is or was in material
compliance with Environmental Laws. No Hazardous Materials have been treated or
disposed of by the Company on any of the Company's properties or on properties
formerly owned or leased by the Company during the time of such ownership or
lease, except in compliance with Environmental Laws. To the Company's knowledge,
no spills, discharges, releases, deposits, emplacements, leaks or disposal of
any Hazardous Materials have occurred on or under, or have emanated from, any of
the Company's properties or former properties for which the cost of remediation
would have a Material Adverse Effect.
(z) NO ENVIRONMENTAL COSTS. There are no costs or liabilities associated
with Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, individually or in the aggregate, have a Material Adverse Effect.
(aa) COMPLIANCE WITH ERISA. 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 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 (the "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 which could reasonably be expected to
have a Material Adverse Effect; and for each such plan that is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA, no
"accumulated funding deficiency" as
10
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 (excluding for these
purposes accrued but unpaid contributions) exceeds the present value of all
benefits accrued under such plan determined using reasonable actuarial
assumptions.
(bb) ACCOUNTING CONTROLS. The Company and its subsidiaries maintain systems
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(cc) INSURANCE. The Company and its subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, including
business interruption insurance, which insurance is in amounts and insures
against such losses and risks as are adequate to protect the Company and its
subsidiaries and their respective businesses; and neither the Company nor any of
its subsidiaries has (i) received notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance or (ii) any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage at reasonable cost from
similar insurers as may be necessary to continue its business.
(dd) NO UNLAWFUL PAYMENTS. Neither the Company nor any of its subsidiaries
nor, to the best knowledge of the Company, any director, officer, agent,
employee or other person associated with or acting on behalf of the Company or
any of its subsidiaries has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
(ee) NO RESTRICTIONS ON SUBSIDIARIES. No subsidiary of the Company is
currently prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party or is subject, 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 properties or
assets to the Company or any other subsidiary of the Company.
(ff) NO BROKER'S FEES. Neither the Company nor any of its subsidiaries is a
party to any contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against the Company or any
of its subsidiaries or any Underwriter for a brokerage commission, finder's fee
or like payment in connection with the offering and sale of the Shares.
11
(gg) NO REGISTRATION RIGHTS. No person has the right to require the Company
or any of its subsidiaries to register any securities for sale under the
Securities Act by reason of the filing of the Registration Statement with the
Commission or the issuance and sale of the Shares other than as described in the
Registration Statement and as have been waived in writing in connection with the
offering contemplated hereby.
(hh) NO STABILIZATION. The Company has not taken, directly or indirectly,
any action designed to or that could reasonably be expected to cause or result
in any stabilization or manipulation of the price of the Shares.
(ii) FORWARD-LOOKING STATEMENTS. No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in the Registration Statement and the Prospectus has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good
faith.
(jj) STATISTICAL AND MARKET DATA. Nothing has come to the attention of the
Company that has caused the Company to believe that the statistical and
market-related data included in the Registration Statement and the Prospectus is
not based on or derived from sources that are reliable and accurate in all
material respects.
(kk) NASDAQ NATIONAL MARKET. The Shares to be sold by the Company have been
approved for quotation by the National Association of Securities Dealers
Automated Quotations National Market (the "NASDAQ NATIONAL MARKET").
(ll) THE GENENTECH AGREEMENT. The execution, delivery and performance by
the Company of the Genentech Agreement was duly authorized and approved by all
requisite corporate and other action on the part of the Company, and the
consummation of this offering will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
such agreement.
(mm) The Registration Statement, the Prospectus and the Preliminary
Prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which they are distributed in connection with the Directed Share Program. No
authorization, approval, consent, license, order, registration or qualification
of or with any government, governmental instrumentality or court, other than
such as have been obtained, is necessary under the securities laws or
regulations of any foreign jurisdiction in which the Directed Shares are offered
outside the United States.
(nn) The Company has not offered, or caused the Underwriters to offer, any
Underwritten Shares to any person pursuant to the Directed Share Program with
the specific intent to unlawfully influence (i) a customer or business partner
of the Company to alter the customer's or business partner'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.
12
4. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees with each
Underwriter that:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Company has filed the
final Prospectus with the Commission within the time periods specified by Rule
424(b) and Rule 430A under the Securities Act and the Company will furnish
copies of the Prospectus to the Underwriters as soon as practicable after the
Registration Statement becomes effective in such quantities as the
Representatives may reasonably request.
(b) DELIVERY OF COPIES. The Company will deliver, without charge, (i) to
the Representatives four signed copies of the Registration Statement as
originally filed and each amendment thereto, in each case including all exhibits
and consents filed therewith; and (ii) to each Underwriter (A) a conformed copy
of the Registration Statement as originally filed and each amendment thereto
(without exhibits) and (B) during the Prospectus Delivery Period, as many copies
of the Prospectus (including all amendments and supplements thereto) as the
Representatives may reasonably request. As used herein, the term "Prospectus
Delivery Period" means 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 of the Shares by any Underwriter or dealer.
(c) AMENDMENTS OR SUPPLEMENTS. Before filing any amendment or supplement to
the Registration Statement or the Prospectus, the Company will furnish to the
Representatives and counsel for the Underwriters a copy of the proposed
amendment or supplement for review and will not file any such proposed amendment
or supplement to which the Representatives reasonably object.
(d) NOTICE TO THE REPRESENTATIVES. The Company will advise the
Representatives promptly, and confirm such advice in writing, (i) when any
amendment to the Registration Statement has been filed or becomes effective;
(ii) when any supplement to the Prospectus or any amendment to the Prospectus
has been filed; (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or the
receipt of any comments from the Commission relating to the Registration
Statement or any other request by the Commission for any additional information;
(iv) of the issuance by the Commission of any order suspending the effectiveness
of the Registration Statement or preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or the initiation or threatening of any
proceeding for that purpose; (v) of the occurrence of any event within the
Prospectus Delivery Period as a result of which the Prospectus as then amended
or supplemented would include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing when the Prospectus is delivered to a
purchaser, not misleading; and (vi) of the receipt by the Company of any notice
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 the Company will use its best efforts to prevent the issuance
of any such order suspending the effectiveness of the Registration Statement,
preventing or suspending the use of any Preliminary Prospectus or the Prospectus
or suspending any such qualification of the Shares and, if any such order is
issued, the Company will use best efforts to obtain as soon as possible the
withdrawal thereof.
(e) ONGOING COMPLIANCE OF THE PROSPECTUS. If during the Prospectus Delivery
Period (i) any event shall occur or condition shall exist as a result of which
the Prospectus as then
13
amended or supplemented would include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances existing
when the Prospectus is delivered to a purchaser, not misleading or (ii) it is
necessary to amend or supplement the Prospectus to comply with law, the Company
will immediately notify the Underwriters thereof and forthwith prepare and,
subject to paragraph (c) above, file with the Commission and furnish to the
Underwriters and to such dealers as the Representatives may designate, 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 existing when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus will comply with law.
(f) BLUE SKY COMPLIANCE. The Company will qualify the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and will continue such qualifications
in effect so long as required for distribution of the Shares; PROVIDED that the
Company shall not be required to (i) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where it would not
otherwise be required to so qualify, (ii) file any general consent to service of
process in any such jurisdiction or (iii) subject itself to taxation in any such
jurisdiction if it is not otherwise so subject.
(g) EARNING STATEMENT. The Company will make generally available to its
security holders and the Representatives as soon as practicable an earning
statement that satisfies the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Commission promulgated thereunder covering a period of at
least twelve months beginning with the first fiscal quarter of the Company
occurring after the "effective date" (as defined in Rule 158) of the
Registration Statement.
(h) CLEAR MARKET. For a period of 180 days after the date of the initial
public offering of the Shares, the Company will not (i) 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, directly or indirectly,
any shares of Stock or any securities convertible into or exercisable or
exchangeable for Stock or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Stock, whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Stock or such other securities, in cash or
otherwise, without the prior written consent of the Representatives, other than
(a) the Shares to be sold hereunder, (b) any shares of Stock of the Company
issued upon the exercise of options granted under existing employee stock option
plans, (c) any shares of Stock or options or other equity grants under the EIP
or ESPP (including the registration of such shares on a Form S-8) and (d) any
transfers that are permitted under the "lock-up" agreements delivered to the
Underwriters pursuant to Section 5(m) hereof.
(i) USE OF PROCEEDS. The Company will apply the net proceeds from the sale
of the Shares as described in the Prospectus under the heading "Use of
proceeds".
14
(j) NO STABILIZATION. The Company will not take, directly or indirectly,
any action designed to or that could reasonably be expected to cause or result
in any stabilization or manipulation of the price of the Shares.
(k) REPORTS. For a period of five years from the date hereof, the Company
will furnish to the Representatives, as soon as they are available, 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 or automatic
quotation system, provided that such reports, communications or financial
statements are not available to the Representatives on the website of the
Commission.
(l) FILINGS. The Company will file with the Commission such reports as may
be required by Rule 463 under the Securities Act.
(m) SARBANES-OXLEY CONTROLS AND PROCEDURES. For a period of 180 days after
the Closing Date, the Company and its subsidiaries will maintain such controls
and other procedures, including, without limitation, those required by Sections
302 and 906 of the Sarbanes-Oxley Act and the applicable regulations thereunder,
that are reasonably designed to ensure that material information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified and required in the Commission's rules and forms, including,
without limitation, controls and procedures reasonably designed to ensure that
material information required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is accumulated and communicated to
the Company's management, including its Chief Executive Officer and its
Principal Financial Officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure to ensure
that material information relating to Company, including its subsidiaries, is
made known to them by others within those entities.
(n) SARBANES-OXLEY COMPLIANCE. For a period of 180 days after the Closing
Date, the Company and its subsidiaries will comply and will use its best efforts
to cause the Company's directors and officers in their capacities as such to
comply, in all material respects, with all applicable provisions of the
Sarbanes-Oxley Act.
(o) In connection with the Directed Share Program, the Company will use
reasonable efforts 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 (3) months following the date of the
effectiveness of the Registration Statement to the extent such Directed Shares
are not already under restrictions that comply with such NASD requirements or
such NASD rules. The Designated Underwriter 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.
(p) The Company will comply with all applicable securities and other laws,
rules and regulations in each foreign jurisdiction in which the Directed Shares
are offered in connection with the Directed Share Program.
15
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligation of each Underwriter
to purchase the Underwritten Shares on the Closing Date or the Option Shares on
the Additional Closing Date, as the case may be, as provided herein is subject
to the performance by the Company of its covenants and other obligations
hereunder and to the following additional conditions:
(a) REGISTRATION COMPLIANCE; NO STOP ORDER. The Registration Statement (or
if a post-effective amendment thereto is required to be filed under the
Securities Act, such post-effective amendment) shall have become effective, and
the Representatives shall have received notice thereof, not later than 5:00
P.M., New York City time, on the date hereof; no order suspending the
effectiveness of the Registration Statement shall be in effect, and no
proceeding for such purpose shall be pending before or threatened by the
Commission; the Prospectus shall have been timely filed with the Commission
under the Securities Act and in accordance with Section 4(a) hereof; and all
requests by the Commission for additional information shall have been complied
with to the reasonable satisfaction of the Representatives.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained herein shall be true and correct on the date hereof and on
and as of the Closing Date or the Additional Closing Date, as the case may be;
and the statements of the Company and its officers made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date or the Additional Closing Date, as the case may be.
(c) NO NASD OBJECTION. The NASD shall have raised no unresolved objection
to the fairness and reasonableness of the underwriting terms and arrangements.
(d) NO MATERIAL ADVERSE CHANGE. Subsequent to the execution and delivery of
this Agreement, no event or condition of a type described in Section 3(d) hereof
shall have occurred or shall exist, which event or condition is not described in
the Prospectus (as amended prior to the date of this Agreement) and the effect
of which in the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the offering, sale or 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 by this Agreement and the Prospectus.
(e) OFFICER'S CERTIFICATE. The Representatives shall have received on and
as of the Closing Date or the Additional Closing Date, as the case may be, a
certificate of the chief financial officer or chief accounting officer of the
Company and one additional senior executive officer of the Company who is
reasonably satisfactory to the Representatives (i) confirming that such officers
have carefully reviewed the Registration Statement and the Prospectus and, to
the best knowledge of such officers, the representation set forth in Section
3(b) hereof is true and correct, (ii) confirming that the other representations
and warranties of the Company in this Agreement are true and correct and that
the Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to such Closing Date and
(iii) to the effect set forth in paragraphs (a) and (d) above.
(f) COMFORT LETTERS. On the date of this Agreement and on the Closing Date
or the Additional Closing Date, as the case may be, PricewaterhouseCoopers LLP
shall have furnished
16
to the Representatives, at the request of the Company, letters, dated the
respective dates of delivery thereof and addressed to the Underwriters, in form
and substance reasonably satisfactory to the Representatives, 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; PROVIDED, that the letter delivered on the Closing Date or the
Additional Closing Date, as the case may be, shall use a "cut-off" date no more
than three business days prior to such Closing Date or such Additional Closing
Date, as the case may be.
(g) OPINION OF COUNSEL FOR THE COMPANY. Bingham McCutchen LLP, counsel for
the Company, shall have furnished to the Representatives, at the request of the
Company, their written opinion, dated the Closing Date or the Additional Closing
Date, as the case may be, and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representatives, in the form attached
as ANNEX A hereto.
(h) OPINION OF PATENT COUNSEL FOR THE COMPANY. Carella, Byrne, Bain,
Gilfillian, Cecchi, Stewart & Olstein, patent counsel for the Company, shall
have furnished to the Representatives, at the request of the Company, their
written opinion, dated the Closing Date or the Additional Closing Date, as the
case may be, and addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representatives, in the form attached as ANNEX B hereto.
(i) OPINION OF COUNSEL FOR THE UNDERWRITERS. The Representatives shall have
received on and as of the Closing Date or the Additional Closing Date, as the
case may be, an opinion of Morgan, Lewis & Bockius LLP, counsel for the
Underwriters, with respect to such matters as the Representatives may reasonably
request.
(j) NO LEGAL IMPEDIMENT TO ISSUANCE. No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued by
any federal, state or foreign governmental or regulatory authority that would,
as of the Closing Date or the Additional Closing Date, as the case may be,
prevent the issuance or sale of the Shares; and no injunction or order of any
federal, state or foreign court shall have been issued that would, as of the
Closing Date or the Additional Closing Date, as the case may be, prevent the
issuance or sale of the Shares.
(k) GOOD STANDING. The Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, satisfactory
evidence of the good standing of the Company and its subsidiaries in their
respective jurisdictions of organization and their good standing as foreign
entities in such other jurisdictions as the Company is required to be registered
and the Representatives may reasonably request, in each case in writing or any
standard form of telecommunication from the appropriate governmental authorities
of such jurisdictions.
(l) EXCHANGE LISTING. The Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved for
listing on the Nasdaq National Market, subject to official notice of issuance.
17
(m) LOCK-UP AGREEMENTS. The "lock-up" agreements, each substantially in the
form of EXHIBIT A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions of
shares of Stock or certain other securities, delivered to you on or before the
date hereof, shall be full force and effect on the Closing Date or Additional
Closing Date, as the case may be.
(n) ADDITIONAL DOCUMENTS. On or prior to the Closing Date or the Additional
Closing Date, as the case may be, the Company shall have furnished to the
Representatives such further certificates and documents as the Representatives
may reasonably request.
All opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION OF THE UNDERWRITERS. The Company and each of its
subsidiaries, jointly and severally, agree to indemnify and hold harmless each
Underwriter, its affiliates, directors, officers, employees, representatives,
agents and each person, if any, who controls such 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, reasonable legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, that arise out of, or are
based upon, or are caused by, any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the Prospectus (or
any amendment or supplement 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 in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
insofar as such losses, claims, damages or liabilities arise out of, or are
based upon, or are caused by, any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with any
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representatives expressly for use therein, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in Section 6(c) below;
provided, that with respect to any such untrue statement in or omission from any
preliminary prospectus, the indemnity agreement contained in this paragraph (a)
shall not insure to the benefit of any Underwriter, its affiliates, directors,
officers, employees, representatives, agents or any person, if any, who controls
such Underwriter within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act to the extent that the sale to the person
asserting any such loss, claim, damage or liability was an initial resale by
such Underwriter and any such loss, claim, damage or liability of or with
respect to such Underwriter results from the fact that both (i) to the extent
required by applicable law, a copy of the Prospectus was not sent or given to
such person at or prior to the written confirmation of the sale of such Shares
to such person and (ii) the untrue statement in or omission from such
preliminary prospectus was corrected in the Prospectus unless, in either case,
such failure to deliver the Prospectus was a result of non-compliance by the
Company with the provisions of Section 4 hereof.
18
(b) Indemnification of the Designated Underwriter. The Company and each of
its subsidiaries, jointly and severally, agree to indemnify and hold harmless
the Designated Underwriter, its affiliates, directors, officers, employees,
representatives, agents and each person, if any, who controls such Designated
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, reasonable legal fees
and other expenses incurred in connection with any suit, action or proceeding or
any claim asserted, as such fees and expenses are incurred), joint or several,
that arise out of, or are based upon, or are caused by, (i) 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; (ii) the omission or alleged
omission to state in any material prepared by or with the consent of the Company
for distribution to Participants in connection with the Directed Share Program
of 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; (iii) the failure of any Participant to pay for and accept
delivery of Directed Shares for which the Participant made a binding agreement
to purchase; or (iv) any other loss, claim, damage or liability, or any action
in respect of, related to, arising out of, or in connection with the Directed
Share Program, other than such losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the willful misconduct or gross negligence of the Designated
Underwriter.
(c) INDEMNIFICATION OF THE COMPANY. Each Underwriter agrees, severally and
not jointly, to indemnify and hold harmless the Company, its directors, its
officers who signed 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 indemnity set
forth in paragraph (a) above, but only with respect to any losses, claims,
damages or liabilities (including without limitation, reasonable legal fees and
other expenses incurred in connection with any suit, action or proceeding or any
claim asserted, as such fees and expenses are incurred) that arise out of, or
are based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating
to such Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use in the Registration Statement and
the Prospectus (or any amendment or supplement thereto) or any Preliminary
Prospectus, it being understood and agreed upon that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the selling concession and
discount figures appearing in the sixth paragraph under the caption
"Underwriting", the information contained in the seventh paragraph under the
section "Underwriting" and the information contained in the eighth paragraph
under the section "Underwriting".
(d) NOTICE AND PROCEDURES. 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 indemnification may be sought
pursuant to either paragraph (a) or (b) above, such person (the "INDEMNIFIED
Person") shall promptly notify the person against whom such indemnification may
be sought (the "INDEMNIFYING PERSON") in writing; PROVIDED that the failure to
notify the Indemnifying Person shall not relieve it from any liability that it
may have under this Section 6 except to the extent that it has been materially
prejudiced (through the forfeiture
19
of substantive rights or defenses) by such failure; and PROVIDED, FURTHER, that
the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under this
Section 6. If any such proceeding shall be brought or asserted against an
Indemnified Person and it shall have notified the Indemnifying Person thereof,
the Indemnifying Person shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person, any others entitled to
indemnification pursuant to this Section 6 that the Indemnifying Person may
designate in such proceeding and the Indemnifying Person, to the extent
relevant, and shall pay the fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person 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 unless (i) the
Indemnifying Person 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; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Person and counsel then representing the
Indemnifying Person refuses or chooses not to assert such defenses; or (iv) the
named parties in any such proceeding (including any impleaded parties) include
both the 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 and agreed that (A)
the Indemnifying Person shall not, 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 paid or reimbursed as they
are incurred and (B) to the extent that any Indemnified Person retains separate
counsel for reasons set forth in clause (iii) in the prior sentence, the
Indemnifying Person shall be responsible only for the reasonable fees and
expenses of separate counsel relating to pursuing the defenses that were not
asserted. Any such separate firm for any Underwriter, its affiliates, directors
and officers and any control persons of such Underwriter shall be designated in
writing by J.P. Morgan Securities Inc. and any such separate firm for the
Company, its directors, its officers who signed the Registration Statement and
any control persons of the Company shall be designated in writing by the
Company. The Indemnifying Person 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
Person agrees to indemnify each 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
that an Indemnifying Person reimburse the Indemnified Person for fees and
expenses of counsel as contemplated by this paragraph, the Indemnifying Person
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by the Indemnifying Person of such request and (ii) the 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 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 indemnification could have been sought
hereunder by such Indemnified Person, unless such settlement (x) includes an
unconditional release of such Indemnified Person, in form and substance
reasonably satisfactory to such Indemnified Person, from all liability on claims
that are the subject matter of such proceeding and (y) does not
20
include any statement as to or any admission of fault, culpability or a failure
to act by or on behalf of any Indemnified Person.
Notwithstanding anything contained herein to the contrary, if indemnity may
be sought pursuant to Section 6(b) hereof in respect of such action or
proceeding, then in addition to such separate firm for the Indemnified Person,
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 Underwriter for the defense of any losses, claims, damages and
liabilities arising out of the Directed Share Program, and all persons, if any,
who control the Designated Underwriter within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act.
(e) CONTRIBUTION. If the indemnification provided for in paragraphs (a) and
(b) above 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) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
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 (before
deducting expenses) received by the Company from the sale of the Shares and the
total underwriting discounts and commissions received by the Underwriters in
connection therewith, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate 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.
(f) LIMITATION ON LIABILITY. The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 6 were
determined by PRO RATA allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above 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 any such
action or claim. Notwithstanding the provisions of this Section 6, 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
21
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 6 are several in proportion to their respective purchase obligations
hereunder and not joint.
(g) NON-EXCLUSIVE REMEDIES. The remedies provided for in this Section 6 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Person at law or in equity.
7. EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
8. TERMINATION. This Agreement may be terminated in the absolute discretion of
the Representatives, by notice 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 any of the New York Stock
Exchange, the American Stock Exchange, the NASD, the Chicago Board Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade; (ii)
trading of any securities issued or guaranteed by the Company shall have been
suspended on any exchange or in any over-the-counter market; (iii) a general
moratorium on commercial banking activities shall have been declared by federal
or New York State authorities; (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis, either within or outside the United States, that, in the judgment of the
Representatives, which in each case is material and adverse and makes it
impracticable or inadvisable to proceed with the offering, sale or 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 by this Agreement and the
Prospectus; or (v) there shall be 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 the Company shall for any reason be unable to perform its
obligations under this Agreement, in each case which the Underwriters have not
waived.
9. DEFAULTING UNDERWRITER. (a) If, on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter defaults on its obligation to purchase
the Shares that it has agreed to purchase hereunder on such date, the
non-defaulting Underwriters may in their discretion arrange for the purchase of
such Shares by other persons satisfactory to the Company on the terms contained
in this Agreement. If, within 36 hours after any such default by any
Underwriter, the non-defaulting Underwriters do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of 36 hours
within which to procure other persons satisfactory to the non-defaulting
Underwriters to purchase such Shares on such terms. If other persons become
obligated or agree to purchase the Shares of a defaulting Underwriter, either
the non-defaulting Underwriters or the Company may postpone the Closing Date or
the Additional Closing Date, as the case may be, for up to five full business
days in order to effect any changes that in the reasonable opinion of counsel
for the Company or counsel for the Underwriters may be necessary in the
Registration Statement and the Prospectus or in any other document or
arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Registration Statement and the Prospectus that effects any
such changes. As
22
used in this Agreement, the term "Underwriter" includes, for all purposes of
this Agreement unless the context otherwise requires, any person not listed in
Schedule 1 hereto that, pursuant to this Section 9, purchases Shares that a
defaulting Underwriter agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the aggregate
number of Shares that remain unpurchased on the Closing Date or the Additional
Closing Date, as the case may be, does not exceed one-tenth of the aggregate
number of Shares to be purchased on such date, then the Company shall have the
right to require each non-defaulting Underwriter to purchase the number of
Shares that such Underwriter agreed to purchase hereunder on such date plus such
Underwriter's pro rata share (based on the number of Shares that such
Underwriter agreed to purchase on such date) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the aggregate
number of Shares that remain unpurchased on the Closing Date or the Additional
Closing Date, as the case may be, exceeds one-tenth of the aggregate amount of
Shares to be purchased on such date, or if the Company shall not exercise the
right described in paragraph (b) above, then this Agreement or, with respect to
any Additional Closing Date, the obligation of the Underwriters to purchase
Shares on the Additional Closing Date, as the case may be, shall terminate
without liability on the part of the non-defaulting Underwriters. Any
termination of this Agreement pursuant to this Section 9 shall be without
liability on the part of the Company, except that the Company will continue to
be liable for the payment of expenses as set forth in Section 10 hereof and
except that the provisions of Section 6 hereof shall not terminate and shall
remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company or any non-defaulting Underwriter for
damages caused by its default.
10. PAYMENT OF EXPENSES. (a) Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, the Company will
pay or cause to be paid all reasonable costs and expenses incident to the
performance of its obligations hereunder, including without limitation, (i) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Shares; (ii) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement, the Preliminary
Prospectus and the Prospectus (including all exhibits, amendments and
supplements thereto) and the distribution thereof; (iii) the fees and expenses
of the Company's counsel and independent accountants; (iv) the fees and expenses
incurred in connection with the registration or qualification and determination
of eligibility for investment of the Shares under the laws of such jurisdictions
as the Representatives may reasonably designate and the preparation, printing
and distribution of a Blue Sky Memorandum (including the related reasonable fees
and expenses of counsel for the Underwriters not to exceed $10,000, subject
however, to the limitations set forth in this Section 10); (v) the cost of
preparing stock certificates; (vi) the costs and charges of any transfer agent
and any registrar; (vii) all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters, including any transfer or other
taxes payable thereon; (viii) all expenses and
23
application fees incurred in connection with any filing with, and clearance of
the offering by, the NASD (whether incurred by the Underwriters or not); (ix)
the costs and expenses incurred by 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, 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, with the prior approval of the Company; and (x) all expenses and
application fees related to the listing of the Shares on the Nasdaq National
Market. Notwithstanding the foregoing provisions of this Section 10(a), the
Company shall not be responsible for the payment of any fees and expenses of
counsel for the Underwriters in the event that (i) the transactions contemplated
by this Agreement were not consummated because the condition in Section 5(c) was
not satisfied or (ii) this Agreement is terminated pursuant to Section 9(c) of
this Agreement.
(b) If (i) this Agreement is terminated pursuant to Section 8, (ii) the
Company for any reason fails to tender the Shares for delivery to the
Underwriters or (iii) the Underwriters decline to purchase the Shares for any
reason permitted under this Agreement, the Company agrees to reimburse the
Underwriters for all out-of-pocket costs and expenses (including the fees and
expenses of their counsel) reasonably incurred by the Underwriters in connection
with this Agreement and the offering contemplated hereby. Notwithstanding
anything expressed or implied in the foregoing provisions of this Section 10(b),
this Section 10(b) shall not apply in the event that this Agreement is
terminated pursuant to Section 9(c) or in the event that the Underwriters are in
material breach of their obligations under this Agreement.
11. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and any controlling persons referred
to in Section 6 hereof. Nothing in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein. No
purchaser of Shares from any Underwriter shall be deemed to be a successor
merely by reason of such purchase.
12. SURVIVAL. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and its subsidiaries
and the Underwriters contained in this Agreement or made by or on behalf of the
Company or the Underwriters pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the
Shares and shall remain in full force and effect, regardless of any termination
of this Agreement or any investigation made by or on behalf of the Company or
the Underwriters.
13. CERTAIN DEFINED TERMS. For purposes of this Agreement, (a) except where
otherwise expressly provided, the term "affiliate" has the meaning set forth in
Rule 405 under the Securities Act; (b) 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; and (c) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act.
24
14. MISCELLANEOUS. (a) AUTHORITY OF THE REPRESENTATIVES. Any action by the
Underwriters hereunder may be taken by the Representatives on behalf of the
Underwriters, and any such action taken by the Representatives shall be binding
upon the Underwriters.
(b) NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted and
confirmed by any standard form of telecommunication. Notices to the Underwriters
shall be given to the Representatives c/o [J.P. Morgan Securities Inc., 277 Park
Avenue, New York, New York 10172 (fax: (212) 622-8358)]; Attention: Henry K.
Wilson. Notices to the Company shall be given to it at TolerRx, Inc., 300
Technology Square, Cambridge, Massachusetts 02139 (fax: ______); Attention:
__________.
(c) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) COUNTERPARTS. This Agreement may be signed in counterparts (which may
include counterparts delivered by any standard form of telecommunication), each
of which shall be an original and all of which together shall constitute one and
the same instrument.
(e) AMENDMENTS OR WAIVERS. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
(f) HEADINGS. The headings herein are included for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
(g) PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
(h) CONSENT TO JURISDICTION. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("RELATED PROCEEDINGS") may be instituted in the federal courts of the United
States of America located in the City and County of New York or the courts of
the State of New York, in each case located in the City and County of New York
(collectively, the "SPECIFIED COURTS"), and each party irrevocably submits to
the exclusive jurisdiction (except for proceedings instituted in regard to the
enforcement of a judgment of any such court (a "RELATED JUDGMENT"), as to which
such jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
25
If the foregoing is in accordance with your understanding, please
indicate your acceptance of this Agreement by signing in the space provided
below.
Very truly yours,
TOLERRX, INC.
By
-----------------------------
Name:
Title:
Accepted: __________, 2003
J.P. MORGAN SECURITIES INC.
For itself and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
By
------------------------------------------
Authorized Signatory
SG COWEN SECURITIES CORPORATION
For itself and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
By
------------------------------------------
Authorized Signatory
LEERINK, SWANN & COMPANY, INC.
For itself and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
By
------------------------------------------
Authorized Signatory
26
Schedule 1
UNDERWRITER NUMBER OF SHARES
- ----------- ----------------
J.P. Morgan Securities Inc....................................
SG Cowen Securities Corporation...............................
Leerink Swann & Company, Inc..................................
[Other underwriters]
----------------
Total
Exhibit A
FORM OF LOCK-UP AGREEMENT
__________, 2003
J.P. MORGAN SECURITIES INC.
As Representative of the several
Underwriters listed in Schedule I
to the Underwriting Agreement
referred to below
c/o J.P. Morgan Securities Inc.
277 Park Avenue
New York, NY 10172
Re: TolerRx, Inc.---Public Offering
Ladies and Gentlemen:
The undersigned understands that you, as Representative of the several
Underwriters, propose to enter into an Underwriting Agreement (the "UNDERWRITING
AGREEMENT") with TolerRx, Inc., a Delaware corporation (the "COMPANY"),
providing for the public offering (the "PUBLIC OFFERING") by the several
Underwriters named in Schedule I to the Underwriting Agreement (the
"UNDERWRITERS"), of shares (the "SECURITIES") of common stock, par value $0.001
per share (the "COMMON STOCK"), of the Company. Capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the Underwriting
Agreement.
In consideration of the Underwriters' agreement to purchase and make the
Public Offering of the Securities, and for other good and valuable consideration
receipt of which is hereby acknowledged, the undersigned hereby agrees that,
without the prior written consent of J.P. Morgan Securities Inc. on behalf of
the Underwriters, the undersigned will not, during the period ending 180 days
after the date of the prospectus relating to the Public Offering (the
"PROSPECTUS"), (1) 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, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
(including, without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission) EXCEPT, for securities
which may be issued upon exercise of a stock option or warrant, and EXCEPT for
the participation by employees of the Company in the Company's 2003 Employee
Stock Purchase Plan (provided in each case that the holder of such equity of the
Company has entered into an agreement on substantially the terms set forth
herein), or (2) enter into any swap or other agreement that transfers, in whole
or in part, any of the
A-1
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. In addition, the
undersigned agrees that, without the prior written consent of J.P. Morgan
Securities Inc. on behalf of the Underwriters, it will not, during the period
ending 180 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock. The foregoing paragraph shall not apply to transactions relating to
shares of Common Stock or other securities acquired in open market transactions
after completion of the Public Offering.
Notwithstanding the foregoing, if the undersigned is an individual, he or
she may transfer any shares of Common Stock or securities convertible into or
exchangeable or exercisable for the Company's Common Stock either during his or
her lifetime or on death by will or intestacy to his or her family member, to a
trust the beneficiaries of which are exclusively the undersigned and/or his or
her family members, to any partnership substantially all of the partners of
which are the undersigned and/or his or her family members, or for other estate
planning purposes; provided, however, that prior to any such transfer each
transferee shall execute an agreement, satisfactory to J.P. Morgan Securities
Inc. on behalf of the Underwriters, pursuant to which each transferee shall
agree to receive and hold such shares of Common Stock, or securities convertible
into or exchangeable or exercisable for the Common Stock, subject to the
provisions hereof, and there shall be no further transfer except in accordance
with the provisions hereof. For the purposes of this paragraph, "family member"
shall mean spouse or equivalent domestic partner, lineal descendant, spouses of
such descendants, father, mother, brother or sister of the transferor.
The undersigned hereby waives any rights of the undersigned to sell shares
of Common Stock or any other security issued by the Company pursuant to the
Prospectus, and acknowledges and agrees that during the period ending 180 days
after the date of the Prospectus the undersigned has no right to require the
Company to register under the Securities Act of 1933, as amended, such Common
Stock or other securities issued by the Company and beneficially owned by the
undersigned.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released from all obligations under this Letter Agreement.
The undersigned understands that the Underwriters are entering into the
Underwriting Agreement and proceeding with the Public Offering in reliance upon
this Letter Agreement.
A-2
This lock-up agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of laws
principles thereof.
Very truly yours,
Name of Stockholder:
--------------------------------
Signature of Stockholder:
--------------------------------
A-3