EXHIBIT 1.1
_______________ Shares
NitroMed, Inc.
Common Stock
($ 0.01 Par Value)
EQUITY UNDERWRITING AGREEMENT
____________, 2003
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
Pacific Growth Equities, LLC
As Representatives of the
Several Underwriters
c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, New York 10005
Ladies and Gentlemen:
NitroMed, Inc., a Delaware corporation (the "Company"), proposes to sell to
the several underwriters (the "Underwriters") named in Schedule I hereto for
whom you are acting as representatives (the "Representatives") an aggregate of
__________ shares of the Company's Common Stock, $0.01 par value (the "Firm
Shares"). The respective amounts of the Firm Shares to be so purchased by the
several Underwriters are set forth opposite their names in Schedule I hereto.
The Company also proposes to sell at the Underwriters' option an aggregate of up
to __________ additional shares of the Company's Common Stock (the "Option
Shares") as set forth below.
As the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option Shares
if you elect to exercise the over-allotment option in whole or in part for the
accounts of the several Underwriters. The Firm Shares and the Option Shares (to
the extent the aforementioned option is exercised) are herein collectively
called the "Shares."
Deutsche Bank Securities Inc. ("DBSI") has agreed to reserve up to
___________ of the Firm Shares to be purchased by it under this Agreement for
sale to the Company's directors, officers, employees and business associates and
other parties related to the Company (collectively, "Participants"), as set
forth in the Prospectus (as defined below) under the heading "Underwriting" (the
"Directed Share Program"). The Shares to be sold by DBSI and its affiliates
pursuant to the Directed Share Program are referred to hereinafter as the
"Directed Shares." Any Directed Shares not orally confirmed for purchase by any
Participants 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.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Underwriters as
follows:
(a) A registration statement on Form S-1 (File No. 333-108104) with
respect to the Shares has been prepared by the Company in conformity in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission. Copies of such registration statement, including
any amendments thereto, the preliminary prospectuses (meeting the requirements
of the Rules and Regulations) contained therein and the exhibits and financial
statements, as finally amended and revised, have heretofore been delivered by
the Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462 (b) of the Act, is herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means the form of prospectus first filed
with the Commission pursuant to Rule 424(b). Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is
herein referred to as a "Preliminary Prospectus." Any reference to the
Registration Statement, any Preliminary Prospectus or to the Prospectus or any
amendment or supplement to any of the foregoing documents shall be deemed to
refer to and include any supplements or amendments thereto, filed with the
Commission after the date of filing of the Prospectus under Rules 424(b) or 430A
and prior to he termination of the offering of the Shares by the Underwriters.
(b) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. Each of the subsidiaries of
the Company as listed in Exhibit 21 to Item 16(a) of the Registration Statement
(collectively, the "Subsidiaries") has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation,
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with corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement. The Subsidiaries are
the only subsidiaries, direct or indirect, of the Company. The Company and each
of the Subsidiaries are duly qualified to transact business in all jurisdictions
in which the conduct of their business requires such qualification, except for
such jurisdictions where the failure to so qualify would not, individually or in
the aggregate, result in any material adverse change in the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company or its Subsidiaries, taken together as a
whole (a "Material Adverse Change"). The outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable and are owned by the Company or another Subsidiary free
and clear of all liens, encumbrances and equities and claims; and no options,
warrants or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into shares of capital stock or
ownership interests in the Subsidiaries are outstanding.
(c) The outstanding shares of Common Stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable; the Shares
to be issued and sold by the Company have been duly authorized and when issued
and paid for as contemplated herein will be validly issued, fully paid and
non-assessable; and no preemptive rights of stockholders exist with respect to
any of the Shares or the issue and sale thereof. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common Stock.
(d) The information set forth under the caption "Capitalization" in the
Prospectus is fairly presented on a basis consistent with the Company's
financial statements. All of the Shares conform to the description thereof
contained in the Registration Statement. The form of certificates for the Shares
conforms to the Delaware General Corporation Law.
(e) The Commission has not issued an order preventing or suspending the
use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose. The Registration Statement contains,
and the Prospectus and any amendments or supplements thereto will contain, all
statements which are required to be stated therein by, and will comply in all
material respects with, the requirements of the Act and the Rules and
Regulations. The Registration Statement and any amendment thereto do not
contain, and will not contain, any untrue statement of a material fact and do
not omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and any amendments and supplements thereto do not contain, and will
not contain, any untrue statement of material fact; and do not omit, and will
not omit, to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. Notwithstanding the foregoing, the Company makes
no representations or warranties as to information contained in or omitted from
the Registration Statement or the Prospectus, or any such amendment or
supplement, in reliance upon, and in conformity with, written information
furnished to the
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Company by or on behalf of any Underwriter through the Representatives,
specifically for use in the preparation thereof.
(f) Each material contract, agreement and license filed as an exhibit to
the Registration Statement to which the Company or any of its Subsidiaries is
bound is legal, valid, binding, enforceable and in full force and effect against
the Company or such Subsidiary, and to the knowledge of the Company, each other
party thereto, except to the extent such enforceability is subject to (i) laws
of general application relating to bankruptcy, insolvency, moratorium and the
relief of debtors and (ii) the availability of specific performance, injunctive
relief and other equitable remedies. Neither the Company nor any of its
Subsidiaries nor to the Company's knowledge any other party is in material
breach or default with respect to any such contract, agreement and license, and,
to the Company's knowledge, no event has occurred which with notice or lapse of
time would constitute a material breach or default, or permit termination,
modification, or acceleration, under any such contract, agreement or license. No
party has repudiated any material provision of any such contract, agreement or
license.
(g) The statistical and market-related data included in the Registration
Statement and the Prospectus are based on or derived from sources which the
Company reasonably and in good faith believes are reliable and accurate, and
such data agree, in all material respects, with the sources from which they are
derived.
(h) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes as set forth in the Registration
Statement, present fairly the financial position, results of operations and cash
flows of the Company and the consolidated Subsidiaries, at the indicated dates
and for the indicated periods. Such financial statements and related notes have
been prepared in accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, except as disclosed
therein, and all adjustments necessary for a fair presentation of results for
such periods have been made. The summary financial and statistical data included
in the Registration Statement present fairly, on the basis stated in the
Registration Statement, the information shown therein and such data have been
compiled on a basis consistent with the financial statements presented therein
and the books and records of the Company. The pro forma financial statements and
other pro forma financial information included in the Registration Statement and
the Prospectus present fairly the information shown therein, have been prepared
in accordance with the Commission's rules and guidelines with respect to pro
forma financial statements, have been properly compiled on the pro forma bases
described therein, and, in the opinion of the Company, the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(i) Ernst & Young LLP, who have certified certain of the financial
statements filed with the Commission as part of the Registration Statement, are
independent public accountants as required by the Act and the Rules and
Regulations.
(j) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or
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administrative agency or otherwise which if determined adversely to the Company
or any of its Subsidiaries might result in a Material Adverse Change or prevent
the consummation of the transactions contemplated hereby, except as set forth in
the Registration Statement.
(k) The Company and the Subsidiaries have good and marketable title in
fee simple to all real property and good title to all personal property
reflected in the consolidated financial statements hereinabove described or
described in the Registration Statement, subject to no lien, mortgage, pledge,
charge or encumbrance of any kind except (i) those reflected in such financial
statements or described in the Registration Statement and (ii) liens and
encumbrances for taxes not yet due and payable, and liens and encumbrances
arising in the ordinary course of business or which are not material in amount.
The Company and the Subsidiaries occupy their leased properties under valid and
binding leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such properties by the Company or
its Subsidiaries.
(l) The Company and the Subsidiaries have filed (or have duly requested
extension of) all Federal, State, local and foreign tax returns which have been
required to be filed and have paid all taxes indicated by such returns and all
assessments received by them or any of them to the extent that such taxes have
become due and payable, except for any such assessment that is currently being
contested in good faith and which, if resolved unfavorably to the Company would
not result in a Material Adverse Change. All tax liabilities have been
adequately provided for in the financial statements of the Company, and the
Company does not know of any actual or proposed additional material tax
assessments.
(m) Since the respective dates as of which information is given in the
Registration Statement, as it may be amended or supplemented, there has not been
any Material Adverse Change or any development that would be reasonably expected
to result in a Material Adverse Change, whether or not occurring in the ordinary
course of business, and there has not been any material transaction entered into
or any material transaction that is probable of being entered into by the
Company or the Subsidiaries, other than transactions in the ordinary course of
business and changes and transactions described in the Registration Statement,
as it may be amended or supplemented. The Company and the Subsidiaries have no
material contingent obligations which are not disclosed in the Company's
financial statements which are included in the Registration Statement.
(n) Neither the Company nor any of the Subsidiaries is or with the
giving of notice or lapse of time or both, will be, in violation of or in
default under (i) its Certificate of Incorporation or By-Laws or (ii) under any
agreement, lease, contract, indenture or other instrument or obligation to which
it is a party or by which it, or any of its properties, is bound and, solely
with respect to this clause (ii), which violation or default would result in a
Material Adverse Change. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated and the fulfillment of the
terms hereof will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any material indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of their
respective
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properties is bound, or of the Certificate of Incorporation or By-Laws of the
Company or any law, order, rule or regulation judgement, order, writ or decree
applicable to the Company or any Subsidiary of any court or of any government,
regulatory body or administrative agency or other governmental body having
jurisdiction.
(o) The execution and delivery of, and the performance by the Company of
its obligations under, this Agreement has been duly and validly authorized by
all necessary corporate action on the part of the Company, and this Agreement
has been duly executed and delivered by the Company.
(p) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission
or the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect.
(q) The Company and the Subsidiaries each own or possess the right to
use all patents, patent rights and patent applications (collectively, the
"Company Patents"), trademarks, trade names, service marks, service names,
copyrights, license rights, know-how (including trade secrets and other
unpatented and unpatentable proprietary or confidential information, systems or
procedures) and other intellectual property rights (collectively, the
"Intellectual Property") necessary to carry on their business in all material
respects as described in the Prospectus; neither the Company nor any of the
Subsidiaries has infringed any Intellectual Property of any other person or
entity. The Company has taken all reasonable steps necessary to secure interests
in such Intellectual Property from its contractors. There are no outstanding
options, licenses or agreements of any kind relating to the Intellectual
Property of the Company that are required to be described in the Prospectus and
are not described in all material respects. The Company is not a party to or
bound by any options, licenses or agreements with respect to the Intellectual
Property of any other person or entity that are required to be set forth in the
Prospectus and are not described in all material respects. None of the
technology employed by the Company has been obtained or is being used by the
Company in violation of any contractual obligation binding on the Company or, to
its knowledge, any of its officers, directors or employees or otherwise in
violation of the rights of any persons; the Company has not received any written
or oral communications alleging that the Company has violated, infringed or
conflicted with, or, by conducting its business as set forth in the Prospectus,
would violate, infringe or conflict with, any of the Intellectual Property of
any other person or entity. The Company knows of no infringement by others of
Intellectual Property owned by or licensed to the Company.
(r) All patent applications that resulted in Company Patents or pending
applications that describe inventions necessary to conduct the business of the
Company and its Subsidiaries in the manner described in the Prospectus (the
"Company Patent Applications") have been duly and properly filed (have been
accorded filing dates and serial numbers and
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assignments have been recorded for each listed inventory) or caused to be filed
with the United States Patent and Trademark Office (the "PTO") and applicable
foreign and international patent authorities. In connection with the filing of
the Company Patent Applications, to the best knowledge of the Company, all
printed publications and patent references relevant to the patentability of the
inventions claimed in such applications has been disclosed to those patent
offices so requiring. To the best knowledge of the Company, the Company has met
its duty of candor and good faith to the PTO or similar foreign authority for
the Company Patent Applications. No material misrepresentation have been made to
the PTO or similar foreign authority by or in connection with the Company Patent
Applications. The Company and its Subsidiaries are not aware or any facts
material to a determination of patentability regarding the Company Patent
Applications not called to the attention of the PTO or similar foreign
authority. The Company has no knowledge of any facts which would preclude the
Company from having clear title to the Company Patent Applications.
(s) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken or intends to take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Shares. The Company acknowledges that the Underwriters may engage in passive
market making transactions in the Shares on the Nasdaq National Market in
accordance with Regulation M under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(t) Neither the Company nor any Subsidiary is and, after giving effect
to the offering and sale of the Shares contemplated hereunder and the
application of the net proceeds from such sale as described in the Prospectus,
will be an "investment company" within the meaning of such term under the
Investment Company Act of 1940, (as amended, the "1940 Act") and the rules and
regulations of the Commission thereunder.
(u) The Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals.
(v) The Company maintains "disclosure controls and procedures" (as
defined in Rule 13a-14(i) under the Exchange Act) and the Company is otherwise
in compliance in all material respects with all applicable effective provisions
of the Sarbanes-Oxley Act of 2002 and the rules and regulations issued
thereunder by the Commission.
(w) The Company and each of its Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is customary for companies
engaged in similar businesses.
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(x) The Company and each Subsidiary is in compliance with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"), except where such non-compliance would not result in a Material
Adverse Change; no "reportable event" (as defined in ERISA) has occurred with
respect to any "pension plan" (as defined in ERISA) to which the Company or any
Subsidiary contributes or which the Company or any Subsidiary maintains; the
Company and each Subsidiary has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company or any Subsidiary would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(y) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or securityholders, except as set forth under the caption
"Underwriting" in the Registration Statement.
(z) Except as described in the Prospectus, the Company and its
Subsidiaries possess all certificates, authorizations, licenses and permits
issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, including without limitation
all such certificates, authorizations and permits required by the United States
Food and Drug Administration (the "FDA") or any other federal, state or foreign
agencies or bodies engaged in the regulation of pharmaceuticals or biohazardous
materials, except where the failure to so possess such certificates,
authorizations and permits, singly or in the aggregate, would not result in a
Material Adverse Change; and, except as described in the Prospectus, neither the
Company nor any of its Subsidiaries have received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Change.
(aa) The studies, tests and preclinical and clinical trials conducted by
or on behalf of the Company or any prior owner of the Company's Intellectual
Property that are described in the Registration Statement and the Prospectus
were and, if still pending, are being, conducted in all material respects in
accordance with experimental protocols, procedures and controls pursuant to,
where applicable, accepted professional scientific standards; the descriptions
of the results of such studies, tests and trials contained in the Registration
Statement and the Prospectus are accurate in all material respects; and the
Company has not received any notices or correspondence from the FDA or any
foreign, state or local governmental body exercising comparable authority
requiring the termination, suspension or material modification of any studies,
tests or preclinical or clinical trials conducted by or on behalf of the Company
which termination, suspension or material modification would reasonably be
expected to result in a Material Adverse Change.
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(bb) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained, is required in
connection with the offering of the Directed Shares in any jurisdiction where
the Directed Shares are being offered.
(cc) The Company has not offered, or caused DBSI or its affiliates to
offer, Firm Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company, or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Company agrees to
sell to the Underwriters and each Underwriter agrees, severally and not jointly,
to purchase, at a price of $_____ per share, the number of Firm Shares set forth
opposite the name of each Underwriter in Schedule I hereof, subject to
adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made in
Federal (same day) funds against delivery of certificates therefor to the
Representatives for the several accounts of the Underwriters. Such payment and
delivery are to be made through the facilities of The Depository Trust Company,
New York, New York at 10:00 a.m., New York time, on the third business day after
the date of this Agreement or at such other time and date not later than five
business days thereafter as you and the Company shall agree upon, such time and
date being herein referred to as the "Closing Date." (As used herein, "business
day" means a day on which the New York Stock Exchange is open for trading and on
which banks in New York are open for business and are not permitted by law or
executive order to be closed.)
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase the
Option Shares at the price per share as set forth in the first paragraph of this
Section 2. The option granted hereby may be exercised in whole or in part by
giving written notice (i) at any time before the Closing Date and (ii) only once
thereafter within 30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company setting forth the
number of Option Shares as to which the several Underwriters are exercising the
option and the time and date at which such certificates are to be delivered. The
time and date at which certificates for Option Shares are to be delivered shall
be determined by the Representatives but shall not be earlier than three nor
later than 10 full business days after the exercise of such option, nor in any
event prior to the Closing Date (such time and date being herein referred to as
the "Option Closing Date"). If the date of exercise of the option is three or
more days before the Closing Date, the notice of exercise shall set the Closing
Date as the Option Closing Date. The number of Option Shares to be purchased by
each Underwriter shall be in the same proportion to the total number of Option
Shares being purchased as the number of Firm Shares being purchased by such
Underwriter bears to the total number of Firm Shares, adjusted by you in such
manner as to avoid fractional shares. The option
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with respect to the Option Shares granted hereunder may be exercised only to
cover over-allotments in the sale of the Firm Shares by the Underwriters. You,
as Representatives of the several Underwriters, may cancel such option at any
time prior to its expiration by giving written notice of such cancellation to
the Company. To the extent, if any, that the option is exercised, payment for
the Option Shares shall be made on the Option Closing Date in Federal (same day
funds) through the facilities of The Depository Trust Company in New York, New
York drawn to the order of the Company.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY
The Company covenants and agrees with the several Underwriters that:
(a) The Company will (A) use its best efforts to cause the Registration
Statement to become effective or, if the procedure in Rule 430A of the Rules and
Regulations is followed, to prepare and timely file with the Commission under
Rule 424(b) of the Rules and Regulations a Prospectus in a form approved by the
Representatives containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations and (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations.
(b) The Company will advise the Representatives promptly (A) when the
Registration Statement or any post-effective amendment thereto shall have become
effective, (B) of receipt of any comments from the Commission, (C) of any
request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, and (D) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose. The Company will use its best efforts to prevent
the issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
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(c) The Company will cooperate with the Representatives in endeavoring
to qualify the Shares for sale under the securities laws of such jurisdictions
as the Representatives may reasonably have designated in writing and will make
such applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent. The Company will, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to continue
such qualifications in effect for so long a period as the Representatives may
reasonably request for distribution of the Shares.
(d) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the Representatives
may reasonably request.
(e) The Company will comply with the Act and the Rules and Regulations,
and the Exchange Act, and the rules and regulations of the Commission
thereunder, so as to permit the completion of the distribution of the Shares as
contemplated in this Agreement and the Prospectus. If during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, any
event shall occur as a result of which, in the judgment of the Company or in the
reasonable opinion of the Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light
of the circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company promptly will
prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus as
so amended or supplemented will not, in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will comply with the
law.
(f) The Company will make generally available to its security holders,
as soon as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earning statement
(which need not be audited) in reasonable detail, covering a period of at least
12 consecutive months beginning after the effective date of the Registration
Statement, which earnings statement shall satisfy the requirements of Section
11(a) of the Act and Rule 158 of the Rules and Regulations and will advise you
in writing when such statement has been so made available.
-11-
(g) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
(h) No offering, sale, short sale or other disposition of any shares of
Common Stock of the Company or other securities convertible into or exchangeable
or exercisable for shares of Common Stock or derivative of Common Stock (or
agreement for such) will be made for a period of 180 days after the date of this
Agreement, directly or indirectly, by the Company otherwise than (i) pursuant to
this Agreement, (ii) Common Stock issued by the Company either pursuant to the
employee stock purchase plan of the Company or upon the exercise of options
granted under existing stock option plans of the Company, provided the holders
of Common Stock issued in such manner shall have executed a Lockup Agreement,
(iii) options to purchase Common Stock granted under existing stock option plans
of the Company, or (iv) with the prior written consent of DBSI.
(i) The Company will use its best efforts to include the Shares on the
Nasdaq National Market.
(j) The Company has caused the officers, directors and shareholders of
the Company (except as listed in Schedule II hereto) to furnish to you, on or
prior to the date of this agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such person shall agree
not to offer, sell, sell short or otherwise dispose of any shares of Common
Stock of the Company or other capital stock of the Company, or any other
securities convertible, exchangeable or exercisable for Common Stock or
derivative of shares of Common Stock owned by such person or request the
registration for the offer or sale of any of the foregoing (or as to which such
person has the right to direct the disposition of) for a period of 180 days
after the date of this Agreement, directly or indirectly, except with the prior
written consent of DBSI ("Lockup Agreements").
(k) The Company shall apply the net proceeds of its sale of the Shares
as set forth in the Prospectus and shall file such reports with the Commission
with respect to the sale of the Shares and the application of the proceeds
therefrom as may be required in accordance with Rule 463 under the Act.
(l) The Company shall not invest, or otherwise use the proceeds received
by the Company from its sale of the Shares in such a manner as would require the
Company or any of the Subsidiaries to register as an investment company under
the 1940 Act.
(m) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar for the Common
Stock.
(n) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.
-12-
(o) The Company will comply with all applicable securities and other
applicable laws, rules and regulations in each jurisdiction in which the
Directed Shares are offered in connection with the Directed Share Program.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting fees
of the Company; the fees and disbursements of counsel for the Company; the cost
of printing and delivering to, or as requested by, the Underwriters copies of
the Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Underwriters' Selling Memorandum, the Underwriters' Invitation
Letter, the Listing Application, the Blue Sky Survey and any supplements or
amendments thereto; the filing fees of the Commission; the filing fees and
expenses (including legal fees and disbursements) incident to securing any
required review by the NASD of the terms of the sale of the Shares; the Listing
Fee of the Nasdaq National Market; and the expenses, including the fees and
disbursements of counsel for the Underwriters, incurred in connection with the
qualification of the Shares under State securities or Blue Sky laws. The Company
agrees to pay all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, incident to the offer and sale of
Directed Shares by the Underwriters to employees and persons having business
relationships with the Company and its Subsidiaries. The Company shall not,
however, be required to pay for any of the Underwriters expenses (other than
those related to qualification under NASD regulation and State securities or
Blue Sky laws) except that, if this Agreement shall not be consummated because
the conditions in Section 6 hereof are not satisfied, or because this Agreement
is terminated by the Representatives pursuant to Section 11 hereof, or by reason
of any failure, refusal or inability on the part of the Company to perform any
undertaking or satisfy any condition of this Agreement or to comply with any of
the terms hereof on its part to be performed, unless such failure, refusal or
inability is due primarily to the default or omission of any Underwriter, the
Company shall reimburse the several Underwriters for reasonable out-of-pocket
expenses, including fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares or
in contemplation of performing their obligations hereunder; but the Company
shall not in any event be liable to any of the several Underwriters for damages
on account of loss of anticipated profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm Shares
on the Closing Date and the Option Shares, if any, on the Option Closing Date
are subject to the accuracy, as of the Closing Date or the Option Closing Date,
as the case may be, of the representations and warranties of the Company
contained herein, and to the performance by the Company of its covenants and
obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments thereto
shall have become effective and any and all filings required by Rule 424 and
Rule 430A of the
-13-
Act shall have been made within the applicable time period prescribed by, and in
compliance with, the Rules and Regulations, and any request of the Commission
for additional information (to be included in the Registration Statement or
otherwise) shall have been disclosed to the Representatives and complied with to
their reasonable satisfaction. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been issued and
no proceedings for that purpose shall have been taken or, to the knowledge of
the Company, shall be contemplated or threatened by the Commission and no
injunction, restraining order or order of any nature by a Federal or state court
of competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the corporate opinion of Hale and Dorr
LLP, counsel for the Company, dated the Closing Date or the Option Closing Date,
as the case may be, addressed to the Underwriters (and stating that it may be
relied upon by counsel to the Underwriters) to the effect that:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to carry on its business and to own and
lease its properties as such business and properties are described in the
Prospectus. Each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of its incorporation.
The Company and the Subsidiary are duly qualified to do business and are in good
standing in the Commonwealth of Massachusetts.
(ii) The authorized capital stock of the Company on the date hereof
consists of (A) 65,000,000 shares of Common Stock, $.01 par value per share, and
(B) 5,000,000 shares of Preferred Stock, $.01 par value per share. The currently
outstanding shares of Common Stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable.
(iii) The certificates evidencing the Shares delivered to the
Representatives for the several accounts for the Underwriters, assuming they are
in the form filed with the Commission, are in due and proper form under the
Delaware General Corporation Law statute, and when duly countersigned by the
Company's transfer agent and registrar and delivered to the Representatives or
upon their order against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement, the Shares to be sold pursuant
to this Agreement will be duly authorized and validly issued, fully paid and
non-assessable. The issuance of such Shares will not be subject to any
preemptive or similar statutory rights under the Delaware General Corporation
Law statute, the Company's Certificate of Incorporation or By-Laws, or, to the
knowledge of such counsel, similar contractual rights granted by the Company
(except for such contractual rights as have been waived). To the knowledge of
such counsel, except as described in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to permit them to
underwrite the sale of any of the Shares, to file a registration statement under
the Act with respect to any securities of the Company or to require the Company
-14-
to include such securities with the Shares registered pursuant to the
Registration Statement, except in each case for any such rights that have been
waived.
(iv) Except as described in or contemplated by the Prospectus, to
the knowledge of such counsel, there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock.
(v) The Registration Statement has been declared effective by the
Commission under the Act and, to the knowledge of such counsel (A) no stop order
suspending its effectiveness has been issued and (B) no proceedings for that
purpose are pending before or threatened by the Commission.
(vi) The statements under the captions "Risk Factors - We rely on
Merck and Boston Scientific for a significant portion of our revenues and if
either of these relationships is terminated or is otherwise unsuccessful our
business and results of operations would be harmed," "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Financial
Operations Overview - Merck Collaboration and Boston Scientific Collaboration,"
"Business - Corporate Collaborations," "Description of Capital Stock," "Shares
Eligible for Future Sale" and "Underwriting" (only with respect to the
description of this Agreement) in the Prospectus and Items 14 and 15 of Part II
of the Registration Statement, insofar as such statements constitute summaries
of matters of law or legal conclusions or summarize the terms of agreements or
documents, are correct in all material respects.
(vii) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement that are not so
filed.
(viii) Such counsel does not know any material legal or governmental
proceedings pending or threatened against the Company that are required by the
Act or the Rules and Regulations to be described in the Registration Statement
or in the Prospectus that are not so described.
(ix) The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions herein
contemplated do not and will not (A) conflict with or constitute a breach of any
of the terms or provisions of, or constitute a default under, the Certificate of
Incorporation or By-Laws of the Company, as amended, or any indenture, loan
agreement, mortgage, deed of trust 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 may be bound and (B) violate any applicable United States
federal or Massachusetts state statute, rule or regulation which in the
experience of such counsel is normally applicable in transactions of the type
contemplated by the Agreement or the Delaware General Corporation Law statute,
or contravene any judgment, order or decree specifically
-15-
naming the Company or its Subsidiary of any governmental body, agency or court
having jurisdiction over the Company or its Subsidiary of which such counsel is
aware.
(x) This Agreement has been duly authorized, executed and delivered
by the Company.
(xi) The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby will not require any consent, approval, authorization or other order of,
or qualification with, any court or governmental body or agency, except such as
have been obtained under the Act and the Exchange Act and except such as may be
required by the securities or Blue Sky laws of the various states or foreign
jurisdictions or by the NASD, as to which such counsel need express no opinion.
(xii) The Company is not and after giving effect to the offering and
sale of the Shares and the application of the proceeds therefrom as described in
the Prospectus, will not be an "investment company" as such term is defined in
the 1940 Act.
(c) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, an intellectual property opinion of
Hale and Dorr LLP, counsel for the Company, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters (and stating
that it may be relied upon by counsel to the Underwriters) to the effect that:
(i) To such counsel's knowledge, the Company and each of its
Subsidiaries owns, possesses or has adequate rights to use the Intellectual
Property reasonably necessary to carry on the business conducted by it as
described in the Prospectus, except to the extent that the failure to own,
possess or have adequate rights to use such Intellectual Property would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the Company or its Subsidiaries, taken together as a whole.
(ii) Other than as set forth or contemplated in the Registration
Statement and the Prospectus, to such counsel's knowledge, none of the Company
and its Subsidiaries have received any notice of infringement of or conflict
with, and such counsel has no knowledge of any infringement of or conflict with,
asserted rights of others with respect to the Company's Intellectual Property
which would reasonably be expected to have a material adverse effect on the
Company or its Subsidiaries, taken together as a whole.
(iii) Other than as set forth or contemplated in the Registration
Statement and the Prospectus, to such counsel's knowledge, the discoveries,
inventions, products or processes of the Company and its Subsidiaries referred
to in the Registration Statement and the Prospectus do not infringe interfere or
conflict with any rights of any third party, or with any earlier discovery,
invention, product or process that is the subject of a patent application filed
by any third party which patent application has been published in the PTO or the
World Intellectual Patent Office or is otherwise known to the Company except to
the extent that any such
-16-
infringement, individually or in the aggregate, would not reasonably be expected
to have a material adverse effect on the Company or its Subsidiaries, taken
together as a whole.
(iv) Other than as set forth or contemplated in the Registration
Statement and the Prospectus, to such counsel's knowledge, no third party,
including any academic or governmental organization, possesses or could obtain
rights to the patents, patent applications or patent rights of the Company or
any of its Subsidiaries which, if exercised, would allow such third party to
develop products competitive with those of the Company or could reasonably be
expected to have a material adverse effect on the Company or its Subsidiaries,
taken together as a whole.
(v) To the knowledge of such counsel, (A) the Company Patents are
valid and enforceable and are entitled to a statutory presumption of validity
and of ownership by the assignee, (B) there are no asserted or unasserted claims
of any persons relating to the scope or ownership of any of the Company Patents,
(C) there are no liens which have been filed against any of the Company Patents,
(D) there are no material defects of form in the preparation or filing of the
Company's patent applications, (E) the Company's patent applications are being
diligently prosecuted, and (F) the Company and its Subsidiaries are listed on
the records of the PTO or appropriate foreign patent offices as the sole
assignee of record thereof.
(vi) Such counsel has no reason to believe that any of the Company
Patent Applications will not eventuate in issued patents, or that any patents
issued in respect of any such Company Patent Applications will not be valid or
will not afford the Company or its subsidiaries the patent protection described
by the claims therein; to the knowledge of such counsel, all pertinent
references were disclosed to the PTO or similar foreign authority during the
prosecution of the Company Patents and the Company Patent Applications and no
misrepresentation was made to, or material fact withheld from, the PTO or
similar foreign authority during such prosecution.
(vii) Such counsel has no reason to believe that any of the
Company's trademark applications filed with the PTO or similar foreign authority
will not eventuate in registered trademarks, or that any trademark registrations
previously issued or issued in respect of any such applications will not be or
will not afford the Company or its subsidiaries reasonable trademark protection
relative to the subject matter thereof; and to the knowledge of such counsel,
the Company takes security measures adequate to assert trade secret protection
in its non-patented technology.
(viii) The trademark BiDil has been registered in the PTO.
(ix) The statements under the captions "Risk Factors - Our patent
protection for BiDil, which is a combination of two generic drugs, is limited
and we may be subject to generic substitution or competition and resulting
pricing pressure," "Risk Factors - If we are not able to obtain and enforce
patent protection for our discoveries, our ability to develop and commercialize
our product candidates will be harmed and we may not be able to operate our
business profitably," "Risk Factors - If we become involved in patent litigation
or other
-17-
proceedings to enforce our patent rights, we could incur substantial costs and
expenses, substantial liability for damages or be required to stop our product
development and commercialization efforts," "Risk Factors - We in-license a
significant portion of our principal proprietary technologies and if we fail to
comply with our obligations under any of the related agreements, we could lose
license rights that are necessary to developing BiDil and our other product
candidates," "Business - Nitric Oxide Enhancing NSAIDs for Inflammation and
Other Development Programs (only with respect to the last paragraph and table
thereof)," "Business - Proprietary Rights and Licensing," "Business - License
and Royalty Agreements," and "Business - Trademarks, Trade Secrets and Other
Proprietary Information" in the Prospectus, insofar as such statements
constitute summaries of matters of law or legal conclusions or summarize the
terms of agreements or documents, are correct in all material respects.
(d) In rendering such opinions Hale and Dorr LLP will rely only on the
laws of the Commonwealth of Massachusetts, the Delaware General Corporation Law
statute and Federal laws. In addition to the matters set forth above, such
counsel shall state that, in connection with the preparation of the Registration
Statement and the Prospectus, they have participated in conferences with
officers and representatives of the Company, representatives of the
Underwriters, counsel for the Underwriters and the independent accountants of
the Company, at which conferences such counsel made inquiries of such persons
and others and discussed the contents of the Registration Statement and the
Prospectus. Such counsel shall further state that, while the limitations
inherent in the independent verification of factual matters and the character of
determinations involved in the registration process are such that they are not
passing upon and do not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or the
Prospectus, subject to the foregoing and based on such participation, inquiries
and discussions:
(i) The Registration Statement (except for the financial statements,
including the notes thereto, and other financial or accounting data included
therein, as to which such counsel need not express any view), at the time it
became effective (but after giving effect to changes incorporated pursuant to
Rule 430A under the Act), and the Prospectus (except as aforesaid), as of the
date it was filed with the Commission pursuant to Rules 424 and 430A under the
Act, comply as to form in all material respects to the requirements of the Act
and the Rules and Regulations.
(ii) No facts have come to the attention of such counsel that cause
them to believe that the Registration Statement, at the time it became effective
(but after giving effect to changes incorporated pursuant to Rule 430A under the
Act), contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading (except that such counsel need not express any
view with respect to the financial statements, including the notes thereto, or
any other financial or accounting data included therein).
(iii) No facts have come to the attention of such counsel that cause
them to believe that the Prospectus, as of the date it was filed with the
Commission pursuant to Rules 424 and 430A under the Act or of the Closing Date
or the Option Closing Date, as the case
-18-
may be, contained or contains any untrue statement of a material fact or omitted
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except that such counsel need not express any view with respect to
the financial statements, including the notes thereto, or any other financial or
accounting data included therein).
(e) The Representatives shall have received from Kleinfeld, Kaplan &
Becker LLP, counsel to the Company, an opinion dated the Closing Date or the
Option Closing Date, as the case may be, in its capacity as special regulatory
counsel to the Company, dated such date, to the effect that:
(i) Such counsel is familiar with the United States Federal Food,
Drug, and Cosmetic Act (the "FFDC Act") and related government regulatory
matters as applied generally to drugs of the nature under development and
clinical testing by the Company and has reviewed the portions of the
Registration Statement and the Prospectus under the captions "Risk Factors - We
are heavily dependent on obtaining regulatory approval for and successfully
commercializing BiDil, our most advanced drug candidate," "Risk Factors - Our
ability to obtain FDA approval and to successfully market BiDil depends, in
part, on the FDA and the U.S. pharmaceutical marketplace accepting ethnicity as
a basis for therapeutic decisions, which is a novel issue that may attract
controversy," "Risk Factors - If our clinical trials for BiDil and any other
product candidates we advance into clinical testing are not successful, we may
not be able to successfully develop and commercialize our products," "Risk
Factors - If we and our partners do not obtain and maintain the regulatory
approvals required to market and sell BiDil and our other products under
development, then our business will be unsuccessful and the market price of our
stock will substantially decline," "Business - BiDil Clinical Trials," and
"Business - Regulatory Matters" (collectively, the "Regulatory Portion").
(ii) In such counsel's opinion, insofar as the statements in the
Regulatory Portion constitute a summary of matters of law or regulatory
requirements referred to therein, the Regulatory Portion fairly summarizes in
all material respects the information called for with respect to such matters.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that based on materials examined by such
counsel and their participation in the preparation of the Registration Statement
and the Prospectus, nothing has come to the attention of such counsel which
leads them to believe that (i) the Regulatory Portion of the Registration
Statement at the time the Registration Statement became effective under the Act
and as of the Closing Date or the Option Closing Date, as the case may be,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (ii) the Regulatory Portion of
the Prospectus, or any supplement thereto, on the date it was filed pursuant to
the Rules and Regulations and as of the Closing Date or the Option Closing Date,
as the case may be, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
-19-
(f) The Representatives shall have received from Ropes & Gray LLP,
counsel for the Underwriters, an opinion dated the Closing Date or the Option
Closing Date, as the case may be, substantially to the effect specified in
subparagraphs (v) and (x) of Paragraph (b) of this Section 6, that the shares of
Common Stock, including the Option Shares, if any, to be sold by the Company
pursuant to this Agreement have been only duly authorized and will be validly
issued, fully paid and non-assessable when issued and paid for as contemplated
by this Agreement, and that the Company is a duly organized and validly existing
corporation under the laws of the State of Delaware. In rendering such opinion
Ropes & Gray LLP will rely only on the laws of the Commonwealth of
Massachusetts, the Delaware General Corporation Law statute and Federal laws. In
addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such counsel
which leads them to believe that (i) the Registration Statement, or any
amendment thereto, as of the time it became effective under the Act (including
the information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 430A under the Act) as of the Closing Date or
the Option Closing Date, as the case may be, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Prospectus, or any supplement thereto, on the date it
was filed pursuant to the Rules and Regulations and as of the Closing Date or
the Option Closing Date, as the case may be, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact,
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Ropes & Gray
LLP may state that their belief is based upon the procedures set forth therein,
but is without independent check and verification.
(g) The Representatives shall have received at or prior to the Closing
Date from Ropes & Gray LLP a memorandum or summary, in form and substance
satisfactory to the Representatives, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the State securities
or Blue Sky laws of such jurisdictions as the Representatives may reasonably
have designated to the Company.
(h) You shall have received, on each of the date hereof, the Closing
Date and, if applicable, the Option Closing Date, a letter dated the date
hereof, the Closing Date or the Option Closing Date, as the case may be, in form
and substance satisfactory to you, of Ernst & Young LLP confirming that they are
independent public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating that in their opinion the
financial statements and schedules examined by them and included in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
-20-
(i) The Representatives shall have received on the Closing Date and, if
applicable, the Option Closing Date, as the case may be, a certificate or
certificates of the Chief Executive Officer and the Chief Financial Officer of
the Company to the effect that, as of the Closing Date or the Option Closing
Date, as the case may be, each of them severally represents as follows:
(i) The Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of the Registration Statement has
been issued, and no proceedings for such purpose have been taken or are, to his
knowledge, contemplated or threatened by the Commission;
(ii) The representations and warranties of the Company contained in
Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules 424
or 430A under the Act have been made as and when required by such rules;
(iv) He has carefully examined the Registration Statement and the
Prospectus and, in his or her opinion, as of the effective date of the
Registration Statement, the Registration Statement and Prospectus did not
include any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, and since the effective date of the
Registration Statement, no event has occurred which should have been set forth
in a supplement to or an amendment of the Prospectus which has not been so set
forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, there has not been any Material
Adverse Change or any development that would be expected to result in a Material
Adverse Change, whether or not arising in the ordinary course of business.
(j) The Company shall have furnished to the Representatives such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the
Representatives may reasonably have requested.
(k) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the Nasdaq National Market.
(l) The Lockup Agreements described in Section 4 (j) are in full force
and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects reasonably satisfactory to the Representatives and to Ropes &
Gray LLP, counsel for the Underwriters.
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If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees:
(1) to indemnify and hold harmless each Underwriter and each
person, if any, who controls or is alleged to control any Underwriter
within the meaning of either Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities
to which such Underwriter or any such controlling person may become
subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made or (iii) any act or failure
to act, or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Shares or the
offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising
out of or based upon matters covered by clause (i) or (ii) above
(PROVIDED, that the Company shall not be liable under this clause
(iii) to the extent that it is determined in a final judgment by a
court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from any such acts or failures
to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct); provided, however, that
the Company will not be liable in any such case to the extent (A) that
any such losses, claims, damages or liabilities of the Underwriter or
controlling person results from an untrue statement of a material fact
contained in, or the omission of a material fact from,
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the Preliminary Prospectus that was corrected in the Prospectus or any
amendment or supplement thereto, if such Underwriter sold Shares to
the person alleging such loss, claim, damage or liability without
sending or giving, at or prior to the written confirmation of the sale
of such Shares, a copy of the Prospectus or any amendment or
supplement thereto, but only if the Company has previously furnished
copies of the Prospectus or any such amendment or supplement to the
Underwriter, or (B) that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof; and
(2) except as otherwise provided in Section 8(a)(1), to reimburse
each Underwriter and each such controlling person upon demand for any
legal or other out-of-pocket expenses reasonably incurred by such
Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental
inquiry related to the offering of the Shares, whether or not such
Underwriter or controlling person is a party to any action or
proceeding. In the event that it is finally judicially determined that
the Underwriters were not entitled to receive payments for legal and
other expenses pursuant to this subparagraph, the Underwriters will
promptly return all sums that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer, or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (ii) the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made; and
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that each Underwriter will be liable in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
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(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a), (b) or (d) shall be available to any party who shall fail to give notice
as provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a), (b) or (d). In case
any such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party and shall pay as incurred the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred (or within 30 days of
presentation) the fees and expenses of the counsel retained by the indemnified
party in the event (i) the indemnifying party and the indemnified party shall
have mutually agreed to the retention of such counsel, (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them or (iii) the indemnifying party shall have failed to
assume the defense and employ counsel acceptable to the indemnified party within
a reasonable period of time after notice of commencement of the action. It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by the
Representatives in the case of parties indemnified pursuant to Section 8(a) or
(d) and by the Company in the case of parties indemnified pursuant to Section
8(b). The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. In addition, the indemnifying party will
not, without the prior written consent of the indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding of which indemnification may be sought hereunder
(whether or not any indemnified party is an actual or potential party to such
claim, action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action or proceeding.
(d) The Company and its Subsidiaries, jointly and severally, agree to
indemnify and hold harmless DBSI and its affiliates and each person, if any, who
controls or is alleged to control DBSI or its affiliates within the meaning of
either Section 15 of the Act or
-24-
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in any material prepared by or with the
consent of the Company for distribution to Participants in connection with the
Directed Share Program, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
DBSI or its affiliates specifically for inclusion therein; (ii) caused by the
failure of any Participant to pay for and accept delivery of Directed Shares
that the Participant has agreed to purchase; or (iii) related to, arising out
of, or in connection with the Directed Share Program other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
DBSI.
(e) To the extent the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a), (b), or (d) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) 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 from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault 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
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(e) 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 which does not take account of the
equitable considerations referred to above in this Section 8(e).
-25-
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 8(e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter and (ii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this Section 8(e)
to contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon it by any other contributing party and consents to the service of such
process and agrees that any other contributing party may join it as an
additional defendant in any such proceeding in which such other contributing
party is a party.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be,
any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company), you, as
Representatives of the Underwriters, shall use your reasonable efforts to
procure within 36 hours thereafter one or more of the other Underwriters, or any
others, to purchase from the Company such amounts as may be agreed upon and upon
the terms set forth herein, the Shares which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as such
Representatives, shall not have procured such other Underwriters, or any others,
to purchase the Shares agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Shares to be purchased on
the Closing Date or the Option
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Closing date, as the case may be, the other Underwriters shall be obligated,
severally, in proportion to the respective numbers of Shares which they are
obligated to purchase hereunder, to purchase the Shares which such defaulting
Underwriter or Underwriters failed to purchase, or (b) if the aggregate number
of shares of Shares with respect to which such default shall occur exceeds 10%
of the Shares to be purchased on the Closing Date or the Option Closing Date, as
the case may be, the Company or you as the Representatives of the Underwriters
will have the right, by written notice given within the next 36-hour period to
the parties to this Agreement, to terminate this Agreement without liability on
the part of the non-defaulting Underwriters or of the Company except to the
extent provided in Sections 5 and 8 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section 9, the Closing Date or
Option Closing Date, as the case may be, may be postponed for such period, not
exceeding seven days, as you, as Representatives, may determine in order that
the required changes in the Registration Statement or in the Prospectus or in
any other documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any action taken
under this Section 9 shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to Deutsche Bank Securities
Inc., 60 Wall Street, New York, New York 10005, Attention: Brent Milner and
Ropes & Gray LLP, One International Place, Boston, Massachusetts 02110,
Attention: Geoffrey B. Davis, Esq., and J.P. Morgan Securities Inc., 227 Park
Avenue, New York, New York 10172, Attention: Philip Ross; if to the Company, to
Nitromed, Inc., 12 Oak Park Drive, Bedford, Massachusetts 01730, Attention Chief
Executive Officer, with a copy to Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts 02109, Attention: Steven D. Singer.
11. TERMINATION.
This Agreement may be terminated by the Representatives by notice to the
Company (a) at any time prior to the Closing Date or any Option Closing Date (if
different from the Closing Date and then only as to Option Shares) if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change in or
affecting the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make it
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, (iii) suspension of trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the
-27-
Nasdaq National Market or limitation on prices (other than limitations on hours
or numbers of days of trading) for securities on either such Exchange, (iv) the
enactment, publication, decree or other promulgation of any statute, regulation,
rule or order of any court or other governmental authority which in your opinion
materially and adversely affects or may materially and adversely affect the
business or operations of the Company, (v) the declaration of a banking
moratorium by United States or New York State authorities, (vi) the suspension
of trading of the Company's common stock by the Nasdaq National Market, the
Commission, or any other governmental authority, (vii) the taking of any action
by any governmental body or agency in respect of its monetary or fiscal affairs
which in your reasonable opinion has a material adverse effect on the securities
markets in the United States or, (viii) a material disruption in securities
settlement, payment or clearance services in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Prospectus or the Registration Statement consists of the
information set forth in the third and ninth through fifteenth paragraphs under
the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements contained
in this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
DBSI, for the benefit of each of the other Representatives, agrees not
to consent to any action proposed to be taken by the Company or any holder of
the Company's securities that would otherwise be prohibited by, or to waive
compliance by the Company or such holder with the provisions of, Section 4(h) or
any Lockup Agreement delivered in connection with this Agreement, without giving
each of the other Representatives at least 17 days prior notice (or such shorter
notice as each of the other Representatives may deem acceptable to permit
compliance
-28-
with applicable provisions of NASD Rule 2711(f) restricting research and public
appearances before and after the expiration, waiver or termination of Lockup
Agreements).
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but both of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
NITROMED, INC.
By:
-------------------------------
Name: Michael D. Loberg
Title: Chief Executive Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
DEUTSCHE BANK SECURITIES INC.
J.P. MORGAN SECURITIES INC.
PACIFIC GROWTH EQUITIES, LLC
As Representatives of the several
Underwriters listed on Schedule I
By: Deutsche Bank Securities Inc.
By:
---------------------------------------
Name:
Title:
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SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
----------- ------------------------
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
Pacific Growth Equities, LLC
----------
Total __________
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SCHEDULE II
SHAREHOLDERS NOT AGREEING TO LOCKUP AGREEMENTS
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