EXHIBIT 1.1
EXECUTION COPY
5,115,961 SHARES
ALNYLAM PHARMACEUTICALS, INC.
Common Stock, Par Value $0.01 Per Share
UNDERWRITING AGREEMENT
January 31, 2006
January 31, 2006
Xxxxxx Xxxxxxx & Co. Incorporated
Banc of America Securities LLC
Xxxxx Xxxxxxx & Co.
XX Xxxxx & Co., LLC
Xxxxxx & Xxxxxxx, LLC
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Alnylam Pharmaceuticals, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "UNDERWRITERS") 5,115,961 shares (the "FIRM SHARES") of its common
stock, par value $0.01 per share (the "COMMON STOCK"). The Company also proposes
to issue and sell to the several Underwriters not more than an additional
767,394 shares of its Common Stock (the "ADDITIONAL SHARES") if and to the
extent that you, as representatives of the several Underwriters (in such
capacity, each a "REPRESENTATIVE") in connection with the offering, shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such shares of Common Stock granted to the Underwriters in Section 2 hereof. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "SHARES."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement (the file number of which is set forth in
Schedule II hereto) on Form S-3, including a prospectus, relating to the Shares,
to be issued from time to time by the Company. The registration statement as
amended to the date of this Agreement, including the information (if any) deemed
to be part of the registration statement at the time of effectiveness pursuant
to Rule 430A or Rule 430B under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), is hereinafter referred to as the "REGISTRATION STATEMENT,"
and the related prospectus covering the Shares dated December 20, 2005 in the
form first used to confirm sales of the Shares (or in the form first made
available to the Underwriters by the Company to meet requests of purchasers
pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the
"BASIC PROSPECTUS." The Basic Prospectus, as supplemented by the prospectus
supplement specifically
relating to the Shares in the form first used to confirm sales of the Shares (or
in the form first made available to the Underwriters by the Company to meet
requests of purchasers pursuant to Rule 173 under the Securities Act) is
hereinafter referred to as the "PROSPECTUS," and the term "PRELIMINARY
PROSPECTUS" means any preliminary form of the Prospectus. The term "REGISTRATION
STATEMENT" shall be deemed to include the abbreviated registration statement
filed with the Commission by the Company on January 23, 2006 to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "RULE 462 REGISTRATION STATEMENT"). For purposes of this Agreement,
"FREE WRITING PROSPECTUS" has the meaning set forth in Rule 405 under the
Securities Act, "TIME OF SALE PROSPECTUS" means the preliminary prospectus
together with the free writing prospectuses, if any, each identified in Schedule
II hereto, and "BROADLY AVAILABLE ROAD SHOW" means a "bona fide electronic road
show" as defined in Rule 433(h)(5) under the Securities Act that has been made
available without restriction to any person. As used herein, the terms
"REGISTRATION STATEMENT," "BASIC PROSPECTUS," "PRELIMINARY PROSPECTUS," "TIME OF
SALE PROSPECTUS," "PROSPECTUS" and "FREE WRITING PROSPECTUS" shall include the
documents, if any, incorporated by reference therein. The terms "SUPPLEMENT,"
"AMENDMENT," and "AMEND" as used herein with respect to the Registration
Statement, the Basic Prospectus, the Time of Sale Prospectus, any preliminary
prospectus or free writing prospectus shall include all documents subsequently
filed by the Company with the Commission pursuant to the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), that are deemed to be incorporated by
reference therein.
1. Representations and Warranties. The Company represents and warrants to
and agrees with each of the Underwriters that:
(a) The Registration Statement, including the Rule 462 Registration
Statement, has become effective under the Securities Act; the Company has
complied to the Commission's satisfaction with all requests of the Commission
for additional or supplemental information; no stop order suspending the
effectiveness of the Registration Statement, including the Rule 462 Registration
Statement is in effect, and no proceedings for such purpose have been instituted
or, to the knowledge of the Company, are pending before or contemplated or
threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Time of Sale Prospectus or the
Prospectus complied or will comply when so filed in all material respects with
the Exchange Act and the applicable rules and regulations of the Commission
thereunder, (ii) the Registration Statement, when it became effective, did not
contain, and as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(iii) the Registration Statement and the Prospectus comply, and as amended or
supplemented, if applicable, will comply in all material respects with the
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Securities Act and the applicable rules and regulations of the Commission
thereunder, (iv) the Time of Sale Prospectus does not, and at the time of each
sale of the Shares in connection with the offering when the Prospectus is not
yet available to prospective purchasers and at the Closing Date (as defined in
Section 4), the Time of Sale Prospectus, as then amended or supplemented by the
Company, if applicable, will not, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
(v) each broadly available road show, if any, when considered together with the
Time of Sale Prospectus, does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading and
(vi) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement, the Time of Sale
Prospectus, any broadly available road show or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representatives expressly for use therein.
(c) The Company is not an "ineligible issuer" in connection with the
offering pursuant to Rules 164, 405 and 433 under the Securities Act. Any free
writing prospectus that the Company is required to file pursuant to Rule 433(d)
under the Securities Act has been, or will be, filed with the Commission in
accordance with the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder. Each free writing prospectus that
the Company has filed, or is required to file, pursuant to Rule 433(d) under the
Securities Act or that was prepared by or on behalf of or used or referred to by
the Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder. Except for the free writing prospectuses, if any,
identified in Schedule II hereto, and electronic road shows each furnished to
you before first use, the Company has not prepared, used or referred to, and
will not, without your prior consent, prepare, use or refer to, any free writing
prospectus.
(d) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its properties and
to conduct its business as described in the Time of Sale Prospectus and the
Prospectus, to enter into and perform its obligations under this Agreement, and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not result in a Material Adverse
Change (as defined in Section 1(n) below).
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(e) Each subsidiary of the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its properties
and to conduct its business as described in the Time of Sale Prospectus and the
Prospectus, and is duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not result in a Material
Adverse Change; all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are fully paid and
non assessable and are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other than
the subsidiaries listed in Exhibit 21.1 to its Annual Report on Form 10-K for
the fiscal year ended December 31, 2004.
(f) This Agreement has been duly authorized, executed and delivered by the
Company.
(g) The authorized capital stock of the Company conforms in all material
respects as to legal matters to the description thereof contained in the Time of
Sale Prospectus and the Prospectus.
(h) The shares of Common Stock outstanding prior to the issuance of the
Shares have been duly authorized, are validly issued, fully paid and non
assessable and have been issued in compliance with federal and state securities
laws. None of the shares of Common Stock outstanding prior to the issuance of
the Shares were issued in violation of any preemptive rights, rights of first
refusal or other similar rights to subscribe for or purchase securities of the
Company. There are no authorized or outstanding options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital
stock of the Company or any of its subsidiaries other than those described in
the Time of Sale Prospectus and the Prospectus or issued or granted after the
date thereof. The description of the Company's stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted
thereunder, contained in the Time of Sale Prospectus and the Prospectus
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights.
(i) The Shares to be purchased by the Underwriters from the Company have
been duly authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered in accordance with the terms of this Agreement against
payment of consideration set forth herein, will be validly issued, fully paid
and non assessable, and the issuance of the Shares will not be subject to any
preemptive or similar rights.
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(j) Other than (A) the Collaboration Agreement dated as of February 8, 2005
by and between the Company and Medtronic, Inc., (B) the Investor Rights
Agreement dated as of March 11, 2004 by and between the Company and Isis
Pharmaceuticals, Inc., (C) the Registration Rights Agreement dated as of July
31, 2003 by and among the Company and the Investors (as defined therein), (D)
the Investor Rights Agreement dated as of September 8, 2003 by and between the
Company and Merck & Co., Inc., and (E) the Investor Rights Agreement dated as of
September 6, 2005 by and between the Company and Novartis Pharma AG, there are
no contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company. There are no contracts, agreements or understandings between the
Company and any person granting such person the right to include such securities
with the Shares registered pursuant to the Registration Statement, except for
such rights as have been waived.
(k) PricewaterhouseCoopers LLP, who have expressed their opinion with
respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) that are incorporated by reference in the
Registration Statement, the Time of Sale Prospectus and the Prospectus, are an
independent registered public accounting firm with respect to the Company and
its subsidiaries within the meaning of the Securities Act and the rules and
regulations adopted by the Commission and the Public Company Accounting
Oversight Board (United States).
(l) The financial statements that are incorporated by reference in the
Registration Statement, the Time of Sale Prospectus and the Prospectus present
fairly, in all material respects, the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. Such financial
statements have been prepared in conformity with generally accepted accounting
principles as applied in the United States applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules are
required to be included or incorporated by reference in the Registration
Statement. The financial data set forth in the Time of Sale Prospectus and the
Prospectus under the captions "Prospectus Supplement Summary -- Summary
Consolidated Financial Data," "Dilution" and "Capitalization" fairly present, in
all material respects, the information set forth therein on a basis consistent
with that of the audited financial statements contained or incorporated by
reference in the Registration Statement.
(m) Neither the Company nor any of its subsidiaries is in violation of its
charter or by-laws or is in default (or, with the giving of notice or lapse of
time, would be in default) ("DEFAULT") under any indenture, mortgage, loan or
credit agreement, note, contract, franchise, lease or other instrument to which
the Company or any of its subsidiaries is a party or by which it or any of them
may be
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bound, or to which any of the property or assets of the Company or any of its
subsidiaries is subject (each, an "EXISTING INSTRUMENT"), except for such
Defaults as would not, individually or in the aggregate, result in a Material
Adverse Change. The Company's execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby and by the
Time of Sale Prospectus and the Prospectus (i) have been duly authorized by all
necessary corporate action and will not result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary, (ii) will
not conflict with or constitute a breach of, or Default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, or require the
consent of any other party to, any Existing Instrument, except for such
conflicts, breaches, Defaults, liens, charges or encumbrances as would not,
individually or in the aggregate, result in a Material Adverse Change and (iii)
will not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any subsidiary,
except for such violations as would not, individually or in the aggregate,
result in a Material Adverse Change. No consent, approval, authorization or
other order of, or registration, qualification or filing with, any court or
other governmental or regulatory authority or agency, is required for the
Company's execution, delivery and performance of its obligations under this
Agreement and consummation of the transactions contemplated hereby and by the
Time of Sale Prospectus and the Prospectus, except such as have been obtained or
made by the Company and are in full force and effect under the Securities Act,
applicable state securities or blue sky laws and from the National Association
of Securities Dealers, Inc. (the "NASD").
(n) Except as otherwise disclosed in the Time of Sale Prospectus and the
Prospectus, since the respective dates as of which information is given in the
Time of Sale Prospectus and the Prospectus, there has been no material adverse
change, or any development that could reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise, or in the
earnings, business, operations or prospects of the Company and its subsidiaries,
considered as one entity, whether or not arising from transactions in the
ordinary course of business (any such change is called a "MATERIAL ADVERSE
CHANGE"); (ii) the Company and its subsidiaries, considered as one entity, have
not (A) incurred any material liability or material obligation, indirect, direct
or contingent, not in the ordinary course of business or (B) entered into any
material transaction or material agreement not in the ordinary course of
business; and (iii) there has been (A) no dividend or distribution of any kind
declared, paid or made by the Company or, except for dividends paid to the
Company or other subsidiaries, any of its subsidiaries on any class of capital
stock or, (B) except for repurchases by the Company of Common Stock, no
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.
(o) Each preliminary prospectus filed as part of the registration statement
as originally filed or as part of any amendment thereto, or filed pursuant to
Rule 424 under the Securities Act, complied when so filed in all material
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respects with the Securities Act and the applicable rules and regulations of the
Commission thereunder.
(p) The Company is not, and after giving effect to the offering and sale of
the Shares and the application of the proceeds thereof as described in the Time
of Sale Prospectus and the Prospectus will not be, required to register as an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended (the "INVESTMENT COMPANY ACT"); and the Company will conduct
its business in a manner so that it will not be subject to the Investment
Company Act.
(q) Each of the Company and its subsidiaries are insured by recognized,
financially sound and reputable institutions with policies in such amounts and
with such deductibles and covering such risks as the Company has deemed adequate
and customary for its businesses including, but not limited to, policies
covering real and personal property owned or leased by the Company and its
subsidiaries against theft, damage, destruction and acts of vandalism. The
Company has no reason to believe that it or any of its subsidiaries will not be
able (i) to renew its existing insurance coverage as and when such coverage
expires or (ii) to obtain comparable coverage from similar institutions as may
be necessary or appropriate to conduct its business as now conducted and at a
cost that would not result in a Material Adverse Change.
(r) The Shares have been approved for inclusion on the Nasdaq National
Market, subject only to official notice of issuance.
(s) Except as described in the Time of Sale Prospectus and the Prospectus,
there are no legal or governmental actions, suits or proceedings pending or, to
the Company's knowledge, threatened (i) against or affecting the Company or any
of its subsidiaries, (ii) which has as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination matters, where
in any such case (A) there is a reasonable possibility that such action, suit or
proceeding might be determined adversely to the Company or such subsidiary and
(B) any such action, suit or proceeding, if so determined adversely, would
reasonably be expected to result in a Material Adverse Change or adversely
affect the consummation of the transactions contemplated by this Agreement. No
material labor dispute with the employees of the Company or any of its
subsidiaries, or with the employees of any principal supplier of the Company,
exists or, to the Company's knowledge, is threatened or imminent that could
result in a Material Adverse Change. There are no statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement, the Time of Sale Prospectus or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described or filed
as required.
(t) Except as described in the Time of Sale Prospectus and the Prospectus,
the Company and its subsidiaries own or have rights to use the
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patents, patent applications, trade and service marks, trade and service xxxx
registrations, trade names, copyrights, licenses, inventions, trade secrets,
technology, know-how and other intellectual property (collectively, the
"INTELLECTUAL PROPERTY") necessary for the conduct of the Company's business as
now conducted. Except as described in the Time of Sale Prospectus and the
Prospectus, (a) there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others challenging the Company's rights in
or to any such Intellectual Property, and the Company is unaware of any material
fact which would form a reasonable basis for any such claim; (b) there is no
pending, or to the Company's knowledge, threatened action, suit, proceeding or
claim by others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other material fact which would form a reasonable
basis for any such claim; (c) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property owned by the Company,
and with respect to any such Intellectual Property that the Company has a right
to use, the Company is unaware of any such claim, and, in either case, the
Company is unaware of any material fact which would form a reasonable basis for
any such claim; (d) there is no prior art of which the Company is aware that may
render invalid any patent owned by the Company or that the Company has rights to
use the inventions covered thereby which has not been disclosed to the
applicable government patent office; (e) the Company's license agreements
mentioned in the Time of Sale Prospectus and the Prospectus are in full force
and effect, and the Company is not in material breach or default thereof, and to
the knowledge of the Company, other parties to those agreements are not in
material breach or default thereof; and (f) the granted or issued patents,
trademarks, and copyrights owned by the Company have been duly maintained and
are in full force and in effect, and none of such patents, trademarks and
copyrights have been adjudged invalid or unenforceable in whole or in part.
(u) All patent applications owned by the Company that describe inventions
necessary to conduct the business of the Company in the manner described in the
Time of Sale Prospectus and the Prospectus (the "COMPANY PATENT APPLICATIONS")
have been duly and properly filed with the U. S. Patent and Trademark Office
(the "PTO") or foreign and international patent authorities. To the knowledge of
the Company, the Company has complied with the PTO's duty of candor and
disclosure for the Company Patent Applications and has made no material
misrepresentation during prosecution of the Company Patent Applications. To the
Company's knowledge, the Company Patent Applications disclose patentable subject
matters, and the Company has not been notified of any inventorship challenges
nor has any interference been declared or provoked nor is any material fact
known by the Company that would preclude the issuance of patents with respect to
the Company Patent Applications or would render such patents invalid or
unenforceable.
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(v) The statements contained in the Time of Sale Prospectus and the
Prospectus under the captions "Risk Factors -- Risks Relating to Patents,
Licenses and Trade Secrets" and "Prospectus Supplement Summary -- Business
Strategy" insofar as such statements summarize legal matters, agreements,
documents, or proceedings discussed therein, are accurate and fair summaries in
all material respects of such legal matters, agreements, documents or
proceedings.
(w) The Company and each subsidiary possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies necessary to conduct their respective
businesses (other than any the absence of which would not, singly or in the
aggregate, result in a Material Adverse Change), and neither the Company nor any
subsidiary has received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a Material Adverse Change.
(x) Except as disclosed in the Time of Sale Prospectus or the Prospectus,
the Company and each of its subsidiaries has good and marketable title to all
real property and good title to all other properties and assets reflected as
owned in the financial statements referred to in Section 1(l) above, in each
case free and clear of any security interests, mortgages, liens, encumbrances,
equities, claims and other defects, except such as do not materially and
adversely affect the value of such property and do not materially interfere with
the use made of such property by the Company or such subsidiary. The real
property, improvements, equipment and personal property held under lease by the
Company or any subsidiary are held under valid and enforceable leases, with such
exceptions as are not material and do not materially interfere with the use made
of such real property, improvements, equipment or personal property by the
Company or such subsidiary or with such exceptions that would not result in a
Material Adverse Change.
(y) The Company and its consolidated subsidiaries have filed all necessary
federal, state and foreign income and franchise tax returns or have properly
requested extensions thereof (which extensions have not expired) and have paid
all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them,
except as are being contested in good faith and that, if resolved unfavorably to
the Company, would not result in a Material Adverse Change. The Company has made
adequate charges, accruals and reserves in the applicable financial statements
referred to in Section 1(l) above in respect of all federal, state and foreign
income and franchise taxes for all periods as to which the tax liability of the
Company or any of its subsidiaries has not been finally determined.
(z) The Company has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of any security of the Company
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to facilitate the sale or resale of the Shares. The Company acknowledges that
the Underwriters may engage in passive market making transactions in the Common
Stock on the Nasdaq National Market in accordance with Regulation M under the
Exchange Act.
(aa) There are no business relationships or related-party transactions
involving the Company or any subsidiary or any other person required to be
described in the Time of Sale Prospectus or the Prospectus which have not been
described as required.
(bb) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 under the Exchange Act), and
such controls and procedures are designed (i) to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Commission's rules and forms and (ii) to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the Company's management, including its principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding
required disclosure, and such controls and procedures are effective, in that
they provide reasonable assurance that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the Commission's rules and regulations, in all material respects.
(cc) Neither the Company nor any of its subsidiaries nor, to the Company's
knowledge, any employee or agent of the Company or any subsidiary, has made any
contribution or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law or of the character required to
be disclosed in the Time of Sale Prospectus or the Prospectus.
(dd) The Company 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 authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles as
applied in the United States and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. Except as described in the Time of Sale
Prospectus and the Prospectus, since the end of the Company's most recent
audited fiscal year, there has been (i) no material weakness in the Company's
internal control over financial reporting (whether or not remediated) and (ii)
no change in the Company's internal control over financial reporting that has
materially affected,
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or is reasonably likely to materially affect, the Company's internal control
over financial reporting.
(ee) Except as would not, individually or in the aggregate, result in a
Material Adverse Change: (i) neither the Company nor any of its subsidiaries is
in violation of any federal, state, local or foreign law or regulation relating
to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, sediment, land
surface or subsurface strata) or wildlife, including without limitation, laws
and regulations relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum, petroleum products, toxic mould or asbestos
(collectively, "MATERIALS OF ENVIRONMENTAL CONCERN"), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of, or exposure to, Materials of Environment Concern
(collectively, "ENVIRONMENTAL LAWS"), which violation includes, but is not
limited to, noncompliance with any permits or other governmental authorizations
required for the operation of the business of the Company or its subsidiaries
under applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has the Company or any of its subsidiaries received any
written communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company or any of its subsidiaries
is in violation of any Environmental Law; (ii) there is no claim, action or
cause of action filed with a court or governmental authority, no investigation
with respect to which the Company has received written notice, and no written
notice by any person or entity alleging potential liability for investigatory
costs, cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys' fees or penalties arising out
of, based on or resulting from the presence or release into the environment of,
or any exposure to, any Materials of Environmental Concern at any location
owned, leased or operated by the Company or any of its subsidiaries, now or in
the past (collectively, "ENVIRONMENTAL CLAIMS"), pending or, to the Company's
knowledge, threatened against the Company or any of its subsidiaries or any
person or entity whose liability for any Environmental Claim the Company or any
of its subsidiaries has retained or assumed either contractually or by operation
of law; and (iii) to the Company's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal of
any Materials of Environmental Concern, that reasonably could result in a
violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company or
any of its subsidiaries has retained or assumed either contractually or by
operation of law.
(ff) The Company and its subsidiaries and any "employee benefit plan" (as
defined under the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder
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(collectively, "ERISA")) established or maintained by the Company, its
subsidiaries or their "ERISA AFFILIATES" (as defined below) are in compliance in
all material respects with ERISA. "ERISA AFFILIATE" means, with respect to the
Company or a subsidiary, any member of any group of organizations described in
Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended,
and the regulations and published interpretations thereunder (the "CODE") of
which the Company or such subsidiary is a member. Except as would not be
expected to result in a Material Adverse Change, no "reportable event" (as
defined under Section 4043 of ERISA) has occurred or is reasonably expected to
occur with respect to any "employee benefit plan" established or maintained by
the Company, its subsidiaries or any of their ERISA Affiliates. Except as would
not be expected to result in a Material Adverse Change, no "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such "employee benefit plan" were terminated, would have
any "amount of unfunded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code, except, in each case, as
would not be expected to result in a Material Adverse Change. Each "employee
benefit plan" established or maintained by the Company, its subsidiaries or any
of their ERISA Affiliates that is intended to be qualified under Section 401(a)
of the Code is so qualified and nothing has occurred, whether by action or
failure to act, which would cause the loss of such qualification, except where
the loss of such qualification would not be expected to result in a Material
Adverse Change.
(gg) Except as provided or contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the Company any
brokerage or finder's fee or other fee or commission as a result of any
transactions contemplated by this Agreement.
(hh) There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the executive
officers or directors of the Company, except as disclosed in the Time of Sale
Prospectus or the Prospectus.
(ii) The Company has not been advised, and has no reason to believe, that
it and each of its subsidiaries are not conducting business in compliance with
all applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, except where failure to be so in compliance would not
result in a Material Adverse Change.
(jj) The Company and its subsidiaries are in compliance in all material
respects with all applicable rules and regulations of the U.S. Food and Drug
Administration (the "FDA"), and all related applicable laws, statutes,
ordinances, rules or regulations (including, without limitation, the Federal
Food, Drug and
12
Cosmetic Act, as amended, the Biologic Products provisions of the Public Health
Act, as amended, and the Comprehensive Drug Abuse Prevention and Control Act of
1970, as amended), the enforcement of which, individually or in the aggregate,
would be expected to result in a Material Adverse Change.
(kk) To the Company's knowledge, except as disclosed in the Time of Sale
Prospectus or the Prospectus, there are no rulemaking or similar proceedings
before the FDA or the U.S. Patent and Trademark Office or any similar entity in
any other jurisdiction which affects or involves, or will affect or involve, the
Company or any of its subsidiaries or any of the processes or products which the
Time of Sale Prospectus or the Prospectus discloses the Company or any of its
subsidiaries has developed, is developing or proposes to develop or uses or
proposes to use which, if the subject of an action unfavorable to the Company,
would be expected to result in a Material Adverse Change.
(ll) Except as described in the Time of Sale Prospectus and the Prospectus,
the Company has not sold, issued or distributed any shares of Common Stock
during the six-month period preceding the date hereof, including any sales
pursuant to Rule 144A under, or Regulation D or S of, the Securities Act, other
than shares issued pursuant to employee benefit plans, qualified stock option
plans or other employee compensation plans or pursuant to outstanding options,
rights or warrants.
The Company acknowledges that the Underwriters and, for purposes of the
opinions to be delivered pursuant to Section 5 hereof, counsel to the Company
and counsel to the Underwriters, will rely upon the accuracy and truthfulness of
the foregoing representations and hereby consents to such reliance.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedule I hereto
opposite its name at $12.22 a share (the "PURCHASE PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to 767,394 Additional Shares at
the Purchase Price. You may exercise this right on behalf of the Underwriters in
whole or in part (but not more than once) by giving written notice not later
than 30 days after the date of this Agreement. Any exercise notice shall specify
the number of Additional Shares to be purchased by the Underwriters and the date
on which such shares are to be purchased. Each purchase date must be at least
three full business days after the written notice is given, and may not be
earlier than the Closing Date for the Firm Shares nor later than five business
days after the date of such notice. Additional Shares may be purchased as
provided in Section 4 hereof
13
solely for the purpose of covering over allotments made in connection with the
offering of the Firm Shares. On each day, if any, that Additional Shares are to
be purchased (an "OPTION CLOSING DATE"), each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased on such
Option Closing Date as the number of Firm Shares set forth in Schedule I hereto
opposite the name of such Underwriter bears to the total number of Firm Shares.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after this Agreement has become effective as in your judgment
is advisable. The Company is further advised by you that the Shares are to be
offered to the public initially at $13.00 a share (the "PUBLIC OFFERING PRICE")
and to certain dealers selected by you at a price that represents a concession
not in excess of $0.47 a share below the Public Offering Price.
4. Payment and Delivery. Payment for the Firm Shares shall be made to the
Company in Federal or other funds immediately available in New York City against
delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on February 6, 2006, or at such
other time on the same or such other date, not later than February 6, 2006, as
shall be agreed upon by the Company and you. The time and date of such payment
are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in Federal
or other funds immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on the date specified in the corresponding
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than 35 days after the date hereof, as shall be
agreed upon by the Company and you.
The Firm Shares and Additional Shares shall be registered in such names and
in such denominations as you shall request in writing not later than two full
business days prior to the Closing Date or the applicable Option Closing Date,
as the case may be. The Firm Shares and Additional Shares shall be delivered to
you on the Closing Date or an Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The several obligations of
the Underwriters to purchase and pay for the Firm Shares on the Closing Date are
subject to the following conditions:
14
(a) Subsequent to the execution and delivery of this Agreement and prior to
the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the securities of the
Company or any of its subsidiaries by any "nationally recognized
statistical rating organization," as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Time of Sale
Prospectus that, in your judgment, is material and adverse and that makes
in, in your judgment, impracticable to market the Shares on the terms and
in the manner contemplated in the Time of Sale Prospectus.
(b) The Underwriters shall have received on the Closing Date a certificate,
dated the Closing Date and signed by an executive officer of the Company, to the
effect set forth in Section 5(a)(i) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date and that the Company has complied in all
material respects with all of the agreements and satisfied in all material
respects all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, U.S. outside counsel for the Company,
dated the Closing Date, to the effect set forth on Exhibit A (and the
Representatives shall have received an additional 3 conformed copies of such
counsel's legal opinion for each of the several Underwriters).
(d) The Underwriters shall have received on the Closing Date an opinion of
Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, special German counsel for the
Company, dated the Closing Date, to the effect set forth on Exhibit B (and the
Representatives shall have received an additional 3 conformed copies of such
counsel's legal opinion for each of the several Underwriters).
(e) The Underwriters shall have received on the Closing Date an opinion of
(i) Fish & Xxxxxxxxxx P.C., (ii) CMS Xxxxxx Xxxxx and (iii) Xxxxx Xxxx LLP,
Intellectual Property Counsel for the Company, each such opinion dated the
Closing Date, to the effect set forth on Exhibits C, D and E, respectively
15
(and the Representatives shall have received an additional 3 conformed copies of
each of such counsel's legal opinion for each of the several Underwriters).
(f) The Underwriters shall have received on the Closing Date an opinion of
Shearman & Sterling LLP, counsel for the Underwriters, dated the Closing Date,
in form and substance reasonably satisfactory to the Representatives (and the
Representatives shall have received an additional 6 conformed copies of such
counsel's legal opinion for each of the several Underwriters).
(g) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
PricewaterhouseCoopers LLP, independent registered public accounting firm,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in or incorporated by
reference into the Registration Statement, the Time of Sale Prospectus and the
Prospectus; provided that the letter delivered on the Closing Date shall use a
"cut off date" not earlier than the date hereof.
(h) The "lock up" agreements, each substantially in the form of Exhibit F
hereto, between you and the executive officers and directors of the Company,
relating to sales and certain other dispositions of shares of Common Stock or
certain other securities, and between you and CHP II L.P., a beneficial owner of
at least 5% of the Company's Common Stock (as defined and determined according
to Rule 13d-3 under the Exchange Act, except that a thirty-day period shall be
used rather than the ninety-day period set forth therein) delivered to you on or
before the date hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
6. Covenants of the Company. The Company covenants with each Underwriter as
follows:
(a) To furnish to you, without charge, a copy of the signed Registration
Statement (including exhibits thereto and documents incorporated by reference)
and to deliver to each of the Underwriters during the period mentioned in
Section 6(e) or 6(f) below, as many copies of the Time of Sale Prospectus, the
Prospectus, any documents incorporated therein by reference, and any
16
supplements and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement, the Time
of Sale Prospectus or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.
(c) To furnish to you a copy of each proposed free writing prospectus to be
prepared by or on behalf of, used by, or referred to by the Company and not to
use or refer to any proposed free writing prospectus to which you reasonably
object.
(d) Not to take any action that would result in an Underwriter or the
Company being required to file with the Commission pursuant to Rule 433(d) under
the Securities Act a free writing prospectus prepared by or on behalf of the
Underwriter that the Underwriter otherwise would not have been required to file
thereunder.
(e) If the Time of Sale Prospectus is being used to solicit offers to buy
the Shares at a time when the Prospectus is not yet available to prospective
purchasers and any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Time of Sale Prospectus in order to make
the statements therein, in the light of the circumstances, not misleading, or if
any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts in any material respect with the information contained in
the Registration Statement then on file, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Time of Sale
Prospectus to comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to any
dealer upon request, either amendments or supplements to the Time of Sale
Prospectus so that the statements in the Time of Sale Prospectus as so amended
or supplemented will not, in the light of the circumstances when delivered to a
prospective purchaser, be misleading or so that the Time of Sale Prospectus, as
amended or supplemented, will no longer conflict with the Registration
Statement, or so that the Time of Sale Prospectus, as amended or supplemented,
will comply with applicable law.
(f) If, during such period after the first date of the public offering of
the Shares, as in the opinion of counsel for the Underwriters, the Prospectus
(or in lieu thereof the notice referred to in Rule 173(a) under the Securities
Act) is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus (or in
lieu thereof the notice
17
referred to in Rule 173(a) under the Securities Act) is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been sold by
you on behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus (or in lieu thereof the notice referred to in
Rule 173(a) under the Securities Act) is delivered to a purchaser, be misleading
or so that the Prospectus, as amended or supplemented, will comply with
applicable law.
(g) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request. The Company shall not be required to qualify as a foreign corporation
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation.
(h) To make generally available to the Company's security holders and to
you as soon as practicable an earning statement covering a period of at least
twelve months beginning with the first fiscal quarter of the Company occurring
after the date of this Agreement which shall satisfy the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's counsel and
the Company's accountants in connection with the registration and delivery of
the Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, the Prospectus, any free writing
prospectus prepared by or on behalf of, used by, or referred to by the Company
and amendments and supplements to any of the foregoing, including the filing
fees payable to the Commission relating to the Shares (within the time required
by Rule 456(b)(1), if applicable), all printing costs associated therewith, and
the mailing and delivering of copies thereof to the Underwriters and dealers, in
the quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or legal investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 6(g) hereof, including filing fees and the reasonable fees
and disbursements of
18
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or legal investment memorandum, (iv) all filing
fees and the reasonable fees and disbursements of counsel to the Underwriters
incurred in connection with the review and qualification of the offering of the
Shares by the NASD, (v) all costs and expenses incident to listing the Shares on
the Nasdaq National Market, (vi) the cost of printing certificates representing
the Shares, if any, (vii) the costs and charges of the transfer agent and
registrar of the Common Stock (viii) the costs and expenses of the Company
relating to investor presentations on any "road show" undertaken in connection
with the marketing of the offering of the Shares, including, without limitation,
expenses associated with the preparation or dissemination of any electronic road
show, expenses associated with the production of road show slides and graphics,
fees and expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and one-half of the total cost of any aircraft chartered in
connection with the road show, (ix) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section. It is understood, however, that except as
provided in this Section, Section 8 entitled "Indemnity and Contribution," and
the last paragraph of Section 10 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them, any advertising
expenses connected with any offers they may make, travel and lodging expenses
incurred by the Underwriters and one-half of the total cost of any aircraft
chartered in connection with the road show.
(j) The Company also covenants with each Underwriter that, without the
prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the
Underwriters, it will not, during the period ending 90 days after the date of
the Prospectus (the "LOCK-UP PERIOD"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise or (3) file any registration statement (other than a registration
statement on Form S-8 and a registration statement relating to the resale of up
to 500,000 shares of Common Stock issued by the Company in connection with a
strategic alliance, license, acquisition agreement or loan agreement referred to
in clause (f) below) with the Commission relating to the offering by the Company
of any shares of Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock.
19
The restrictions contained in the preceding paragraph shall not apply to
(a) the Shares to be sold hereunder, (b) the issuance by the Company of shares
of Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof, (c) the issuance by the Company of
shares of Common Stock in accordance with the terms of the Company's employee
stock purchase plan in existence on the date hereof, (d) the grant of options
for shares of Common Stock provided such options do not vest, in whole or in
part, during the Lock-Up Period, (e) the issuance by the Company of shares of
Common Stock pursuant to (i) the Investor Rights Agreement dated September 6,
2005 between the Company and Novartis Pharma AG, and (ii) the Collaboration
Agreement dated February 8, 2005 between the Company and Medtronic, Inc., and
(f) the issuance by the Company of up to 4,000,000 shares of Common Stock
pursuant to any strategic alliance, license, acquisition agreements or loan
agreements entered into during the Lock-Up Period, provided that (with the
exception of up to 500,000 shares of such Common Stock) such shares of Common
Stock are subject to a "lock-up" agreement, substantially in the form of Exhibit
F hereto. Notwithstanding the foregoing, if (1) during the last 17 days of the
Lock-Up Period the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (2) prior to the expiration of
the Lock-Up Period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the 90-day period, and in
each of case (1) and (2) above if, at the end of the restricted period, (i) the
Company's shares are not "actively traded securities" as such term is defined in
Regulation M under the Securities Act or (ii) the Underwriters are not able to
publish or distribute research reports concerning the Company or its industry
pursuant to Rule 139 of the Securities Act, the restrictions imposed by this
agreement shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event. The Company shall promptly notify Xxxxxx
Xxxxxxx & Co. Incorporated of any earnings release, news or event that may give
rise to an extension of the Lock-Up Period.
(k) The Company shall apply the net proceeds from the sale of the Shares
sold by it in the manner described under the caption "Use of Proceeds" in the
Time of Sale Prospectus and the Prospectus.
(l) The Company shall engage and maintain, at its expense, a registrar and
transfer agent for the Common Stock.
(m) The Company will use its best efforts to include, subject to notice of
issuance, the Shares on the Nasdaq National Market.
(n) 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 its subsidiaries to register as an investment company under
the Investment Company Act.
20
(o) 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.
(p) The Company will enforce all existing agreements between the Company
and any of its security holders that prohibit the sale, transfer, assignment,
pledge or hypothecation of any of the Company's securities in connection with
the Company's offering of the Shares. In addition, the Company will direct the
transfer agent to place stop transfer restrictions upon any such securities of
the Company that are bound by such existing "lock-up" agreements for the
duration of the periods contemplated in such agreements.
7. Covenants of the Underwriters. Each Underwriter severally covenants with
the Company not to take any action that would result in the Company being
required to file with the Commission under Rule 433(d) a free writing prospectus
prepared by or on behalf of such Underwriter that otherwise would not be
required to be filed by the Company thereunder, but for the action of the
Underwriter.
8. Indemnity and Contribution. (a) The Company agrees to indemnify and hold
harmless each Underwriter, each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act and each affiliate of any Underwriter within the meaning of
Rule 405 under the Securities Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus, the Time of Sale Prospectus, any issuer
free writing prospectus as defined in Rule 433(h) under the Securities Act, any
Company information that the Company has filed, or is required to file, pursuant
to Rule 433(d) under the Securities Act or the Prospectus or any amendment or
supplement thereto, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Underwriter,
but only with reference to information relating to such
21
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement or any amendment thereof, any
preliminary prospectus, the Time of Sale Prospectus, any issuer free writing
prospectus or the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 8(a) or Section 8(b), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonably
incurred fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the reasonably incurred fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonably incurred fees and expenses
of more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such reasonably incurred fees and expenses
shall be reimbursed as they are incurred. Such firm shall be designated in
writing by Xxxxxx Xxxxxxx & Co. Incorporated, in the case of parties indemnified
pursuant to Section 8(a), 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. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for reasonably incurred
fees and expenses of counsel as contemplated by the second and third sentences
of this paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party,
22
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or
Section 8(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause 8(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company on the one hand and of
the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the front cover page of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the Company
on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 8 are several in proportion
to the respective aggregate number of Shares they have purchased hereunder, and
not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 8(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has
23
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter, any person controlling any Underwriter or
any affiliate of any Underwriter or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Shares.
9. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over the counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or
(v) there shall have occurred any outbreak or escalation of hostilities, or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the
terms and in the manner contemplated in the Time of Sale Prospectus and the
Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
24
Firm Shares set forth opposite the names of all such non defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 10 by an amount in excess of one ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one tenth of the aggregate number of Firm
Shares to be purchased on such date, and arrangements satisfactory to you and
the Company for the purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non defaulting Underwriter or the Company. In any such case either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement, the Time of Sale Prospectus, the Prospectus or in any
other documents or arrangements may be effected. If, on an Option Closing Date,
any Underwriter or Underwriters shall fail or refuse to purchase Additional
Shares and the aggregate number of Additional Shares with respect to which such
default occurs is more than one tenth of the aggregate number of Additional
Shares to be purchased on such Option Closing Date, the non-defaulting
Underwriters shall have the option to (i) terminate their obligation hereunder
to purchase the Additional Shares to be sold on such Option Closing Date or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out of pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Entire Agreement. (a) This Agreement, together with any contemporaneous
written agreements that relate to the offering of the Shares, represents the
entire agreement between the Company and the Underwriters with respect to the
preparation of any preliminary prospectus, the Time of Sale Prospectus, the
Prospectus, the conduct of the offering and the purchase and sale of the Shares.
25
(b) The Company acknowledges that in connection with the offering of the
Shares: (i) the Underwriters have acted at arms length, are not agents of, and
owe no fiduciary duties to, the Company or any other person, (ii) the
Underwriters owe the Company only those duties and obligations set forth in this
Agreement and prior written agreements (to the extent not superseded by this
Agreement), if any, and (iii) the Underwriters may have interests that differ
from those of the Company. The Company waives to the full extent permitted by
applicable law any claims it may have against the Underwriters arising from an
alleged breach of fiduciary duty in connection with the offering of the Shares.
12. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
15. Notices. All communications hereunder shall be in writing and effective
only upon receipt and if to the Underwriters shall be delivered, mailed or sent
to you in care of Xxxxxx Xxxxxxx & Co. Incorporated, 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Equity Syndicate Desk, with a copy to the Legal
Department; and if to the Company shall be delivered, mailed or sent to Alnylam
Pharmaceuticals, Inc., 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Vice President of Finance.
26
Very truly yours,
Alnylam Pharmaceuticals, Inc.
By: /s/ Xxxx Xxxxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxxxx
Title: President and CEO
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Banc of America Securities LLC
Xxxxx Xxxxxxx & Co.
XX Xxxxx & Co., LLC
Xxxxxx & Xxxxxxx, LLC
Acting severally on behalf of themselves
and the several Underwriters named
in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ Xxxxxxx Xxxxx
-----------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
27
SCHEDULE I
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
---------------------------------------------------- ---------------------
Xxxxxx Xxxxxxx & Co. Incorporated........ 2,557,982
Banc of America Securities LLC .......... 1,125,511
Xxxxx Xxxxxxx & Co ...................... 613,915
XX Xxxxx & Co., LLC ..................... 613,915
Xxxxxx & Xxxxxxx, LLC ................... 204,638
Total ................................... 5,115,961
=========
SCHEDULE II
Represenatives:
Xxxxxx Xxxxxxx & Co. Incorporated
Banc of America Securities LLC
Xxxxx Xxxxxxx & Co.
XX Xxxxx & Co., LLC
Xxxxxx & Xxxxxxx, LLC
Transfer Agent: EquiServe Trust Company
Registration Statement File No.: 333-129905
Time of Sale Prospectus 1. Preliminary Prospectus dated
January 23, 2006 relating to the
Shares, consisting of the
Prospectus dated December 20, 2005
and the preliminary
prospectus supplement dated
January 23, 2006.
2. The information contained in the
Pricing Term Sheet set out in Schedule III
of this Agreement.
Securities to be purchased: Common Stock, par value $0.01 per share
Purchase Price: $12.22 per share
Closing Date and Time: February 6, 2006, 10:00 a.m.,
New York
City time
Closing Location: Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Address for Notices to Underwriters: Xxxxxx Xxxxxxx & Co. Incorporated,
0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Equity Syndicate Desk, with a
copy to the Legal Department.
Address for Notices to the Company:
Alnylam Pharmaceuticals, Inc., 000 Xxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Vice President of Finance.
SCHEDULE III
ALNYLAM PHARMACEUTICALS, INC.
5,115,961 SHARES
Issuer:
Alnylam Pharmaceuticals, Inc.
Symbol: ALNY
Size: $66,507,493
Shares offered by Alnylam Pharmaceuticals, Inc: 5,115,961 shares
Selling Stockholders: N/A
Greenshoe: 767,394 shares; option to purchase additional
shares from
Alnylam Pharmaceuticals, Inc.
Price to public: $13.00 per share
Trade date: January 31, 2006
Closing date: February 6, 2006
CUSIP: 00000X000
Underwriters: Xxxxxx Xxxxxxx & Co. Incorporated
Banc of America Securities LLC
Xxxxx Xxxxxxx & Co.
XX Xxxxx & Co., LLC
Xxxxxx & Xxxxxxx, LLC
A copy of the prospectus supplement relating to this offering may be
obtained by contacting Xxxxxx Xxxxxxx & Co. Incorporated, 000 Xxxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Prospectus Department or by email at
xxxxxxxxxx@xxxxxxxxxxxxx.xxx.
