EXHIBIT 1.1
4,700,000 SHARES
ALNYLAM PHARMACEUTICALS, INC.
Common Stock, Par Value $0.01 Per Share
UNDERWRITING AGREEMENT
December 12, 2006
December 12, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ Securities LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Alnylam Pharmaceuticals, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to Banc of America Securities LLC (the "UNDERWRITER")
4,700,000 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 705,000 shares of its Common
Stock (the "ADDITIONAL SHARES") if and to the extent that you shall have
determined to exercise the right to purchase such shares of Common Stock granted
to you 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 I 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 November 27, 2006, in the
form first used to confirm sales of the Shares (or in the form first made
available to you 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 you 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. 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
and the information included in Schedule II hereto, together with the free
writing prospectuses, if any, each
identified in Schedule I hereto. 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 you that:
(a) The 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 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
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,
and (v) 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 or the Prospectus based
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upon information relating to you furnished to the Company in writing by you
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 I hereto, 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).
(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, 2005.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
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(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, those issued or granted under
employee stock purchase or stock incentive plans described in the Time of Sale
Prospectus and the Prospectus, or those 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 in all material respects the information required to be shown
with respect to such plans, arrangements, options and rights.
(i) The Shares to be purchased by you 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.
(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.
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(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 Company's Form 10-K for the year
ended December 31, 2005 under the caption "Selected Consolidated Financial Data"
and in the Time of Sale Prospectus and the Prospectus under the caption
"Dilution" 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 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
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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 or operations 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 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").
(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
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(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) A notification form for the listing of the Shares has been
submitted to the Nasdaq Global Market, and no objection to such additional
listing, written or oral, has been received by the Company.
(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 , to the Company's knowledge, 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
patents, patent applications, trade and service marks, trade and service ▇▇▇▇
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 action, suit, proceeding or claim 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 action, suit, proceedings or claim
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 action, suit, proceedings or claim or,
to the Company's knowledge, threatened action, suit, proceeding or claim, by
others
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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
would reasonably be expected to 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. Except as described in the Time of Sale Prospectus and the
Prospectus, 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.
(v) The statements contained in the Time of Sale Prospectus and
the Prospectus under the caption "Risk Factors--Risks Relating to Patents,
Licenses and Trade Secrets," 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
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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 would reasonably be expected to cause
or result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares. The Company acknowledges
that the Underwriter may engage in passive market making transactions in the
Common Stock on the Nasdaq Global 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
9
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, 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
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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
(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
11
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 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 PTO 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.
12
(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 you and, for purposes of the opinions to
be delivered pursuant to Section 5 hereof, counsel to the Company and your
counsel, 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 you, and you, upon the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter stated, agrees to
purchase from the Company the Firm Shares at $21.57 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 you the Additional Shares, and you shall have the right to purchase up to
705,000 Additional Shares at the Purchase Price. You may exercise this right 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 you and the date on which
such shares are to be purchased. The 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 solely for the purpose
of covering over allotments made in connection with the offering of the Firm
Shares. Each day, if any, that Additional Shares are to be purchased is an
"OPTION CLOSING DATE."
3. Terms of Public Offering. The Company is advised by you that
you propose to make a public offering of the Shares as soon after this Agreement
has become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
$22.00 a share (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 your account at 10:00 a.m., New
York City time, on December 15, 2006, or at such other time on the same or such
other date, not later than December 18, 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."
13
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 your account 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 one
full business day 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 your account, with any transfer taxes payable in connection with the
transfer of the Shares to you duly paid, against payment of the Purchase Price
therefor.
5. Conditions to the Underwriter's Obligation. Your obligation to
purchase and pay for the Firm Shares on the Closing Date is subject to the
following conditions:
(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 it, in your judgment, impracticable to market the Shares on
the terms and in the manner contemplated in the Time of Sale
Prospectus.
(b) You 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.
14
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date an opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ LLP, U.S. outside counsel for the Company,
dated the Closing Date, to the effect set forth on Exhibit A.
(d) You shall have received on the Closing Date an opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ LLP, special German counsel for the
Company, dated the Closing Date, to the effect set forth on Exhibit B.
(e) You shall have received on the Closing Date an opinion of (i)
Fish & ▇▇▇▇▇▇▇▇▇▇ P.C., (ii) CMS ▇▇▇▇▇▇ ▇▇▇▇▇ and (iii) ▇▇▇▇▇ ▇▇▇▇ 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.
(f) You shall have received on the Closing Date an opinion of
Shearman & Sterling LLP, counsel for the Underwriter, dated the Closing Date, in
form and substance reasonably satisfactory to you.
(g) You 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 you, 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 delivered to you on or before the date hereof,
shall be in full force and effect on the Closing Date.
Your obligation to purchase Additional Shares hereunder is 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 you as
follows:
(a) To furnish to you, without charge, a copy of the signed
Registration Statement (including exhibits thereto and documents incorporated by
15
reference) and to deliver to you 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 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 you 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 your behalf that you
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 your counsel, 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 you 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 your counsel, 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 you or a 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
16
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, not
misleading, or if, in the opinion of your counsel, 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 you and to the
dealers (whose names and addresses you will furnish to the Company) to which
Shares may have been sold by you or on your behalf 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 you and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to you, including any transfer or other
taxes payable thereon, (iii) all filing fees and the reasonable fees and
disbursements of your counsel incurred in connection with the review and
qualification of the offering of the Shares by the NASD, (iv) all costs and
expenses incident to listing the Shares on the Nasdaq Global Market, (v) the
cost of printing certificates representing the
17
Shares, if any, (vi) the costs and charges of the transfer agent and registrar
of the Common Stock, (vii) 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, you will pay all of their costs and
expenses, including fees and disbursements of their counsel and stock transfer
taxes payable on resale of any of the Shares by them.
(j) The Company also covenants with you that, without your prior
written consent, 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, a registration statement filed in connection with a
demand for registration pursuant to an existing agreement or a registration
statement relating to the resale of up to 750,000 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.
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 and 401K plan in existence on the date hereof; (d)
the grant of options, restricted stock or other equity-based awards under equity
incentive plans now established and currently maintained by the Company or
assumed in connection with a business combination, provided that such options,
restricted stock and other equity-based awards do not vest, in whole or in part,
during the Lock-Up Period or the underlying shares are subject to a "lock-up"
agreement, substantially in the form of Exhibit F hereto; (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
18
the exception of up to 750,000 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.
(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 Global 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.
(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 direct the transfer agent to place stop
transfer restrictions upon any securities of the Company held by its executive
officers and directors who have entered into "lock-up" agreements with you,
substantially in the form of Exhibit F hereto, for the duration of the periods
contemplated in such agreements.
7. Covenants of the Underwriter. You covenant 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 your behalf that otherwise would not be required to be filed by the Company
thereunder, but for your actions.
8. Indemnity and Contribution. (a) The Company agrees to
indemnify and hold harmless the Underwriter, each person, if any, who controls
the Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act and each affiliate of the 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
19
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 the
Underwriter furnished to the Company in writing by the Underwriter expressly for
use therein.
(b) The Underwriter agrees 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 the Underwriter, but only
with reference to information relating to the Underwriter furnished to the
Company in writing by the Underwriter 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 the Underwriter, 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
20
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 (A) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (B) 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,
unless such settlement (x) includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding and (y) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(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 Underwriter 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 Underwriter 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 Underwriter 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 Underwriter, 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
Underwriter 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 Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
21
(e) The Company and the Underwriter agree that it would not be
just or equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 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, the Underwriter shall not be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that the Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The 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 the Underwriter, any person controlling
the Underwriter or any affiliate of the 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 Underwriter 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 Global 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. If this Agreement is terminated by you or because of any failure or
refusal on the part of
22
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 you for all out of
pocket expenses (including the fees and disbursements of your counsel)
reasonably incurred by you in connection with this Agreement or the offering
contemplated hereunder.
10. Effectiveness. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
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 you 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.
(b) The Company acknowledges that in connection with the offering
of the Shares: (i) the Underwriter has acted at arms length, is not an agent of,
and owes no fiduciary duties to, the Company or any other person, (ii) the
Underwriter owes 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 Underwriter 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 Underwriter 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 Underwriter shall be delivered, mailed
or sent to you at Banc of America Securities LLC, ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, with a copy to the Legal Department; and if to the
Company shall be delivered, mailed or sent to Alnylam Pharmaceuticals, Inc., ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Vice President of
Finance, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
23
Very truly yours,
ALNYLAM PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Ph.D.
Title: President and CEO
Accepted as of the date hereof
BANC OF AMERICA SECURITIES LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
24
SCHEDULE I
Transfer Agent: Computershare Trust Company
Registration Statement File No.: 333-138586
Time of Sale Prospectus 1. Preliminary Prospectus dated December
11, 2006 relating to the
Shares, consisting of the
Prospectus dated November
27, 2006 and the preliminary
prospectus supplement dated
December 11, 2006.
2. The information contained in the
Pricing Term Sheet set out in Schedule II of
this Agreement.
Closing Location: Shearman & Sterling LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
SCHEDULE II
ALNYLAM PHARMACEUTICALS, INC.
4,700,000 SHARES
Issuer: Alnylam Pharmaceuticals, Inc.
Symbol: ALNY
Shares offered by Alnylam 4,700,000 shares
Pharmaceuticals, Inc:
Public Offering Price: $22.00 per share
Trade date: December 12, 2006
Closing date: December 15, 2006
CUSIP: ▇▇▇▇▇▇▇▇▇
Underwriter: Banc of America Securities LLC
EXHIBIT A
Form of Opinion of Counsel for the Company
------------------------------------------
EXHIBIT B
Form of Opinion of Special German Counsel for the Company
---------------------------------------------------------
EXHIBIT C
Form of Opinion of Fish & ▇▇▇▇▇▇▇▇▇▇ P.C.
-----------------------------------------
EXHIBIT D
Form of Opinion of CMS ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
EXHIBIT E
Form of Opinion of ▇▇▇▇▇ ▇▇▇▇ LLP
---------------------------------
EXHIBIT F
[FORM OF LOCK-UP LETTER]
December 11, 2006
[___]
c/o [___]
Dear Sirs and Mesdames:
The undersigned understands that [ ] (the "UNDERWRITER") proposes to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with Alnylam
Pharmaceuticals, Inc. a Delaware corporation (the "COMPANY"), providing for the
public offering (the "PUBLIC OFFERING") by the Underwriter of [ ] shares (the
"SHARES") of the common stock, par value $0.01 per share of the Company (the
"COMMON STOCK").
To induce the Underwriter to participate in the Public Offering and to
continue its efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of the Underwriter, it
will not, during the period commencing on the date hereof and ending 90 days
after the date of the final prospectus relating to the Public Offering (the
"PROSPECTUS"), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or (2) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (a) transactions relating to shares of Common Stock
or other securities acquired in open market transactions after the completion of
the Public Offering, provided that no filing under Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") shall be
required or shall be voluntarily made in connection with subsequent sales of
Common Stock or other securities acquired in such open market transactions, (b)
transfers of shares of Common Stock or any security convertible into or
exercisable for Common Stock as a bona fide gift or by will or intestate
succession; provided that in the case of any such transfer, each donee shall
sign and deliver a lock up letter substantially in the form of this letter, (c)
distributions of shares of Common Stock or any security convertible into or
exercisable for Common Stock to limited partners, members or stockholders of the
undersigned; provided that in the case of any such distribution, each
F-1
distributee shall sign and deliver a lock up letter substantially in the form of
this letter and no filing under Section 16(a) of the Exchange Act, reporting a
reduction in beneficial ownership of shares of Common Stock, shall be required
or shall be voluntarily made during the restricted period referred to in the
foregoing sentence, (d) the exercise of an option to purchase shares of Common
Stock granted under the Company's stock incentive plan or stock purchase plan,
provided that the shares of Common Stock issued upon such exercise shall be
subject to the foregoing sentence, (e) transactions relating to shares of Common
Stock acquired in the Public Offering or (f) transactions relating to shares of
Common Stock or other securities pursuant to a contract, instruction or written
plan entered into by the undersigned prior to the date hereof that is designed
to satisfy the affirmative defense requirements of Rule 10b5-1 promulgated under
the Exchange Act. In addition, the undersigned agrees that, without the prior
written consent of the Underwriter, it will not, during the period commencing on
the date hereof and ending 90 days after the date of the Prospectus, make any
demand for or exercise any right with respect to, the registration of any shares
of Common Stock or any security convertible into or exercisable or exchangeable
for Common Stock. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of the undersigned's shares of Common Stock except in compliance
with the foregoing restrictions.
The undersigned understands that the Company and the Underwriter are
relying upon this agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is irrevocable
and shall be binding upon the undersigned's heirs, legal representatives,
successors and assigns.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriter.
This agreement shall automatically terminate upon the earliest to
occur, if any, of: (1) either the Underwriter, on the one hand, or the Company,
on the other hand, advising the other in writing, prior to the execution of the
Underwriting Agreement, that it has determined not to proceed with the Public
Offering, (2) termination of the Underwriting Agreement before the sale of any
Shares to the Underwriter or (3) December 31, 2006, in the event that the Public
Offering has not been consummated by that date.
Very truly yours,
-----------------------------------
(Name)
-----------------------------------
(Address)
F-2
