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EXHIBIT 1.1
2,250,000 Shares
CELLEGY PHARMACEUTICALS, INC.
Common Stock
[FORM OF]
UNDERWRITING AGREEMENT
_______ __, 1997
▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Cellegy Pharmaceuticals, Inc., a California corporation
(the "Company"), proposes to sell to you (the "Underwriter") an aggregate of
2,250,000 shares (the "Firm Shares") of the Company's Common Stock, no par
value (the "Common Stock"). In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an additional 337,500 shares (the
"Option Shares") of Common Stock from it for the purpose of covering
over-allotments in connection with the sale of the Firm Shares. The Firm
Shares and the Option Shares are together called the "Shares."
The Company also proposes to issue to the Underwriter, the
warrants referred to in Section 1(c) to purchase up to an aggregate of 125,000
shares of Common Stock.
1. Sale and Purchase of the Shares. On the basis of
the representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to sell to the Underwriter, and
the Underwriter agrees to purchase from the Company, at $_____ per
share (the "Initial Price"), 2,250,000 Firm Shares.
(b) The Company grants to the Underwriter an option to
purchase all or any part of the Option Shares at the Initial Price.
Such option may be exercised only to cover over-allotments in the
sales of the Firm Shares by the Underwriter and may be exercised in
whole or in part at any time on or before 12:00 noon, New York City
time, on the business day before the Firm Shares Closing Date (as
defined below), and only once thereafter within 30 days after the
date of this Agreement, in each case upon written or telegraphic
notice, or verbal or telephonic notice confirmed by written or
telegraphic notice, by the Underwriter no later than 4:30 p.m., New
York City
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time, on the business day before the Firm Shares Closing Date or at
least two business days before the Option Shares Closing Date (as
defined below), as the case may be, setting forth the number of
Option Shares to be purchased and the time and date (if other than
the Firm Shares Closing Date) of such purchase.
(c) On the Firm Shares Closing Date, the Company agrees
to issue to the Underwriter a warrant (the "Warrant") to purchase
shares of Common Stock in an amount equal to 5% of the Firm Shares,
up to a maximum of 125,000 shares (the "Warrant Shares"). The
Warrant will have a five-year term and will be exercisable one year
from the Firm Shares Closing Date at an exercise price equal to 130%
of the Initial Price. The Warrant will be substantially identical to
the form of Warrant filed as an exhibit to the Registration
Statement (as defined below).
2. Delivery and Payment. Delivery by the Company of
the Firm Shares to the Underwriter and payment of the purchase price by wire
transfer, certified or official bank check or checks payable in New York
Clearing House (same day) funds to the Company, shall take place at the offices
of ▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc., at ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New York City time (a) on the third full
business day following the first day that the Shares are traded, (b) if this
Agreement is executed and delivered after 4:30 p.m. New York City time, on the
fourth business day following the date of this Agreement, or (c) at such other
time or date, but not later than the fourth full business day following the
Effective Date (as hereinafter defined), as shall be agreed upon by the Company
and the Underwriter (such time and date of delivery and payment are called the
"Firm Shares Closing Date").
In the event the option with respect to the Option Shares
is exercised, delivery by the Company of the Option Shares to the Underwriter
and payment of the purchase price by certified or official bank check or checks
payable in New York Clearing House (same day) funds to the Company shall take
place at the offices of ▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc. specified above at the time and
on the date (which may be the same date as, but in no event shall be earlier
than, the Firm Shares Closing Date) specified in the notice referred to in
Section 1(b) (such time and date of delivery and payment are called the "Option
Shares Closing Date"). The Firm Shares Closing Date and the Option Shares
Closing Date are called, individually, a "Closing Date" and, together, the
"Closing Dates."
Certificates evidencing the Shares shall be registered in
such names and shall be in such denominations as the Underwriter shall request
at least two full business days before the Firm Shares Closing Date or, in the
case of Option Shares, on the day of notice of exercise of the option as
described in Section l(b) and shall be made available to the Underwriter for
checking and packaging, at such place as is designated by the Underwriter, on
the full business
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day before the Firm Shares Closing Date (or the Option Shares Closing Date in
the case of the Option Shares).
3. Registration Statement, Prospectus and Offering
Memorandum; Public Offering. The Company has prepared in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the published rules and regulations thereunder (the "Rules") adopted by the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-1 (No. 333-_____), including a preliminary prospectus relating to the
Shares, and has filed with the Commission the Registration Statement (as
hereinafter defined) and such amendments thereof as may have been required to
the date of this Agreement. The number of executed copies requested by the
Underwriter of such Registration Statement (including all amendments thereof)
and of the related preliminary prospectus have heretofore been delivered by the
Company to the Underwriter. The term "preliminary prospectus" means any
preliminary prospectus (as described in Rule 430 of the Rules), including the
documents incorporated by reference therein, concluded at any time as a part of
the Registration Statement. The Registration Statement, as amended at the time
and on the date it became effective (the "Effective Date"), including all
documents incorporated by reference therein and all exhibits and information, if
any, deemed to be part of the Registration Statement pursuant to Rule 424(b),
Rule 430A, Rule 434 and Rule 462(b) of the Rules, is called the "Registration
Statement." The term "Prospectus" means the prospectus, including the documents
incorporated by reference therein, in the form first used to confirm sales of
the Shares (whether such prospectus was included in the Registration Statement
at the time of effectiveness or was subsequently filed with the Commission
pursuant to Rule 424(b) of the Rules).
The Company understands that the Underwriter proposes to
make a public offering of the Shares, as set forth in and pursuant to the
Prospectus, as soon after the Effective Date and the date of this Agreement as
the Underwriter deems advisable. The Company hereby confirms that the
Underwriter and dealers have been authorized to distribute or cause to be
distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriter).
4. Representations and Warranties of the Company.
The Company hereby represents and warrants to the Underwriter as follows:
(a) On the Effective Date the Registration Statement
complied, and on the date of the Prospectus, on the date any
post-effective amendment to the Registration Statement shall become
effective, on the date any supplement or amendment to the
Prospectus is filed with the Commission and on each Closing Date,
the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and
the Rules and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder; the Registration Statement did not, as of the Effective
Date, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the
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statements therein not misleading; and on the other dates referred
to above neither the Registration Statement nor the Prospectus, nor
any amendment thereof or supplement thereto, will contain any
untrue statement of a material fact or will omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein not misleading. When any related
preliminary prospectus was first filed with the Commission (whether
filed as part of the Registration Statement or any amendment
thereto or pursuant to Rule 424(a) of the Rules) and when any
amendment thereof or supplement thereto was first filed with the
Commission, such preliminary prospectus as amended or supplemented
complied in all material respects with the applicable provisions of
the Securities Act and the Rules and did not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. Notwithstanding the foregoing,
the Company makes no representation or warranty as to the paragraph
with respect to stabilization on the inside front cover page of the
Prospectus and the statements contained under the caption
"Underwriting" in the Prospectus. The Company acknowledges that
the statements referred to in the previous sentence constitute the
only information furnished in writing by the Underwriter
specifically for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus.
(b) All contracts and other documents required to be
filed as exhibits to the Registration Statement have been filed
with the Commission as exhibits to the Registration Statement.
(c) The financial statements of the Company (including
all notes and schedules thereto) included in the Registration
Statement and Prospectus present fairly the financial position, the
results of operations and cash flows and the shareholders' equity
and the other information purported to be shown therein of the
Company at the respective dates and for the respective periods to
which they apply; and such financial statements have been prepared
in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of the results for
such periods have been made.
(d) Ernst & Young LLP, whose reports are filed with
the Commission as a part of the Registration Statement, are and,
during the periods covered by their reports, were independent
public accountants as required by the Securities Act and the Rules.
(e) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of California. The Company has no subsidiary or subsidiaries and
does not control, directly or indirectly, any corporation,
partnership, joint venture, association or other business
organization. The Company is duly qualified and in good standing
as a foreign corporation in each jurisdiction in which the
character or location of its assets or properties (owned, leased or
licensed)
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or the nature of its business makes such qualification necessary
except for such jurisdictions where the failure to so qualify would
not have a material adverse effect on the assets or properties,
business, results of operations or financial condition of the
Company. Except as disclosed in the Registration Statement and the
Prospectus, the Company does not own, lease or license any asset or
property or conduct any business outside the United States of
America. The Company has all requisite corporate power and
authority, and all necessary authorizations, approvals, consents,
orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity, to
own, lease and license its assets and properties and conduct its
businesses as now being conducted and as described in the
Registration Statement and the Prospectus except for such
authorizations, approvals, consents, orders, material licenses,
certificates and permits the failure to so obtain would not have a
material adverse effect upon the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company; no such authorization, approval,
consent, order, license, certificate or permit contains a
materially burdensome restriction other than as disclosed in the
Registration Statement and the Prospectus; and the Company has all
such corporate power and authority, and such authorizations,
approvals, consents, orders, licenses, certificates and permits to
enter into, deliver and perform this Agreement and to issue and
sell the Shares (except as may be required under the Securities Act
and state and foreign Blue Sky laws).
(f) The Company owns or possesses adequate and
enforceable rights to use all trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications,
licenses, know-how and other similar rights and proprietary
knowledge (collectively, "Intangibles") necessary for the conduct
of its business as described in the Registration Statement and the
Prospectus. The Company has not received any notice of, or to its
best knowledge is not aware of, any infringement of or conflict
with asserted rights of others with respect to any Intangibles
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect
upon the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(g) The Company has good and marketable title to each
of the items of personal property which are reflected in the
financial statements referred to in Section 4(c) or are referred to
in the Registration Statement and the Prospectus as being owned by
it and valid and enforceable leasehold interests in each of the
items of real and personal property which are referred to in the
Registration Statement and the Prospectus as being leased by it, in
each case free and clear of all liens, encumbrances, claims,
security interests and defects, other than those described in the
Registration Statement and the Prospectus and those which do not
and will not have a material adverse effect upon the assets or
properties, business, results of operations or financial condition
of the Company.
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(h) There is no litigation or governmental or other
proceeding or investigation before any court or before or by any
public body or board pending or, to the Company's best knowledge,
threatened (and the Company does not know of any basis therefor)
against, or involving the assets, properties or business of, the
Company which would materially adversely affect the value or the
operation of any such assets or properties or the business, results
of operations, prospects or condition (financial or otherwise) of
the Company.
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, except as described therein, (i) there has not been
any material adverse change in the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise), of the Company, whether or not arising from
transactions in the ordinary course of business; (ii) the Company
has not sustained any material loss or interference with its
assets, businesses or properties (whether owned or leased) from
fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree; and
(iii) and since the date of the latest balance sheet included in
the Registration Statement and the Prospectus, except as reflected
therein, the Company has not (a) issued any securities or incurred
any liability or obligation, direct or contingent, for borrowed
money, except such liabilities or obligations incurred in the
ordinary course of business, (b) entered into any transaction not
in the ordinary course of business or (c) declared or paid any
dividend or made any distribution on any shares of its stock or
redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its stock.
(j) There is no document or contract of a character
required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. Each
agreement listed in the Exhibits to the Registration Statement is
in full force and effect and is valid and enforceable by and
against the Company in accordance with its terms, assuming the due
authorization, execution and delivery thereof by each of the other
parties thereto. Neither the Company, nor to the best of the
Company's knowledge, any other party is in default in the
observance or performance of any term or obligation to be performed
by it under any such agreement, and no event has occurred which
with notice or lapse of time or both would constitute such a
default, in any such case which default or event would have a
material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company. No default exists, and no event has
occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company of any other agreement
or instrument to which the Company is a party or by which it or its
properties or business may be bound or affected which default or
event would have a material adverse effect on the assets or
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properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company.
(k) The Company is not in violation of any term or
provision of its charter or by-laws or of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where
the consequences of such violation would have a material adverse
effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company.
(l) Neither the execution, delivery and performance of
this Agreement and the Warrants by the Company nor the consummation
of any of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the Shares and
the Warrants) will give rise to a right to terminate or accelerate
the due date of any payment due under, or conflict with or result
in the breach of any term or provision of, or constitute a default
(or an event which with notice or lapse of time or both would
constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge
or encumbrance upon any properties or assets of the Company
pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company is a party or by
which it or any of its properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule
or regulation applicable to the Company or violate any provision of
the charter or bylaws of the Company, except for such consents or
waivers which have already been obtained and are in full force and
effect.
(m) The Company has an authorized and outstanding
capital stock as set forth under the caption "Capitalization" in
the Prospectus. All of the outstanding shares of Common Stock have
been duly and validly issued and are fully paid and nonassessable
and none of them was issued in violation of any preemptive or other
similar right. The Company has reserved and kept available for the
exercise of the Warrants such number of authorized but unissued
shares as are sufficient to permit the exercise in full of the
Warrants. The Shares, when issued and sold pursuant to this
Agreement, and the Warrant shares, when issued and sold pursuant to
the Warrants, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and
there is no commitment, plan or arrangement to issue, any share of
stock of the Company or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock, the
Shares and the Warrants conform in all material respects to all
statements in relation thereto contained in the Registration
Statement and the Prospectus.
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(n) No holder of any security of the Company has the
right to have any security owned by such holder included in the
Registration Statement or to demand registration of any security
owned by such holder during the period ending 120 days after the
date of this Agreement. Each shareholder, director and executive
officer of the Company has delivered to the Underwriter his or her
enforceable written agreement that he or she will not, for a period
of 120 days after the date of this Agreement, offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, or exercise any registration rights with
respect to, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares of
Common Stock) owned by him or her, without the prior written consent
of the Underwriter.
(o) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery
and performance of this Agreement and the Warrants and the issuance
and sale of the Shares, the Warrants and the Warrant Shares by the
Company. This Agreement has been, and the Warrants on the Firm
Shares Closing Date will be, duly and validly authorized, executed
and delivered by the Company and will constitute legal, valid and
binding obligations of the Company enforceable against the Company
in accordance with their respective terms, except (A) as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles and (B) to the extent that rights to indemnity or
contribution under this Agreement may be limited by federal and
state securities laws or the public policy underlying such laws.
(p) The Company is not involved in any labor dispute
nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a material adverse effect on
the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(q) No transaction has occurred between or among the
Company and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be
described in and is not described in the Registration Statement and
the Prospectus.
(r) The Company has not taken, nor will it take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has
constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock
to facilitate the sale or resale of any of the Shares.
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(s) The Company has filed all federal, state, local
and foreign tax returns which are required to be filed through the
date hereof, or has received extensions thereof, and has paid all
taxes shown on such returns and all assessments received by it to
the extent that the same are material and have become due.
(t) The books, records and accounts of the Company
accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the
results of operations of, the Company. 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 accordance with generally accepted
accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences.
(u) Neither the Company nor any director, officer or
employee of the Company has, in the course of such person's actions
for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity or made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; and neither the Company,
nor to the Company's knowledge, any director, officer, employee,
agent or other person acting on behalf of the Company, has, in the
course of his actions for, or on behalf of, the Company violated or
is in violation of any provision of the Foreign Corrupt Practices
Act of 1977 or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(v) Each approval, consent, order, authorization,
designation, declaration or filing of, by or with any regulatory,
administrative or other governmental body necessary in connection
with the execution and delivery by the Company of this Agreement
and the consummation of the transactions herein contemplated
required to be obtained or performed by the Company (except such
additional steps as may be required by the National Association of
Securities Dealers, Inc. (the "NASD") or may be necessary to
qualify the Shares for public offering by the Underwriters under
the Securities Act or state securities or Blue Sky laws has been
obtained or made and is in full force and effect.
(w) The Shares have been duly authorized for quotation
on Nasdaq.
(x) There are no affiliations with the NASD among the
Company's officers, directors or, to the best of the knowledge of
the
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Company, any shareholders of the Company, except as set forth in
the Registration Statement or otherwise disclosed to the
Representatives of the Underwriters.
(y) (i) The Company is in compliance in all material
respects with all rules, laws and regulation relating to the use,
treatment, storage and disposal of toxic substances and protection
of health or the environment ("Environmental Laws") which are
applicable to its business, (ii) the Company has not received any
notice from any governmental authority or third party of an
asserted claim under Environmental Laws, (iii) to the Company's
knowledge, no facts currently exist that will require the Company
to make future material capital expenditures to comply with
Environmental Laws, and (iv) no property which is or has been
owned, leased or occupied by the Company has been designated as a
Superfund site pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9601, et seq.), or otherwise designated as a
contaminated site under applicable state or local law.
(z) The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
5. Conditions of the Underwriter's Obligations. The
obligations of the Underwriter to purchase the Shares are subject
to each of the following terms and conditions:
(a) Notification that the Registration Statement has
become effective shall have been received by the Underwriter, and
the Prospectus shall have been timely filed with the Commission in
accordance with Section 6(a)(i) of this Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall
be in effect and no order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for
such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part
of the Commission (to be included in the Registration Statement or
the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Underwriter.
(c) The representations and warranties of the Company
contained in this Agreement and in the certificates delivered
pursuant to Section 5(d) shall be true and correct when made and on
and as of each Closing Date as if made on such date and the Company
shall have performed all covenants and agreements and satisfied all
the conditions contained in this Agreement required to be performed
or satisfied by it at or before such Closing Date.
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(d) The Underwriter shall have received on each
Closing Date a certificate, addressed to the Underwriter and dated
such Closing Date, of the chief executive or chief operating
officer of the Company to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and
warranties of the Company in this Agreement are true and correct on
and as of such Closing Date with the same effect as if made on such
Closing Date and the Company has performed all covenants and
agreements and satisfied all conditions contained in this Agreement
required to be performed or satisfied by it at or prior to such
Closing Date.
(e) The Underwriter shall have received on the
Effective Date, at the time this Agreement is executed and on each
Closing Date a signed letter from Ernst & Young LLP addressed to
the Underwriter and dated, respectively, the Effective Date, the
date of this Agreement and each such Closing Date, in form and
substance reasonably satisfactory to the Underwriter, confirming
that they are independent accountants within the meaning of the
Securities Act and the Rules, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them and
stating in effect that:
(i) in their opinion the audited financial
statements and financial statement schedules included in
the Registration Statement and the Prospectus and reported
on by them comply as to form in all material respects with
the applicable accounting requirements of the Securities
Act and the Rules;
(ii) on the basis of a reading of the amounts
included in the Registration Statement and the Prospectus
under the headings "Summary Financial Information" and
"Selected Financial Data," carrying out certain procedures
(but not an examination in accordance with generally
accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments
set forth in such letter, a reading of the minutes of the
meetings of the shareholders and directors of the Company,
and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the
Company as to transactions and events subsequent to the
date of the latest audited financial statements, except as
disclosed in the Registration Statement and the Prospectus,
nothing came to their attention which caused them to
believe that:
(A) the amounts in "Summary Financial
Information," and "Selected Financial Data"
included in the Registration Statement and the
Prospectus do not agree with the corresponding
amounts in the audited and unaudited financial
statements from which such amounts were derived;
or
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(B) with respect to the Company, there
were, at a specified date not more than five
business days prior to the date of the letter, any
increases in the current liabilities and long-term
liabilities of the Company or any decreases in net
income or in working capital or the shareholders'
equity in the Company, as compared with the
amounts shown on the Company's audited balance
sheet for the fiscal year ended December 31, 1996
and the nine months ended September 30, 1997
included in the Registration Statement; and
(iii) they have performed certain other
procedures as a result of which they determined that
certain information of an accounting, financial or
statistical nature (which is limited to accounting,
financial or statistical information derived from the
general accounting records of the Company) set forth in the
Registration Statement and the Prospectus and reasonably
specified by the Underwriter agrees with the accounting
records of the Company.
References to the Registration Statement and the Prospectus
in this paragraph (e) are to such documents as amended and
supplemented at the date of the letter.
(f) The Underwriter shall have received on each
Closing Date from Fenwick & West LLP, counsel for the Company, an
opinion, addressed to the Underwriter and dated such Closing Date,
and stating in effect that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under
the laws of the State of California. To the best of such
counsel's knowledge, the Company has no subsidiary and does
not control, directly or indirectly, any corporation,
partnership, joint venture, association or other business
organization. The Company is duly qualified and in good
standing as a foreign corporation in each jurisdiction in
which the character or location of its assets or properties
(owned, leased or licensed) or the nature of its businesses
makes such qualification necessary, except for such
jurisdictions where the failure to so qualify would not
have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition
(financial or otherwise) of the Company.
(ii) The Company has all requisite corporate
power and authority to own, lease and license its assets
and properties and conduct its business as now being
conducted and as described in the Registration Statement
and the Prospectus; and the Company has all requisite
corporate power and authority and all necessary
authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform
this Agreement and
12.
13
the Warrants and to issue and sell the Shares and the
Warrant Shares, other than those required under the
Securities Act and state and foreign Blue Sky laws.
(iii) The Company has authorized and issued
capital stock as set forth in the Registration Statement
and the Prospectus; the certificates evidencing the Shares
are in due and proper legal form and have been duly
authorized for issuance by the Company; all of the
outstanding shares of Common Stock of the Company have been
duly and validly authorized and have been duly and validly
issued and are fully paid and nonassessable and none of
them was issued in violation of any preemptive or other
similar right. The Warrant Shares have been duly
authorized and reserved by the Company. The Shares when
issued and sold pursuant to this Agreement and the Warrant
Shares, when sold and issued pursuant to the Warrants, will
be duly and validly issued, outstanding, fully paid and
nonassessable and none of them will have been issued in
violation of any preemptive or other similar right. To the
best of such counsel's knowledge, except as disclosed in
the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the
issuance of, and no commitment, plan or arrangement to
issue, any share of stock of the Company or any security
convertible into, exercisable for, or exchangeable for
stock of the Company. The Common Stock, the Shares and the
Warrants conform in all material respects to the
descriptions thereof contained in the Registration
Statement and the Prospectus.
(iv) To such counsel's knowledge, no holders of
securities of the Company have rights, which have not been
waived or complied with, to the registration of shares of
Common Stock or other securities, because of the filing of
the Registration Statement by the Company or the offering
contemplated hereby.
(v) All necessary corporate action has been duly
and validly taken by the Company to authorize the
execution, delivery and performance of this Agreement, the
execution, delivery and performance of the Warrants and the
issuance and sale of the Shares, the Warrants and the
Warrant Shares. This Agreement has been duly and validly
authorized, executed and delivered by the Company (and the
Warrants will have been duly and validly executed and
delivered by the Company when paid for on the Firm Shares
Closing Date) and this Agreement constitutes the legal,
valid and binding obligation of the Company enforceable
against the Company in accordance with their respective
terms except (A) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable
principles and (B) to the extent that rights to indemnity
or contribution under
13.
14
this Agreement may be limited by federal or state
securities laws or the public policy underlying such laws.
(vi) Neither the execution, delivery and
performance of this Agreement by the Company nor the
consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale by
the Company of the Shares and the Warrants) will give rise
to a right to terminate or accelerate the due date of any
payment due under, or conflict with or result in the breach
of any term or provision of, or constitute a default (or
any event which with notice or lapse of time, or both,
would constitute a default) under, or require consent or
waiver under, or result in the execution or imposition of
any lien, charge or encumbrance upon any properties or
assets of the Company pursuant to the terms of any
indenture, mortgage, deed trust, note or other agreement or
instrument of which such counsel is aware and to which the
Company is a party or by which it or any of its properties
or businesses is bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation of
which such counsel is aware or violate any provision of the
charter or bylaws of the Company.
(vii) To the best of such counsel's knowledge, no
default exists, and no event has occurred which with notice
or lapse of time, or both, would constitute a default, in
the due performance and observance of any term, covenant or
condition by the Company of any indenture, mortgage, deed
of trust, note or any other agreement or instrument to
which the Company is a party or by which it or any of its
assets or properties or businesses may be bound or
affected, where the consequences of such default would have
a material and adverse effect on the assets, properties,
business, results of operations, prospects or condition
(financial or otherwise) of the Company.
(viii) To the best of such counsel's knowledge,
the Company is not in violation of any term or provision of
its charter or bylaws or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where
the consequences of such violation would have a material
and adverse effect on the assets or properties, businesses,
results of operations, prospects or condition (financial or
otherwise) of the Company.
(ix) No consent, approval, authorization or order
of any court or governmental agency or body is required for
the performance of this Agreement or the Warrants by the
Company or the consummation of the transactions
contemplated hereby or thereby, except such as have been
obtained under the Securities Act and such as may be
required under state securities or Blue Sky
14.
15
laws in connection with the purchase and distribution of
the Shares by the Underwriter.
(x) To the best of such counsel's knowledge,
there is no litigation or governmental or other proceeding
or investigation, before any court or before or by any
public body or board pending or threatened against, or
involving the assets, properties or businesses of, the
Company which would have a material adverse effect upon the
assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the
Company.
(xi) The statements in the Prospectus and
Registration Statement under the captions
"_____________________" have been reviewed by such counsel
and are accurate in all material respects and fairly present
the information disclosed therein. All contracts and other
documents required to be filed as exhibits to, or described
in, the Registration Statement have been so filed with the
Commission or are fairly described in the Registration
Statement, as the case may be.
(xii) The statements in the Prospectus and
Registration Statement under the captions "Risk Factors -
Possible FDA Regulation of Cosmeceutical Products" and
"Business - Government Regulation," insofar as such
statements purport to summarize applicable provisions of
the Federal Food, Drug and Cosmetic Act, as amended, and
the regulations promulgated thereunder, are accurate
summaries in all material respects of the provisions
purported to be summarized under such captions.
(xiii) The Registration Statement has become
effective under the Securities Act, and, to such counsel's
knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are
threatened, pending or contemplated; any required filing of
the Prospectus and any supplement thereto pursuant to Rule
424(b) of the Rules has been made in the manner and within
the time period required by Rule 424(b).
15.
16
(xiv) The description of the capital stock of
the Company contained in the Registration Statement and the
Prospectus under the caption "Description of Capital Stock"
is accurate and complete.
(xv) The description of the Common Stock of the
Company contained in the Company's Form 8-A filed with the
Commission is accurate and complete.
(xvi) To such counsel's knowledge, the Shares
have been approved for quotation on the Nasdaq National
Market System.
To the extent deemed advisable by such counsel, they may
rely as to matters of fact on certificates of responsible officers of the
Company and public officials and on the opinions of other counsel satisfactory
to the Underwriter as to matters which are governed by laws other than the laws
of the State of New York, the General Corporation Law of the State of
California and the federal laws of the United States; provided that such
counsel shall state that in their opinion the Underwriter and they are
justified in relying on such other opinions. Copies of such certificates and
other opinions shall be furnished to the Underwriter and counsel for the
Underwriter.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Underwriter and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except
as specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to believe
that the Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and other
financial data, as to which such counsel need express no belief) contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus as amended or supplemented (except with
respect to the financial statements and notes schedules thereto and other
financial data, as to which such counsel need make no statement) on the date
thereof contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(g) The Underwriter shall have received on each
Closing Date from ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ and Crew, patent
counsel for the Company, an opinion addressed to the
Underwriter and dated such Closing Date, and stating in
effect that:
(i) The statements with respect to patent
matters in the Prospectus and Registration Statement under
the captions "Risk Factors - Patents and Proprietary
Technology" and "Business - Patents and Trade Secrets" have
been
16.
17
reviewed by such patent counsel and are accurate in all
material respects and fairly present the information
disclosed therein.
(ii) To such patent counsel's knowledge, such
patent counsel believes the statements in the Registration
Statements and the Prospectus under the captions "Risk
Factors - Patents and Proprietary Technology" and "Business
- Patents and Trade Secrets" do not contain any untrue
statement of material fact, or do not omit to state any
material fact which would be required to be stated in the
Registration Statement and the Prospectus or are necessary
to make the statements therein not misleading.
(iii) Except as set forth in the Registration
Statement and the Prospectus, to such patent counsel's
knowledge, there is no claim or action by any person
pertaining to, or proceeding, pending or threatened, which
challenges the rights of the Company with respect to the
Company's patents or patent applications.
(h) All proceedings taken in connection with the sale
of the Firm Shares and the Option Shares as herein contemplated
shall be reasonably satisfactory in form and substance to the
Underwriter and its counsel and the Underwriter shall have received
from ▇▇▇▇▇▇ Godward LLP a favorable opinion, addressed to the
Underwriter and dated such Closing Date, with respect to the
Shares, the Registration Statement and the Prospectus, and such
other related matters, as the Underwriter may reasonably request,
and the Company shall have furnished to ▇▇▇▇▇▇ Godward LLP such
documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(i) The Underwriter shall have received copies of the
Lock-up Agreements executed by each person described in Section
4(n).
(j) The Underwriter shall have received on each
Closing Date a certificate, addressed to the Underwriter, and dated
such Closing Date, of an executive officer of the Company to the
effect that the signer of such certificate has reviewed and
understands the provisions of Section 517.075 of the Florida
Statutes, and represents that the Company has complied, and at all
times will comply, with all provisions of Section 517.075 and
further, that as of such Closing Date, neither the Company nor any
of its affiliates does business with the government of Cuba or with
any person or affiliate located in Cuba.
6. Covenants of the Company.
(a) The Company covenants and agrees as follows:
17.
18
(i) The Company shall prepare the Prospectus in a form
approved by the Underwriter and file such Prospectus pursuant to
Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second business day following
the execution and delivery of this Agreement, or, if applicable,
such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act, and shall promptly advise the Underwriter (A) when
any amendment to the Registration Statement shall have become
effective, (B) of any request by the Commission for any amendment
of the Registration Statement or the Prospectus or for any
additional information, (C) of the prevention or suspension of the
use of any preliminary prospectus or the Prospectus or of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (D) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company shall not file any amendment of the
Registration Statement or supplement to the Prospectus unless the
Company has furnished the Underwriter a copy for its review prior
to filing and shall not file any such proposed amendment or
supplement to which the Underwriter reasonably objects. The
Company shall use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Shares is required to be delivered under the Securities Act and the
Rules, any event occurs as a result of which the Prospectus as then
amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make
the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to
amend or supplement the Prospectus to comply with the Securities
Act or the Rules, the Company promptly shall prepare and file with
the Commission, subject to the second sentence of paragraph (i) of
this Section 6(a), an amendment or supplement which shall correct
such statement or omission or an amendment which shall effect such
compliance.
(iii) The Company shall make generally available to its
security holders and to the Underwriter as soon as practicable, but
not later than 45 days after the end of the 12-month period
beginning at the end of the fiscal quarter of the Company during
which the Effective Date occurs (or 90 days if such 12-month period
coincides with the Company's fiscal year), an earning statement
(which need not be audited) of the Company, covering such 12-month
period, which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Rules.
(iv) The Company shall furnish to the Underwriter and
counsel for the Underwriter, without charge, signed copies of the
Registration Statement (including all exhibits thereto and
amendments thereof) and, so long as delivery of a prospectus
18.
19
by the Underwriter or dealer may be required by the Securities Act
or the Rules, as many copies of any preliminary prospectus and the
Prospectus and any amendments thereof and supplements thereto as
the Underwriter may reasonably request.
(v) The Company shall cooperate with the Underwriter
and its counsel in endeavoring to qualify the Shares for offer and
sale under the laws of such jurisdictions as the Underwriter may
designate and shall maintain such qualifications in effect so long
as required for the distribution of the Shares; provided, however,
that the Company shall not be required in connection therewith, as
a condition thereof, to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction
or subject itself to taxation as doing business in any
jurisdiction.
(vi) For a period of five years after the date of this
Agreement, the Company shall supply to the Underwriter, copies of
such financial statements and other periodic and special reports as
the Company may from time to time distribute generally to the
holders of any class of its capital stock and to furnish to the
Underwriter a copy of each annual or other report it shall be
required to file with the Commission.
(vii) Without the prior written consent of the
Underwriter, for a period of 120 days after the date of this
Agreement, the Company shall not issue, sell or register with the
Commission (other than on Form S-8 or on any successor form), or
otherwise dispose of, directly or indirectly, any equity securities
of the Company (or any securities convertible into or exercisable
or exchangeable for equity securities of the Company), except for
the issuance of the Shares pursuant to the Registration Statement
and the issuance of shares pursuant to the Company's existing stock
option plan or bonus plan. In the event that during this period,
(i) any shares are issued pursuant to the Company's existing stock
option plan or bonus plan or (ii) any registration is effected on
Form S-8 or on any successor form, the Company shall obtain the
written agreement of such grantee or purchaser or holder of such
registered securities that, for a period of 120 days after the
date of this Agreement, such person will not, without the prior
written consent of the Underwriter, offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, or exercise any registration rights
with respect to, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares
of Common Stock) owned by such person.
(viii) On or before completion of this offering, the
Company shall make all filings required under applicable securities
laws and by the Nasdaq National Market System (including any
required registration under the Exchange Act).
19.
20
(b) The Company agrees to pay, or reimburse if paid by
the Underwriter, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company under this Agreement including those relating to: (i) the preparation,
printing, filing and distribution of the Registration Statement including all
exhibits thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statement and the Prospectus, and the
printing, filing and distribution of this Agreement; (ii) the preparation and
delivery of certificates for the Shares to the Underwriter and the Warrants to
the Underwriter; (iii) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the various
jurisdictions referred to in Section 6(a)(v), including the reasonable fees and
disbursements of counsel for the Underwriter in connection with such
registration and qualification and the preparation, printing, distribution and
shipment of preliminary and supplementary Blue Sky memoranda; (iv) the
furnishing (including costs of shipping and mailing) to the Underwriter of
copies of each preliminary prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by this
Section to be so furnished, as may be reasonably requested for use in
connection with the offering and sale of the Shares by the Underwriter or by
dealers to whom Shares may be sold; (v) the filing fees of the National
Association of Securities Dealers, Inc. in connection with its review of the
terms of the public offering; (vi) the furnishing (including costs of shipping
and mailing) to the Underwriter of copies of all reports and information
required by Section 6(a)(vi); (vii) inclusion of the Shares for quotation on
the Nasdaq National Market System; and (viii) all transfer taxes, if any, with
respect to the sale and delivery of the Shares by the Company to the
Underwriters.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
the Underwriter and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any and all losses,
claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Securities Act, the Exchange Act
or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any
amendment thereof or supplement thereto, or arise out of or are
based upon any omission or alleged omission to state
20.
21
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however,
that such indemnity shall not inure to the benefit of the
Underwriter (or any person controlling such Underwriter) on account
of any losses, claims, damages or liabilities arising from the sale
of the Shares to any person by such Underwriter if such untrue
statement or omission or alleged untrue statement or omission was
made in such preliminary prospectus, the Registration Statement or
the Prospectus, or such amendment or supplement, in reliance upon
and in conformity with information furnished in writing to the
Company by the Underwriter specifically for use therein. This
indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) The Underwriter agrees to indemnify and hold
harmless the Company, each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, each director of the Company, and each
officer of the Company who signs the Registration Statement, to the
same extent as the foregoing indemnity from the Company to the
Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in
any preliminary prospectus, the Registration Statement or the
Prospectus, or any amendment thereof or supplement thereto,
contained in the last paragraph of the cover page, in the paragraph
relating to stabilization on the inside front cover page of the
Prospectus and the statements contained under the caption
"Underwriting" in the Prospectus; provided, however, that the
obligation of the Underwriter to indemnify the Company (including
any controlling person, director or officer thereof) shall be
limited to the net proceeds received by the Company from the
Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of
notice of commencement of any action, suit or proceeding against
such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section, notify each such
indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 7(a) or 7(b) shall be
available to any party who shall fail to give notice as provided in
this Section 7(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice but the
omission so to notify such indemnifying party of any such action,
suit or proceeding shall not relieve it from any liability that it
may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other indemnifying
party similarly
21.
22
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall
have the right to employ its counsel in any such action, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have
reasonably concluded that there may be a conflict of interest
between the indemnifying parties and the indemnified party in the
conduct of the defense of such action (in which case the
indemnifying parties shall not have the right to direct the defense
of such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written
consent.
8. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnification provided
for in Section 7(a) is due in accordance with its terms but for any reason is
held to be unavailable from the Company, the Company and the Underwriter shall
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting any contribution received by the
Company from persons other than the Underwriter, such as persons who control
the Company within the meaning of the Securities Act, officers of the Company
who signed the Registration Statement and directors of the Company, who may
also be liable for contribution) to which the Company, and the Underwriter may
be subject 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 from the offering of the Shares or, if such allocation is not permitted
by applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 7 hereof,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company on the one hand
and the Underwriter on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Underwriter shall be deemed to be in the same
proportion as (x) the total proceeds from the offering (net of underwriting
discounts but before deducting expenses) received by the Company, as set forth
in the table on the cover page of the Prospectus, bear to (y) the underwriting
discounts received by the Underwriter, as set forth in the table on the cover
page of the Prospectus. The
22.
23
relative fault of the Company or the Underwriter shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact related to information supplied by the Company or
the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriter agree that it would not be just and equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 8, (i) in no case shall the Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by the Underwriter hereunder, and (ii) the Company shall
be liable and responsible for any amount in excess of such underwriting
discount; provided, however, that 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. For purposes of this Section 8, each person, if
any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed
the Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) in the immediately preceding sentence of this Section 8. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim for contribution may be made against another party or parties under this
Section, notify such party or parties from whom contribution may be sought, but
the omission so to notify such party or parties from whom contribution may be
sought shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise
than under this Section. No party shall be liable for contribution with
respect to any action, suit, proceeding or claim settled without its written
consent.
9. Termination. This Agreement may be terminated
with respect to the Shares to be purchased on a Closing Date by the Underwriter
by notifying the Company at any time:
(a) in the absolute discretion of the Underwriter at
or before any Closing Date: (i) if on or prior to such date, any
domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Underwriter will in the future
materially disrupt, the securities markets; (ii) if there has
occurred any new outbreak or material escalation of hostilities or
other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment
of the Underwriter, inadvisable to proceed with the offering; (iii)
if there shall be such a material adverse change in general
financial, political or economic conditions or the effect of
international conditions on the financial markets in the United
23.
24
States is such as to make it, in the judgment of the Underwriter,
inadvisable or impracticable to market the Shares; (iv) if trading
in the Shares has been suspended by the Commission or trading
generally on the New York Stock Exchange, Inc. or Nasdaq has been
suspended or limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for
securities have been required, by said exchanges or by order of the
Commission, the National Association of Securities Dealers, Inc.,
or any other governmental or regulatory authority; or (v) if a
banking moratorium has been declared by any state or federal
authority, or
(b) at or before any Closing Date, that any of the
conditions specified in Section 5 shall not have been fulfilled
when and as required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to the Underwriter,
and the Underwriter shall not be under any liability to the Company, except
that (y) if this Agreement is terminated by the Underwriter because of any
failure, refusal or inability on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, the Company will
reimburse the Underwriter for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with the proposed purchase and sale of the Shares or in
contemplation of performing their obligations hereunder and (z) no Underwriter
who shall have failed or refused to purchase the Shares agreed to be purchased
by it under this Agreement, without some reason sufficient hereunder to justify
cancellation or termination of its obligations under this Agreement, shall be
relieved of liability to the Company for damages occasioned by its failure or
refusal.
10. Miscellaneous. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriter set forth in or made pursuant to this
Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Sections 7 and 8
hereof, and shall survive delivery of and payment for the Shares. The
provisions of Sections 6(b), 7, 8 and 9 shall survive the termination or
cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriter and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling the
Underwriter, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from the Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in
writing and mailed or delivered or by telephone or telegraph if subsequently
confirmed in writing, (a) if to the
24.
25
Underwriter, c/o Oppenheimer & Co., Inc., ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with a
copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇ Godward LLP, Five Palo Alto Square,
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ and (b) if to the
Company, to its agent for service as such agent's address appears on the cover
page of the Registration Statement with a copy to C. ▇▇▇▇▇ ▇▇▇▇▇, Esq., Fenwick
& West LLP, Two ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflict of laws.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
25.
26
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
CELLEGY PHARMACEUTICALS, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written:
▇▇▇▇▇▇▇▇▇▇▇ & CO., INC.
By:
--------------------------------
Name:
------------------------------
Title:
----------------------------
26.
