1
EXHIBIT 1.1
NEOTHERAPEUTICS, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
UNDERWRITING AGREEMENT
July __, 1999
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc.
Millennium Financial Group, Inc.
As Representatives of the Several Underwriters
Named in Schedule I hereto
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
NeoTherapeutics, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") pursuant to this Underwriting Agreement (the "Agreement"), an
aggregate of 1,000,000 shares of common stock, $.001 par value per share (the
"Firm Shares"). In addition, the Company proposes to grant to the Underwriters
the option referred to in Section 2(b) to purchase all or any part of an
aggregate of 150,000 additional Shares to be offered by the Company (the "Option
Shares").
The aggregate of 1,000,000 Firm Shares, together with all or any part
of the Option Shares which the Underwriters have the option to purchase herein
are called the "Shares" or "Securities." The common stock, $.001 par value per
share, of the Company is herein called the "Common Stock." The Common Stock is
more fully described in the Registration Statement and the Prospectus.
You have advised the Company that you desire to purchase the Shares,
and that you have been authorized to execute this Agreement as Representatives
of the Underwriters (the "Representatives"). The Company confirms the agreements
made by it with respect to the purchase of the Shares by you, as follows:
1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter,
and agrees with each Underwriter that:
2
(i) A registration statement (File No. 333-79935) on Form
S-1 relating to the public offering of the Shares, including a preliminary form
of prospectus, copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has been filed with the Commission under the Act and one or more
amendments to such registration statement also may have been filed. "Preliminary
Prospectus" shall mean each prospectus filed pursuant to Rule 430A of the Rules
and Regulations. The registration statement (including all financial schedules
and exhibits) as amended at the time it becomes effective ("Effective Date") and
the final prospectus included therein are respectively referred to as the
"Registration Statement" and the "Prospectus," except that (i) if the prospectus
first filed by the Company pursuant to Rule 424(b) or Rule 430A of the Rules and
Regulations or otherwise utilized and not required to be so filed shall differ
from said prospectus as then amended, the term "Prospectus" shall mean the
prospectus filed pursuant to Rule 424(b) or Rule 430A or so utilized from and
after the date on which it shall have been filed or utilized, and (ii) if such
Registration Statement or prospectus is amended or such prospectus is
supplemented, after the Effective Date of such Registration Statement and prior
to the Option Closing Date (as defined in Section 2(b)), the term "Registration
Statement" shall include such registration statement as so amended and any
registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations, and the term "Prospectus" shall include the prospectus as so
amended or supplemented, or both, as the case may be.
(ii) At the time the Registration Statement becomes
effective and at all times subsequent thereto up to the Option Closing Date (as
defined in Section 2(b)), (i) the Registration Statement and Prospectus will in
all material respects conform to the requirements of the Act and the Rules and
Regulations; and (ii) neither the Registration Statement nor the Prospectus will
include 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, in
light of the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representation, warranty or agreement as to
information contained in or omitted from the Registration Statement or
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by you or on behalf of any Underwriter through you
specifically for use in the preparation thereof. It is understood that the
material set forth under the heading "Underwriting" and the identity of counsel
to the Representatives under the heading "Legal Matters" constitute the only
information furnished in writing by you, or by any Underwriter through you, for
inclusion in the Registration Statement and Prospectus, as the case may be.
(iii) The Company, including each subsidiary thereof
(individually, "Subsidiary," and collectively, "Subsidiaries"), has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation and is duly qualified or licensed
to do business as a foreign corporation and is in good standing in each other
jurisdiction in which the nature of its business or the character or location of
its properties requires such qualification, except where failure to so qualify
will not have a material adverse effect on the business, business prospects, net
worth, properties or condition (financial or other) of the Company and its
Subsidiaries ("Material Adverse Effect"). The Company has the corporate power to
own,
2
3
lease and operate its properties and to conduct its business as described in the
Registration Statement and to enter into and perform its obligations under this
Agreement, the Representatives' Warrants and the Financial Consulting Agreement
(as such terms are defined herein). All of the Company's Subsidiaries are listed
in Exhibit 21.1 to the Registration Statement. All of the outstanding shares of
capital stock of each Subsidiary have been duly authorized and validly issued,
are fully paid and non-assessable, and except as set forth in the Registration
Statement, are owned by the Company directly or indirectly through one of the
other Subsidiaries, free and clear of any lien, adverse claim, security
interest, equity or other encumbrance.
(iv) The authorized capital stock of the Company as of
the date of the Prospectus was as set forth under "Capitalization" in the
Registration Statement and the Prospectus. The shares of issued and outstanding
capital stock of the Company set forth thereunder have been duly authorized,
validly issued and are fully paid and non-assessable; the outstanding securities
of the Company, including without limitation, the Shares of the Company, have
been duly authorized and issued in compliance with or under an exemption from
registration under the Act and applicable state securities laws and have not
been issued in violation of the preemptive or similar rights of any stockholder
and the stockholders of the Company do not have any preemptive rights or other
rights to subscribe for or to purchase any of the Shares subject hereof. Except
for (i) the transfer restrictions regarding "affiliates" contained in Rule 144
promulgated under the Act, (ii) restrictions provided for in this Agreement, and
(iii) with respect to the Representatives' Warrants (as defined) restrictions
stated therein or under the National Association of Securities Dealers, Inc.'s
("NASD") Conduct Rules, there are no restrictions upon the voting or transfer
of, any of the Shares, the Common Stock or Representatives' Warrants. Except as
set forth in the Prospectus or as contemplated hereby, no options, warrants or
other rights to purchase, agreements or other obligations to issue, or
agreements or other rights to convert any obligation into, any shares of capital
stock of the Company have been granted or entered into by the Company. The
Shares and Representatives' Warrants (as that term is defined in Section 12
herein, the "Representatives' Warrants") conform in all material respects to all
statements relating thereto contained in the Registration Statement and
Prospectus.
(v) The Shares are duly authorized and, when issued,
delivered and paid for pursuant to this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights of
any security holder of the Company. The certificates evidencing the Shares are
and will be in valid and proper legal form. The Representatives' Warrants will
be exercisable for shares of Common Stock of the Company in accordance with the
terms of the Representatives' Warrants and at the prices provided for therein.
The shares of Common Stock issuable upon exercise of the Representatives'
Warrants have been duly authorized and reserved for issuance upon such exercise,
and such shares, when issued upon such exercise and paid for in accordance with
the terms of the Representatives' Warrants and this Agreement, shall be fully
paid and non-assessable. Neither the filing of the Registration Statement nor
the issuance, offering or sale of any of the Shares or Representatives' Warrants
as contemplated in this Agreement gives rise to any rights, other than those
which have been waived or satisfied, for or relating to the registration of any
securities of the Company, except as described in the Registration Statement.
3
4
(vi) This Agreement, the Representatives' Warrants and
the Financial Consulting Agreement (as defined in Section 3(p)) have been duly
and validly authorized, executed and delivered by the Company, and assuming due
execution by the other party or parties hereto and thereto, constitute valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms, except as rights to indemnity and contribution
thereunder may be limited by applicable law and except as enforceability may be
limited by bankruptcy, insolvency or other laws affecting the rights of
creditors generally or by general equitable principles of law. The Company has
full power and authority to authorize, issue and sell the Securities to be sold
by it hereunder on the terms and conditions set forth herein, and no consent,
approval, authorization or other order of any governmental authority is required
in connection with such authorization, execution and delivery or with the
authorization, issue and sale of the Representatives' Warrants or the Common
Stock underlying the Representatives' Warrants, except such as may be required
under the Act, state securities laws, or the by-laws and rules of the NASD.
(vii) Except as described in the Prospectus, the Company
is not in violation, breach or default of or under, and consummation of the
transactions herein contemplated and the fulfillment of the terms of this
Agreement, and the Representatives' Warrants and the Financial Consulting
Agreement (as defined in Section 3(p)) will not conflict with, or result in a
breach of, any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance pursuant
to the terms of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the property or assets of the Company are
subject, which would have a Material Adverse Effect, nor will such action result
in any violation of the provisions of any statute or any order, rule or
regulation applicable to the Company of any court or of any regulatory authority
or other governmental body having jurisdiction over the Company.
(viii) Subject to the qualifications stated in the
Prospectus, the Company and each Subsidiary has good and valid title to all
properties and assets described in the Prospectus as owned by it, free and clear
of all liens, charges, encumbrances or restrictions, except such liens, charges,
encumbrances or restrictions which would not have a Material Adverse Effect; all
of the leases and subleases under which the Company and each Subsidiary is the
lessor or sublessor of properties or assets or under which the Company and each
Subsidiary holds properties or assets as lessee or sublessee as described in the
Prospectus are in full force and effect, and, except as described in the
Prospectus, the Company and each Subsidiary is not in material default in any
respect with respect to any of the terms or provisions of any of such leases or
subleases, and the Company has no notice of any claim that has been asserted by
anyone adverse to rights of the Company or any Subsidiary as lessor, sublessor,
lessee or sublessee under any of the leases or subleases mentioned above, or
affecting or questioning the right of the Company and each Subsidiary to
continued possession of the leased or subleased premises or assets under any
such lease or sublease except as described or referred to in the Prospectus; and
the Company and each Subsidiary owns or leases all such properties described in
the Prospectus as are necessary to its operations as now conducted and, except
as otherwise stated in the Prospectus, as proposed to be conducted as set forth
in the Prospectus.
4
5
(ix) Neither the Company nor any Subsidiary is in
violation of its charter or by-laws or in default in any respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any of the contracts,
indentures, mortgages, loan agreements, leases, joint ventures or other
agreements or instruments to which the Company or any Subsidiary is a party or
by which it is bound. The execution and delivery of the Underwriting Agreement,
the Representatives' Warrants and the Financial Consulting Agreement and the
incurrence of the obligations of the Company herein and therein set forth and
the consummation of the transactions herein or therein contemplated will not
result in a violation of or default under the charter or bylaws of the Company,
or any obligation, agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any of the contracts,
indentures, mortgages, loan agreements, leases, joint ventures or other
agreements or instruments to which the Company or any Subsidiary is a party or
by which it is bound.
(x) To the knowledge of the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
who has given its report on certain consolidated financial statements filed and
to be filed with the Commission as a part of the Registration Statement, which
are included in the Prospectus, are with respect to the Company independent
public accountants as required by the Act and the Rules and Regulations.
(xi) The consolidated financial statements, related notes
and schedules set forth in the Registration Statement and the Prospectus present
fairly, in all material respects, the financial position and results of
operations and changes in financial position of the Company on the basis stated
therein and in the Registration Statement and the Prospectus, at the respective
dates and for the respective periods to which they apply. Said statements and
schedules and related notes have been prepared in accordance with generally
accepted accounting principles applied on a basis which is consistent during the
periods involved except for, with respect to interim statements, changes
resulting from year-end audit adjustments.
(xii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
set forth in or contemplated by this Agreement, the Registration Statement and
the Prospectus, neither the Company nor any Subsidiary has incurred any material
liabilities or obligations, direct or contingent, not in the ordinary course of
business, or entered into any transaction not in the ordinary course of
business, which is material to the business of the Company or any such
Subsidiary, and there has not been any change in the capital stock of, or any
incurrence of long-term debt by, the Company or any Subsidiary or any issuance
of options, warrants or other rights to purchase the capital stock of the
Company or any Subsidiary or any adverse change or any development which would
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any Subsidiary has become party to, and neither the business nor the
property of the Company nor any Subsidiary has become the subject of, any
material litigation whether or not in the ordinary course of business.
(xiii) Except as set forth in the Prospectus, there is
not now pending nor, to the knowledge of the Company, threatened, any action,
suit or proceeding (including those related to environmental matters or
discrimination on the basis of age, sex, religion or race) to which the
5
6
Company is or could become a party before or by any court or governmental agency
or body, which, if adversely determined, would have a Material Adverse Effect on
the Company or any Subsidiary; and, except as set forth in the Prospectus, no
labor disputes involving the employees of the Company or any Subsidiary exist
which, if adversely determined, would have a Material Adverse Effect on the
Company or any such Subsidiary.
(xiv) Except as disclosed in the Prospectus, the Company
and its Subsidiaries have filed all necessary federal, state and foreign income
and franchise tax returns and have paid all taxes shown as due thereon; and
there is no tax deficiency which has been or to the knowledge of the Company
might be asserted against the Company or any Subsidiary which has not been
adequately reserved for on the Company's balance sheet.
(xv) The Company and each Subsidiary has sufficient
consents, approvals, licenses, permits, franchises and authorizations of and
from all United States and foreign, federal, state or provincial, local and
other governmental or other regulatory authorities ("Licenses") currently
required for the conduct of its businesses or the ownership of its property as
described in the Prospectus and is in all material respects complying therewith.
Except as described in the Prospectus, none of the activities or businesses of
the Company or any Subsidiary is in violation of, or causes the Company or any
Subsidiary to violate, any law, rule, regulation or order of the United States,
any state, county or locality, or of any agency or locality, or of any foreign
jurisdiction or subdivision thereof. Each of the Company and each Subsidiary has
fulfilled and performed all its obligations with respect to such Licenses and no
event has occurred that allows, or after notice or lapse of time or both would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such License, except where any of
the foregoing would not have individually or in the aggregate a Material Adverse
Effect, subject in each case to such qualification as may be set forth in the
Prospectus; and, except as described in the Prospectus, none of such Licenses
contains any restriction or conditions not normally contemplated by such License
that is materially burdensome to the Company or any Subsidiary.
(xvi) The Company and its Subsidiaries have not, directly
or indirectly, at any time (A) made any contributions to any candidate for
foreign political office in violation of law, or if made, failed to disclose
fully any such contribution, or (B) made any payment to any state, federal or
foreign governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments or contributions required or
allowed by applicable law. The Company's internal accounting controls and
procedures are sufficient to cause the Company to comply in all respects with
the Foreign Corrupt Practices Act of 1977, as amended.
(xvii) On the Closing Dates (as defined in Section 2(c)),
all transfer or other taxes (including franchise, capital stock or other tax,
other than income taxes imposed by any jurisdiction), if any, which are required
to be paid in connection with the sale and transfer of the Shares to the
Underwriters hereunder will have been fully paid or provided for by the Company,
and all laws imposing such taxes will have been complied with fully.
6
7
(xviii) All contracts and other documents of the Company
which are, under the Rules and Regulations, required to be filed as exhibits to
the Registration Statement have been filed.
(xix) The Company has not taken and will not take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Shares, or to facilitate the
sale or resale of the Securities.
(xx) Except for this Agreement and other agreements with
the Representatives and except as disclosed in the Prospectus, the Company has
not entered into any agreement pursuant to which any person is entitled either
directly or indirectly to compensation from the Company for services as a finder
in connection with the proposed public offering.
(xxi) The Common Stock has been approved for listing on
The Nasdaq National Market and is in material compliance with the continuing
listing requirements of Nasdaq NMS.
(xxii) Except for such rights which have been waived or
satisfied and except as set forth in the Registration Statement or the
Prospectus, no holder of securities of the Company has any rights to the
registration of securities of the Company because of the filing of the
Registration Statement or otherwise in connection with the sale of the Shares
contemplated hereby.
(xxiii) The Company is not, and upon consummation of the
transactions contemplated hereby will not be, subject to registration as an
investment company under the Investment Company Act of 1940, as amended, or the
rules thereunder.
(xxiv) Each of the Company and each Subsidiary (A) is in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (B) has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
its business and (C) is in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals will not have a
Material Adverse Effect.
(xxv) The Company maintains a system of internal
accounting controls that, taken as a whole, are sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with management's
general or specific authorizations; (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (C) access
to assets is permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
7
8
(xxvi) The Company and the Subsidiaries own or possess
all patents, patent applications, trademarks, trademark registrations, service
marks, service ▇▇▇▇ registrations, trade names, copyrights, licenses,
inventories, trade secrets and rights described in the Prospectus as being owned
by them or necessary for the conduct of their respective businesses except where
the lack of such ownership or possession would not have a Material Adverse
Effect and the Company is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company and the Subsidiaries
with respect to the foregoing.
(xxvii) Each of the Company and the Subsidiaries
maintains insurance of the types and in the amounts reasonably adequate for its
business, including, but not limited to, products' liability insurance with
coverage limits in the amount of $5 million and insurance covering real and
personal property owned or leased by the Company or such Subsidiary against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against by corporations of established reputations engaged in the same
or similar businesses and similarly situated, all of which insurance is in full
force and effect.
(xxviii) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus.
2. Purchase, Delivery and Sale of the Shares.
(a) Subject to the terms and conditions of this Agreement, and
upon the basis of the representations, warranties and agreements herein
contained, the Company agrees to issue and sell to the Underwriters, and the
Underwriters agree, severally and not jointly, to purchase from the Company at
$_____ per Firm Share [92% of the public offering price per Firm Share] at the
place and time hereinafter specified, the number of Firm Shares set forth
opposite each Underwriter's name in Schedule I hereto.
Delivery of the Firm Shares against payment therefor shall
take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such other place as may be
designated by agreement between you and the Company) at 10:00 a.m. Eastern
Standard Time on _______________, 1999, or at such other time and date, not
later than five (5) business days thereafter, as you may designate, such time
and date of payment and delivery for the Firm Shares being herein called the
"First Closing Date." Time shall be of the essence and delivery at the time and
place specified in this subsection (a) is a further condition to the obligations
of the Underwriters hereunder.
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, the Company hereby grants the Representatives an option to
purchase all or any part of Option Shares at the same price per Option Share as
the Representatives pay for the Firm Shares being sold pursuant to the
8
9
provisions of subsection (a) of this Section 2. This option may be exercised on
one occasion within 45-days after the Effective Date upon notice by you to the
Company advising it as to the amount of Option Shares as to which the option is
being exercised, the names and denominations in which the certificates for such
Option Shares are to be registered and the time and date when such certificates
are to be delivered. Such time and date shall be determined by you but shall not
be earlier than three (3) and not later than five (5) full business days after
the exercise of said option, nor in any event prior to the First Closing Date,
and such time and date is referred to herein as the "Option Closing Date."
Delivery of the Option Shares against payment therefor shall take place at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or as otherwise may be agreed in writing. Time shall
be of the essence and delivery at the time and place specified in this
subsection (b) is a further condition to the obligations of the Underwriters
hereunder.
The Option granted hereunder may be exercised only to cover
over-allotments in the sale of Firm Shares referred to in subsection (a) above.
(c) The Company will make one or more certificates for the
Shares to be purchased by the Representatives hereunder, in definitive form,
available to you for checking and packaging at the office of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Assoc., Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or at
such other location as the Representatives may reasonably request in writing at
least one (1) full business day prior to the First Closing Date or the Option
Closing Date (which are collectively referred to herein as the "Closing Dates"
and individually as a "Closing Date"), as the case may be. The certificates
shall be registered in such name or names and in such denomination or
denominations as you may request in writing, at least two (2) full business days
prior to the relevant Closing Date. Time shall be of the essence and the
availability of the certificates at the time and place specified in this
Agreement is a further condition to the obligations of the Underwriters.
Definitive certificates in negotiable form for the Securities
to be purchased by the Underwriters hereunder will be delivered by the Company
to you for the several accounts of the Underwriters against payment of the
purchase price by you, at your option, by certified or bank cashier's checks
payable in New York Clearing House funds or by wire transfer of same-day funds,
payable to the order of the Company.
In addition, in the event the Representatives exercise the
option to purchase from the Company all or any portion of the Option Shares
pursuant to the provisions of subsection (b) above, payment for such Option
Shares shall be made to or upon the order of the Company by you, for the several
accounts of the Underwriters, at your option, by certified or bank cashier's
checks payable in New York Clearing House funds or by wire transfer of same-day
funds payable to the order of the Company, at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Assoc., Inc. at the time and date of delivery of such Option Shares as required
by the provisions of subsection (b) above, against receipt of the certificates
for such Option Shares by you, for the several accounts of the Underwriters
registered in such names and in such denominations as you may request.
9
10
If the Representatives so elect, delivery of the Firm Shares
and Option Shares may be made by credit through full fast transfer to the
accounts at The Depository Trust Company designated by the Representatives.
It is understood that the Underwriters propose to offer the
Shares to be purchased hereunder to the public upon the terms and conditions set
forth in the Registration Statement, after the Registration Statement becomes
effective.
3. Covenants of the Company.
The Company covenants and agrees with each Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective and, upon notification from the
Commission that the Registration Statement has become effective, will so advise
the Representatives and will not at any time, whether before or after the
Effective Date, file any amendment to the Registration Statement or supplement
to the Prospectus of which the Representatives shall not previously have been
advised and furnished with a copy or to which the Representatives or counsel to
the Representatives shall have reasonably objected in writing or which is not in
compliance with the Act and the Rules and Regulations. During any time when a
prospectus relating to the Shares is required to be delivered under the Act, the
Company will prepare and file with the Commission, promptly upon your request,
any amendments or supplements to the Registration Statement or Prospectus which,
in the Representatives' reasonable opinion, may be necessary or advisable in
connection with the distribution of the Shares.
Promptly after the Representatives or the Company is advised thereof,
the Representatives will advise the Company or the Company will advise the
Representatives, as the case may be, and confirm the advice in writing, of the
receipt of any comments of the Commission, of the effectiveness of any
post-effective amendment to the Registration Statement, of the filing of any
supplement to the Prospectus or any amended Prospectus, of any request made by
the Commission for amendment of the Registration Statement or for supplementing
of the Prospectus or for additional information with respect thereto, of the
issuance by the Commission or any state or regulatory body of any stop orders or
other order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or of the suspension of the qualification of the Shares for offering
in any jurisdiction, or the institution of any proceedings for any of such
purposes, and will use its best efforts to prevent the issuance of any such
order and, if issued, to obtain as soon as possible the lifting thereof.
The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company authorizes
the Underwriters and dealers to use the Prospectus in connection with the sale
of the Shares for such period as is required to comply with the applicable
provisions of the Act and the Rules and Regulations. In case of the happening,
at any time within such period as a Prospectus is required under the Act to be
delivered in connection with sales by an underwriter or dealer, of any event of
which the Company has knowledge and which
10
11
materially affects the Company or the Securities, or which in the opinion of
counsel for the Company or counsel for the Underwriters should be set forth in
an amendment to the Registration Statement or a supplement to the Prospectus in
order to make the statements therein not then misleading, in light of the
circumstances existing at the time the Prospectus is required to be delivered to
a purchaser of the Shares, or in case it shall be necessary to amend or
supplement the Prospectus to comply with the Act or with the Rules and
Regulations, the Company will notify you promptly and forthwith prepare and
furnish to you copies of such amended Prospectus or of such supplement to be
attached to the Prospectus, in such quantities as the Representatives reasonably
may request, in order that the Prospectus, as so amended or supplemented, will
not contain any untrue statement of a material fact or omit to state any
material facts necessary to make the statements in the Prospectus, in the light
of the circumstances under which they are made, not misleading. The preparation
and furnishing of any such amendment or supplement to the Registration Statement
or amended Prospectus or supplement to be attached to the Prospectus shall be
without expense to the Underwriters, except that in case the Underwriters are
required, in connection with the sale of the Shares, to deliver a Prospectus
nine months or more after the Effective Date, the Company will upon request of
and at your expense, amend or supplement the Registration Statement and
Prospectus and furnish the Underwriters with reasonable quantities of
prospectuses complying with Section 10(a)(3) of the Act.
(b) The Company will comply with the Act, the Rules and
Regulations and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder in connection with the offering
and issuance of the Shares. The Company will use its best efforts to qualify or
register the Securities for sale under the securities or "Blue Sky" laws of such
jurisdictions as the Representatives may have designated in writing prior to the
execution hereof and will make such applications and furnish such information to
counsel for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc., as may be required for that purpose
and to comply with such laws, provided that the Company shall not be required to
qualify as a foreign corporation or a dealer in securities or to execute a
general consent to service of process in any jurisdiction. The Company will,
from time to time, prepare and file such statements and reports as are or may be
required to continue such qualification in effect for so long a period as you
may reasonably require for the distribution of the Shares. Legal fees for such
registration or qualifications under U.S. state Blue Sky laws shall be $15,000
exclusive of U.S. state Blue Sky filing fees and disbursements.
(c) The Company will instruct its transfer agent to provide
you with copies of the Depository Trust Company stock transfer sheets on a
weekly basis for a period of three (3) months from the First Closing Date and on
a monthly basis thereafter for nine (9) additional months.
(d) The Company is a reporting company under Section 12(g) of
the Exchange Act. The Company has filed all reports required under the Exchange
Act. None of such reports include 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, in light of the circumstances under which they were
made, not misleading.
11
12
(e) For so long as the Company is a reporting company under
either Section 12(g), 13 or 15(d) of the Exchange Act, the Company, at its
expense, will furnish to its stockholders an annual report (including financial
statements audited by independent public accountants), and will furnish to you
during the period ending five (5) years from the date hereof, (i) as soon as it
is available after the end of each fiscal year, a consolidated balance sheet of
the Company and its Subsidiaries as at the end of such fiscal year, together
with consolidated statements of income, stockholders' equity and cash flows of
the Company and its Subsidiaries as at the end of such fiscal year, all in
reasonable detail and accompanied by a copy of the certificate or report thereon
of independent accountants; (ii) as soon as they are available, a copy of all
reports (financial or other) mailed to security holders; (iii) as soon as they
are available, a copy of all non-confidential reports and financial statements
furnished to or filed with the Commission; and (iv) such other information of a
public nature as you may from time to time reasonably request.
(f) The financial statements referred to in subsection (e)
above will be on a consolidated basis to the extent the accounts of the Company
and its Subsidiaries are consolidated in reports furnished to its stockholders
generally.
(g) The Company will deliver to you at or before the First
Closing Date two (2) originally signed copies of the Registration Statement,
including all financial statements and exhibits filed therewith and all
amendments thereto. The Company will deliver to or upon your order, from time to
time until the Effective Date as many copies of any Preliminary Prospectus filed
with the Commission prior to the Effective Date as the Underwriters may
reasonably request. The Company will deliver to you on the Effective Date and
thereafter for so long as a Prospectus is required to be delivered under the
Act, from time to time, as many copies of the Prospectus, in final form, or as
thereafter amended or supplemented, as the Underwriters may from time to time
reasonably request.
(h) The Company will make generally available to its security
holders and deliver to you as soon as it is practicable to do so, but in no
event later than ninety (90) days after the end of twelve (12) months after its
current fiscal quarter, an earnings statement (which need not be audited)
covering a period of at least twelve (12) consecutive months beginning after the
Effective Date which shall satisfy the requirements of Section 11(a) of the Act.
(i) The Company will, promptly upon your request, prepare and
file with the Commission any amendments or supplements to the Registration
Statement, preliminary Prospectus or Prospectus and take any other action, which
in the opinion of De ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, counsel to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Assoc., Inc., may be reasonably necessary or advisable in connection
with the distribution of the Shares and will use its best efforts to cause the
same to become effective as promptly as possible.
(j) Prior to the Effective Date, the Company will cause all of
the directors, executive officers and 5% stockholders of the Company (except
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.), and those employees, consultants, and attorneys who
are issued options after March 23, 1999, and prior to the Effective Date, to
enter into a written agreement with the Representatives, reasonably acceptable
to the Representatives which, among other things, shall provide that for a
period of six
12
13
(6) months following the Effective Date of the Registration Statement ("Lock-up
Period"), such persons will not offer, sell, contract to sell, transfer, assign,
gift, grant any option or warrant to purchase or right to acquire, any of the
shares of Common Stock or other capital stock or securities of the Company
(including preferred stock, warrants, options or other securities convertible
into Common Stock which may be deemed to be owned beneficially by such person in
accordance with the rules of the Commission) owned by them on the Effective
Date, or subsequently acquired by the exercise of any options or warrants or
conversion of any convertible security of the Company held by them on the
Effective Date directly or indirectly, except with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc.,
Inc.'s prior written consent, other than intra-family transfers or transfers to
trusts for estate planning purposes, and the Company will instruct the transfer
agent for the Company to place stop transfer restrictions on the transfer books
and records of the Company against such shares of Common Stock or other capital
stock. Notwithstanding the foregoing, during the Lock-up Period and commencing
ninety (90) days after the Effective Date, ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ may sell up to
200,000 shares of Common Stock pursuant to Rule 144.
(k) As of the date hereof, the shares of Common Stock of the
Company are listed on The Nasdaq National Market and the Company will use its
best efforts to maintain such listing for at least three (3) years from the date
of this Agreement. Within ten (10) days after the Effective Date, the Company
shall cause the Company to be listed in the ▇▇▇▇▇'▇ OTC Industrial Manual or S&P
Manual and cause such listing to be maintained for three (3) years from the date
of this Agreement.
(l) The Company has not taken, and agrees that it will not
take, directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Shares, or to facilitate the sale or resale of
the Securities.
(m) During the period of the offering, and for a period of six
(6) months from the later of the First Closing or Option Closing Date, the
Company will not sell or otherwise dispose of any shares of Common Stock or
preferred stock or other securities or issue warrants or options or other equity
securities of the Company (except for: (i) shares of Common Stock in connection
with strategic partnership transactions; (ii) shares of Common Stock issuable
upon exercise of options and warrants outstanding on the First Closing Date;
(iii) shares of Common Stock in connection with an acquisition; (iv) shares of
Common Stock pursuant to the Company's equity line of credit in the amount of up
to $10.5 million with Kingsbridge Capital, Ltd.; and/or (v) shares of Common
Stock upon conversion of outstanding shares of the Company's Series A Preferred
Stock) or purchase any securities of the Company without ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Assoc., Inc.'s prior written consent, which shall not be unreasonably withheld.
(n) The Company shall retain a public relations firm
reasonably acceptable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc., and shall continue to
retain such firm, or any alternate firm acceptable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc.,
Inc., for a minimum period of one (1) year following the later of the First
Closing or Option Closing Date.
13
14
(o) The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon
exercise of the Representatives' Warrants outstanding from time to time.
(p) The Company shall deliver to the Representatives, at the
Company's expense, five (5) bound volumes containing the Registration Statement
and all exhibits filed therewith, and all amendments thereto, and all other
material correspondence, filings, certificates and other documents filed and/or
delivered in connection with this offering and such number of cubes as the
Representatives may reasonably request. The Company shall use its best efforts
to deliver such volumes and cubes within one hundred eighty (180) days of the
First Closing Date.
(q) The Company shall deliver to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc.
an executed financial consulting agreement ("Financial Consulting Agreement") in
form and substance reasonably acceptable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc.
whereby ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc. agrees to act as a financial consultant
for a period of __________ (__) months from the First Closing Date for a fee of
$4,000 per month payable in advance at the First Closing Date.
(r) The Company shall have acquired directors' and officers'
liability insurance (provided that such insurance can be obtained at a
reasonable cost as determined by the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc.)
from an insurer and in an amount reasonably satisfactory to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Assoc., Inc.
(s) If at any time during the one hundred-eighty (180) day
period after the Registration Statement becomes effective, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which in your opinion the market price of the Common Stock has been or
is likely to be affected materially (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from you advising the
Company to the effect set forth above, forthwith prepare, consult with you
concerning the substance of and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
4. Conditions of Obligations of the Underwriters.
The obligations of the Underwriters to purchase and pay for the Shares
which they have agreed to purchase hereunder are subject to the accuracy (as of
the date hereof, and as of the Closing Dates) of and compliance with the
representations and warranties of the Company herein, to the performance by the
Company of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and
you shall have received notice thereof not later than 4:30 p.m., Eastern
Standard Time, on the date of this Agreement, or at such later time or on such
later date as to which you may agree in writing; on the Closing Dates, no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that or any similar purpose shall have been
instituted or shall be pending or, to the knowledge of any Underwriter or to the
knowledge of the Company, shall be
14
15
contemplated by the Commission; any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of De ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, counsel to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Assoc., Inc.; and no stop order shall be in effect denying or suspending
effectiveness of the Registration Statement nor shall any stop order proceedings
with respect thereto be instituted or pending or threatened under the Act.
(b) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇,
counsel for the Company, in form and substance reasonably satisfactory to
counsel for the Representatives, to the effect that:
(i) Each of the Company and Advanced ImmunoTherapeutics,
Inc. ("AIT"), has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation and is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each other state of the United States in
which the nature of its business or the character or location of its properties
requires such qualification, except where failure to so qualify will not have a
Material Adverse Effect. The Company has the corporate power to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus and to enter into and perform its
obligations under this Agreement, the Representatives' Warrants and the
Financial Consulting Agreement. All of the Company's Subsidiaries are listed in
Exhibit 21.1 to the Registration Statement. All of the outstanding shares of
capital stock of AIT have been duly authorized and validly issued, are fully
paid and non-assessable, and except as set forth in the Registration Statement,
are, to the knowledge of such counsel, owned by the Company directly or
indirectly through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance;
(ii) The authorized capital stock of the Company as of
the date of the Prospectus was as set forth under "Capitalization" in the
Registration Statement and the Prospectus. The shares of issued and outstanding
capital stock of the Company set forth thereunder have been duly authorized,
validly issued and are fully paid and non-assessable; the outstanding securities
of the Company, including without limitation, the Shares of the Company, have
been duly authorized and issued in compliance with or under an exemption from
registration under the Act and applicable state securities laws and have not
been issued in violation of the preemptive or, to the knowledge of such counsel,
similar rights of any stockholder. The stockholders of the Company do not have
any preemptive rights or, to such counsel's knowledge, other rights to subscribe
for or to purchase any of the Shares subject hereof. Except for (i) the transfer
restrictions regarding "affiliates" contained in Rule 144 promulgated under the
Act, (ii) restrictions provided for in this Agreement, and (iii) with respect to
the Representatives' Warrants, restrictions stated therein or under the NASD's
Conduct Rules, there are no restrictions upon the voting or transfer of, any of
the Shares or the Common Stock and there are no restrictions on the transfer of
the Representatives' Warrants. Except as set forth in the Prospectus, to the
knowledge of such counsel, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or agreements or other rights to
convert any obligation into, any shares of capital stock of the Company have
been granted or entered into by the Company. The Shares conform in all material
respects to all statements relating thereto contained in the Registration
Statement and Prospectus;
15
16
(iii) The Shares are duly authorized and, when issued,
delivered and paid for pursuant to the Underwriting Agreement, will be duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights of any security holder of the Company. The certificates evidencing the
Shares are in valid and proper legal form. The Representatives' Warrants are
exercisable for shares of Common Stock of the Company in accordance with the
terms of the Representatives' Warrants and at the prices provided for therein.
The shares of Common Stock issuable upon exercise of the Representatives'
Warrants have been duly authorized and reserved for issuance upon such exercise,
and such shares, when issued upon such exercise in accordance with the terms of
the Representatives' Warrants and when the price is paid, shall be fully paid
and non-assessable. Neither the filing of the Registration Statement nor the
issuance, offering or sale of any of the Shares or Representatives' Warrants as
contemplated in this Agreement gives rise to any rights under any agreement
known to such counsel, other than those which have been waived or satisfied, for
or relating to the registration of any securities of the Company, except as
described in the Registration Statement;
(iv) The Underwriting Agreement, the Representatives'
Warrants and the Financial Consulting Agreement have been duly and validly
authorized by all corporate action on the part of the Company and have been duly
executed and delivered by the Company, and assuming due execution by the other
party or parties hereto and thereto, constitute valid and binding obligations of
the Company enforceable against the Company, in accordance with their respective
terms, except as rights to indemnity and contribution hereunder may be limited
by applicable law and except as enforceability may be limited by bankruptcy,
insolvency or other laws affecting the rights of creditors generally or by
general equitable principles of law. The Company has full power and authority to
authorize, issue and sell the Securities to be sold by it thereunder on the
terms and conditions set forth therein, and no consent, approval, authorization
or other order of any governmental authority is required in connection with such
authorization, execution and delivery or with the authorization, issue and sale
of the Securities, the Representatives' Warrants or the Securities underlying
the Representatives' Warrants, except such as may be required under the Act,
state securities laws (as to which such counsel need express no opinion), or the
by-laws and rules of the National Association of Securities Dealers, Inc.
("NASD");
(v) To the knowledge of such counsel and except as
described in the Prospectus, the Company is not in violation, breach or default
of or under, and consummation of the transactions herein contemplated and the
fulfillment of the terms of the Underwriting Agreement, and the Representatives'
Warrants and the Financial Consulting Agreement (as defined in Section 3(p)) do
not conflict with, or result in a breach of, any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance pursuant to the terms of, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company is a party or by which the Company may be bound or to which any of the
property or assets of the Company are subject, which would have a Material
Adverse Effect, nor, to such counsel's knowledge, will such action result in any
violation of the provisions of any statute or any order, rule or regulation
applicable to the Company of any court or of any regulatory authority or other
governmental body having jurisdiction over the Company;
16
17
(vi) Neither the Company nor AIT is in violation of its
charter or by-laws;
(vii) Except as set forth in the Prospectus, there is not
now pending nor, to the knowledge of such counsel, threatened, any action, suit
or proceeding (including those related to environmental matters or
discrimination on the basis of age, sex, religion or race) to which the Company
is a party before or by any court or governmental agency or body, which, if
adversely determined, would have a Material Adverse Effect on the Company; and,
except as set forth in the Prospectus, no labor disputes involving the employees
of the Company exist which, if adversely determined, would have a Material
Adverse Effect on the Company;
(viii) The Registration Statement has become effective
under the Act and, to the best of 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 pending before or
contemplated by the Commission and any and all filings required by Rule 424 and
430A of the Rules and Regulations have been made. The Registration Statement and
the Prospectus (except, in the case of both the Registration Statement and any
amendment thereto and the Prospectus and any supplement thereto, for the
consolidated financial statements and notes and schedules thereto, and other
financial information or statistical data contained therein, or omitted
therefrom, as to which such counsel need express no opinion) comply as to form
in all material respects with the applicable requirements of the Act and the
Rules and Regulations with respect to registration statements on Form S-1;
(ix) All descriptions in the Registration Statement and
the Prospectus, and any amendment or supplement thereto, of contracts, plans,
options and other documents are accurate and fairly present the information
required to be shown in all material respects, and such counsel is familiar with
all contracts and other documents referred to in the Registration Statement and
the Prospectus and any such amendment or supplement, or filed as exhibits to the
Registration Statement, and such counsel does not know of any contracts or
documents of a character required to be summarized or described therein or to be
filed as exhibits thereto which are not so summarized, described or filed;
(x) To the extent that the statements contained in the
Prospectus under the headings "Business - Legal Proceedings" (except with
respect to intellectual property matters), "Management Employment Agreements,"
"Management - Stock Option Plans," "Description of Capital Stock," "Shares
Eligible For Future Sale," "Certain Relationships and Related Transactions,"
"Certain United States Federal Tax Considerations for Non-U.S. Holders of Common
Stock," and "Legal Matters" refer to opinions of such counsel on matters of law
or purport to summarize the status of litigation or purport to summarize the
provisions of statutes, regulations, contracts, agreements or other documents,
such statements have been reviewed by such counsel and accurately reflect the
status of any such litigation, such provisions purported to be summarized and
any such opinions of such counsel;
(xi) The Securities have been approved for listing on The
Nasdaq National Market system ("Nasdaq NMS");
17
18
(xii) The Company is not, and immediately after receipt
of payment for the Shares will not be, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended; and
(xiii) Except as disclosed in the Prospectus and
Registration Statement and except for such rights which have been waived or
satisfied, to the knowledge of such counsel, there are no persons with
registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the offering
contemplated by this Agreement.
Such counsel has participated in conferences with officers,
directors, employees and Representatives of the Company in connection with the
preparation of the Registration Statement and nothing has come to the attention
of such counsel which causes them to believe that the Registration Statement
(except as to financial statements, as aforesaid) at the time it became
effective 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, in the light of the circumstances under which they were
made, not misleading, or that the Prospectus and any supplement or amendment
thereto (except as to financial statements, as aforesaid), contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading;
In rendering such opinion, counsel may rely (i) as to matters
of law other than the State of California and federal law, upon the opinion or
opinions of local counsel provided that the extent of such reliance is specified
in such opinion and that such counsel shall state that such opinion or opinions
of local counsel are satisfactory to them and that they believe they and you are
justified in relying thereon and (ii) as to matters of fact, upon certificates
of officers of the Company provided that the extent of such reliance is
specified in the opinion.
(c) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
L.L.P., as patent counsel to the Company, in form and substance reasonably
satisfactory to counsel to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc., to the effect that:
(i) Such counsel is familiar with the technology embodied
in the Company's patents ("Patents") and the patent applications as listed in an
exhibit to the opinion ("Patent Applications");
(ii) The statements in the Registration Statement and the
Prospectus under the captions "Risk Factors - We Face Uncertainty Regarding
Patents and Proprietary Rights," "Business - Patents and Proprietary Rights,"
and under the caption "Business," solely to the extent such statements relate to
patent matters, are accurate and complete statements or summaries of the matters
therein set forth and nothing has come to such counsel's attention that causes
such counsel to believe that the above-described portions of the Registration
Statement and the Prospectus contain any untrue statement of a material fact or
omit to state a material fact
18
19
required to be stated therein or necessary to make the statement therein, in the
light of the circumstances under which they were made, not misleading;
(iii) Except as set forth in the Prospectus under the
captions "Risk Factors - We Face Uncertainty Regarding Patents and Proprietary
Rights," "Business - Patents and Proprietary Rights," and "Business - Legal
Proceedings," to such counsel's knowledge, there are no legal or governmental
proceedings pending, except patent prosecution, relating to patent rights, trade
secrets, or other proprietary information or materials of the Company and its
Subsidiaries, and, to such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or others;
(iv) To such counsel's knowledge, the Company and
Advanced ImmunoTherapeutics, Inc., the Company's wholly owned subsidiary
("AIT"), have complied and are continuing to comply on an ongoing basis with the
required duty of candor and good faith in dealing with the United States Patent
and Trademark Office (the "USPTO"), including the duty to disclose to the USPTO
all information actually known by the Company and AIT to be material to the
patentability of each of the Patents or Patent Applications;
(v) Except as set forth in the Prospectus, to the
knowledge of such counsel, (a) the use by the Company or AIT of the technology
embodied in the Patents and Patent Applications will not infringe or otherwise
violate any patents of others, and (b) there are no infringements by others of
any of the Company's and AIT's Patents which could affect materially the use
thereof by the Company and AIT; and
(vi) To such counsel's knowledge, there are no patents
which would prevent the Company, without obtaining a license from the owner of
such patent, from commercializing the Company's technology embodied in the
Patents and Patent Applications.
In rendering such opinion, counsel may rely (i) as to matters
of law other than the State of California and federal law, upon the opinion or
opinions of local counsel provided that the extent of such reliance is specified
in such opinion and that such counsel shall state that such opinion or opinions
of local counsel are satisfactory to them and that they believe they and you are
justified in relying thereon and (ii) as to matters of fact, upon certificates
of officers of the Company provided that the extent of such reliance is
specified in the opinion.
(d) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of ___________________, Swiss
counsel to the Company and NeoTherapeutics GmbH, in form and substance
reasonably satisfactory to counsel for the Representatives, to the effect that:
(i) NeoTherapeutics GmbH has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
jurisdictions of its incorporation and is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each other
jurisdiction in which the nature of its business or the character or location of
its properties requires such qualification, except where failure to so qualify
will not have a Material
19
20
Adverse Effect. All of the outstanding shares of capital stock of
NeoTherapeutics GmbH have been duly authorized and validly issued, are fully
paid and non-assessable, and except as set forth in the Registration Statement,
are, to the knowledge of such counsel, owned by the Company directly or
indirectly through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance; and
(ii) NeoTherapeutics GmbH is not in violation of its
charter or by-laws.
In rendering such opinion, counsel may rely (i) as to matters
of law other than the laws of Switzerland, upon the opinion or opinions of local
counsel provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local counsel
are satisfactory to them and that they believe they and you are justified in
relying thereon and (ii) as to matters of fact, upon certificates of officers of
the Company provided that the extent of such reliance is specified in the
opinion.
(e) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of Kleinfeld, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, Food
and Drug Administration ("FDA") counsel to the Company, in form and substance
reasonably satisfactory to counsel for the Representatives, to the effect that:
(i) The statements in the Registration Statement and
Prospectus under the captions "Risk Factors - We Need to Comply with Extensive
Governmental Regulation to Obtain Product Approvals" and "Business - Drug
Approval Process and Other Government Regulation" are complete and accurate in
all material respects and are a fair summary of the applicable statutes,
regulations and legal procedures applied by the United States Food and Drug
Administration in its administration of the Federal Food, Drug and Cosmetics Act
("FDA Laws") and the FDA review processes to which the products of the Company
described in the Prospectus and Registration Statement are subject.
No facts have come to such counsel's attention that lead such
counsel to believe that the description of FDA Laws and FDA review processes
relating to the manufacture or sale of the Company's products as contained in
the above-referenced portions of the Registration Statement and Prospectus,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
In rendering such opinion, counsel may rely (i) as to matters
of law other than the District of Columbia and federal law, upon the opinion or
opinions of local counsel provided that the extent of such reliance is specified
in such opinion and that such counsel shall state that such opinion or opinions
of local counsel are satisfactory to them and that they believe they and you are
justified in relying thereon and (ii) as to matters of fact, upon certificates
of officers of the Company provided that the extent of such reliance is
specified in the opinion.
(f) All corporate proceedings and other legal matters relating
to this Agreement, the Registration Statement, the Prospectus, and other matters
directly related to this Agreement and
20
21
the offering contemplated hereby shall be reasonably satisfactory to or approved
by De ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Representatives.
(g) You shall have received a "cold comfort" letter on and as
of the date of the execution of this Agreement (the "Original Comfort Letter")
and again on and as of the First Closing Date, in each instance describing
procedures carried out to a date within five (5) days of the date of the letter,
from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public accountants for the Company, with
respect to the consolidated financial statements and certain consolidated
financial information contained in the Registration Statement and Prospectus,
substantially in the form approved by you.
(h) At each of the Closing Dates, (i) the representations and
warranties of the Company contained in this Agreement shall be true and correct
with the same effect as if made on and as of such Closing Date, and the Company
shall have performed all of its obligations hereunder and satisfied all the
conditions on its part to be satisfied at or prior to such Closing Date; (ii)
the Registration Statement and the Prospectus and any amendments or supplements
thereto shall contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and shall in all material
respects conform to the requirements thereof, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statements of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; (iii)
there shall have been, since the respective dates as of which information is
given, no material adverse change in the business, properties, condition
(financial or otherwise), business prospects, results of operations, capital
stock, long-term or short-term debt or general affairs of the Company from that
set forth in the Registration Statement and the Prospectus, except changes which
the Registration Statement and Prospectus indicate might occur after the
Effective Date and the Company shall not have incurred any material liabilities
nor entered into any agreement not in the ordinary course of business other than
as referred to in the Registration Statement and Prospectus; and (iv) except as
set forth in the Prospectus, no action, suit or proceeding at law shall be
pending or, to its knowledge, threatened against the Company which would be
required to be disclosed in the Registration Statement, and no proceedings shall
be pending or, to its knowledge, threatened against the Company before or by any
commission, board or administrative agency in the United States or elsewhere,
wherein an unfavorable decision, ruling or finding would materially and
adversely affect the business, property, condition (financial or otherwise),
results of operations or general affairs of the Company. In addition, you shall
have received, at the First Closing Date, a certificate signed by the President
and the principal financial or accounting officer of the Company, dated as of
the First Closing Date, evidencing compliance with the provisions of this
subsection (h).
(i) Upon exercise of the option provided for in Section 2(b)
hereof, the obligations of the Representatives to purchase and pay for the
Option Shares referred to therein will be subject (as of the date hereof and as
of the Option Closing Date) to the following additional conditions:
(i) The Registration Statement shall remain effective at
the Option Closing Date, no stop order suspending the effectiveness thereof
shall have been issued, and no
21
22
proceedings for that purpose shall have been instituted or shall be pending, or,
to your knowledge or the knowledge of the Company, shall be contemplated by the
Commission, and any reasonable request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of De ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, counsel to the
Representatives.
(ii) At the Option Closing Date there shall have been
delivered to you signed opinions of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for
the Company, and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P., patent counsel for the
Company, ____________________, Swiss counsel to the Company and NeoTherapeutics
GmbH, and Kleinfeld, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, FDA counsel to the Company, dated as of
the Option Closing Date, in form and substance reasonably satisfactory to De
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Representatives, which
opinions shall be substantially the same in scope and substance as the opinion
furnished to you at the First Closing Date pursuant to Section 4(b), 4(c), 4(d)
and 4(e) hereof, except that such opinions, where appropriate, shall cover the
Option Shares rather than the Firm Shares. If the First Closing Date is the same
as the Option Closing Date, such opinions may be combined.
(iii) At the Option Closing Date, there shall have been
delivered to you a certificate of the President and the Chairman of the Board of
Directors of the Company dated the Option Closing Date, in form and substance
reasonably satisfactory to De ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, counsel to the
Representatives, substantially the same in scope and substance as the
certificates furnished to you at the First Closing Date pursuant to Section 4(h)
hereof.
(iv) At the Option Closing Date, there shall have been
delivered to you a letter in form and substance satisfactory to you from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, dated the Option Closing Date and addressed to you, confirming the
information in the Original Comfort Letter referred to in Section 4(g) hereof as
of the date thereof and stating that, without any additional investigation
required, nothing has come to their attention during the period from the ending
date of their review referred to in said letter to a date not more than five (5)
days prior to the Option Closing Date which would require any change in said
letter if it were required to be dated the Option Closing Date.
(v) All proceedings taken at or prior to the Option
Closing Date in connection with the sale and issuance of the Option Shares shall
be reasonably satisfactory in form and substance to you, and you and/or De
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Representatives, shall have
been furnished with all such documents and certificates as you may request in
connection with this transaction in order to evidence the accuracy and
completeness of any of the representations, warranties or statements of the
Company or of its compliance with any of the covenants or conditions contained
therein.
(j) If any of the conditions provided for in this Section
shall not have been completely fulfilled as of the date indicated, this
Agreement and all obligations of the Underwriters under this Agreement may be
canceled at, or at any time prior to, each Closing Date by your notifying the
Company of such cancellation in writing or by telegram at or prior to the
applicable
22
23
Closing Date. Any such cancellation shall be without liability of any
Underwriter to the Company, except as otherwise provided herein.
5. Conditions of the Obligations of the Company.
The obligation of the Company to sell and deliver the Shares is subject
to the following conditions:
(a) The Registration Statement shall have become effective not
later than 4:30 p.m. Eastern Standard Time, on the date of this Agreement, or at
such later time or on such later date as to which you and the Company may agree
in writing.
(b) On the Closing Dates, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the Act
or any proceedings therefor initiated or threatened by the Commission.
If the conditions to the obligations of the Company provided for in
this Section have been fulfilled on the First Closing Date but are not fulfilled
after the First Closing Date and prior to the Option Closing Date, then only the
obligation of the Company to sell and deliver the Option Shares on exercise of
the option provided for in Section 2(b) hereof shall be affected.
6. Indemnification.
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Representative and Underwriter, their
shareholders, partners, directors, officers, employees, and counsel, and each
person, if any, who controls the Representatives and each Underwriter within the
meaning of Section 15 of the Act and Section 20 of the Exchange Act against any
loss, claim, damage, liability or expense, as incurred, to which each
Representative and Underwriter or such controlling person may become subject,
under the Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, claim, damage, liability or expense (or actions
in respect thereof as contemplated below) arises out of or is based (i) upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A or Rule 434 under the Act, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (ii) upon any
untrue statements or alleged untrue statement of a material fact contained in
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the Company
contained herein; or (iv) any act or failure to act or any alleged act or
failure to act by the Representatives or any Underwriter in connection with, or
relating in any manner to, the Common Stock or the offering contemplated hereby,
and which is included as part of or referred to
23
24
in any loss, claim, damage, liability or action arising out of or based upon any
matter covered by clause (i) or (ii) above, provided that the Company shall not
be liable under this clause (iv) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by the Representatives or such Underwriter
through its bad faith or willful misconduct; and to reimburse the
Representatives or each Underwriter and each such controlling person for any and
all expenses (including the fees and disbursements of counsel chosen by the
Representatives) as such expenses are reasonably incurred by the Representatives
or such Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Representatives expressly for use in the Registration Statement,
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and provided, further, that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
the Representatives or any Underwriter from whom the person asserting any loss,
claim, damage, liability or expense purchased Shares, or any person controlling
the Representatives or such Underwriter, if copies of the Prospectus were timely
delivered to the Representatives or the Underwriter pursuant to the provisions
hereunder, and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of the Representatives or such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage, liability or expense; and provided, further, that the
Company may agree, and without limiting the rights of the Representatives or the
Underwriters under this Agreement, as to the respective amounts of such
liability for which it shall be responsible. The indemnity agreement set forth
in this Section 6(a) shall be in addition to any liabilities that the Company
may otherwise have.
(b) Indemnification of the Company and each Director and
Officer of the Company. Each Representative and Underwriter agrees, severally
and not jointly, to indemnify and hold harmless the Company, each of its
shareholders, partners, directors, and counsel, and each of its officers who
signed the Registration Statement, each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
against any loss, claim, damage, liability or expense, as incurred to which the
Company, or any director, officer or controlling person of the Company may
become subject, under the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based upon any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or arises out of or is
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
24
25
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any preliminary prospectus, the
Prospectus (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, or any
director, officer or controlling person, for any legal and other expense
reasonably incurred by the Company, or any director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The Company
hereby acknowledges that the only information that the Representatives and the
Underwriters have furnished to the Company expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) are the statements set forth (A) information under the
caption "Underwriting" in the Prospectus; and (B) information under the heading
"Legal Matters." The indemnity agreement set forth in this Section 6(b) shall be
in addition to any liabilities that the Representatives and each Underwriter may
otherwise have.
(c) Notifications and Other Indemnification Procedures.
Promptly after receipt by an indemnified party under this Section 6 of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this Section
6, notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained in this
Section 6, to the extent it is not prejudiced as a proximate result of such
failure. In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party's election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 6 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
provisions of the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (a Representative in the case of Section 6(b) and Section 7), representing
the indemnified parties who are parties to such action) or (ii) the
25
26
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 6
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense incurred
by reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity was or could have been sought hereunder by such
indemnified party, unless such settlement, compromise or consent includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
7. Contribution.
If the indemnification provided for in Section 6 is for any reason held
to be unavailable to or otherwise insufficient to hold harmless an indemnified
party of any losses, claims, damages, liabilities or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
paid or payable by such indemnified party, as incurred, as a result of any
losses, claims, damages, liabilities or expenses referred to therein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand, and the Underwriters, on the other hand, from the
offering of the Shares pursuant to this Agreement or (ii) if the allocation
provided by clause (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 (i) above but also the relative fault of the Company on the one
hand, and the Underwriters, on the other hand, in connection with the statements
or omissions or inaccuracies in the representations and warranties herein 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 on the one hand, and the Underwriters, on the other hand, in
connection with the offering of the Shares pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of the Shares pursuant to this Agreement (before deducting
expenses) received by the Company, and the total underwriting discount received
by the Underwriters, in each case as set forth on the front cover page of the
Prospectus, bear to the aggregate public offering price of the Shares as set
forth on such cover. The relative fault of the Company on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact or any such
inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Company on the one hand, or the Underwriters, on the
other hand, and the parties relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
26
27
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 6(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 6(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 7; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 6(c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 7.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Shares underwritten by it
and distributed to the public. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters obligations to contribute pursuant to this
Section 7 are several, and not joint, in proportion to their respective
underwriting commitments as set forth opposite their names in Schedule I. For
purposes of this Section 7, each officer and employee of an Underwriter and each
person, if any, who controls an Underwriter within the meaning of the Securities
Act and the Exchange Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company with the meaning of the Securities Act and the Exchange Act shall have
the same rights to contribution as the Company.
8. Costs and Expenses.
(a) Whether or not this Agreement becomes effective or the
sale of the Shares to the Underwriters is consummated, the Company will pay all
costs and expenses incident to the performance of this Agreement by the Company,
including but not limited to the fees and expenses of counsel to the Company and
of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the Registration
Statement (including the consolidated financial statements therein and all
amendments and exhibits thereto), each Preliminary Prospectus and the
Prospectus, as amended or supplemented, the fee of the National Association of
Securities Dealers, Inc. ("NASD") in connection with the filing required by the
NASD relating to the offering of the Shares contemplated hereby; all expenses,
including fees (but not in excess of the amount set forth in Section 3(b)) and
disbursements of counsel to the Representatives, in connection with the
qualification of the Shares under the state or foreign securities or Blue Sky
Laws which you shall designate; the cost of printing and furnishing to you
copies of the Registration Statement, each Preliminary Prospectus, the
Prospectus, this Agreement, the Agreement Among Underwriters and related
agreements, and the Blue Sky Memorandum; the cost of printing the certificates
representing the Securities, the expenses of Company due diligence
27
28
meetings and presentations (but not of any Representatives or Representatives'
counsel in connection therewith), the expense of placing one "tombstone"
advertisement as directed by you and approved by the Company, and the cost of
preparing bound volumes of all public offering documents and of the cubes to be
distributed to the Representatives. The Company shall pay or reimburse the
Representatives for the costs of background searches with respect to the
officers, directors and shareholders of the Company. All "road show" expenses
incurred by the Representatives shall be borne by the Company. The Company shall
pay any and all taxes (including any transfer, franchise, capital stock or other
tax imposed by any jurisdiction) on sales to the Representatives and the
Underwriters hereunder. The Company will also pay all costs and expenses
incident to the furnishing of any amended Prospectus or of any supplement to be
attached to the Prospectus as called for in Section 3(a) of this Agreement
except as otherwise set forth in said Section.
(b) In addition to the foregoing expenses, the Company shall
at the First Closing Date pay to you the balance of a non-accountable expense
allowance equal to 3.00% of the gross proceeds of the offering, of which $50,000
has been paid. In the event the over-allotment option is exercised in part or in
full, the Company shall pay to you at the Option Closing Date an additional
amount equal to 3.00% of the gross proceeds received upon exercise of the
over-allotment option. In the event the transactions contemplated hereby are not
consummated for any reason, the Company shall be liable for your actual
accountable out-of-pocket expenses (with credit given to the amount heretofore
paid), including legal fees, provided however, that any portion of the $50,000
paid by the Company that has not been utilized by you in connection with the
offering on an accountable basis shall be refunded by you to the Company; and
further provided that if the contemplated transactions are not consummated by
reason of breach by the Company of this Agreement or of any representation,
warranty, covenant or condition contained herein, the Company shall be liable
for your accountable out-of-pocket expenses.
(c) Except as disclosed in the Prospectus and Registration
Statement, no person is entitled either directly or indirectly to compensation
from the Company, from any Underwriter or from any other person for services as
a finder in connection with the proposed offering, and the Company agrees to
indemnify and hold harmless each Underwriter, and the Underwriters agree to
indemnify and hold harmless, severally and not jointly, the Company from and
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable attorneys'
fees), to which the indemnified party may become subject insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon the claim of any person (other than an employee of the party
claiming indemnity) or entity that he or it is entitled to a finder's fee in
connection with the proposed offering by reason of such person's or entity's
influence or prior contact with the indemnifying party.
9. Default of One or More of the Several Underwriters.
If, on the First Closing Date or the Option Closing Date, as the case
may be, any one or more of the several Underwriters fail or refuse to purchase
Shares that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting
28
29
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Shares set forth opposite their respective names on Schedule I bears to
the aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as may be specified by
the Representatives with the consent of the non-defaulting Underwriters, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date. If, on the First Closing Date or the
Option Closing Date, as the case may be, any one or more of the Underwriters
shall fail or refuse to purchase Shares and the aggregate number of Shares with
respect to which such default occurs exceeds 10% of the aggregate number of
Shares to be purchased on such date, and arrangements satisfactory to the
Representatives and the Company for the purchase of such Shares are not made
within 48 hours after such default, this Agreement shall terminate without
liability of any party to any other party except that the provisions of Section
6, Section 7 and Section 8 shall at all times be effective and shall survive
such termination. In any such case either the Representatives or the Company
shall have the right to postpone the First Closing Date or the Option Closing
Date, as the case may be, but in no event for longer than seven days in order
that the required changes, if any, to the Registration Statement and the
Prospectus or any other document or arrangements may be effected.
As used in this Agreement, the term Underwriter shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
9. Any action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. Effective Date.
The Agreement shall become effective upon its execution, except that
you may, at your option, delay its effectiveness until the earlier to occur of
(a) 10:00 a.m., Eastern Standard Time, on the first full business day following
the Effective Date or (b) the day on which the Representatives in their
discretion shall first commence the public offering of any of the Shares. This
Agreement may be terminated by you at any time before it becomes effective as
provided above, except that Sections 6, 7, 8, 13, 14, 15 and 16 shall remain in
effect notwithstanding such termination. The time of the public offering shall
mean the time of release by you of the first newspaper advertisement with
respect to the Shares, or the time when the Shares are first generally offered
by you to dealers by letter or telecopier, whichever shall occur first.
11. Termination.
(a) This Agreement, except for Sections 6, 7, 8, 13, 14, 15
and 16, may be terminated at any time prior to the First Closing Date, and the
option referred to in Section 2(b), if exercised, may be canceled, at any time
prior to the Option Closing Date, by the Representatives if in the
Representatives' judgment it is impracticable to offer for sale or to enforce
contracts made by you for the resale of the Shares agreed to be purchased
hereunder, by reason of (i) the Company having sustained a material loss,
whether or not insured, by reason of fire, earthquake, flood, accident or other
calamity, or from any labor dispute or court or government action, order or
decree,
29
30
(ii) trading in securities on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq NMS having been suspended or limited, (iii) material
governmental restrictions having been imposed on trading in securities generally
which are not in force and effect on the date hereof, (iv) a banking moratorium
having been declared by federal or New York State authorities, (v) an outbreak
of major international hostilities or other national or international calamity
having occurred, (vi) the passage by the Congress of the United States or by any
state legislative body of similar impact, of any act or measure, or the adoption
of any orders, rules or regulations by any governmental body or any
authoritative accounting institute or board, or any governmental executive,
which is reasonably believed likely by you to have a material adverse impact on
the business, financial condition or financial statements of the Company, (vii)
any material adverse change in the financial or securities markets beyond normal
fluctuations in the United States having occurred since the date of this
Agreement, or (viii) any material adverse change having occurred, since the
respective dates for which information is given in the Registration Statement
and Prospectus, in the earnings, business, prospects or general condition of the
Company, financial or otherwise, whether or not arising in the ordinary course
of business.
(b) If the Representatives elect to prevent this Agreement
from becoming effective or to terminate this Agreement as provided in this
Section 11 or in Section 10, the Company shall be promptly notified by you, by
telephone or facsimile transmission, confirmed by letter.
12. Representatives' Warrants.
On the First Closing Date, the Company will issue to you, for a
consideration of $100.00 ($.001 per Warrant) and upon the terms and conditions
set forth in the form of Representatives' Warrants annexed as an exhibit to the
Registration Statement, the Representatives' Warrants to purchase 100,000
Shares. In the event of conflict in the terms of this Agreement and the
Representatives' Warrants, the language of the Representatives' Warrants shall
control.
13. Representations, Warranties and Agreements to Survive
Delivery.
The respective indemnities, agreements, representations, warranties and
other statements of the Company and the Representatives, set forth in or made
pursuant to this Agreement will remain in full force and effect regardless of
any investigation made by or on behalf of the Underwriters, the Company or any
of its officers or directors or any controlling persons and will survive
delivery of and payment for the Shares and the termination of this Agreement.
14. Notice.
All communications hereunder will be in writing and, except as
otherwise expressly provided herein, if sent to any Underwriter, will be mailed,
delivered or telecopied and confirmed to it at ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc.,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, President, with a copy sent to De ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇,
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇ ▇. ▇▇
▇▇▇▇▇▇▇, Esq. and ▇▇▇▇ R.E. ▇▇▇▇, Esq., and to Millennium Financial Group, Inc.,
____________________,
30
31
____________________, ____________________, Attn: ____________________,
President, or if sent to the Company, will be mailed, delivered, or facsimiled
and confirmed to ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive Officer,
NeoTherapeutics, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a
copy sent to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇
▇. ▇▇▇▇, Esq.
15. Parties in Interest.
The Agreement herein set forth is made solely for the benefit of the
Representatives, the Underwriters, the Company and, to the extent expressed, any
person controlling the Company, or the Representatives or any Underwriter, and
directors of the Company, nominees for directors of the Company (if any) named
in the Prospectus, the officers of the Company who have signed the Registration
Statement, and their respective executors, administrators, 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, as such purchaser, from any Underwriter of the Shares.
16. Severability
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
17. Applicable Law.
This Agreement will be governed by, and construed in accordance with,
the laws of the State of Florida applicable to agreements made and to be
entirely performed within Florida.
18. Integration
This Agreement constitutes the entire agreement of the parties and
supersede all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in several counterparts, each one of which shall be an
original, and all of which shall constitute one and the same document.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK.]
31
32
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this Underwriting Agreement, whereupon it will
become a binding agreement between the Company and the Underwriters in
accordance with its terms.
Very truly yours,
NEOTHERAPEUTICS, INC.
Dated: , 1999 By:
-------------------- --------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
The foregoing Underwriting Agreement is
hereby confirmed and accepted by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Assoc., Inc. and Millennium
Financial Group, Inc., on their behalf
and on behalf of each of the
Underwriters named in Schedule I hereto,
as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ASSOC., INC.
By:
-------------------------------------
Authorized Officer
Dated: , 1999
--------------------
MILLENNIUM FINANCIAL GROUP, INC.
By:
-------------------------------------
Authorized Officer
Dated: , 1999
--------------------
32
33
SCHEDULE I
Underwriting Agreement dated July __, 1999
Underwriter Number of Firm Shares to be Purchased
----------- -------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Assoc., Inc. __________
Millennium Financial Group, Inc. __________
______________________________ __________
______________________________ __________
______________________________ __________
Total __________
33
