EXHIBIT 1.1
4,000,000 Shares
Common Stock
($0.001 Par Value)
UNDERWRITING AGREEMENT
September __, 1999
UNDERWRITING AGREEMENT
September __, ▇▇▇▇
▇▇▇▇▇▇▇ DILLON READ LLC
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
as Managing Underwriters
c/o Warburg Dillon Read LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Connetics Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule A annexed
hereto (the "Underwriters") an aggregate of 4,000,000 shares (the "Firm
Shares") of Common Stock, $0.001 par value (the "Common Stock"), of the Company.
In addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters the option to purchase from the Company up
to an additional 600,000 shares of Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the "Shares." The Shares are described in the Prospectus which
is referred to below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the "Act"), with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (File No. 333-85833),
including a prospectus, relating to the Shares, which incorporates by reference
documents which the Company has filed or will file in accordance with the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively called the "Exchange Act"). The Company
has furnished to you, for use by the Underwriters and by dealers, copies of one
or more preliminary prospectuses and the documents incorporated by reference
therein (each thereof, including the documents incorporated therein by
reference, being herein called a "Preliminary Prospectus") relating to the
Shares. Except where the context otherwise requires, the registration
statement, as amended when it becomes effective, including all documents filed
as a part thereof or incorporated by reference therein, and including any
information contained in a prospectus subsequently filed with the Commission
pursuant to Rule 424(b) under the Act and deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the Act and
also including any registration statement filed pursuant to Rule 462(b) under
the Act, is herein called the Registration Statement, and the prospectus,
including all documents incorporated therein by reference, in the form filed by
the Company with the Commission pursuant to Rule 424(b) under the Act on or
before the second business day after the date hereof (or such earlier time as
may be required under the Act) or, if no such filing is required, the form of
final prospectus included in the Registration Statement at the time it became
effective, is herein called the Prospectus.
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the warranties and representations and
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subject to the terms and conditions herein set forth, the Company agrees to sell
to the respective Underwriters and each of the Underwriters, severally and not
jointly, agrees to purchase from the Company the respective number of Firm
Shares (subject to such adjustment as you may determine to avoid fractional
shares) which bears the same proportion to the number of Firm Shares to be sold
by the Company as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule A annexed hereto bears to the total number of Firm
Shares to be sold by the Company, in each case at a purchase price of $[____]
per Share. The Company is advised by you that the Underwriters intend (i) to
make a public offering of their respective portions of the Firm Shares as soon
after the effective date of the Registration Statement as in your judgment is
advisable and (ii) initially to offer the Firm Shares upon the terms set forth
in the Prospectus. You may from time to time increase or decrease the public
offering price after the initial public offering to such extent as you may
determine.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company, ratably
in accordance with the number of Firm Shares to be purchased by each of them
(subject to such adjustment as you shall determine to avoid fractional shares),
all or a portion of the Additional Shares as may be necessary to cover over-
allotments made in connection with the offering of the Firm Shares, at the same
purchase price per share to be paid by the Underwriters to the Company for the
Firm Shares. This option may be exercised by you on behalf of the several
Underwriters at any time (but not more than once) on or before the thirtieth day
following the date hereof, by written notice to the Company. Such notice shall
set forth the aggregate number of Additional Shares as to which the option is
being exercised, and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the additional time of
purchase); provided, however, that the additional time of purchase shall not be
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earlier than the time of purchase (as defined below) nor earlier than the second
business day/1/ after the date on which the option shall have been exercised nor
later than the tenth business day after the date on which the option shall have
been exercised. The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same proportion to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule A hereto bears to the total
number of Firm Shares (subject, in each case, to such adjustment as you may
determine to eliminate fractional shares).
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/1/ As used herein "business day" shall mean a day on which the New York Stock
Exchange is open for trading.
2.
2. Payment and Delivery. Payment of the purchase price for the Firm
--------------------
Shares shall be made to the Company by Federal Funds wire transfer, against
delivery of the certificates for the Firm Shares to you through the facilities
of the Depository Trust Company (the "DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on September __, 1999 (unless another time shall be agreed to by you
and the Company or unless postponed in accordance with the provisions of Section
10 hereof). The time at which such payment and delivery are actually made is
hereinafter sometimes called the time of purchase. Certificates for the Firm
Shares shall be delivered to you in definitive form in such names and in such
denominations as you shall specify no later than the second business day
preceding the time of purchase. For the purpose of expediting the checking of
the certificates for the Firm Shares by you, the Company agrees to make such
certificates available to you for such purpose at least one full business day
preceding the time of purchase.
Payment of the purchase price for the Additional Shares shall be made
at the additional time of purchase in the same manner and at the same office as
the payment for the Firm Shares. Certificates for the Additional Shares shall
be delivered to you in definitive form in such names and in such denominations
as you shall specify no later than the second business day preceding the
additional time of purchase. For the purpose of expediting the checking of the
certificates for the Additional Shares by you, the Company agrees to make such
certificates available to you for such purpose at least one full business day
preceding the additional time of purchase.
3. Representations and Warranties of the Company. The Company represents and
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warrants to each of the Underwriters that:
(a) the Company has not received, and has no notice of, any order of the
Commission preventing or suspending the use of any Preliminary Prospectus, or
instituting proceedings for that purpose, and each Preliminary Prospectus, at
the time of filing thereof, conformed in all material respects to the
requirements of the Act when the Registration Statement becomes effective, the
Registration Statement and the Prospectus will fully comply in all material
respects with the provisions of the Act, and the Registration Statement will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and the Prospectus will not contain an 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; any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed; provided, however,
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that the Company makes no warranty or representation with respect to any
statement contained in the Registration Statement or the Prospectus in
reliance upon and in conformity with information concerning the Underwriters
and furnished in writing by or on behalf of any Underwriter through you to the
Company expressly for use in the Registration Statement or the Prospectus; the
documents incorporated by reference in the Prospectus, at the time they became
effective were filed with the Commission, complied in all material respects
with the requirements of the Act the Exchange Act, and do not contain an
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
3.
the circumstances under which they were made, not misleading and the Company
has not distributed any offering material in connection with the offering or
sale of the Shares other than the Registration Statement, the Preliminary
Prospectus, the Prospectus or any other materials, if any, permitted by the
Act;
(b) as of the date of this Agreement, the Company has an authorized
capitalization as set forth under the heading entitled "Actual" in the section
of the Registration Statement and the Prospectus entitled "Capitalization"
and, as of the time of purchase and the additional time of purchase, as the
case may be, the Company shall have an authorized capitalization as set forth
under the heading entitled "As Adjusted" in the section of the Registration
Statement and the Prospectus entitled "Capitalization"; all of the issued and
outstanding shares of capital stock including Common Stock of the Company have
been duly and validly authorized and issued and are fully paid and non-
assessable , have been issued in compliance with all federal and state
securities laws and were not issued in violation of any preemptive right,
resale right, right of first refusal or similar right;
(c) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, with
full power and authority to own, lease and operate its properties and conduct
its business as described in the Registration Statement;
(d) the Company is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a
material adverse effect on the business, properties, financial condition or
results of operation of the Company and its Subsidiaries (as hereinafter
defined) taken as a whole (a "Material Adverse Effect"). The Company has no
subsidiaries (as defined in the Rules and Regulations) [other than _________]
(collectively, the "Subsidiaries"); the Company owns __% of the outstanding
capital stock of [________]; other than the Subsidiaries, the Company does not
own, directly or indirectly, any shares of stock or any other equity or long-
term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity; complete and
correct copies of the certificates of incorporation and of the bylaws of the
Company and the Subsidiaries and all amendments thereto have been delivered to
you, and except as set forth in the exhibits to the Registration Statement no
changes therein will be made subsequent to the date hereof and prior to the
time of purchase or, if later, the additional time of purchase; each
Subsidiary has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, with
full corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement; each
Subsidiary is duly qualified to do business as a foreign corporation in good
standing in each jurisdiction where the ownership or leasing of the properties
or the conduct of its business requires such qualification, except where the
failure to so qualify would not have a Material Adverse Effect; all of the
outstanding shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable and (except
as otherwise described in this Section 3(d)) are owned by the Company subject
to no security interest, other encumbrance or adverse claims; no options,
warrants or
4.
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligation into shares of capital stock or ownership
interests in the Subsidiaries are outstanding.
(e) the Company and each of its Subsidiaries are duly qualified or
licensed by and are in good standing in each jurisdiction in which they
conduct their respective businesses and in which the failure, individually or
in the aggregate, to be so licensed or qualified could have a Material Adverse
Effect; and the Company and each of its Subsidiaries are in compliance in all
material respects with the laws, orders, rules, regulations and directives
issued or administered by such jurisdictions;
(f) neither the Company nor any of its Subsidiaries is in breach of,
or in default under (nor has any event occurred which with notice, lapse of
time, or both would result in any breach of, or constitute a default under),
its respective charter or by-laws or in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which any of them or
any of their properties is bound, and the execution, delivery and performance
of this Agreement, the issuance and sale of the Shares and the consummation of
the transactions contemplated hereby will not conflict with, or result in any
breach of or constitute a default under (nor constitute any event which with
notice, lapse of time, or both would result in any breach of, or constitute a
default under), any provisions of the charter or by-laws, of the Company or
any of its Subsidiaries or under any provision of any license, indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which any of them or
their respective properties may be bound or affected, or under any federal,
state, local or foreign law, regulation or rule or any decree, judgment or
order applicable to the Company or any of its Subsidiaries;
(g) this Agreement has been duly authorized, executed and delivered
by the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms;
(h) the capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and Prospectus and the certificates for the Shares are
in due and proper form and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
(i) the Shares have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable;
(j) no approval, authorization, consent or order of or filing with
any national, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the issuance and sale
of the Shares or the consummation by the Company of the transaction as
contemplated hereby other than registration of the Shares under the Act and
any necessary qualification under the securities or blue sky laws of the
various
5.
jurisdictions in which the Shares are being offered by the Underwriters or
under the rules and regulations of the National Association of Securities
Dealers, Inc. (the "NASD");
(k) no person has the right, contractual or otherwise, to cause the
Company to issue to it, or register pursuant to the Act, any shares of capital
stock of the Company upon the issue and sale of the Shares to the Underwriters
hereunder, nor does any person have preemptive rights, co-sale rights, rights
of first refusal or other rights to purchase any of the Shares other than
those that have been expressly waived prior to the dates hereof;
(l) Ernst & Young LLP, whose reports on the consolidated financial
statements of the Company and its Subsidiaries are filed with the Commission
as part of the Registration Statement and Prospectus, are independent
certified public accountants as required by the Act;
(m) each of the Company and its Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state, local or foreign law, regulation or
rule, and has obtained all necessary authorizations, consents and approvals
from other persons, in order to conduct its respective business; neither the
Company nor any of its Subsidiaries is in violation of, or in default under,
any such license, authorization, consent or approval or any federal, state,
local or foreign law, regulation or rule or any decree, order or judgment
applicable to the Company or any of its Subsidiaries the effect of which could
have a Material Adverse Effect;
(n) all legal or governmental proceedings, contracts, leases or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement have been so described or filed as required;
(o) there are no actions, suits, claims, investigations or
proceedings pending or threatened to which the Company or any of its
Subsidiaries or any of their respective officers is a party or of which any of
their respective properties is subject at law or in equity, or before or by
any federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency which could result in a judgment, decree or
order having a Material Adverse Effect or consummation of the transaction
contemplated hereby;
(p) the audited and unaudited financial statements included in the
Registration Statement and the Prospectus present fairly the consolidated
financial position of the Company and its Subsidiaries as of the dates
indicated and the consolidated results of operations and cash flows of the
Company and its Subsidiaries for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved;
(q) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been (i)
any material adverse change, or any development which, in the Company's
reasonable judgment, is likely to cause a material adverse change, in the
business, properties or assets described or referred to in the
6.
Registration Statement, or the results of operations, condition (financial or
otherwise), business or operations of the Company and its Subsidiaries taken
as a whole, (ii) any transaction which is material to the Company or its
Subsidiaries, except transactions in the ordinary course of business, (iii)
any obligation, direct or contingent, which is material to the Company and its
Subsidiaries taken as a whole, incurred by the Company or its Subsidiaries,
except obligations incurred in the ordinary course of business, (iv) any
change in the capital stock or outstanding indebtedness of the Company or its
Subsidiaries or (v) any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company. Neither the Company nor its
Subsidiaries has any material contingent obligation which is not disclosed in
the Registration Statement.
(r) the Company has obtained the agreement of each of its directors
and officers and certain of its other stockholders not to sell, offer to sell,
contract to sell, hypothecate grant any option to sell or otherwise dispose
of, directly or indirectly, any shares of Common Stock or securities
convertible into or exchangeable for Common Stock or warrants or other rights
to purchase Common Stock for a period of 90 days after the date of the
Prospectus;
(s) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(t) except as described in the Registration Statement and Prospectus,
the Company owns, or has obtained valid and enforceable licenses for, or other
rights to use, the inventions, patent applications, patents, trademarks (both
registered and unregistered), tradenames, copyrights and trade secrets
described in the Registration Statement and Prospectus as being owned or
licensed by it, which the Company reasonably believes are necessary for the
conduct of its business (collectively, "Intellectual Property") and which the
failure to own, license or have such rights could have a Material Adverse
Effect. Except as described in the Registration Statement and Prospectus, (i)
the Company believes that there are no third parties who have or will be able
to establish their rights to any Intellectual Property, except for the
ownership rights of the owners of the Intellectual Property which is licensed
to the Company; (ii) to the Company's knowledge there is no infringement by
third parties of any Intellectual Property; (iii) there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the Company's rights in or to any Intellectual Property,
and the Company is unaware of any facts which would form a reasonable basis
for any such claim; (iv) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
validity or scope of any Intellectual Property, and the Company is unaware of
any facts which would form a reasonable basis for any such claim; (v) there is
no pending or, to the Company's knowledge, threatened action, suit, proceeding
or claim by others that the Company infringes or otherwise violates any
patent, trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any facts which would form a reasonable
basis for any such claim; (vi) to the Company's knowledge there is no patent
or patent application which contains claims that interfere with the issued or
pending claims of any of the Intellectual Property which could have a Material
Adverse Effect;
7.
and (vii) there is no prior art of which the Company is aware that may render
any patent application owned by the Company of the Intellectual Property
unpatentable which has not been disclosed to the U.S. Patent and Trademark
Office which could have a Material Adverse Effect;
(u) the Company has filed with the U.S. Food and Drug Administration
(the "FDA"), and all applicable foreign, state and local regulatory bodies for
and received approval of all registrations, applications, licenses, requests
for exemptions, permits and other regulatory authorizations necessary to
conduct the Company's business as it is described in the Registration
Statement and Prospectus; the Company is in compliance in all material
respects with all such registrations, applications, licenses, requests for
exemptions, permits and other regulatory authorizations, and all applicable
FDA, foreign, state and local rules, regulations, guidelines and policies,
including, but not limited to, applicable FDA, foreign, state and local rules,
regulations and policies relating to good manufacturing practice ("GMP") and
good laboratory practice ("GLP"); the Company has no reason to believe that
any party granting any such registration, application, license, request for
exemption, permit or other authorization is considering limiting, suspending
or revoking the same and knows of no basis for any such limitation, suspension
or revocation; and
(v) the human clinical trials, animal studies and other preclinical
tests conducted by the Company or in which the Company has participated that
are described in the Registration Statement and Prospectus or the results of
which are referred to in the Registration Statement or Prospectus, and such
studies and tests conducted on behalf of the Company, were and, if still
pending, are being conducted in all material respects in accordance with
experimental protocols, procedures and controls generally used by qualified
experts in the preclinical or clinical study of new drugs or diagnostics as
applied to comparable products to those being developed by the Company; the
descriptions of the results of such studies, test and trials contained in the
Registration Statement and Prospectus are accurate and complete in all
material respects, and except as set forth in the Registration Statement and
Prospectus, the Company has no knowledge of any other trials, studies or
tests, the results of which the Company believes reasonably call into question
the clinical trial results described or referred to in the Registration
Statement and Prospectus when viewed in the context in which such results are
described and the clinical state of development; and the Company has not
received any notices or correspondence from the FDA or any other domestic or
foreign governmental agency requiring the termination, suspension or
modification (other than such modifications as are normal in the regulations,
any such modifications which are material have been disclosed to you) of any
animal studies, preclinical tests or clinical trials conducted by or on behalf
of the Company or in which the Company has participated that are described in
the Registration Statement or Prospectus or the results of which are referred
to in the Registration Statement or Prospectus.
4. Representations and Warranties of the Selling Stockholders.
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Intentionally Omitted.
5. Certain Covenants of the Company. The Company hereby agrees:
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8.
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities
or blue sky laws of such states as you may designate and to maintain such
qualifications in effect so long as required for the distribution of the
Shares; provided that the Company shall not be required to qualify as a
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foreign corporation or to consent to the service of process under the laws of
any such state (except service of process with respect to the offering and
sale of the Shares); and to promptly advise you of the receipt by the Company
of any notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;
(b) to make available to the Underwriters in New York City, as soon
as practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Underwriters, as many copies of
the Prospectus (or of the Prospectus as amended or supplemented if the Company
shall have made any amendments or supplements thereto after the effective date
of the Registration Statement) as the Underwriters may request for the
purposes contemplated by the Act; in case any Underwriter is required to
deliver a prospectus within the nine-month period referred to in Section
10(a)(3) of the Act in connection with the sale of the Shares, the Company
will prepare promptly upon request, but at the expense of such Underwriter,
such amendment or amendments to the Registration Statement and such
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act;
(c) to advise you promptly and (if requested by you) to confirm such
advice in writing, (i) when the Registration Statement has become effective
and when any post-effective amendment thereto becomes effective and (ii) if
Rule 430A under the Act is used, when the Prospectus is filed with the
Commission pursuant to Rule 424(b) under the Act (which the Company agrees to
file in a timely manner under such Rules);
(d) to advise you promptly, confirming such advice in writing, of any
request by the Commission for amendments or supplements to the Registration
Statement or Prospectus or for additional information with respect thereto, or
of notice of institution of proceedings for, or the entry of a stop order
suspending the effectiveness of the Registration Statement and, if the
Commission should enter a stop order suspending the effectiveness of the
Registration Statement, to make every reasonable effort to obtain the lifting
or removal of such order as soon as possible; to advise you promptly of any
proposal to amend or supplement the Registration Statement or Prospectus
including by filing any documents that would be incorporated therein by
reference and to file no such amendment or supplement to which you shall
object in writing;
(e) to file promptly all reports and any definitive proxy or
information statement required to be filed by the Company with the Commission
in order to comply with the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the shares, and to promptly notify you
of such filing;
9.
(f) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) under the Act;
(g) to furnish to you and, upon request, to each of the other
Underwriters for a period of five years from the date of this Agreement (i)
copies of any reports or other communications which the Company shall send to
its stockholders or shall from time to time publish or publicly disseminate,
(ii) copies of all annual, quarterly and current reports filed with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar form as may be
designated by the Commission, (iii) copies of documents or reports filed with
any national securities exchange on which any class of securities of the
Company is listed, and (iv) such other information as you may reasonably
request regarding the Company or its Subsidiaries, in each case as soon as
such communications, documents or information becomes available;
(h) to advise the Underwriters promptly of the happening of any event
known to the Company within the time during which a Prospectus relating to the
Shares is required to be delivered under the Act which, in the judgment of the
Company, would require the making of any change in the Prospectus then being
used , or in the information incorporated therein by reference, so that the
Prospectus would not include an untrue statement of material fact or omit to
state a material fact necessary to make the statements therein, in the light
of the circumstances under which they are made, not misleading, and, during
such time, to prepare and furnish, at the Company's expense, to the
Underwriters promptly such amendments or supplements to such Prospectus as may
be necessary to reflect any such change and to furnish you a copy of such
proposed amendment or supplement before filing any such amendment or
supplement with the Commission;
(i) to make generally available to its security holders, and to
deliver to you, an earnings statement of the Company (which will satisfy the
provisions of Section 11(a) of the Act) covering a period of at least twelve
months beginning after the effective date of the Registration Statement (as
defined in Rule 158(c) of the Act) as soon as is reasonably practicable after
the termination of such twelve-month period but not later than the forty-fifth
(45th) day following the end of the fiscal quarter first occurring after the
first anniversary of the effective date of the registration statement;
(j) to furnish to its shareholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, shareholders' equity and of cash flow of the Company for
such fiscal year, accompanied by a copy of the certificate or report thereon
of nationally recognized independent certified public accountants);
(k) to furnish to you four (4) signed copies of the Registration
Statement, as initially filed with the Commission, and of all amendments
thereto (including all exhibits thereto and documents incorporated by
reference therein) and sufficient conformed copies of the foregoing (other
than exhibits) for distribution of a copy to each of the other Underwriters;
10.
(l) to furnish to you as early as practicable prior to the time of
purchase and the additional time of purchase, as the case may be, but not
later than two business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements, if any, of the Company
and its Subsidiaries which have been read by the Company's independent
certified public accountants, as stated in their letter to be furnished
pursuant to Section 8(c) hereof;
(m) to apply the net proceeds from the sale of the Shares in the
manner set forth under the caption "Use of Proceeds" in the Prospectus;
(n) to furnish to you, before filing with the Commission subsequent
to the effective date of the Registration Statement and during the period
referred to in paragraph (f) above, a copy of any document proposed to be
filed pursuant to Section 13, 14 or 15(d) of the Exchange Act;
(o) not to sell, offer or agree to sell, contract to sell, grant any
option to sell or otherwise dispose of, directly or indirectly, any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
Common Stock or warrants or other rights to purchase Common Stock or any other
Securities of the Company that are substantially similar to Common Stock or
permit the registration under the Act of any shares of Common Stock, except
for the registration of the Shares and the sales to the Underwriters pursuant
to this Agreement and except for issuances of Common Stock upon the exercise
of outstanding options, warrants and debentures, for a period of ninety (90)
days after the date hereof, without the prior written consent of the Warburg
Dillon Read LLC ("WDR"); and
(p) to cause the Shares to be listed for quotation on the NASDAQ
National Market.
6. Fees and Expenses. The Company will pay all expenses, fees and
-----------------
taxes (other than any transfer taxes and fees and disbursements of counsel for
the Underwriters except as set forth under Section 7 hereof or (iii) or (iv)
below) in connection with (i) the preparation and filing of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and any amendments or
supplements thereto, and the printing and furnishing of copies of each thereof
to the Underwriters and to dealers (including costs of mailing and shipment),
(ii) the issuance, sale and delivery of the Shares by the Company, (iii) the
word processing and/or printing of this Agreement, any Agreement Among
Underwriters, any dealer agreements, any Statements of Information, the Custody
Agreement and the Powers of Attorney and the reproduction and/or printing and
furnishing of copies of each thereof to the Underwriters and to dealers
(including costs of mailing and shipment), (iv) the qualification of the Shares
for offering and sale under state laws and the determination of their
eligibility for investment under state law as aforesaid (including the legal
fees and filing fees and other disbursements of counsel to the Underwriters) and
the printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriters and to dealers, (v) any listing of the
Shares on any securities exchange or qualification of the Shares for quotation
on NASDAQ and any registration thereof under the Exchange Act, (vi) the filing
for review of the public offering of the Shares by the National
11.
Association of Securities Dealers, Inc. (the "NASD"), and (vii) the
performance of the Company's other obligations hereunder.
7. Reimbursement of Underwriters' Expenses. If the Shares are not
---------------------------------------
delivered for any reason other than the termination of this Agreement pursuant
to the second paragraph of Section 9 hereof or the default by one or more of the
Underwriters in its or their respective obligations hereunder, the Company
shall, in addition to paying the amounts described in Section 6 hereof,
reimburse the Underwriters for all of their out-of-pocket expenses, including
the fees and disbursements of their counsel.
8. Conditions of Underwriters' Obligations. The several obligations of
---------------------------------------
the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Company on the date hereof and at the time of
purchase (and the several obligations of the Underwriters at the additional time
of purchase are subject to the accuracy of the representations and warranties on
the part of the Company on the date hereof and at the time of purchase (unless
previously waived) and at the additional time of purchase, as the case may be),
the performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Company shall furnish to you at the time of purchase and at
the additional time of purchase, as the case may be, an opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, counsel for the Company,
addressed to the Underwriters, and dated the time of purchase or the
additional time of purchase, as the case may be, with reproduced copies for
each of the other Underwriters and in form satisfactory to ▇▇▇▇▇▇▇, Phleger &
▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, stating that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with full corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and the Prospectus, to execute and deliver this
Agreement and to issue, sell and deliver the Shares as herein
contemplated;
(ii) each of the Subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
its respective jurisdiction of incorporation with full corporate power
and authority to own, lease and operate its respective properties and to
conduct its respective business;
(iii) the Company and its Subsidiaries are duly qualified or
licensed by each jurisdiction in which they conduct their respective
businesses and in which the failure, individually or in the aggregate, to be
so licensed or qualified could have a Material Adverse Effect and the Company
and its Subsidiaries are duly qualified, and are in good standing, in each
jurisdiction in which they own or lease real property or maintain an office
and in which such qualification is necessary;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
12.
(v) the Shares have been duly authorized and, when issued and
delivered to and paid for by the Underwriters, will be duly and validly
and issued and will be fully paid and non-assessable;
(vi) the Company has an authorized capitalization as set forth
in the Registration Statement and the Prospectus; the outstanding shares
of capital stock of the Company have been duly and validly authorized and
issued, and are fully paid, nonassessable and free of statutory and
contractual preemptive rights; the Shares when issued will be free of
statutory and contractual preemptive rights, resale rights, rights of
first refusal and similar rights; the certificates for the Shares are in
due and proper form and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
(vii) other than the Subsidiaries, the Company does not own or
control, directly or indirectly, any corporation, association or other
entity; each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement; each Subsidiary is
duly qualified to do business as a foreign corporation in good standing
in each jurisdiction where the ownership or leasing of the properties or
the conduct of its business requires such qualification, except where the
failure to so qualify would not have a Material Adverse Effect; all of
the outstanding shares of capital stock of each of the Subsidiaries have
been duly authorized and validly issued, are fully paid and non-
assessable and, except as otherwise stated in the Registration Statement,
are owned by the Company, in each case subject to no security interest,
other encumbrance or adverse claim; to the best of such counsel's
knowledge, no options, warrants or other rights to purchase, agreements
or other obligations to issue or other rights to convert any obligation
into shares of capital stock or ownership interests in the Subsidiaries
are outstanding;
(viii) the capital stock of the Company, including the Shares,
conforms to the description thereof contained in the Registration
Statement and Prospectus;
(ix) the Company is eligible to use a registration statement
on Form S-3 to register the Shares;
(x) the Registration Statement and the Prospectus (except as
to the financial statements and schedules and other financial and
statistical data contained or incorporated by reference therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act;
(xi) the Registration Statement has become effective under the
Act and, to the best of such counsel's knowledge, no stop order
proceedings with respect thereto are pending or threatened under the Act
and any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424 under the Act has been made in the manner and within
the time period required by such Rule 424;
13.
(xii) no approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory commission,
board, body, authority or agency is required in connection with the
issuance and sale of the Shares and consummation by the Company of the
transaction as contemplated hereby other than registration of the Shares
under the Act (except such counsel need express no opinion as to any
necessary qualification under the state securities or blue sky laws of
the various jurisdictions in which the Shares are being offered by the
Underwriters);
(xiii) the execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not conflict with, or result in any
breach of, or constitute a default under (nor constitute any event which
with notice, lapse of time, or both, would result in any breach of or
constitute a default under), any provisions of the charter or by-laws of
the Company or any of its Subsidiaries or under any provision of any
license, indenture, mortgage, deed of trust, bank loan, credit agreement
or other evidence of indebtedness, or any lease, contract or other
agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which any of them or their respective properties may be
bound or affected, or under any federal, state, local or foreign law,
regulation or rule or any decree, judgment or order applicable to the
Company or any of its Subsidiaries;
(xiv) neither the Company nor any of its Subsidiaries is in
violation of its charter or by-laws or, to the best of such counsel's
knowledge, is in breach of or in default under (nor has any event
occurred which with notice, lapse of time, or both would result in any
breach of, or constitute a default under), any license, indenture,
mortgage, deed of trust, bank loan or any other agreement or instrument
to which the Company or any of its Subsidiaries is a party or by which
any of them or their respective properties may be bound or affected or
under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its
Subsidiaries;
(xv) to the best of such counsel's knowledge, there are no
contracts, licenses, agreements, leases or documents of a character which
are required to be filed as exhibits to the Registration Statement or to
be summarized or described in the Prospectus which have not been so
filed, summarized or described;
(xvi) to the best of such counsel's knowledge, there are no
actions, suits, claims, investigations or proceedings pending, threatened
or contemplated to which the Company or any of its Subsidiaries is
subject or of which any of their respective properties, is subject at law
or in equity or before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency
which are required to be described in the Prospectus but are not so
described;
(xvii) the documents incorporated by reference in the
Registration Statement and Prospectus, when they became effective were
filed (or, if an amendment with respect to any such document was filed
when such amendment was filed) with the Commission,
14.
complied as to form in all material respects with the Exchange Act
(except as to the financial statements and schedules and other financial
and statistical data contained or incorporated by reference therein as to
which such counsel need express no opinion);
(xviii) the Company will not, upon consummation of the
transactions contemplated by this Agreement, be an "investment company,"
or a "promoter" or "principal underwriter" for, a "registered investment
company," as such terms are defined in the Investment Company Act of
1940, as amended;
(xix) such counsel have participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants of the Company and representatives of the
Underwriters at which the contents of the Registration Statement and
Prospectus were discussed and, although such counsel is not passing upon
and does not assume responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
Prospectus (except as and to the extent stated in subparagraphs (vi) and
(viii) above), on the basis of the foregoing nothing has come to the
attention of such counsel that causes them to believe that the
Registration Statement or any amendment thereto at the time such
Registration Statement or amendment became effective contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus or any supplement thereto at the date
of such Prospectus or such supplement, and at all times up to and
including the time of purchase or additional time of purchase, as the
case may be, contained an 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 light of the circumstances under which
they were made, not misleading (it being understood that such counsel
need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the
Registration Statement or Prospectus).
(b) The Company shall furnish to you at the time of purchase
and at the additional time of purchase, as the case may be, an opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, patent counsel for the Company, addressed to the
Underwriters, and dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for each of the other
Underwriters, substantially in the form attached hereto as Exhibit A and
---------
satisfactory to ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters.
(c) You shall have received from Ernst & Young LLP, letters
dated, respectively, the date of this Agreement and the time of purchase and
additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the
forms heretofore approved by WDR.
(d) You shall have received at the time of purchase and at
the additional time of purchase, as the case may be, the favorable opinion of
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, dated the time
of purchase or the additional time of
15.
purchase, as the case may be, as to the matters referred to in subparagraphs
(viii) (with respect to the Shares only), (ix) and (x) of paragraph (a) of
this Section 8.
In addition, such counsel shall state that such counsel have
participated in conferences with officers and other representatives of the
Company, counsel for the Company, representatives of the independent public
accountants of the Company and representatives of the Underwriters at which the
contents of the Registration Statement and Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as to matters
referred to with respect to the Shares under subparagraph (viii) of paragraph
(a) of this Section 8), on the basis of the foregoing (relying as to materiality
to a large extent upon the opinions of officers and other representatives of the
Company), no facts have come to the attention of such counsel which lead them to
believe that the Registration Statement or any amendment thereto at the time
such Registration Statement or amendment became effective contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus as of its date or any supplement thereto as of its date
contained an 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 light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no comment with respect to the
financial statements and schedules and other financial and statistical data
included in the Registration Statement or Prospectus).
(e) No amendment or supplement to the Registration Statement or
Prospectus, including documents deemed to be incorporated by reference
therein, shall be filed prior to the time the Registration Statement becomes
effective to which you object in writing.
(f) The Registration Statement shall become effective, or if
Rule 430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act, at or before 5:00 P.M., New
York City time, on the date of this Agreement, unless a later time (but not
later than 5:00 P.M., New York City time, on the second full business day
after the date of this Agreement) shall be agreed to by the Company and you in
writing or by telephone, confirmed in writing; provided, however, that the
--------- -------
Company and you and any group of Underwriters, including you, who have agreed
hereunder to purchase in the aggregate at least 50% of the Firm Shares may
from time to time agree on a later date.
(g) Prior to the time of purchase or the additional time of
purchase, as the case may be, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under the
Act or proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the
Registration Statement and all amendments thereto, or modifications thereof,
if any, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and (iii) the Prospectus and all amendments
or supplements thereto, or modifications thereof, if any, shall not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated
16.
therein or necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(h) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, (i) no
material and unfavorable change, financial or otherwise (other than as
referred to in the Registration Statement and Prospectus), in the business,
condition or prospects of the Company and its Subsidiaries taken as a whole
shall occur or become known and (ii) no transaction which is material and
unfavorable to the Company shall have been entered into by the Company or any
of its Subsidiaries.
(i) The Company will, at the time of purchase or additional time of
purchase, as the case may be, deliver to you a certificate of two of its
executive officers to the effect that the representations and warranties of
the Company as set forth in this Agreement are true and correct as of each
such date, that the Company shall perform such of its obligations under this
Agreement as are to be performed at or before the time of purchase and at or
before the additional time of purchase, as the case may be and the conditions
set forth in paragraphs (g) and (h) of this Section 8 have been met.
(j) You shall have received signed letters, dated the date of this
Agreement, from each of the directors and officers of the Company and certain
of its other stockholders to the effect that such persons shall not sell,
offer or agree to sell, contract to sell, grant any option to sell or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company or securities convertible into or exchangeable or exercisable for
Common Stock or warrants or other rights to purchase Common Stock for a period
of 90 days after the date of the Prospectus without WDR's prior written
consent.
(k) The Company shall have furnished to you such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the time of purchase and the
additional time of purchase, as the case may be, as you may reasonably
request.
(l) The Shares shall have been approved for listing for quotation on
the NASDAQ National Market, subject only to notice of issuance at or prior to
the time of purchase. or the additional time of purchase, as the case may be.
(m) Intentionally Omitted.
(n) Between the time of execution of this Agreement and the time of
purchase or additional time of purchase, as the case may be, there shall not
have occurred any downgrading, nor shall any notice or announcement have been
given or made of (i) any intended or potential downgrading or (ii) any review
or possible change that does not indicate an improvement, in the rating
accorded any securities of or guaranteed by the Company by any "nationally
recognized statistical rating organization", as that term is defined in Rule
436(g)(2) under the Act.
17.
9. Effective Date of Agreement; Termination. This Agreement shall become
----------------------------------------
effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of you or any group of Underwriters
(which may include you) which has agreed to purchase in the aggregate at least
50% of the Firm Shares, if, since the time of execution of this Agreement or the
respective dates as of which information is given in the Registration Statement
and Prospectus, (y) there has been any material adverse and unfavorable change,
financial or otherwise (other than as referred to in the Registration Statement
and Prospectus), in the operations, business, condition or prospects of the
Company and its Subsidiaries taken as a whole, which would, in your judgment or
in the judgment of such group of Underwriters, make it impracticable to market
the Shares, or (z) there shall have occurred any downgrading, or any notice
shall have been given of (i) any intended or potential downgrading or (ii) any
review or possible change that does not indicate an improvement, in the rating
accorded any securities of or guaranteed by the Company by any "nationally
recognized statistical rating organization", as that term is defined in Rule
436(g)(2) under the Act or, if, at any time prior to the time of purchase or,
with respect to the purchase of any Additional Shares, the additional time of
purchase, as the case may be, trading in securities on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market shall have
been suspended or limitations or minimum prices shall have been established on
the New York Stock Exchange, the American Stock Exchange or the NASDAQ National
Market or if a banking moratorium shall have been declared either by the United
States or New York State authorities, or if the United States shall have
declared war in accordance with its constitutional processes or there shall have
occurred any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on the
financial markets of the United States as, in your judgment or in the judgment
of such group of Underwriters, to make it impracticable to market the Shares.
If you or any group of Underwriters elects to terminate this Agreement
as provided in this Section 9, the Company and each other Underwriter shall be
notified promptly by letter or telegram.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 6, 7 and 11 hereof), and the Underwriters shall be under no
obligation or liability to the Company under this Agreement (except to the
extent provided in Section 11 hereof) or to one another hereunder.
10. Increase in Underwriters' Commitments. Subject to Sections 8 and 9,
-------------------------------------
if any Underwriter shall default in its obligation to take up and pay for the
Firm Shares to be purchased by it hereunder (otherwise than for reasons
sufficient to justify the termination of this Agreement under the provisions of
Section 9 hereof) and if the number of Firm Shares which all
18.
Underwriters so defaulting shall have agreed but failed to take up and pay for
does not exceed 10% of the total number of Firm Shares, the non-defaulting
Underwriters shall take up and pay for (in addition to the number of Firm
Shares they are obligated to purchase pursuant to Section 1 hereof) the number
of Firm Shares agreed to be purchased by all such defaulting Underwriters, as
hereinafter provided. Such Shares shall be taken up and paid for by such non-
defaulting Underwriter or Underwriters in such amount or amounts as you may
designate with the consent of each Underwriter so designated or, in the event
no such designation is made, such Shares shall be taken up and paid for by all
non-defaulting Underwriters pro rata in proportion to the aggregate number of
Firm Shares set opposite the names of such non-defaulting Underwriters in
Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that they
will not sell any Firm Shares hereunder unless all of the Firm Shares are
purchased by the Underwriters (or by substituted Underwriters selected by you
with the approval of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this agreement shall refer to and
include any Underwriter substituted under this Section 10 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting Underwriter or
Underwriters agreed to purchase exceeds 10% of the total number of Shares which
all Underwriters agreed to purchase hereunder, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the five business
day period stated above for the purchase of all the Shares which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall
be terminated without further act or deed and without any liability on the part
of the Company to any non-defaulting Underwriter and without any liability on
the part of any non-defaulting Underwriter to the Company. Nothing in this
paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
11. Indemnity and Contribution.
--------------------------
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, and the successors and assigns of all of the foregoing
persons from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
any such Underwriter or any such person may incur under the Act, the Exchange
Act,
19.
the Common Law or otherwise, insofar as such loss, damage, expense, liability
or claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in
the Registration Statement as amended by any post-effective amendment thereof
by the Company) or in a Prospectus (the term Prospectus for the purpose of
this Section 11 being deemed to include any Preliminary Prospectus, the
Prospectus and the Prospectus as amended or supplemented by the Company), or
arises out of or is based upon any omission or alleged omission to state a
material fact required to be stated in either such Registration Statement or
Prospectus or necessary to make the statements made therein not misleading,
except insofar as any such loss, damage, expense, liability or claim arises
out of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information furnished in
writing by or on behalf of any Underwriter through you to the Company
expressly for use with reference to such Underwriter in such Registration
Statement or such Prospectus or arises out of or is based upon any omission or
alleged omission to state a material fact in connection with such information
required to be stated in either such Registration Statement or Prospectus or
necessary to make such information not misleading.
If any action, suit or proceeding (together, a "Proceeding") is
brought against an Underwriter or any such person in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
Underwriter or such person shall promptly notify the Company in writing of the
institution of such Proceeding and the Company shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses; provided, however, that
-------- -------
the omission to so notify the Company shall not relieve the Company from any
liability which the Company may have to any Underwriter or any such person or
otherwise. Such Underwriter or such controlling person shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Underwriter or of such person
unless the employment of such counsel shall have been authorized in writing by
the Company in connection with the defense of such Proceeding or the Company
shall not have, within a reasonable period of time in light of the circumstances
employed counsel to have charge of the defense of such Proceeding or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from, additional to or in
conflict with those available to the Company (in which case the Company shall
not have the right to direct the defense of such Proceeding on behalf of the
indemnified party or parties), in any of which events such fees and expenses
shall be borne by the Company and paid as incurred (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). The Company shall not
be liable for any settlement of any such Proceeding effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such person from
and against any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected
20.
without its written consent if (i) such settlement is entered into more than
60 business days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened Proceeding in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such Proceeding
and does not include an admission of fault, culpability or a failure to act,
by or on behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, its directors and officers, and any person who controls
the Company or within the meaning of Section 15 of the Act, or Section 20 of
the Exchange Act from and against any loss, damage, expense, liability or
claim (including the reasonable cost of investigation) which, jointly or
severally, the Company or any such person may incur under the Act, the
Exchange Act, or Common Law or otherwise, insofar as such loss, damage,
expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in and in
conformity with information furnished in writing by or on behalf of such
Underwriter through you to the Company expressly for use with reference to
such Underwriter in the Registration Statement (or in the Registration
Statement as amended by or on behalf of any post-effective amendment thereof
by the Company) or in a Prospectus, or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement or Prospectus
or necessary to make such information not misleading.
If any Proceeding is brought against the Company or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses, provided, however, that the omission to so
-------- -------
notify such Underwriter shall not relieve such Underwriter, from any liability
which such Underwriter may have to the Company, or any such person or otherwise.
The Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense of such
Proceeding or such Underwriter shall not have employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the right to direct
the defense of such Proceeding on behalf of the indemnified party or parties,
but such Underwriter may employ counsel and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall
21.
be borne by such Underwriter and paid as incurred (it being understood,
however, that such Underwriter shall not be liable for the expenses of more
than one separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such Proceeding effected
without the written consent of such Underwriter but if settled with the
written consent of such Underwriter, such Underwriter agrees to indemnify and
hold harmless the Company and any such person from and against any loss or
liability by reason of such settlement. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 business days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement and (iii) such indemnified party shall have given the
indemnifying party at least 30 days' prior notice of its intention to settle.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
Proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such Proceeding.
(c) If the indemnification provided for in this Section 11 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 11 in respect of any losses, damage, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages,
expenses, liabilities or claims (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause (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 of the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, damages, expenses,
liabilities or claims, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same respective
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the
Company and the total underwriting discounts and commissions received by the
Underwriters, bear to the aggregate public offering price is the shares. The
relative fault of the Company on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, damages,
expenses, liabilities and claims referred to in this subsection shall be
deemed to include any legal
22.
or other fees or expenses reasonably incurred by such party in connection with
investigating, preparing to defend or defending any claim or Proceeding.
(d) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 11 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account
of the equitable considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 11, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by such Underwriter and distributed to
the public were offered to the public exceeds the amount of any damage which
such Underwriter has otherwise been required to pay by reason of such untrue
statement or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 11 are several in proportion to their
respective underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 11 and the covenants, warranties and representations of the Company
contained in this Agreement shall remain in full force and effect regardless
of any partners, investigation made by or on behalf of any Underwriter, its
directors and officers or any person (including each partner, officer or
director of such person) who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of
the Company, its directors or officers, or any person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and shall survive any termination of this Agreement or the issuance and
delivery of the Shares. The Company and each Underwriter agree promptly to
notify each other of any commencement of any Proceeding against it and, in the
case of the Company, against any of the Company's officers or directors in
connection with the issuance and sale of the Shares, or in connection with the
Registration Statement or Prospectus.
12. Notices. Except as otherwise herein provided, all statements,
-------
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
Warburg Dillon Read LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, Attention:
Syndicate Department, and if to the Company, shall be sufficient in all respects
if delivered or sent to the Company at the offices of the Company at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer.
13. Governing Law; Construction. This Agreement and any claim,
---------------------------
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
14. Submission to Jurisdiction. Except as set forth below, no Claim may
--------------------------
be commenced, prosecuted or continued in any court other than the courts of the
State of New York
23.
located in the City and County of New York or in the United States District
Court for the Southern District of New York, which courts shall have
jurisdiction over the adjudication of such matters, and the Company consents
to the jurisdiction of such courts and personal service with respect thereto.
The Company hereby consents to personal jurisdiction, service and venue in any
court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against Warburg Dillon Read LLC or any
indemnified party. Each of Warburg Dillon Read LLC and the Company (on its
behalf and, to the extent permitted by applicable law, on behalf of its
stockholders and affiliates) waives all right to trial by jury in any action,
proceeding or counterclaim (whether based upon contract, tort or otherwise) in
any way arising out of or relating to this Agreement. The Company agrees that
a final judgment in any such action, proceeding or counterclaim brought in any
such court shall be conclusive and binding upon the Company and may be
enforced in any other courts in the jurisdiction of which the Company is or
may be subject, by suit upon such judgment.
15. Parties at Interest. The Agreement herein set forth has been and is
-------------------
made solely for the benefit of the Underwriters and the Company, and, to the
extent provided in Section 11 hereof, the controlling persons, directors and
officers referred to in such Section, and their respective successors, assigns,
heirs, pursuant representatives and executors and administrators. No other
person, partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
16. Counterparts. This Agreement may be signed by the parties in one or
------------
more counterparts which together shall constitute one and the same agreement
among the parties.
17. Successors and Assigns. This Agreement shall be binding upon the
----------------------
Underwriters and the Company and their successors and assigns and any successor
or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
18. Miscellaneous. Warburg Dillon Read LLC, an indirect, wholly owned
-------------
subsidiary of [ ], is not a bank and is separate from any affiliated
bank, including any U.S. branch or agency of Warburg Dillon Read LLC. Because
Warburg Dillon Read LLC is a separately incorporated entity, it is solely
responsible for its own contractual obligations and commitments, including
obligations with respect to sales and purchases of securities. Securities sold,
offered or recommended by Warburg Dillon Read LLC are not deposits, are not
insured by the Federal Deposit Insurance Corporation, are not guaranteed by a
branch or agency, and are not otherwise an obligation or responsibility of a
branch or agency.
19. A lending affiliate of Warburg Dillon Read LLC may have lending
relationships with issuers of securities underwritten or privately placed by
Warburg Dillon Read LLC. To the extent required under the securities laws,
prospectuses and other disclosure documents for securities underwritten or
privately placed by Warburg Dillon Read LLC will disclose the existence of any
such lending relationships and whether the proceeds of the issue will be used to
repay debts owed to affiliates of Warburg Dillon Read LLC.
24.
If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
CONNETICS CORPORATION
By:
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
Accepted and agreed to as of the date first above written, on behalf of
themselves and the other several Underwriters named in Schedule A
WARBURG DILLON READ LLC
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
By: WARBURG DILLON READ LLC
By:
_________________________
Title:
By:
_________________________
Title:
25.
SCHEDULE A
Number of
Underwriter Shares
----------- ---------
WARBURG DILLON READ LLC
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
----------
Total...............................
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