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ADOLOR CORPORATION
(a Delaware corporation)
6,000,000 Shares of Common Stock
PURCHASE AGREEMENT
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Dated: ., 2000
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Table of Contents
Page
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SECTION 1. Representations and Warranties....................................3
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(a) Representations and Warranties by the Company................3
(i) Compliance with Registration Requirements..........3
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(ii) Independent Accountants............................4
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(iii) Financial Statements...............................4
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(iv) No Material Adverse Change in Business.............4
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(v) Good Standing of the Company.......................5
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(vi) Good Standing of Subsidiaries......................5
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(vii) Capitalization.....................................5
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(viii) Authorization of Agreement.........................5
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(ix) Authorization and Description of Securities........5
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(x) Absence of Defaults and Conflicts..................6
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(xi) Absence of Labor Dispute...........................6
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(xii) Absence of Proceedings.............................6
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(xiii) Accuracy of Exhibits; Agreements...................7
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(xiv) Absence of Further Requirements....................7
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(xv) Possession of Licenses and Permits.................8
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(xvi) Title to Property..................................8
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(xvii) Investment Company Act.............................8
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(xviii) Environmental Laws.................................8
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(xix) Registration Rights................................9
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(xx) Nasdaq Listing.....................................9
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(xxi) Intellectual Property..............................9
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(xxii) Business Relationships and Related Party
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Transactions......................................10
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(xxiii) Internal Controls.................................10
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(xxiv) Unlawful Contributions............................10
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(xxv) Taxes.............................................11
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(xxvi) Transfer Taxes....................................11
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(xxvii) Insurance.........................................11
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(xxviii) ERISA.............................................11
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(xxix) Regulatory Filings................................12
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(xxx) Clinical Trials...................................12
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(xxxi) Distribution of Reserved Securities...............13
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(xxxii) Actions Relating to Common Stock..................13
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(xxxiii) No Integration....................................13
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(b) Officer's Certificates......................................13
SECTION 2. Sale and Delivery to Underwriters; Closing.......................13
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(a) Initial Securities..........................................13
(b) Option Securities...........................................14
(c) Payment.....................................................14
(d) Denominations; Registration.................................15
SECTION 3. Covenants of the Company.........................................15
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i
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(a) Compliance with Securities Regulations and Commission
Requests...................................................15
(b) Filing of Amendments........................................15
(c) Delivery of Registration Statements.........................16
(d) Delivery of Prospectuses....................................16
(e) Continued Compliance with Securities Laws...................16
(f) Blue Sky Qualifications.....................................17
(g) Rule 158....................................................17
(h) Use of Proceeds.............................................17
(i) Listing.....................................................17
(j) Restriction on Sale of Securities...........................17
(k) Restriction on Sale of Reserved Securities..................18
(l) Reporting Requirements......................................18
(m) Compliance with Rule 463....................................18
(n) Rule 462(b).................................................18
(o) Furnish Information.........................................18
(p) Annual Report...............................................19
(q) Interim Financial Statements................................19
SECTION 4. Payment of Expenses..............................................19
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(a) Expenses....................................................19
(b) Termination of Agreement....................................20
SECTION 5. Conditions of Underwriters' Obligations..........................20
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(a) Effectiveness of Registration Statement.....................20
(b) Opinion of Counsel for Company..............................20
(i) Counsel for the Company...........................20
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(ii) Special FDA Counsel for the Company...............21
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(iii) Patent Counsel for the Company....................21
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(c) Opinion of Counsel for Underwriters.........................21
(d) Officers' Certificate.......................................21
(e) Accountant's Comfort Letter.................................22
(f) Bring-down Comfort Letter...................................22
(g) Approval of Listing.........................................22
(h) No Objection................................................22
(i) Lock-up Agreements..........................................22
(j) Conditions to Purchase of Option Securities.................22
(i) Officers' Certificate.............................22
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(ii) Opinion of Counsel for Company....................23
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(iii) Opinion of Special FDA Counsel for Company........23
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(iv) Opinion of Patent Counsel for Company.............23
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(v) Opinion of Counsel for Underwriters...............23
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(vi) Bring-down Comfort Letter.........................23
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(k) Additional Documents........................................23
(l) Termination of Agreement....................................24
SECTION 6. Indemnification..................................................24
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(a) Indemnification of Underwriters.............................24
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(b) Indemnification of Company, Directors and Officers..........25
(c) Actions against Parties; Notification.......................25
(d) Settlement without Consent if Failure to Reimburse..........26
(e) Indemnification for Reserved Securities.....................26
SECTION 7. Contribution.....................................................26
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SECTION 8. Representations, Warranties and Agreements to Survive Delivery...28
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SECTION 9. Termination of Agreement.........................................28
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(a) Termination; General........................................28
(b) Liabilities.................................................28
SECTION 10. Default by One or More of the Underwriters......................28
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SECTION 11. Notices.........................................................29
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SECTION 12. Parties.........................................................29
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SECTION 13. GOVERNING LAW AND TIME..........................................30
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SECTION 14. Effect of Headings..............................................30
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SCHEDULES
Schedule A - List of Underwriters......................Sch A-1
Schedule B - Pricing Information.......................Sch B-1
Schedule C - List of Persons subject to Lock-up........Sch C-1
EXHIBITS
Exhibit A-1 Form of Opinion of Company's Counsel.........A-1
Exhibit A-2 Form of Opinion of Company's Special
FDA Counsel..........................................A-2
Exhibit A-3 Form of Opinion of Company's Patent Counsel..A-3
Exhibit B- Form of Lock-up Letter.........................B-1
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Draft of 10/16/00
ADOLOR CORPORATION
(a Delaware corporation)
6,000,000 Shares of Common Stock
(Par Value $0.0001 Per Share)
PURCHASE AGREEMENT
., 2000
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Lehman Brothers Inc.
Pacific Growth Equities, Inc.
as Representative(s) of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Adolor Corporation, a Delaware corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
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include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch, Lehman Brothers Inc. and Pacific Growth
Equities, Inc. are acting as representatives (in such capacity, the
"Representatives"), with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $0.0001 per share, of
the Company ("Common Stock") set forth in said Schedule A, and with respect to
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the grant by the Company to the Underwriters, acting severally and not jointly,
of the option described in Section 2(b) hereof to purchase all or any part of
900,000 additional shares of Common Stock to cover over-allotments, if any. The
6,000,000 shares of Common Stock (the "Initial Securities") to be purchased by
the Underwriters and all or any part of the 900,000 shares of Common Stock
subject to the option described in Section 2(b) hereof (the "Option Securities")
are hereinafter called, collectively, the "Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Company and the Underwriters agree that up to [300,000] [verify] of the
Securities to be purchased by the Underwriters (together with the Securities to
be reserved for sale to
<PAGE>
Santen Pharmaceutical Co., Ltd. ("Santen") the "Reserved Securities") shall be
reserved for sale by the Underwriters to certain eligible employees and persons
having business relationships with the Company, and a number of Securities
having an aggregate value, at the initial public offering price, equal to
$800,000 shall be reserved for sale by the Underwriters to Santen, as part of
the distribution of the Securities by the Underwriters, subject to the terms of
this Agreement, the applicable rules, regulations and interpretations of the
National Association of Securities Dealers, Inc. and all other applicable laws,
rules and regulations. To the extent that such Reserved Securities are not
orally confirmed for purchase by such eligible employees and persons having
business relationships with the Company or by Santen by the end of the first
business day after the date of this Agreement, such Reserved Securities may be
offered to the public as part of the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-96333) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such prospectus or in such Term Sheet, as the case may
be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final prospectus in the form first furnished to the
Underwriters for use in connection with the offering of the Securities is herein
called the "Prospectus." If Rule 434 is relied on, the term "Prospectus" shall
refer to the preliminary prospectus dated _____, 2000 together with the Term
Sheet and all references in this Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. For purposes of this Agreement, all references
to the Registration Statement, any preliminary prospectus, the Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").
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SECTION 1. Representations and Warranties.
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(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the
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Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and 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, any preliminary prospectus and any
supplement thereto or prospectus wrapper prepared in connection therewith,
at their respective times of issuance and at the Closing Time, complied and
will comply in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectus and such
preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the offer and sale of Reserved Securities.
Neither the Prospectus nor any amendments or supplements thereto (including
any prospectus wrapper), at the time the Prospectus or any such amendment
or supplement was issued and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
If Rule 434 is used, the Company will comply with the requirements of Rule
434 and the Prospectus shall not be "materially different", as such term is
used in Rule 434, from the prospectus included in the Registration
Statement at the time it became effective. The Company's representations
and warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing
by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to
3
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the Underwriters for use in connection with this offering was identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
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financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included in the
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Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company
at the dates indicated and the statement of operations, stockholders'
equity and cash flows of the Company for the periods specified; said
financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules included in the
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data, the
capitalization information and the summary financial information included
in the Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement. The pro forma financial
information included in the Registration Statement and the Prospectus
presents fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro
forma financial information and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.
(iv) No Material Adverse Change in Business. Since the respective dates
--------------------------------------
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the Company,
other than those in the ordinary course of business, which are material
with respect to the Company, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
(v) Good Standing of the Company. The Company has been duly organized
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and is validly existing as a corporation in good standing under the laws of
the State of Delaware and has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in the Commonwealth of
Pennsylvania and in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a
4
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Material Adverse Effect. The Company is in compliance in all material
respects with the laws, orders, rules, regulations and directives issued or
administered by such jurisdictions.
(vi) Good Standing of Subsidiaries. The Company has no subsidiaries.
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(vii) Capitalization. The authorized, issued and outstanding capital
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stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus or
pursuant to the exercise of convertible securities or options referred to
in the Prospectus). The shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights
of any securityholder of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal
or other rights to purchase, or equity or debt securities convertible into
or exchangeable or exercisable for, any capital stock of the Company other
than those accurately described in the Prospectus; the description of the
Company's stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(viii) Authorization of Agreement. This Agreement has been duly
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authorized, executed and delivered by the Company. This Agreement is a
legal, valid and binding agreement of the Company enforceable in accordance
with its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to
enforcement of creditors' rights generally, and general equitable
principles relating to the availability of remedies, and except as rights
to indemnity or contribution may be limited by federal or state securities
laws and the public policy underlying such laws).
(ix) Authorization and Description of Securities. The Securities have
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been duly authorized for issuance and sale to the Underwriters pursuant to
this Agreement and, when issued and delivered by the Company pursuant to
this Agreement against payment of the consideration set forth herein, will
be validly issued and fully paid and non-assessable; the Common Stock
conforms to all statements relating thereto contained in the Prospectus and
such description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to personal
liability by reason of being such a holder; and the issuance of the
Securities is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(x) Absence of Defaults and Conflicts. The Company is not in violation
---------------------------------
of its charter or by-laws or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which the Company is a party or by
which it may be bound, or to which any of the property or
5
<PAGE>
assets of the Company is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and
in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant
to, the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or by-laws of the Company or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company.
(xi) Absence of Labor Dispute. No labor dispute with the employees of
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the Company exists or, to the knowledge of the Company, is imminent, and
the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its principal suppliers, manufacturers, customers
or contractors, which may reasonably be expected to result in a Material
Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
-----------------------
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the best knowledge
of the Company, threatened, against or affecting the Company which is
required to be disclosed in the Registration Statement (other than as
disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder; the aggregate of
all pending legal or governmental proceedings to which the Company is a
party or of which any of its property or assets is the subject which are
not described in the Registration Statement, including ordinary routine
litigation incidental to the business of the Company, could not reasonably
be expected to result in a Material Adverse Effect.
(xiii) Accuracy of Exhibits; Agreements. There are no contracts or
--------------------------------
documents which are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required, and the exhibits which have been filed are
complete and correct copies of the documents of which they purport to be
copies. All executed agreements or copies of executed
6
<PAGE>
agreements filed as exhibits to the Registration Statement to which the
Company is a party or by which it is or may be bound or to which any of its
assets, properties or businesses is or may be subject have been duly and
validly authorized, executed and delivered by the Company and, assuming
such agreements are the legal, valid, binding and enforceable agreements of
the other parties thereto, constitute the legal, valid and binding
agreements of the Company, enforceable against the Company in accordance
with their respective terms (except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
relating to enforcement of creditors' rights generally, and general
equitable principles relating to the availability of remedies, and except
as rights to indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such laws). The
descriptions in the Registration Statement of contracts and other documents
are accurate in all material respects and fairly present the information
required to be shown with respect thereto by the Act and the rules and
regulations thereunder, legal or governmental proceedings.
(xiv) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except (i) such as have been already
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities laws and (ii) such as have been obtained
under the laws and regulations of jurisdictions outside the United States
in which the Reserved Securities are offered or under the rules and
regulations of the National Association of Securities Dealers, Inc. (the
"NASD").
(xv) Possession of Licenses and Permits. The Company possesses such
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permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by it; the Company is in compliance with the
terms and conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and effect
would not have a Material Adverse Effect; and the Company has not received
any notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xvi) Title to Property. The Company has good and marketable title to
-----------------
all real property owned by the Company and good title to all other
properties owned by it, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of
any kind except such as (a) are described in the Prospectus or (b) do not,
singly or in the aggregate, materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company; and all of the leases and subleases material to
the business of
7
<PAGE>
the Company, and under which the Company holds properties described in the
Prospectus, are in full force and effect, and the Company has no notice of
any material claim of any sort that has been asserted by anyone adverse to
the rights of the Company under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company to the
continued possession of the leased or subleased premises under any such
lease or sublease.
(xvii) Investment Company Act. The Company is not, and upon the
----------------------
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
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 "1940 Act").
(xviii) Environmental Laws. Except as described in the Registration
------------------
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) the Company is not in violation of any
federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release
or threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
has all permits, authorizations and approvals required under any applicable
Environmental Laws and is in compliance with their requirements, (C) there
are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company and (D) there are no events or
circumstances that might reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company relating to Hazardous Materials or any Environmental Laws.
(xix) Registration Rights. There are no persons with registration
-------------------
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Company under
the 1933 Act, except for such rights as have been validly and effectively
waived in connection with the issuance of the Securities contemplated by
the Registration Statement.
(xx) Nasdaq Listing. The Common Stock has been approved for quotation
--------------
on the Nasdaq National Market, subject only to official notice of issuance.
(xxi) Intellectual Property. Except as set forth in the Prospectus:
---------------------
(i) the Company owns or possesses valid and enforceable licenses for all
inventions, patents,
8
<PAGE>
patent applications, trademarks (registered or unregistered), trademark
applications, tradenames, copyrights, manufacturing processes, formulae,
trade secrets, know-how, and other intangible property and assets necessary
to the conduct of its business now conducted as described in the Prospectus
(collectively, Intellectual Property) and the Company does not know of any
facts which would form a reasonable basis for a claim that the Company does
not own or possess valid and enforceable licenses for all Intellectual
Property necessary to the conduct of its business proposed to be conducted
as described in the Prospectus; (ii) the expiration of any Intellectual
Property would not result in a Material Adverse Effect; (iii) the Company
has no knowledge that it lacks or will be unable to obtain any rights or
licenses to use any of the Intellectual Property; (iv) the Company does not
know of any third parties who have or will be able to establish rights to
any of the Intellectual Property; (v) to the best of the Company's
knowledge, there is no infringement by third parties of any of the
Intellectual Property; (vi) there is no pending or, to the best of the
Company's knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's right of title or other interest in or to any
Intellectual Property, and the Company does not know of any facts which
would form a reasonable basis for any such claim; (vii) there is no
pending, or, to the best of the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the validity and scope of
any Intellectual Property, and the Company does not know of any facts which
would form a reasonable basis for any such claim; (viii) there is no
pending or, to the best of the Company's knowledge, threatened action,
suit, proceeding or claim by others that the Company or any of its products
or processes infringe or otherwise violate any patent, trademark,
copyright, trade secret or other proprietary right of others, and the
Company is unaware of any facts which would form a reasonable basis for any
such claim; (ix) to the best of the Company's knowledge, there are no
grounds for an interference proceeding before the United States Patent and
Trademark Office (USPTO) in relation to any of the patents or patent
applications currently owned by the Company; (x) to the best of the
Company's knowledge, there are no facts which would bar the grant of a
patent from each of the patent applications within the Intellectual
Property; (xi) there is no pending or, to the best of the Company's
knowledge, threatened action, suit, proceeding or claim by any current or
former employee, consultant or agent of the Company seeking either
ownership rights to any invention or compensation from the Company for any
invention made by such employee, consultant or agent in the course of
his/her employment with the Company, nor, to the best of the Company's
knowledge, can any such action, suit, proceeding or claim, if instituted,
be sustained; and (xii) there is no act or omission by the Company or its
agents or representatives of which the Company has knowledge that may
render any patent or patent application within the Intellectual Property
unpatentable, unenforceable or invalid. The Prospectus fairly and
accurately describes in all material respects the Company's rights with
respect to the Intellectual Property.
(xxii) Business Relationships and Related Party Transactions. Except
-----------------------------------------------------
as disclosed in the Prospectus, there are no business relationships or
related party transactions required to be disclosed therein by Item 404 of
Regulation S-K of the Commission.
(xxiii) Internal Controls. The Company maintains a system of internal
-----------------
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in
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accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect
to any differences.
(xxiv) Unlawful Contributions. The Company has not at any time during
----------------------
the last five years (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation
of law, or (ii) made any payment to any foreign, United States or state
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by
the laws of the United States.
(xxv) Taxes. The Company has filed all necessary federal, state and
-----
foreign income and franchise tax returns and has paid all taxes required to
be paid by it and, if due and payable, any related or similar assessment,
fine or penalty levied against it; the Company has made adequate charges,
accruals and reserves in the applicable financial statements referred to in
subsection (iii) above in respect of all federal, state and foreign income
and franchise taxes for all periods as to which the tax liability of the
Company has not been finally determined; the Company is not aware of any
tax deficiency that has been or might be asserted or threatened against the
Company that could result in a Material Adverse Effect.
(xxvi) Transfer Taxes. There are no transfer taxes or other similar
--------------
fees or charges under federal law or any material transfer taxes or other
similar fees or charges under the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution
and delivery of this Agreement or the issuance and sale by the Company of
the Securities.
(xxvii) Insurance. The Company is insured by recognized, financially
---------
sound and reputable institutions with policies in such amounts and with
such deductibles and covering such risks as are generally deemed adequate
and customary for their businesses including, but not limited to, policies
covering real and personal property owned or leased by the Company against
theft, damage, destruction, acts of vandalism and earthquakes, general
liability, products liability and directors and officers liability; the
Company has no reason to believe that it will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that
would not result in a Material Adverse Effect; the Company has not been
denied any insurance coverage which it has sought or for which it has
applied.
(xxviii) ERISA. The Company and any "employee benefit plan" (as
-----
defined under the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and published interpretations thereunder
(collectively, ERISA)) established or maintained
10
<PAGE>
by the Company or its ERISA Affiliates (as defined below) are in compliance
in all material respects with ERISA; ERISA Affiliate means, with respect to
the Company, any member of any group of organizations described in Sections
414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended,
and the regulations and published interpretations thereunder (the Code) of
which the Company is a member; no "reportable event" (as defined under
ERISA) has occurred or is reasonably expected to occur with respect to any
"employee benefit plan" established or maintained by the Company or any of
its ERISA Affiliates; no "employee benefit plan" established or maintained
by the Company or any of its ERISA Affiliates, if such "employee benefit
plan" were terminated, would have any "amount of unfounded benefit
liabilities" (as defined under ERISA); neither the Company nor any of its
ERISA Affiliates has incurred or reasonably expects to incur any liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal
from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B
of the Code; each "employee benefit plan" established or maintained by the
Company or any of its ERISA Affiliates that is intended to be qualified
under Section 401(a) of the Code is so qualified and nothing has occurred,
whether by action or failure to act, which would cause the loss of such
qualification.
(xxix) Regulatory Filings. The Company has filed with the U.S. Food
------------------
and Drug Administration (the FDA), and all applicable state and local
regulatory bodies, and received approval of, all registrations,
applications, licenses, requests for exemptions, permits and other
regulatory authorizations, necessary to conduct the Company's business as
of the date hereof as it is described in the Registration Statement and the
Prospectus; the Company is in compliance with all such registrations,
applications, licenses, requests for exemptions, permits and other
regulatory authorizations, and all applicable FDA, state and local rules,
regulations, guidelines and policies, including, without limitation,
applicable FDA, 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 exemptions, permit or other
regulatory authorization is considering limiting, suspending or revoking
the same and knows of no basis for any such limitation, suspension or
revocation.
(xxx) Clinical Trials. 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 that 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 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 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; and the
Company has not received any notices or correspondence from the FDA or any
other governmental agency requiring the
11
<PAGE>
termination, suspension or modification 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.
(xxxi) Distribution of Reserved Securities. No consent, approval,
-----------------------------------
authorization or order of, or qualification with, any governmental body or
agency, other than those obtained in connection with the Registration
Statement, is required in connection with the offering of the Reserved
Securities in any jurisdiction where the Reserved Securities are being
offered. The Company has not offered, or caused the Underwriters to offer,
Securities to any person pursuant to the distribution of the Reserved
Securities with the specific intent to unlawfully influence (i) a customer
or supplier of the Company to alter the customer's or supplier's level or
type of business with the Company or (ii) a trade journalist or publication
to write or publish favorable information about the Company or its
products. The Registration Statement, the Prospectus and any preliminary
prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectuses or any preliminary prospectuses, as amended or
supplemented, if applicable, are distributed in connection with the
issuance and sale of the Reserved Securities.
(xxxii) Actions Relating to Common Stock. The Company has not taken
--------------------------------
and will not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Securities.
(xxxiii) No Integration. Neither the Company, nor any of its
--------------
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would cause this
offering of the Securities to the Underwriters to be integrated with any
prior offering by the Company for purposes of the 1933 Act.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company delivered to the Representatives or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share set forth in Schedule B, the number of Initial Securities
set forth in Schedule A opposite the name of such Underwriter, plus any
additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
12
<PAGE>
(b) Option Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional 900,000 shares of Common Stock at
the price per share set forth in Schedule B, less an amount per share equal to
----------
any dividends or distributions declared by the Company and payable on the
Initial Securities but not payable on the Option Securities. The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial Securities upon notice by the Representatives to the Company setting
forth the number of Option Securities as to which the several Underwriters are
then exercising the option and the time and date of payment and delivery for
such Option Securities. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
----------
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Brobeck, Phleger & Harrison LLP, 1633 Broadway, 47th Floor, New York, New York
10019, or at such other place as shall be agreed upon by the Representatives and
the Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 10),
or such other time as shall be agreed upon by the Representatives and the
Company (such time and date of payment and delivery being herein called "Closing
Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Merrill Lynch, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
13
<PAGE>
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
------------------------
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Representatives notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus and will furnish
the Representatives with copies of any such documents a reasonable amount of
time prior to such proposed filing or use, as the case may be, and will not file
or use any such document to which the Representatives or counsel for the
Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representatives and counsel for the Underwriters, without charge,
four signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, if any, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
14
<PAGE>
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934 (the "1934 Act"), such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply with
the 1933 Act and the 1933 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement. The Company will comply with all applicable
securities and other laws, rules and regulations in each foreign jurisdiction in
which the Reserved Securities are offered.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an
15
<PAGE>
earnings statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
(i) Listing. The Company will use its best efforts to maintain the
quotation of the Securities on the Nasdaq National Market and will file with the
Nasdaq National Market all documents and notices required by the Nasdaq National
Market of companies that have securities that are traded in the over-the-counter
market and quotations for which are reported by the Nasdaq National Market.
(j) Restriction on Sale of Securities. During a period of 180 days from the
date of the Prospectus, the Company will not, without the prior written consent
of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or file any registration statement
under the 1933 Act with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus, (C)
any shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in the
Prospectus[, or (D) any shares of Common Stock issued in connection with any
acquisition or business combination.] [need to specify particular acquisitions
or criteria; also, recipients will need to agree to co-terminus lockup].
(k) Restriction on Sale of Reserved Securities. The Company will ensure
that the Reserved Securities will be restricted to the extent required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD rules
from sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of the effectiveness of the Registration Statement.
The Underwriters will notify the Company as to which recipients of Reserved
Securities, if any, will need to be so restricted. At the request of the
Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the Reserved
Securities prior to three months following the date of the effectiveness of the
Registration Statement, the Company agrees to reimburse the Underwriters for any
reasonable expenses (including, without limitation, legal expenses) they incur
in connection with such release. The Company will direct the removal of the
transfer restrictions upon the expiration of the three-month period.
(l) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to
16
<PAGE>
be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to the 1934 Act within the
time periods required by the 1934 Act and the rules and regulations of the
Commission thereunder.
(m) Compliance with Rule 463. The Company will include in the Company's
reports filed with the Commission such information with respect to the sale of
the Securities and the application of the proceeds therefrom as may be required
by Rule 463 of the 1933 Act Regulations.
(n) Rule 462(b). If necessary or appropriate, the Company will file a
registration statement pursuant to Rule 462(b) under the Act.
(o) Furnish Information. The Company will furnish to the Representatives
and, upon request, to each of the other Underwriters for a period of four 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 the Representatives may reasonably request regarding the Company.
(p) Annual Report. The Company will furnish to its stockholders 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).
(q) Interim Financial Statements. The Company will furnish to the
Representatives 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 financial
statements, if any, of the Company which have been read by the Company's
independent certified public accountants, as stated in their letter to be
furnished pursuant to Section 5(e) hereof.
SECTION 4. Payment of Expenses.
-------------------
(a) Expenses. The Company will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriters, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and
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<PAGE>
the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities and (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities, (x) the
fees and expenses incurred in connection with the inclusion of the Securities in
the Nasdaq National Market and (xi) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Securities which are designated
by the Company for sale to Santen and to employees and others having a business
relationship with the Company.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company delivered pursuant to the
provisions hereof, to the performance by the Company of its covenants and other
obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) Opinion of Counsel for Company. At Closing Time:
(i) Counsel for the Company. The Representatives shall have received
the favorable opinion, dated as of Closing Time, of Dechert, counsel for the
Company, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters to the effect set forth in Exhibit A-1 hereto, and to such further
effect as counsel to the Underwriters may reasonably request.
(ii) Special FDA Counsel for the Company. The Representatives shall
-----------------------------------
have received the favorable opinion, dated as of Closing Time, of Hyman, Phelps
& McNamara, P.C.,
18
<PAGE>
special FDA counsel for the Company, in form and substance satisfactory to
counsel for the Underwriters, together with signed or reproduced copies of such
letter for each of the other Underwriters to the effect set forth in Exhibit A-2
-----------
hereto, and to such further effect as counsel to the Underwriters may reasonably
request.
(iii) Patent Counsel for the Company. The Representatives shall have
------------------------------
received the favorable opinions, dated as of Closing Time, (1) of Woodcock
Washburn Kurtz Mackiewicz & Norris LLP, patent counsel for the Company, (2) of
Dechert, patent counsel for the Company, and (3) of Pepper Hamilton LLP, patent
counsel for the Company, each in form and substance satisfactory to counsel for
the Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters to the effect set forth in Exhibit A-3 hereto,
and to such further effect as counsel to the Underwriters may reasonably
request.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Brobeck, Phleger & Harrison LLP, counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (ii), (v),
(vi) (solely as to preemptive or other similar rights arising by operation of
law or under the charter or by-laws of the Company), (viii) through (x),
inclusive, (xii), (xiv) (solely as to the information in the Prospectus under
"Description of Capital Stock--Common Stock") and the penultimate paragraph of
Exhibit A-1 hereto. In giving such opinion such counsel may rely, as to all
-----------
matters governed by the laws of jurisdictions other than the law of the State of
New York, the federal law of the United States and the General Corporation Law
of the State of Delaware, upon the opinions of counsel satisfactory to the
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) to their knowledge, after due
inquiry, 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 or are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from KPMG LLP a letter dated
such date, in form and substance satisfactory to the Representatives, together
with signed or reproduced copies of such letter for each of the other
Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial
19
<PAGE>
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives shall
have received from KPMG LLP a letter, dated as of Closing Time, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
subsection (e) of this Section, except that the specified date referred to shall
be a date not more than three business days prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall have been
approved for inclusion in the Nasdaq National Market, subject only to official
notice of issuance.
(h) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(i) Lock-up Agreements. At the date of this Agreement, the Representatives
shall have received an agreement substantially in the form of Exhibit B hereto
---------
signed by the persons listed on Schedule C hereto.
----------
(j) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company hereunder shall be true and correct as of each Date of Delivery
and, at the relevant Date of Delivery, the Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of Delivery,
---------------------
of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(d) hereof
remains true and correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of Dechert,
------------------------------
counsel for the Company, in form and substance satisfactory to counsel for
the Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of Special FDA Counsel for Company. The favorable
------------------------------------------
opinion of Hyman, Phelps & McNamara, P.C., special FDA counsel for the
Company, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(b) hereof.
(iv) Opinion of Patent Counsel for Company. The favorable opinion (1)
-------------------------------------
of Woodcock Washburn Kurtz Mackiewicz & Norris LLP, patent counsel for the
Company, and (2) of Dechert, patent counsel for the Company, each in form
and substance satisfactory to counsel for the Underwriters, dated such Date
of Delivery, relating to the
20
<PAGE>
Option Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b) hereof.
(v) Opinion of Counsel for Underwriters. The favorable opinion of
-----------------------------------
Brobeck, Phleger & Harrison LLP, counsel for the Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required
by Section 5(c) hereof.
(vi) Bring-down Comfort Letter. A letter from KPMG LLP, in form and
-------------------------
substance satisfactory to the Representatives and dated such Date of
Delivery, substantially in the same form and substance as the letter
furnished to the Representatives pursuant to Section 5(f) hereof, except
that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
(k) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(l) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
---------------
(a) Indemnification of Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged
21
<PAGE>
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;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) the violation of any applicable
laws or regulations of foreign jurisdictions where Reserved Securities have
been offered and (B) any untrue statement or alleged untrue statement of a
material fact included in the supplement or prospectus wrapper material
distributed in foreign jurisdictions in connection with the reservation and
sale of the Reserved Securities to Santen and to eligible employees and
persons having business relationships with the Company or the omission or
alleged omission therefrom of a material fact necessary to make the
statements therein, when considered in conjunction with the Prospectus or
preliminary prospectus, not misleading.
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission or in connection with any violation of
the nature referred to in Section 6(a)(ii)(A) hereof; provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the Company; and
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission or
in connection with any violation of the nature referred to in Section
6(a)(ii)(A) hereof, to the extent that any such expense is not paid under
(i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to
-------- -------
any loss, liability, claim, damage or expense to the extent arising out of
any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through Merrill Lynch expressly for use
in the Registration Statement (or any amendment thereto), including the
Rule 430A Information and the Rule 434 Information, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto),
22
<PAGE>
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through Merrill Lynch expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) Indemnification for Reserved Securities. In connection with the offer
and sale of the Reserved Securities, the Company agrees, promptly upon a request
in writing, to indemnify and hold harmless the Underwriters from and against any
and all losses, liabilities, claims, damages and expenses incurred by them as a
result of the failure of eligible employees and
23
<PAGE>
persons having business relationships with the Company, including Santen, to pay
for and accept delivery of Reserved Securities which, by the end of the first
business day following the date of this Agreement, were subject to a properly
confirmed agreement to purchase.
SECTION 7. Contribution. If the indemnification provided for in Section 6
------------
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (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 Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) 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 hand in connection with the statements or omissions, or in connection with
any violation of the nature referred to in Section 6(a)(ii)(A) hereof, which
resulted in such losses, liabilities, claims, damages 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 Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
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 cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Securities 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 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 or any violation of the nature referred to in Section 6(a)(ii)(A)
hereof.
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 above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of
24
<PAGE>
any damages which such Underwriter has otherwise been required to pay by reason
of any such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 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 within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
----------
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Company, and shall survive delivery of the Securities to the Underwriters. The
Company and each Underwriter agree to promptly notify each other of the
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 Securities, or in connection with the Registration
Statement or Prospectus.
SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The Representatives may terminate this Agreement,
by notice to the Company, at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the Nasdaq National Market, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
25
<PAGE>
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
------------------------------------------
the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to
any Date of Delivery which occurs after the Closing Time, the obligation of
the Underwriters to purchase and of the Company to sell the Option
Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representative(s) or the Company shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Notices. Except as otherwise provided herein, all notices and
-------
other communications hereunder shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representatives at North Tower, World Financial Center, New York, New York
10281-1201, attention of .; and notices to the Company shall be directed to it
at Adolor Corporation, [371 Phoenixville Pike, Malvern, Pennsylvania 19355]
[Note: Insert new address if applicable once new lease is signed], attention of
Chief Executive Officer.
26
<PAGE>
SECTION 12. Parties. This Agreement shall each inure to the benefit of and
-------
be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
----------------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein and
------------------
the Table of Contents are for convenience only and shall not affect the
construction hereof.
27
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
ADOLOR CORPORATION
By
----------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
LEHMAN BROTHERS INC
PACIFIC GROWTH EQUITIES, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
---------------------------------------------
Name:
Title:
For themselves and as Representatives of the other Underwriters named
in Schedule A hereto.
----------
28
<PAGE>
SCHEDULE A
Number of
Name of Underwriter Initial Securities
------------------- ------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...........................
Lehman Brothers Inc.........................................
Pacific Growth Equities, Inc................................
-----------
Total............................................................ 6,000,000
===========
Sch A-1
<PAGE>
SCHEDULE B
ADOLOR CORPORATION
6,000,000 Shares of Common Stock
(Par Value $0.0001 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $..
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $., being an amount equal to the initial public
offering price set forth above less $. per share; provided that the purchase
price per share for any Option Securities purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by an amount
per share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities.
Sch B-1
<PAGE>
SCHEDULE C
[DRAFT]
List of persons and entities subject to lock-up
-----------------------------------------------
Douglas Alexander
Alta California
Alta Embarcadero
ARCH Development Corp.
ARCH Venture Fund II
ARCH Venture Fund III
Frank Baldino, Jr.
Charles Blanchard
Allen Bloom
Walter Buckley
Erin Bull
Randall Carpenter
Joel Cassel
An-Chih Chang
Hong Chen
City of Milford Pension & Retirement Fund
City of Stamford Fireman's Pension Fund
Luz Cortes-Burgos
Jeffrey Daubert
Dechert
Robert Dehaven
Diane Dehaven-Hudkins
DLJ Capital Corp.
Kwang Dong
Eaton Vance Worldwide
Falcon Technology Partners III
John Farrar
Ellen Feeney
Kenneth Fox
Deanne Garver
Forrest Gaul
Gilde International
Ana Gil-Jones
Susan Gottshall
Deqi Guo
Hare & Co.
Hare & Co. (f/a/o Finsbury)
Hare & Co., Cust. Nom. for Indiana U.
Linda Harver
Justin Klein
John Klopp
Sch C - 1
<PAGE>
Mike Koblish
Winfried Kolbeck
Virendra Kumar
Jim Lebovitz
Michael & Jill Lewis
Jack Lief
Patrick Little
Lombard Odier & Cie
Susan Long
David Madden
Per Erik Mansson
Michael Marella
Alan Maycock
Gwen Melincoff
Mellon Bank (for PERSI/ZCG)
C. Christopher Moller
Sam Morris
MPM Entities
MPM Bioventures II, LP
MPM Bioventures II-QP,
MPM Bioventures GMBH
Darlene Murphy
Claude Nash
Henry Nassau
Robert Nelsen
Richard Olson
One Liberty Partners III
Robert Pollan
Andrew Reddick
Terry Reisine
Roger Richards
S.R. One, Ltd.
Peter Schied
William Schmidt
Thomas Schmitt
Linda Shaw
Sonz Partners
Sonz/Adolor Fund
Special Situations
Stanley Partners
Theodore Stanley
Technology Leaders Mgmt.
Technology Leaders II
Technology Leaders II Offshore
TGI Fund II
UCLA
Sch C - 2
<PAGE>
Vengott
Lizann Wentz
Barton Winokur
WPG Venture Ptnrs.
WPG Enterprise Fund II
Weiss, Peck & Greer Venture Assoc. III
WPG LifeScience Entrepreneur Fund
Curtis Wright
Guangling Yu
Wei-yuan Zhang
(all other officers, directors and stockholders)
Sch C - 3
<PAGE>
Exhibit A-1
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(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.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in the Commonwealth of Pennsylvania.
(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant to
the Purchase Agreement or pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectus or pursuant to the exercise of
convertible securities or options referred to in the Prospectus); the shares of
issued and outstanding capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in violation of
any statutory or contractual preemptive rights or other similar rights of any
securityholder of the Company.
(v) The Securities have been duly authorized and, when issued and
delivered by the Company pursuant to the Purchase Agreement against payment of
the consideration set forth in the Purchase Agreement, will be validly issued
and fully paid and non-assessable and no holder of the Securities is or will be
subject to personal liability by reason of being such a holder.
(vi) The issuance of the Securities is not subject to any preemptive
rights arising under the Restated Certificate of Incorporation of the Company or
the General Corporation Law of the State of Delaware or[, to our knowledge,]
other similar rights of any securityholder of the Company.
(vii) The Company does not have any subsidiaries.
(viii) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(ix) The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the Prospectus pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); and, to the best of our knowledge, no
stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or threatened
by the Commission.
A-1 - 1
<PAGE>
(x) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus and each amendment or supplement to the Registration
Statement and Prospectus as of their respective effective or issue dates (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which we need express no opinion) complied as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(xi) If Rule 434 has been relied upon, the Prospectus was not "materially
different," as such term is used in Rule 434, from the prospectus included in
the Registration Statement at the time it became effective.
(xii) The form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Company and the
requirements of the Nasdaq National Market.
(xiii) To the best of our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company is a
party, or to which the property of the Company is subject, before or brought by
any court or governmental agency or body, domestic or foreign, which are
required to be described in the Prospectus but are not so described.
(xiv) The information in the Prospectus under "Description of Capital
Stock", insofar as such information purports to summarize certain provisions of
the capital stock of the Company, provides a fair summary of such provisions in
all material respects; the information in the Prospectus under
"Business--Property", "Business-Litigation", "Risk Factors--Anti-take-over
provisions in our charter documents and under Delaware law may make an
acquisition of us, which may be beneficial to our stockholders, more difficult"
and "-- If our stockholders sell substantial amounts of our common stock after
this offering, the market price of our common stock may fall;"
"Management--Employee Benefit Plans;" "Certain Transactions;" "Shares Eligible
for Future Sale" and in the Registration Statement under Items 14 and 15, to the
extent that it constitutes matters of law, summaries of legal matters, the
Company's charter and bylaws or legal proceedings, or legal conclusions, has
been reviewed by us and is correct in all material respects. The description in
the Registration Statement and the Prospectus of the charter and the by-laws
fairly presents the information required to be presented by the Securities Act
and the applicable rules and regulations thereunder.
(xv) [To the best of our knowledge, there are no statutes or regulations
that are required to be filed as exhibits to the Registration Statement or to be
described in the Prospectus that are not filed or described as required.]
[discuss]
(xvi) [All descriptions in the Registration Statement of contracts and
other documents to which the Company is a party are accurate in all material
respects;] [discuss] to the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto[,
and the descriptions thereof or references thereto are correct in all material
respects.]
A-1 - 2
<PAGE>
(xvii) To the best of our knowledge, the Company is not in violation of
its charter or by-laws and no default by the Company exists in the due
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by reference
as an exhibit to the Registration Statement.
(xviii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any domestic court or
governmental authority or agency (other than under the 1933 Act and the 1933 Act
Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or for the offering, issuance
or sale of the Securities.
(xix) The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by the Company with its obligations under the Purchase Agreement do not and will
not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(x) of the Purchase Agreement) under or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument, known to us, to which the Company is a party or by which it or any
of them may be bound, or to which any of the property or assets of the Company
is subject (except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company, or any applicable law, statute, rule, regulation, judgment, order,
writ or decree, known to us, of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any of its
properties, assets or operations.
(xx) To the best of our knowledge, except as described in the
Prospectus, no holder of any securities of the Company or any other person has
the right, contractual or otherwise, to cause the Company to sell or otherwise
issue to them, or to permit them to underwrite the sale of, any of the
Securities or the right to have any Common Stock or other securities of the
Company included in the Registration Statement or the right, as a result of the
filing of the Registration Statement, to require the Company to register under
the Securities Act any shares of Common Stock or other securities of the
Company, and any registration rights in connection with the offering
contemplated by the Registration Statement have been waived.
(xxi) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
(xxii) The Common Stock has been approved for quotation on the Nasdaq
National Market, upon issuance as contemplated by the Purchase Agreement.
A-1 - 3
<PAGE>
(xxiii) To the best of our knowledge, , other than as described in the
Registration Statement, the Company has not received any notice of infringement
of or conflict with asserted rights of others with respect to any material
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names currently employed by them in connection with the business now
operated by them which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in any Material Adverse
Effect on the Company.
(xxiv) The issuance and sale of the Company's Series H Preferred Stock in
the private placement completed on or about July 6, 2000 was exempt from the
registration requirements of the Act.
(xxv) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to the
Underwriters to be integrated with any prior offering by the Company for
purposes of the 1933 Act.
We have participated in the conferences with officers and other
representatives of the Company, representatives of the independent public
accountants of the Company and the Underwriters at which the Contents of the
Registration Statement and Prospectus were discussed and, although we are not
passing upon and do not assume responsibility for the accuracy, completeness or
fairness or the statements contained in the Registration Statement or Prospectus
(except as and to the extent stated above), on the basis of the foregoing
nothing has come to our attention that would lead us to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which we need make no statement), at the time such Registration
Statement or any such 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 amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein or omitted
therefrom, as to which we need make no opinion), at the time the Prospectus was
issued, at the time any such amended or supplemented prospectus was issued or at
the Closing Time, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact (but
not as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials and on participation 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. Such opinion shall not state that it is
to be governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document
A-1 - 4
<PAGE>
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
A-1 - 5
<PAGE>
Exhibit A-2
FORM OF OPINION OF SPECIAL FDA COUNSEL
FOR THE COMPANY TO BE
DELIVERED PURSUANT TO SECTION 5(B)
We have acted as special Food and Drug Administration ("FDA") regulatory
counsel to Adolor Corporation (the "Company") in connection with the sale of
6,000,000 shares of Common Stock, $.0001 par value. Capitalized terms used
without definition in this opinion have the meanings given to them in the
Purchase Agreement dated __________, 2000. This opinion is being rendered to you
pursuant to section 5(b)(ii) of the Purchase Agreement.
Based on the foregoing, we are of the opinion that:
(1) The statements in the Prospectus under the captions "Risk Factors -
Because our product candidates are in development, there is a high risk that
further development and testing will demonstrate that our product candidates are
not suitable for commercialization," and "Because we are not certain we will
obtain necessary regulatory approvals to market our products in the United
States and foreign jurisdictions, we cannot predict whether or when we will be
permitted to commercialize our products" and "Business - Government Regulation,"
insofar as they reflect matters relating to the Federal Food, Drug, and Cosmetic
Act and the regulations thereunder, fairly summarize the material legal and
regulatory requirements applicable to the testing and approval of the Company's
products as they are described in the Prospectus.
(2) There are no enforcement actions pending against the Company or any of
its officers or directors by the FDA and, to our knowledge, no such actions are
threatened.
We have reviewed the sections of the Prospectus identified in paragraph (1)
above, and nothing in the course of our representation of the Company has come
to our attention that leads us to believe that the statements contained in the
identified sections, at the time the Registration Statement 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
not misleading, and we confirm that nothing has come to our attention that leads
us to believe that the statements contained in the identified sections in the
Prospectus as of the date of the Prospectus and on the date hereof contained or
contain any untrue statement of a material fact or omitted or omit 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.
A-2 - 1
<PAGE>
Exhibit A-3
FORM OF OPINION OF PATENT COUNSEL
FOR THE COMPANY TO BE DELIVERED
PURSUANT TO SECTION 5(B)
1. The statements in the Registration Statement, as of its effective date,
and the Prospectus as of its date relating to U.S. patent matters, under the
captions "RISK FACTORS -- It is difficult and costly to protect our intellectual
property rights and we cannot ensure their protection" and "BUSINESS --
Intellectual Property", insofar as such statements constitute matters of law,
legal conclusions, or summaries of legal matters or proceedings, are correct in
all material respects and present fairly the facts and information purported to
be shown.
2. With respect to matters known to us, the sections of the Registration
Statement as of its effective date, and the Prospectus as of its date entitled
"RISK FACTORS -- It is difficult and costly to protect our intellectual property
rights and we cannot ensure their protection" and "BUSINESS -- Intellectual
Property", do not contain any untrue statement of material fact or omit to state
a material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
3. To the best of our knowledge, except as described in the Prospectus, and
with the exception of proceedings before the PTO, there are no pending, or
threatened, legal or governmental proceedings relating to any of the Patents and
Patent Applications.
4. To the best of our knowledge, the License Agreements listed in
[schedule] grant the Company rights in the [patents and/or patent applications,
as applicable] referred to in the Prospectus which are listed in [schedule], and
such License Agreements are validly binding and enforceable under federal case
law relating to the licensing of patent rights.
5. To the best of our knowledge, the Company owns each of the Patents and
Patent Applications.
6. To the best of our knowledge, no security interests have been recorded
in the PTO with respect to any of the Patents and Patent Applications.
7. To the best of our knowledge, no liens have been recorded against the
Company with respect to any of the Patents and Patent Applications.
8. To the best of our knowledge, except as described in the Prospectus, and
except for any rights reserved to the United States Government, no third party
has any rights to any of the Patents and Patent Applications that are referred
to in the Prospectus and listed in [Schedule].
9. To the best of our knowledge, except as described in the Prospectus, no
interference has been declared or provoked with respect to any of the Patents
and Patent Applications.
A-3 - 1
<PAGE>
10. To the best of our knowledge, the Company has not received any notice
challenging the validity or enforceability of any of the Patents and Patent
Applications.
11. While there can be no guarantee that any particular patent application
will issue as a patent, each of the Patent Applications listed in [Schedule],
was property filed, and is being properly and diligently prosecuted, in the PTO.
12. For each U.S. patent application listed in [Schedule], all information
known, to date, to be "material to patentability", as defined in 37
C.F.R.(S)1.56(b), has been disclosed, or will be disclosed pursuant to 37
C.F.R.(S)1.97, to the PTO.
13. Without any searches specifically having been conducted, or having been
required to have been conducted, for the purpose of rendering this opinion, and
while there can be no guarantee that any particular patent application will
issue as a patent, each of the U.S. patent applications listed in [Schedule],
discloses patentable subject matter.
14. To the best of our knowledge, without any searches having been
conducted for the purpose of rendering this opinion, no third party is
infringing any of the Patents and Patent Applications.
15. To the best of our knowledge, no claim, which is presently pending, has
been asserted against the Company relating to the potential infringement of, or
conflict with, any patents, trademarks, copyrights, trade secrets, or
proprietary rights, of others.
16. To the best of our knowledge, the company is not infringing the
intellectual property rights of any third party.
A-3 - 2
<PAGE>
Form of lock-up from directors, officers or other stockholders pursuant to
---------------------------------------------------------------------------
Section 5(i) Exhibit B
------------
September 27, 2000
MERRILL LYNCH & CO. Merrill Lynch, Pierce,
Fenner & Smith Incorporated Lehman Brothers Inc.
Pacific Growth Equities, Inc.
as Representative(s) of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower World Financial Center New York,
New York 10281-1209
Re: Proposed Public Offering by Adolor Corporation
----------------------------------------------
Dear Sirs:
The undersigned, a stockholder [and an officer and/or director] of Adolor
Corporation, a Delaware corporation (the "Company"), understands that Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), Lehman Brothers Inc. and Pacific Growth Equities, Inc. propose(s) to
enter into a Purchase Agreement (the "Purchase Agreement") with the Company
providing for the public offering of shares of the Company's common stock (the
"Offering"), par value $0.0001 per share (the "Common Stock"). In recognition of
the benefit that such an offering will confer upon the undersigned as a
stockholder [and an officer and/or director] of the Company, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
Purchase Agreement (the "Underwriters") that, during a period of 180 days from
the date of the Purchase Agreement, the undersigned will not, without the prior
written consent of Merrill Lynch, directly or indirectly, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer any shares of the Company's Common Stock or
any securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition,
otherwise than (a) as a bona fide gift or gifts, provided that the donee or
donees thereof agree in writing to be bound by the terms of this Lock-Up
Agreement, (b) as a distribution to limited partners or shareholders of the
undersigned provided that the distributees thereby agree in writing to bound by
this Lock-Up Agreement or (c) shares of Common Stock registered under the
Securities Act of 1933, as amended, (other an on From S-8) that are purchased by
the undersigned in the open market after the Offering or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise.
B-1
<PAGE>
In addition, the undersigned hereby waives any and all demand and/or
incidental registration rights the undersigned may have with respect to the
Common Stock or any securities convertible into Common Stock, for a period
commencing on the date of this agreement and ending 180 days after the date of
the Purchase Agreement and agrees that this Lock-Up Agreement constitutes a
waiver for purposes of section 13(d) of the Registration Rights Agreement, dated
November 7, 1994, as amended.
Notwithstanding the foregoing, it is understood that if the Underwriters do
not enter into a Purchase Agreement with the Company that becomes effective on
or prior to January 31, 2001, this Lock-Up Agreement shall become null and void
and of no further force or effect.
Very truly yours,
Signature:
-------------------------------
Print Name:
------------------------------
B - 2
