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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of
Earliest Event Reported): September 27, 1995
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SEQUUS Pharmaceuticals, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-15847 94-3031834
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(State or other jurisdiction of (Commission (IRS Employer
Incorporation or organization) File Number) Identification Number)
960 Hamilton Court
Menlo Park, California 94025
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (415) 323-9011
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 7 Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
The exhibits listed below relate to Registration No. 33-58495 on
Form S-3 of the registrant and are filed herewith for incorporation by
reference in such registration statement.
1.1 Form of Underwriting Agreement between the registrant
and Robertson, Stephens & Company, L.P., Dillon, Read &
Co. Inc., Oppenheimer & Co., Inc. and Punk, Ziegel &
Knoell, L.P. relating to the sale of up to 3,450,000
shares of Common Stock.
4.1 Restated Certificate of Incorporation filed with the
Delaware Secretary of State on June 28, 1991, as amended
by the Certificate of Designation of Rights, Preferences
and Privileges of Series A Convertible Reset Preferred
Stock filed on March 29, 1995, the Certificate of
Ownership and Merger of SEQUUS Pharmaceuticals, Inc.
into Liposome Technology, Inc. filed on June 26, 1995,
and the Certificate of Amendment of Certificate of
Incorporation filed on September 13, 1995.
5.1 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe (included in
Exhibit 5.1)
23.2 Consent of Peter J. Dehlinger, Esq.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 8-K to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: October 13, 1995 SEQUUS PHARMACEUTICALS, INC.
By: /s/ L. Scott Minick
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L. Scott Minick, President and
Chief Operating Officer
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EXHIBIT INDEX
Exhibit
Number Description
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1.1 Form of Underwriting Agreement between the registrant and
Robertson, Stephens & Company, L.P., Dillon, Read & Co. Inc.,
Oppenheimer & Co., Inc. and Punk, Ziegel & Knoell, L.P. relating
to the sale of up to 3,450,000 shares of Common Stock.
4.1 Restated Certificate of Incorporation filed with the Delaware
Secretary of State on June 28, 1991, as amended by the Certificate
of Designation of Rights, Preferences and Privileges of Series A
Convertible Reset Preferred Stock filed on March 29, 1995, the
Certificate of Ownership and Merger of SEQUUS Pharmaceuticals,
Inc. into Liposome Technology, Inc. filed on June 26, 1995, and
the Certificate of Amendment of Certificate of Incorporation filed
on September 13, 1995.
5.1 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe (included in Exhibit
5.1)
23.2 Consent of Peter J. Dehlinger, Esq.
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EXHIBIT 1.1
3,000,000 SHARES(1)
SEQUUS PHARMACEUTICALS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
____________, 1995
ROBERTSON, STEPHENS & COMPANY, L.P.
DILLON, READ & CO. INC.
OPPENHEIMER & CO., INC.
PUNK, ZIEGEL & KNOELL, L.P.
As Representatives of the several Underwriters
c/o Robertson, Stephens & Company, L.P.
555 California Street
Suite 2600
San Francisco, California 94104
Ladies/Gentlemen:
SEQUUS Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
addresses you as the Representatives of each of the persons, firms and
corporations listed in Schedule A hereto (herein collectively called the
"Underwriters") and hereby confirms its Agreement with the several Underwriters
as follows:
1. Description of Shares. The Company proposes to issue and sell
3,000,000 shares of its authorized and unissued common stock, $.0001 par value
(the "Firm Shares"), to the several Underwriters. The Company also proposes to
grant to the Underwriters an option to purchase up to 450,000 additional shares
of the Company's common stock, $.0001 par value (the "Option Shares"), as
provided in Section 7 hereof. As used in this Agreement, the term "Shares" shall
include the Firm Shares and the Option Shares. All shares of common stock,
$.0001 par value, of the Company to be outstanding after giving effect to the
sales contemplated hereby, including the Shares, are hereinafter referred to as
"Common Stock."
2. Representations, Warranties and Agreements of the Company.
I. The Company represents and warrants to and agrees with each
Underwriter that:
(a) A registration statement on Form S-3 (File No.
33-58495) with respect to the Shares, including a prospectus dated June 26, 1995
(the "June Prospectus") and a prospectus supplement to the June Prospectus
subject to completion (the "Prospectus Supplement"), has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the applicable rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Act and has been filed with the Commission; such amendments to such
registration statement, such amended prospectuses and prospectus supplements
subject to completion and such abbreviated registration statements pursuant to
Rule 462(b) of the Rules and Regulations as may have been required prior to the
date hereof have been similarly prepared and filed with the Commission; and the
Company will file such additional amendments to such registration statement,
such amended prospectuses and prospectus supplements
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(1) Plus an option to purchase up to 450,000 additional shares from the Company
to cover over-allotments.
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subject to completion and such abbreviated registration statements as may
hereafter be required. Copies of such registration statement and amendments of
the June Prospectus as amended and each related Prospectus Supplement subject to
completion as amended (the "Preliminary Prospectuses"), including all documents
incorporated by reference therein, and of any abbreviated registration statement
pursuant to Rule 462(b) of the Rules and Regulations have been delivered to you.
The Company and the transactions contemplated by this Agreement meet the
requirements for using Form S-3 under the Act.
The Company will prepare and promptly file with the Commission pursuant
to 424(b)(2) of the Rules and Regulations the information omitted from the
registration statement pursuant to Rule 430A(a) or, if Robertson, Stephens &
Company, L.P., on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules and Regulations, the information required
to be included in any term sheet filed pursuant to Rule 434(b) or (c), as
applicable, of the Rules and Regulations pursuant to subparagraph (1), (4) or
(7) of Rule 424(b) of the Rules and Regulations or as part of a post-effective
amendment to the registration statement (including a final form of prospectus).
The term "Registration Statement" as used in this Agreement shall mean such
registration statement, including financial statements, schedules and exhibits,
in the form in which it became effective (including, if the Company omitted
information from the registration statement pursuant to Rule 430A(a) or files a
term sheet pursuant to Rule 434 of the Rules and Regulations, the information
deemed to be a part of the registration statement at the time it became
effective pursuant to Rule 430A(b) or Rule 434(d) of the Rules and Regulations)
and, in the event of any amendment thereto or the filing of any abbreviated
registration statement pursuant to Rule 462(b) of the Rules and Regulations
relating thereto after the effective date of such registration statement, shall
also mean (from and after the effectiveness of such amendment or the filing of
such abbreviated registration statement) such registration statement as so
amended, together with any such abbreviated registration statement. The term
"Prospectus" as used in this Agreement shall mean the June Prospectus relating
to the Shares as included in such Registration Statement at the time it became
effective and the June Prospectus, as amended, and each Prospectus Supplement
(including, if the Company omitted information from the Registration Statement
pursuant to Rule 430A(a) of the Rules and Regulations, the information deemed to
be a part of the Registration Statement at the time it became effective pursuant
to Rule 430A(b) of the Rules and Regulations); provided, however, that if in
reliance on Rule 434 of the Rules and Regulations and with the consent of
Robertson, Stephens & Company, L.P., on behalf of the several Underwriters, the
Company shall have provided to the Underwriters a term sheet pursuant to Rule
434(b) or (c), as applicable, prior to the time that a confirmation is sent or
given for purposes of Section 2(10)(a) of the Act, the term "Prospectus" shall
mean the "prospectus subject to completion" (as defined in Rule 434(g) of the
Rules and Regulations and including the Preliminary Prospectus) last provided to
the Underwriters by the Company and circulated by the Underwriters to all
prospective purchasers of the Shares (including the information deemed to be a
part of the Registration Statement at the time it became effective pursuant to
Rule 434(d) of the Rules and Regulations). Notwithstanding the foregoing, if any
revised prospectus shall be provided to the Underwriters by the Company for use
in connection with the offering of the Shares that differs from the prospectus
referred to in the immediately preceding sentence (whether or not such revised
prospectus is required to be filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations), the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to the Underwriters for
such use. If in reliance on Rule 434 of the Rules and Regulations and with the
consent of Robertson, Stephens & Company, L.P., on behalf of the several
Underwriters, the Company shall have provided to the Underwriters (i) a term
sheet pursuant to Rule 434(b) or (c), as applicable, prior to the time that a
confirmation is sent or given for purposes of Section 2(10)(a) of the Act, the
Prospectus and the term sheet, together, will not be materially different from
the prospectus in the Registration Statement. Any reference to the Registration
Statement or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of the Registration Statement or the Prospectus,
as the case may be, and any reference to any amendment or supplement to the
Registration Statement or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As used
in this Agreement, the term "Incorporated Documents" means the documents which
at the time are
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incorporated by reference in the Registration Statement, the Prospectus or any
amendment or supplement thereto.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or instituted proceedings for that
purpose, and each such Preliminary Prospectus has conformed in all material
respects to the requirements of the Act and the Rules and Regulations and, as of
its date, has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and at the time
the Registration Statement became or becomes, as the case may be, effective and
at all times subsequent thereto up to and on the Closing Date (hereinafter
defined) and on any later date on which Option Shares are to be purchased, (i)
the Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained and will contain all material information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, (ii) the Registration Statement, and any amendments or supplements
thereto, did not and will not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (iii) the Prospectus, and any
amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
warranties contained in this subparagraph (b) shall apply to information
contained in or omitted from the Registration Statement or Prospectus, or any
amendment or supplement thereto, in reliance upon, and in conformity with,
written information relating to any Underwriter furnished to the Company by such
Underwriter specifically for use in the preparation thereof.
The Incorporated Documents (except for the Company's Annual Report on
Form 10-K for the year ended December 31, 1994 which excluded certain required
exhibits filed subsequently in Amendment No. 2 to such Form 10-K) heretofore
filed, when they were filed (or, if any amendment with respect to any such
document was filed, when such amendment was filed), conformed in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the Commission thereunder; any further Incorporated Documents so filed will,
when they are filed, conform in all material respects with the requirements of
the Exchange Act and the rules and regulations of the Commission thereunder; no
such document when it was filed (or, if an amendment with respect to any such
document was filed, when such amendment was filed), 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
no such further amendment will contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation with full power and authority (corporate and other) to own, lease
and operate its properties and conduct its business as described in the
Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company;
no proceeding has been instituted in any such jurisdiction, revoking, limiting
or curtailing, or seeking to revoke, limit or curtail, such power and authority
or qualification; the Company is in possession of and operating in compliance
with all authorizations, licenses, certificates, consents, orders and permits
from state, federal and other regulatory authorities which are material to the
conduct of its business, all of which are valid and in full force and effect;
the Company is not in violation of its respective charter or bylaws or in
default in the performance or observance of any material obligation, Agreement,
covenant or condition contained in any material bond, debenture, note or other
evidence of indebtedness, or in any material lease, contract, indenture,
mortgage, deed of trust, loan Agreement, joint venture or other Agreement or
instrument to which the Company
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is a party or by which it or its properties may be bound; and the Company is
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdiction in which it is conducting business which are
material to the conduct of its business, including without limitation, the
applicable laws, rules and regulations of the United States Food and Drug
Administration ("USFDA") and the Company is not in material violation of any
law, order, rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or over its properties of which it has knowledge.
The Company does not own or control, directly or indirectly, any corporation,
association or other entity.
(d) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and is a valid
and binding Agreement on the part of the Company, enforceable in accordance with
its terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles; the performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a material breach or
violation of any of the terms and provisions of, or constitute a default under,
(i) any bond, debenture, note or other evidence of indebtedness, or under any
lease, contract, indenture, mortgage, deed of trust, loan Agreement, joint
venture or other Agreement or instrument to which the Company is a party or by
which it or its properties may be bound, (ii) the charter or bylaws of the
Company, or (iii) any law, order, rule, regulation, writ, injunction, judgment
or decree of any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or over its properties. No
consent, approval, authorization or order of or qualification with any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or over its properties is required for the
execution and delivery of this Agreement and the consummation by the Company of
the transactions herein contemplated, except such as may be required under state
or other securities or Blue Sky laws.
(e) There is not any pending or, to the best of the Company's
knowledge, threatened action, suit, claim or proceeding against the Company or
any of its officers or any of its properties, assets or rights before any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or otherwise which (i) might result in any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company or might materially
and adversely affect its properties, assets or rights, (ii) might prevent
consummation of the transactions contemplated hereby or (iii) is required to be
disclosed in the Registration Statement or Prospectus and is not so disclosed;
and there are no agreements, contracts, leases or documents of the Company of a
character required to be described or referred to in the Registration Statement
or Prospectus or any Incorporated Document or to be filed as an exhibit to the
Registration Statement or any Incorporated Document by the Act or the Rules and
Regulations or by the Exchange Act or the rules and regulations of the
Commission thereunder which have not been accurately described in all material
respects in the Registration Statement or Prospectus or any Incorporated
Document or filed as exhibits to the Registration Statement or any Incorporated
Document.
(f) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and the authorized and outstanding capital
stock of the Company is as set forth in the Prospectus under the caption
"Capitalization" and conforms in all material respects to the statements
relating thereto contained in the Registration Statement and the Prospectus and
any Incorporated Document (except for the par value per share of the Company's
Common Stock), and such statements correctly state the substance of the
instruments defining the capitalization of the Company); the Firm Shares and the
Option Shares have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered by the
Company against payment therefor in accordance with the terms of this Agreement,
will be duly and validly issued and fully paid and nonassessable, and will be
sold free and clear of
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any pledge, lien, security interest, encumbrance, claim or equitable interest;
and no preemptive right, co-sale right, registration right, right of first
refusal or other similar right of stockholders exists with respect to any of the
Firm Shares or Option Shares or the issuance and sale thereof other than those
that have been expressly waived prior to the date hereof and those that will
automatically expire upon and will not apply to the consummation of the
transactions contemplated on the Closing Date. No further approval or
authorization of any stockholder, the Board of Directors of the Company or
others is required for the issuance and sale or transfer of the Shares except as
may be required under state or other securities or Blue Sky laws. Except as
disclosed in the Prospectus and the financial statements of the Company, and the
related notes thereto, included or incorporated by reference in the Prospectus,
the Company does not have outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, rights, convertible securities
or obligations. The description of the Company's warrants and stock option plan,
stock purchase plan, 401(k) plan and other plans or arrangements, and the
options or other rights granted and exercised thereunder, set forth or
incorporated by reference in the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.
(g) Ernst & Young, LLP, which has examined the financial statements of
the Company, together with the related schedules and notes, as of December 31,
1994 and 1993 and for each of the years in the three (3) years ended December
31, 1994 filed with the Commission as a part of or incorporated by reference
into the Registration Statement, which are included or incorporated by reference
in the Prospectus, are independent accountants within the meaning of the Act and
the Rules and Regulations; the audited financial statements of the Company,
together with the related schedules and notes, and the unaudited financial
information, forming part of the Registration Statement and Prospectus, fairly
present the financial position and the results of operations of the Company at
the respective dates and for the respective periods to which they apply; and all
audited financial statements of the Company, together with the related schedules
and notes, and the unaudited financial information, filed with the Commission as
part of or incorporated by reference into the Registration Statement, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved except as may be otherwise
stated therein. The selected and summary financial and statistical data included
or incorporated by reference in the Registration Statement present fairly the
information shown therein and have been compiled on a basis consistent with the
audited financial statements presented therein. No other financial statements or
schedules are required to be included or incorporated by reference in the
Registration Statement.
(h) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus, there has not been (i) any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company, (ii) any transaction
that is material to the Company, except transactions entered into in the
ordinary course of business, (iii) any obligation, direct or contingent, that is
material to the Company, incurred by the Company, except obligations incurred in
the ordinary course of business, (iv) any change in the capital stock or
outstanding indebtedness of the Company that is material to the Company, (v) any
dividend or distribution of any kind declared, paid or made on the capital stock
of the Company, or (vi) any loss or damage (whether or not insured) to the
property of the Company which has been sustained or will have been sustained
which has a material adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company.
(i) Except as set forth in the Registration Statement and Prospectus
and any Incorporated Document, (i) the Company has good and marketable title to
all properties and assets described in the Registration Statement and Prospectus
and any Incorporated Document as owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest, other than
such as would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company,
(ii) the agreements to which the Company is a party described in the
Registration Statement and Prospectus and any Incorporated Document are valid
agreements, enforceable by the Company
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(as applicable), except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and, to the best of the Company's knowledge, the other contracting
party or parties thereto are not in material breach or material default under
any of such agreements, and (iii) the Company has valid and enforceable leases
for all properties described in the Registration Statement and Prospectus and
any Incorporated Document as leased by it, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. Except as set forth in the Registration Statement
and Prospectus and any Incorporated Document, the Company owns or leases all
such properties as are necessary to its operations as now conducted or as
proposed to be conducted.
(j) The Company has timely filed all necessary federal, state and
foreign income and franchise tax returns and has paid all taxes shown thereon as
due, and there is no tax deficiency that has been or, to the best of the
Company's knowledge, might be asserted against the Company that might have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company; and all tax
liabilities are adequately provided for on the books of the Company.
(k) The Company maintains insurance with insurers of recognized
financial responsibility of the types and in the amounts generally deemed
adequate to conduct its business and consistent with insurance coverage
maintained by similar companies in a similar business, including, but not
limited to, insurance covering real and personal property owned or leased by the
Company against theft, damage, destruction, acts of vandalism, liability and all
other risks customarily insured against, all of which insurance is in full force
and effect; the Company has not been refused any insurance coverage sought or
applied for; and the Company does not have any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not materially and adversely
affect the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company.
(l) To the best of Company's knowledge, no labor disturbance by the
employees of the Company exists or is imminent; and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of its
principal suppliers or customers that might be expected to result in a material
adverse change in the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company. No collective bargaining
Agreement exists with any of the Company's employees and, to the best of the
Company's knowledge, no such Agreement is imminent.
(m) The Company owns or possesses adequate rights to use all patents,
patent rights, inventions, trade secrets, know-how, trademarks, service marks,
trade names and copyrights which are necessary to conduct its business as
described in the Registration Statement and Prospectus and any Incorporated
Document; the expiration of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights would not have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company; except as disclosed on the
Prospectus, the Company has not received any notice of, and has no knowledge of,
any infringement of or conflict with asserted rights of the Company by others
with respect to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights; and the Company has not
received any notice of, and has no knowledge of, any infringement of or conflict
with asserted rights of others with respect to any patent, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names or
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company.
(n) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on The Nasdaq National Market, and the Company has
taken no action designed to, or likely to have
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the effect of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from The Nasdaq National Market, nor
has the Company received any notification that the Commission or the National
Association of Securities Dealers, Inc. ("NASD") is contemplating terminating
such registration or listing.
(o) The Company has been advised concerning the Investment Company Act
of 1940, as amended (the "1940 Act"), and the rules and regulations thereunder,
and has in the past conducted, and intends in the future to conduct, its affairs
in such a manner as to ensure that it will not become an "investment company" or
a company "controlled" by an "investment company" within the meaning of the 1940
Act and such rules and regulations.
(p) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date, or any date on which Option Shares are to be
purchased, as the case may be, and (ii) completion of the distribution of the
Shares, any offering material in connection with the offering and sale of the
Shares other than any Preliminary Prospectuses, the Prospectus, the Registration
Statement and other materials, if any, permitted by the Act.
(q) The Company has not at any time during the last five (5) 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 federal 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 or any jurisdiction thereof.
(r) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(s) Each officer and director of the Company has agreed in writing that
such person will not, for a period of 90 days after the date of this Agreement
(the "Lock-up Period"), offer to sell, contract to sell, or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (excluding the shares held by Wolfensohn Associates,
L.P. and Wolfensohn Partners, L.P.) (collectively, "Securities") now owned or
hereafter acquired directly by such person or with respect to which such person
has or hereafter acquires the power of disposition, otherwise than (i) as a bona
fide gift or gifts, provided the donee or donees thereof agree in writing to be
bound by this restriction, (ii) as a distribution to partners or stockholders of
such person, provided that the distributees thereof agree in writing to be bound
by the terms of this restriction, or (iii) with the prior written consent of
Robertson, Stephens & Company, L.P. The foregoing restriction has been expressly
agreed to preclude the holder of the Securities from engaging in any hedging or
other transaction which is designed to or reasonably expected to lead to or
result in a Disposition of Securities during the Lock-up Period, even if such
Securities would be disposed of by someone other than such holder. Such
prohibited hedging or other transactions would include, without limitation, any
short sale (whether or not against the box) or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a broad-based
market basket or index) that includes, relates to or derives any significant
part of its value from Securities. Furthermore, such person has also agreed and
consented to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of the Securities held by such person except in
compliance with this restriction. The Company has provided to counsel for the
Underwriters a complete and accurate list of all securityholders of the Company
and the number and type of securities held by each securityholder. The Company
has provided to counsel for the Underwriters true, accurate and complete copies
of all of the agreements pursuant to which its officers, directors and
stockholders have agreed to such or similar restrictions (the "Lock-up
Agreements") presently in effect or effected hereby. The Company hereby
represents and warrants that it will not release any
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<PAGE> 8
of its officers, directors or other stockholders from any Lock-up Agreements
currently existing or hereafter effected without the prior written consent of
Robertson, Stephens & Company, L.P.
(t) Except as set forth in the Registration Statement and Prospectus
and any Incorporated Document, (i) the Company is in material compliance with
all rules, laws and regulations relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to its business, (ii) the Company
has received no notice from any governmental authority or third party of an
asserted claim under Environmental Laws, which claim is required to be disclosed
in the Registration Statement and the Prospectus and any Incorporated Document,
(iii) the Company has not performed any acts which may require it to make future
material capital expenditures to comply with Environmental Laws and the costs
and liabilities associated with compliance with Environmental Laws as they apply
to the business conducted by the Company will not have a material adverse effect
on the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company, and (iv) no property which is owned, leased
or occupied by the Company has been designated as a Superfund site pursuant to
the Comprehensive Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. Section 9601, et seq.), or otherwise designated as a contaminated
site under applicable state or local law.
(u) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles 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.
(v) There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
except as disclosed in the Registration Statement and the Prospectus and any
Incorporated Document.
(w) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or with
any person or affiliate located in Cuba.
3. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $_____ per share, the
respective number of Firm Shares as hereinafter set forth. The obligation of
each Underwriter to the Company shall be to purchase from the Company that
number of Firm Shares which is set forth opposite the name of such Underwriter
in Schedule A hereto (subject to adjustment as provided in Section 10).
Delivery of definitive certificates for the Firm Shares to be purchased
by the Underwriters pursuant to this Section 3 shall be made against payment of
the purchase price therefor by the several Underwriters by certified or official
bank check or checks drawn in next-day funds, payable to the order of the
Company (and the Company agrees not to deposit any such check in the bank on
which it is drawn, and not to take any other action with the purpose or effect
of receiving immediately available funds, until the business day following the
date of its delivery to the Company, and, in the event of any breach of the
foregoing, the Company shall reimburse the Underwriters for the interest lost
and any other expenses borne by them by reason of such breach), at the offices
of Heller Ehrman White & McAuliffe, 525 University Avenue, Palo Alto, California
94301(or at such other place as may be agreed upon among the Representatives and
the Company), at 7:00 A.M., San Francisco time (a) on the third (3rd) full
business day following the first day that Shares are traded, (b) if this
Agreement is executed and delivered after 1:30 P.M., San Francisco time, the
fourth (4th) full
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<PAGE> 9
business day following the day that this Agreement is executed and delivered or
(c) at such other time and date not later than seven (7) full business days
following the first day that Shares are traded as the Representatives and the
Company may determine (or at such time and date to which payment and delivery
shall have been postponed pursuant to Section 10 hereof), such time and date of
payment and delivery being herein called the "Closing Date;" provided, however,
that if the Company has not made available to the Representatives copies of the
Prospectus within the time provided in Section 4(d) hereof, the Representatives
may, in their sole discretion, postpone the Closing Date until no later than two
(2) full business days following delivery of copies of the Prospectus to the
Representatives. The certificates for the Firm Shares to be so delivered will be
made available to you at such office or such other location including, without
limitation, in New York City, as you may reasonably request for checking at
least one (1) full business day prior to the Closing Date and will be in such
names and denominations as you may request, such request to be made at least two
(2) full business days prior to the Closing Date. If the Representatives so
elect, delivery of the Firm Shares may be made by credit through full fast
transfer to the accounts at the Depository Trust Company designated by the
Representatives.
It is understood that you, individually, and not as the Representatives
of the several Underwriters, may (but shall not be obligated to) make payment of
the purchase price on behalf of any Underwriter or Underwriters whose check or
checks shall not have been received by you prior to the Closing Date for the
Firm Shares to be purchased by such Underwriter or Underwriters. Any such
payment by you shall not relieve any such Underwriter or Underwriters of any of
its or their obligations hereunder.
After the execution of this Agreement, the several Underwriters intend
to make an initial public offering (as such term is described in Section 11
hereof) of the Firm Shares at an initial public offering price of $_____ per
share. After the initial public offering, the several Underwriters may, in their
discretion, vary the public offering price.
The information set forth in the last paragraph on the front cover page
(insofar as such information relates to the Underwriters), on the inside front
cover, concerning stabilization and over-allotment by the Underwriters, and
under the second and ninth paragraphs under the caption "Underwriting" in any
Preliminary Prospectus and in the Prospectus constitutes the only information
furnished by the Underwriters to the Company for inclusion in any Preliminary
Prospectus, the Prospectus or the Registration Statement or any Incorporated
Document, and you, on behalf of the respective Underwriters, represent and
warrant to the Company that the statements made therein do not include any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
4. Further Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause any abbreviated
registration statement pursuant to Rule 462(b) of the Rules and Regulations as
may be required subsequent to the date the Registration Statement is declared
effective to become effective as promptly as possible; the Company will notify
you, promptly after it shall receive notice thereof, of the time when any
subsequent amendment to the Registration Statement or any abbreviated
registration statement has become effective or any supplement to the Prospectus
has been filed; if the Company omitted information from the Registration
Statement at the time it was originally declared effective in reliance upon Rule
430A(a) of the Rules and Regulations, the Company will provide evidence
satisfactory to you that the Prospectus contains such information and has been
filed, within the time period prescribed, with the Commission pursuant to
subparagraph (2) of Rule 424(b) of the Rules and Regulations or as part of a
post-effective amendment to such Registration Statement as originally declared
effective which is declared effective by the Commission; if the Company files a
term sheet pursuant to Rule 434 of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus and term sheet meeting
the requirements of Rule 434(b) or (c), as applicable, of the Rules and
Regulations, have been filed, within the time period prescribed, with the
Commission pursuant to subparagraph (7) of Rule 424(b) of the Rules and
Regulations; if for any reason the filing of the final form of
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<PAGE> 10
Prospectus is required under Rule 424(b)(3) of the Rules and Regulations, it
will provide evidence satisfactory to you that the Prospectus contains such
information and has been filed with the Commission within the time period
prescribed; it will notify you promptly of any request by the Commission for the
amending or supplementing of the Registration Statement or the Prospectus or for
additional information; promptly upon your request, it will prepare and file
with the Commission any amendments or supplements to the Registration Statement
or Prospectus which, in the opinion of counsel for the several Underwriters
("Underwriters' Counsel"), may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters; it will promptly prepare and
file with the Commission, and promptly notify you of the filing of, any
amendments or supplements to the Registration Statement or Prospectus which may
be necessary to correct any statements or omissions, if, at any time when a
prospectus relating to the Shares is required to be delivered under the Act, any
event shall have occurred as a result of which the Prospectus or any other
prospectus relating to the Shares as then in effect would include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; in case any Underwriter is required to deliver a
prospectus nine (9) months or more after the effective date of the Registration
Statement in connection with the sale of the Shares, it will prepare promptly
upon request, but at the expense of such Underwriter, such amendment or
amendments to the Registration Statement and such prospectus or prospectuses as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act; and it will file no amendment or supplement to the Registration
Statement or Prospectus or the Incorporated Documents, or, prior to the end of
the period of time in which a prospectus relating to the Shares is required to
be delivered under the Act, file any document which upon filing becomes an
Incorporated Document, which shall not previously have been submitted to you a
reasonable time prior to the proposed filing thereof or to which you shall
reasonably object in writing, subject, however, to compliance with the Act and
the Rules and Regulations, the Exchange Act and the rules and regulations of the
Commission thereunder and the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive notice
or obtain knowledge, of the issuance of any stop order by the Commission
suspending the effectiveness of the Registration Statement or of the initiation
or threat of any proceeding for that purpose; and it will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal at
the earliest possible moment if such stop order should be issued.
(c) The Company will use its best efforts to qualify the Shares for
offering and sale under the securities laws of such jurisdictions as you may
designate and to continue such qualifications in effect for so long as may be
required for purposes of the distribution of the Shares, except that the Company
shall not be required in connection therewith or as a condition thereof to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction in which it is not otherwise required to be so
qualified or to so execute a general consent to service of process. In each
jurisdiction in which the Shares shall have been qualified as above provided,
the Company will make and file such statements and reports in each year as are
or may be required by the laws of such jurisdiction.
(d) The Company will furnish to you, as soon as available, and, in the
case of the Prospectus and any term sheet or abbreviated term sheet under Rule
434, in no event later than the first (1st) full business day following the
first day that Shares are traded, copies of the Registration Statement (three of
which will be signed and which will include all exhibits), each Preliminary
Prospectus, the Prospectus and any amendments or supplements to such documents,
including any prospectus prepared to permit compliance with Section 10(a)(3) of
the Act, and the Incorporated Documents (three of which will include all
exhibits,) all in such quantities as you may from time to time reasonably
request. Notwithstanding the foregoing, if Robertson, Stephens & Company, L.P.,
on behalf of the several Underwriters, shall agree to the utilization of Rule
434 of the Rules and Regulations, the Company shall provide to you copies of a
Preliminary Prospectus updated in all respects through the date specified by you
in such quantities as you may from time to time reasonably request.
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<PAGE> 11
(e) The Company will make generally available to its stockholders as
soon as practicable, but in any event not later than the forty-fifth (45th) day
following the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement, an earnings
statement (which will be in reasonable detail but need not be audited) complying
with the provisions of Section 11(a) of the Act and covering a twelve (12) month
period beginning after the effective date of the Registration Statement.
(f) During a period of five (5) years after the date hereof or until
the Company is no longer subject to the reporting requirements of Sections 13 or
15(d) of the Exchange Act, if shorter, the Company will furnish to its
stockholders as soon as practicable after the end of each respective period,
annual reports (including financial statements audited by independent certified
public accountants) and unaudited quarterly reports of operations for each of
the first three quarters of the fiscal year, and will furnish to you and the
other several Underwriters hereunder, upon request (i) concurrently with
furnishing such reports to its stockholders, statements of operations of the
Company for each of the first three (3) quarters in the form furnished to the
Company's stockholders, (ii) concurrently with furnishing to its stockholders, a
balance sheet of the Company as of the end of such fiscal year, together with
statements of operations, of stockholders' equity, and of cash flows of the
Company for such fiscal year, accompanied by a copy of the certificate or report
thereon of independent certified public accountants, (iii) as soon as they are
available, copies of all reports (financial or other) mailed to stockholders,
(iv) as soon as they are available, copies of all reports and financial
statements furnished to or filed with the Commission, any securities exchange or
the National Association of Securities Dealers, Inc. ("NASD"), (v) every
material press release and every material news item or article in respect of the
Company or its affairs which was generally released to stockholders or prepared
by the Company, and (vi) any additional information of a public nature
concerning the Company, or its business which you may reasonably request. During
such five (5) year period, if the Company shall have active subsidiaries, the
foregoing financial statements shall be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and
shall be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(g) The Company will apply the net proceeds from the sale of the Shares
being sold by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(h) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its Common Stock.
(i) If the transactions contemplated hereby are not consummated by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed hereunder or to fulfill any
condition of the Underwriters' obligations hereunder, or if the Company shall
terminate this Agreement pursuant to Section 11(a) hereof, or if the
Underwriters shall terminate this Agreement pursuant to Section 11(b)(i), the
Company will reimburse the several Underwriters for all out-of-pocket expenses
(including fees and disbursements of Underwriters' Counsel) incurred by the
Underwriters in investigating or preparing to market or marketing the Shares.
(j) If at any time during the ninety (90) day period after the date of
this Agreement, any rumor, publication or event relating to or affecting the
Company shall occur as a result of which in your opinion the market price of the
Common Stock has been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus), the Company will, after written notice from you
advising the Company to the effect set forth above, forthwith prepare, consult
with you concerning the substance of and disseminate a press release or other
public statement, reasonably satisfactory to you, responding to or commenting on
such rumor, publication or event.
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<PAGE> 12
(k) During the Lock-up Period, the Company will not, without the prior
written consent of Robertson Stephens & Company, L.P., effect the Disposition
of, directly or indirectly, any Securities other than the sale of the Firm
Shares and the Option Shares hereunder and the Company's issuance of options or
Common Stock under the Company's presently authorized compensation plans.
5. Expenses.
(a) The Company agrees with each Underwriter that:
(i) The Company will pay and bear all costs and expenses in
connection with the preparation, printing and filing of the Registration
Statement (including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus and the Incorporated Documents and any
amendments or supplements thereto; the printing of this Agreement, the Agreement
Among Underwriters, the Selected Dealer Agreement, the Preliminary Blue Sky
Survey and any Supplemental Blue Sky Survey, the Underwriters' Questionnaire and
Power of Attorney, and any instruments related to any of the foregoing; the
issuance and delivery of the Shares hereunder to the several Underwriters,
including transfer taxes, if any, the cost of all certificates representing the
Shares and transfer agents' and registrars' fees; the fees and disbursements of
counsel for the Company; all fees and other charges of the Company's independent
certified public accountants; the cost of furnishing to the several Underwriters
copies of the Registration Statement (including appropriate exhibits),
Preliminary Prospectus and the Prospectus and the Incorporated Documents, and
any amendments or supplements to any of the foregoing; NASD filing fees and the
cost of qualifying the Shares under the laws of such jurisdictions as you may
designate (including filing fees and fees and disbursements of Underwriters'
Counsel in connection with such NASD filings and Blue Sky qualifications); and
all other expenses directly incurred by the Company in connection with the
performance of their obligations hereunder.
(ii) In addition to its other obligations under Section 8(a)
hereof, the Company agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding described in
Section 8(a) hereof, it will reimburse the Underwriters on a quarterly basis for
all reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse the Underwriters for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Underwriters
shall promptly return such payment to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing) listed from time to
time in The Wall Street Journal which represents the base rate on corporate
loans posted by a substantial majority of the nation's thirty (30) largest banks
(the "Prime Rate"). Any such interim reimbursement payments which are not made
to the Underwriters within thirty (30) days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such request.
(b) In addition to their other obligations under Section 8(b) hereof,
the Underwriters severally and not jointly agree that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding described in Section 8(b) hereof, they will reimburse the Company on
a quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company shall
promptly return such payment to the Underwriters together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within thirty (30) days
of a request for reimbursement shall bear interest at the Prime Rate from the
date of such request.
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<PAGE> 13
(c) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 5(a)(ii) and 5(b)
hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the reimbursing parties, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or a written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Any such arbitration will be limited to the operation of
the interim reimbursement provisions contained in Sections 5(a)(ii)and 5(b)
hereof and will not resolve the ultimate propriety or enforceability of the
obligation to indemnify for expenses which is created by the provisions of
Sections 8(a)and 8(b) hereof or the obligation to contribute to expenses which
is created by the provisions of Section 8(d) hereof.
6. Conditions of Underwriters' Obligations. The obligations of the several
Underwriters to purchase and pay for the Shares as provided herein shall be
subject to the accuracy, as of the date hereof and the Closing Date and any
later date on which Option Shares are to be purchased, as the case may be, of
the representations and warranties of the Company herein, to the performance by
the Company of their respective obligations hereunder and to the following
additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been initiated or, to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
any Incorporated Document or otherwise) shall have been complied with to the
satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement and the Prospectus, and
the registration, authorization, issue, sale and delivery of the Shares, shall
have been reasonably satisfactory to Underwriters' Counsel, and such counsel
shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to in
this Section.
(c) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date and on any later date on which Option Shares are to be
purchased, as the case may be, there shall not have been any change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company from that set forth in the Registration Statement or
Prospectus, which, in your sole judgment, is material and adverse and that makes
it, in your sole judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus; and
(d) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, the following
opinion of Heller Ehrman White & McAuliffe, counsel for the Company, dated the
Closing Date or such later date on which Option Shares are to be purchased
addressed to the Underwriters and with reproduced copies or signed counterparts
thereof for each of the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of
its incorporation;
(ii) The Company has the corporate power and corporate authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus;
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<PAGE> 14
(iii) The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction, if any, in
which the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to be so
qualified or be in good standing would not have a material adverse effect
on the condition (financial or otherwise), earnings, operations or
business of the Company. To such counsel's knowledge, the Company does
not own or control, directly or indirectly, any corporation, association
or other entity;
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein;
(v) The Firm Shares or the Option Shares, as the case may be, to be
issued by the Company pursuant to the terms of this Agreement have been
duly authorized and, upon issuance and delivery against payment therefor
in accordance with the terms hereof, will be duly and validly issued and
fully paid and nonassessable, and, to such counsel's knowledge, will not
have been issued in violation of or subject to any preemptive right,
co-sale right, registration right, right of first refusal or other
similar right of stockholders;
(vi) The Company has the corporate power and corporate authority to
enter into this Agreement and to issue, sell and deliver to the
Underwriters the Shares to be issued and sold by it hereunder;
(vii) This Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed
and delivered by the Company and, assuming due authorization, execution
and delivery by you, is a valid and binding Agreement of the Company,
enforceable in accordance with its terms, except insofar as
indemnification provisions may be limited by applicable law and except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights
generally or by general equitable principles;
(viii) The Registration Statement has become effective under the
Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the Act;
(ix) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements
(including supporting schedules) and financial data derived therefrom as
to which such counsel need express no opinion), as of the effective date
of the Registration Statement, complied as to form in all material
respects with the requirements of the Act and the applicable Rules and
Regulations; and each of the Incorporated Documents (other than (i) the
financial statements (including supporting schedules) and the financial
data derived therefrom as to which such counsel need express no opinion
and (ii) the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 which excluded certain required exhibits filed
subsequently in Amendment No. 2 to such Form 10-K) complied when filed
pursuant to the Exchange Act as to form in all material respects with the
requirements of the Act and the Rules and Regulations and the Exchange
Act and the applicable rules and regulations of the Commission
thereunder;
(x) The information in the Prospectus under the captions
"Description of Preferred Stock -- General," "-- Outstanding Preferred
Stock", "Description of Common Stock", and "Description of Warrants--
Outstanding Warrants," to the extent that it constitutes matters of law
or legal conclusions, has been reviewed by such counsel and is a fair
summary of such
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<PAGE> 15
matters and conclusions; and the form of certificate evidencing the
Common Stock and filed as or incorporated by reference as an exhibit to
the Registration Statement comply with Delaware law;
(xi) The description in the Registration Statement and the
Prospectus of the charter and bylaws of the Company and of statutes is
accurate and fairly presents the information required to be presented by
the Act and the applicable Rules and Regulations;
(xii) To such counsel's knowledge, there are no agreements,
contracts, leases or documents to which the Company is a party of a
character required to be described or referred to in the Registration
Statement or Prospectus or any Incorporated Document or to be filed as an
exhibit to the Registration Statement or any Incorporated Document which
are not described or referred to therein or filed as required;
(xiii) Neither the execution and delivery nor the performance
(other than the performance of the Company's indemnification obligations
hereunder, concerning which no opinion need be expressed) of the
Agreement on behalf of or by the Company (i) conflicts with any provision
of the Articles of Incorporation or Bylaws of the Company , (ii) violates
any law applicable to the Company or (iii) results in a breach or
violation of, or constitutes a default under, any term of the agreement
or instrument filed as an exhibit to the Registration Statement or to any
Incorporated Documents, any order, writ or decree of any court,
governmental agency or body of which such counsel has knowledge.
(xiv) No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body
having jurisdiction over the Company or over any of its properties or
operations is necessary in connection with the consummation by the
Company of the transactions herein contemplated, except such as may be
required under state or other securities or Blue Sky laws in connection
with the purchase and the distribution of the Shares by the Underwriters;
(xv) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company of a
character required to be disclosed in the Registration Statement or the
Prospectus or any Incorporated Document by the Act or the Rules and
Regulations or by the Exchange Act or the applicable rules and
regulations of the Commission thereunder, other than those described
therein;
(xvi) To such counsel's knowledge, the Company is not presently (a)
in violation of its respective charter or bylaws, or (b) to such
counsel's knowledge, any order, writ or decree of any court or
governmental agency or body having jurisdiction over the Company or over
any of its properties or operations; and
(xvii) To such counsel's knowledge, except as set forth in the
Registration Statement and Prospectus and any Incorporated Document, no
holders of Common Stock or other securities of the Company have
registration rights with respect to securities of the Company and, except
as set forth in the Registration Statement and Prospectus, all holders of
securities of the Company having rights known to such counsel to
registration of such shares of Common Stock or other securities, because
of the filing of the Registration Statement by the Company have, with
respect to the offering contemplated thereby, waived such rights or such
rights have expired by reason of lapse of time following notification of
the Company's intent to file the Registration Statement or have included
securities in the Registration Statement pursuant to the exercise of and
in full satisfaction of such rights.
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<PAGE> 16
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel which leads them to believe
that, at the time the Registration Statement became effective and at all times
subsequent thereto up to and on the Closing Date and on any later date on which
Option Shares are to be purchased, the Registration Statement and any amendment
or supplement thereto and any Incorporated Document, when such documents became
effective or were filed with the Commission (other than the financial statements
including supporting schedules and other financial and statistical information
derived therefrom, as to which such counsel need express no comment) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or at the Closing Date or any later date on which the Option Shares
are to be purchased, as the case may be, the Prospectus and any amendment or
supplement thereto and any Incorporated Document (except as aforesaid) contained
any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Such counsel shall also state that
the conditions for the use of Form S-3 set forth in the General Instructions
thereto have been satisfied.
Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States or the State of California and State
of Delaware upon opinions of local or special counsel, and as to questions of
fact upon representations or certificates of officers of the Company, and of
government officials, in which case their opinion is to state that they are so
relying and that they have no knowledge of any material misstatement or
inaccuracy in any such opinion, representation or certificate. Copies of any
opinion, representation or certificate so relied upon shall be delivered to you,
as Representatives of the Underwriters, and to Underwriters' Counsel.
(e) Dehlinger & Associates ("Dehlinger"), outside patent counsel for
the Company, shall have expertised the statements set forth in the Prospectus
under the caption "Risk Factors -- Patents and Trade Secrets" and "Business
- -Patents and Trade Secrets". In addition, you shall have received on the Closing
Date and on any later date on which Option Shares are purchased, as the case may
be, the following opinion of Dehlinger, dated the Closing Date or such later
date on which Option Shares are to be purchased, addressed to the Underwriters
and with reproduced copies or signed counterparts thereof for each of the
Underwriters, stating that such counsel is familiar with the technology used by
the Company, its business and the manner of its technology's use thereof and has
read the Registration Statement and the Prospectus, including particularly the
portions of the Registration Statement and the Prospectus referring to patents,
patent rights, inventions, trade secrets, know-how, trademarks, service marks,
trade names, copyrights or other proprietary information or materials (herein
called Intellectual Property Rights) and to the effect that:
(i) Such counsel has no reason to believe that the Registration
Statement or the Prospectus (a) contains any untrue statement of a
material fact with respect to Intellectual Property Rights owned or used
by the Company, or the manner of its use thereof, or any allegation on
the part of any person that the Company is infringing any Intellectual
Property Rights of any such person or (b) omits to state any material
fact relating to Intellectual Property Rights owned or used by the
Company, or the manner of its use thereof, or any allegation of which
such counsel have knowledge, that is required to be stated in the
Registration Statement or the Prospectus or is necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(ii) To the best of such counsel's knowledge, and other than as set
forth in the Prospectus, the Company has not received notice of any
claims of infringement of any Intellectual Property Rights;
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<PAGE> 17
(iii) To the best of such counsel's knowledge, there are no legal
or governmental proceedings relating to any Intellectual Property Rights
owned or used by the Company pending against the Company, or any third
party; there are no legal or governmental proceedings relating to a third
party's Intellectual Property Rights pending against the Company; and no
such proceedings are threatened or contemplated by governmental
authorities or others;
(iv) Such counsel does not know of any contracts or other documents
relating to the Intellectual Property Rights of the Company of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or
the Prospectus that are not filed or described as required;
(v) To the best of such counsel's knowledge, the Company is not
infringing or otherwise violating any valid Intellectual Property Rights
of others and there are no infringements by others of any Intellectual
Property Rights owned or used by the Company which, in the judgment of
such counsel, could affect materially the use thereof by the Company.
(vi) To the best of such counsel's knowledge, the Company owns or
possesses sufficient licenses or other rights to use all necessary
Intellectual Property Rights to conduct the business now being or
proposed to be conducted by the Company as described in the Prospectus;
and
(vii) Such statements in the Registration Statement and Prospectus
as the Underwriters' counsel shall have reasonably determined relate to
Intellectual Property Rights (including, without limitation, all
statements under the captions "Risk Factors--Patents and Trade Secrets"
and "Business--Patents and Trade Secrets"), insofar as such statements
constitute summaries of matters of law, are accurate and complete
statements or summaries of such matters of law set forth therein.
(viii) As to each patent and patent application listed in Exhibit 1
thereto, there is an assignment by each of the named inventors to the
Company. The assignments by the named inventors have been submitted to
the United States Patent and Trademark Office ("USPTO") and those
assignments have been recorded in the USPTO's title records.
(ix) The Company's U.S. patent applications listed on Exhibit 1
thereto have been prepared and filed in the USPTO in a form and with
accompanying papers that are acceptable to the USPTO for the purposes of
according each such application a filing date and serial number, and of
placing each such application in condition for eventual examination on
the merits as to patentability. For each such U.S. application an
Official Filing Receipt has been received from the USPTO. As to each of
such applications, such counsel is not aware of any material defect of
form in preparation or filing.
(x) As to each of the Company's foreign patents and patent
applications based on the United States patents or applications listed on
Exhibit 1 thereto, the applications have either (a) been submitted as
Patent Cooperation Treaty applications, for subsequent filing in one or
more designated countries, or (b) been submitted to patent firms in the
respective foreign countries with instructions to file the applications
in patent offices of those countries, in each case, naming the Company as
the owner of record. In each such application, written confirmation has
been received that the application has, in fact, been accepted for filing
by such patent offices. There is no assurance that the patent offices of
the respective countries will not reject the claims of the foreign patent
applications as being unpatentable, or that any claims will be allowed
without amendment, nor is there any assurance that those patent offices
will ultimately conclude that the foreign patent applications meet all
requirements for patentability.
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<PAGE> 18
(f) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, an opinion of
Wilson, Sonsini, Goodrich & Rosati in form and substance satisfactory to you,
with respect to the sufficiency of all such corporate proceedings and other
legal matters relating to this Agreement and the transactions contemplated
hereby as you may reasonably require, and the Company shall have furnished to
such counsel such documents as they may have requested for the purpose of
enabling them to pass upon such matters.
(g) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, a letter from
Ernst & Young LLP addressed to the Underwriters, dated the Closing Date or such
later date on which Option Shares are to be purchased, as the case may be,
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Act and the applicable published Rules
and Regulations and based upon the procedures described in such letter delivered
to you concurrently with the execution of this Agreement (herein called the
"Original Letter"), but carried out to a date not more than five (5) business
days prior to the Closing Date or such later date on which Option Shares are to
be purchased, as the case may be, (i) confirming, to the extent true, that the
statements and conclusions set forth in the Original Letter are accurate as of
the Closing Date or such later date on which Option Shares are to be purchased,
as the case may be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter which are necessary
to reflect any changes in the facts described in the Original Letter since the
date of such letter, or to reflect the availability of more recent financial
statements, data or information. The letter shall not disclose any change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company from that set forth in the Registration Statement or
Prospectus, which, in your sole judgment, is material and adverse and that makes
it, in your sole judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. The Original
Letter from Ernst & Young LLP shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and shall
(i) represent, to the extent true, that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations, (ii) set forth their opinion with
respect to their examination of the balance sheet of the Company as of December
31, 1994 and related statements of operations, stockholders' equity, and cash
flows for the twelve (12) months ended December 31, 1994, (iii) state that Ernst
& Young LLP has performed the procedure set out in Statement on Auditing
Standards No. 71 ("SAS 71") for a review of interim financial information and
providing the report of Ernst & Young LLP as described in SAS 71 on the
financial statements for each of the quarters and the six-month period ended
June 30, 1994 and 1993 (the "Quarterly Financial Statements"), (iv) state that
in the course of such review, nothing came to their attention that leads them to
believe that any material modifications need be made to any of the Quarterly
Financial Statements in order for them to be in compliance with generally
accepted accounting principles consistently applied across the periods
presented, and (v) address other matters agreed upon by Ernst & Young LLP and
you. In addition, you shall have received from Ernst & Young LLP a letter
addressed to the Company and made available to you for the use of the
Underwriters stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's financial statements as of December
31, 1994, did not disclose any weaknesses in internal controls that they
considered to be material weaknesses.
(h) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, a certificate of
the Company, dated the Closing Date or such later date on which Option Shares
are to be purchased, as the case may be, signed by the Chief Executive Officer
or President and Chief Operating Officer and Chief Financial Officer of the
Company, to the effect that, and you shall be satisfied that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date
or any later date on which Option Shares are to be purchased, as the case
may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at
or prior to
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<PAGE> 19
the Closing Date or any later date on which Option Shares are to be
purchased, as the case may be;
(ii) 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 threatened under the Act;
(iii) When the Registration Statement became effective and at all
times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto and the Incorporated Documents, when such
Incorporated Documents became effective or were filed with the Commission
, contained all material information required to be included therein by
the Act and the Rules and Regulations or the Exchange Act and the
applicable rules and regulations of the Commission thereunder, as the
case may be, and in all material respects conformed to the requirements
of the Act and the Rules and Regulations or the Exchange Act and the
applicable rules and regulations of the Commission thereunder, as the
case may be, the Registration Statement, and any amendment, or supplement
thereto and the Incorporated Documents, did not and do not include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, the Prospectus, and any amendment or supplement thereto,
did not and does not include any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and, since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth; and
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been
(a) any material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company, (b) any transaction that is material to the Company except
transactions entered into in the ordinary course of business, (c) any
obligation, direct or contingent, that is material to the Company,
incurred by the Company except obligations incurred in the ordinary
course of business, (d) any change in the capital stock or outstanding
indebtedness of the Company that is material to the Company, (e) any
dividend or distribution of any kind declared, paid or made on the
capital stock of the Company, or (f) any loss or damage (whether or not
insured) to the property of the Company which has been sustained or will
have been sustained which has a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company.
(i) The Company shall have obtained and delivered to you an Agreement
from each officer and director of the Company in writing prior to the date
hereof that such person will not, during the Lock-up Period, effect the
Disposition of any Securities now owned or hereafter acquired directly by such
person or with respect to which such person has or hereafter acquires the power
of disposition, otherwise than (i) as a bona fide gift or gifts, provided the
donee or donees thereof agree in writing to be bound by this restriction, (ii)
as a distribution to partners or stockholders of such person, provided that the
distributees thereof agree in writing to be bound by the terms of this
restriction, or (iii) with the prior written consent of Robertson, Stephens &
Company, L.P. The foregoing restriction shall have been expressly agreed to
preclude the holder of the Securities from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or result in
a Disposition of Securities during the Lock-up Period, even if such Securities
would be disposed of by someone other than the such holder. Such prohibited
hedging or other transactions would including, without limitation, any short
sale (whether or not against the box) or any purchase, sale or grant of any
right (including, without limitation, any put or call option) with respect to
any Securities or with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any
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<PAGE> 20
significant part of its value from Securities. Furthermore, such person will
have also agreed and consented to the entry of stop transfer instructions with
the Company's transfer agent against the transfer of the Securities held by such
person except in compliance with this restriction.
(j) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, signed by the
Vice President for Regulatory Affairs of the Company to the effect that, and you
shall be satisfied that:
(i) When the Registration Statement became effective and at all
times subsequent thereto up to the delivery of such certificate, the
statements relating to regulatory matters included in "Risk Factors --
Competition", "-- Uncertainty of Pharmaceutical Pricing and
Reimbursement," "-- No Assurance of Regulatory Approvals"; "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Overview"; "Business -- Products and Products Under
Development"; "-- Manufacturing and Production"; "-- Government
Regulation"; and "-- Competition" and the information presented in the
table under the caption "Business -- Products and Products Under
Development -- Products and Development Projects", did not and do not
include an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(k) The Company shall have furnished to you such further certificates
and documents as you shall reasonably request (including certificates of
officers of the Company as to the accuracy of the representations and warranties
of the Company herein, as to the performance by the Company of its obligations
hereunder and as to the other conditions concurrent and precedent to the
obligations of the Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
7. Option Shares.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants to the several Underwriters, for the purpose of covering
over-allotments in connection with the distribution and sale of the Firm Shares
only, a nontransferable option to purchase up to an aggregate of 450,000 Option
Shares at the purchase price per share for the Firm Shares set forth in Section
3 hereof. Such option may be exercised by the Representatives on behalf of the
several Underwriters on one (1) or more occasions in whole or in part during the
period of thirty (30) days after the date on which the Firm Shares are initially
offered to the public, by giving written notice to the Company. The number of
Option Shares to be purchased by each Underwriter upon the exercise of such
option shall be the same proportion of the total number of Option Shares to be
purchased by the several Underwriters pursuant to the exercise of such option as
the number of Firm Shares purchased by such Underwriter (set forth in Schedule A
hereto) bears to the total number of Firm Shares purchased by the several
Underwriters (set forth in Schedule A hereto), adjusted by the Representatives
in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares to be
purchased by the several Underwriters pursuant to the exercise of the option
granted by this Section 7 shall be made against payment of the purchase price
therefor by the several Underwriters by certified or official bank check or
checks drawn in next-day funds, payable to the order of the Company (and the
Company agrees not to deposit any such check in the bank on which it is drawn,
and not to take any other action with the purpose or effect of receiving
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<PAGE> 21
immediately available funds, until the business day following the date of its
delivery to the Company). In the event of any breach of the foregoing, the
Company shall reimburse the Underwriters for the interest lost and any other
expenses borne by them by reason of such breach. Such delivery and payment shall
take place at the offices of Heller Ehrman White & McAuliffe, 525 University
Avenue, Palo Alto, California 94301 or at such other place as may be agreed upon
among the Representatives and the Company (i) on the Closing Date, if written
notice of the exercise of such option is received by the Company at least two
(2) full business days prior to the Closing Date, or (ii) on a date which shall
not be later than the third (3rd) full business day following the date the
Company receives written notice of the exercise of such option, if such notice
is received by the Company less than two (2) full business days prior to the
Closing Date.
The certificates for the Option Shares to be so delivered will be made
available to you at such office or such other location including, without
limitation, in New York City, as you may reasonably request for checking at
least one (1) full business day prior to the date of payment and delivery and
will be in such names and denominations as you may request, such request to be
made at least two (2) full business days prior to such date of payment and
delivery. If the Representatives so elect, delivery of the Option Shares may be
made by credit through full fast transfer to the accounts at the Depository
Trust Company designated by the Representatives.
It is understood that you, individually, and not as the Representatives
of the several Underwriters, may (but shall not be obligated to) make payment of
the purchase price on behalf of any Underwriter or Underwriters whose check or
checks shall not have been received by you prior to the date of payment and
delivery for the Option Shares to be purchased by such Underwriter or
Underwriters. Any such payment by you shall not relieve any such Underwriter or
Underwriters of any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in Section 7(a) hereof,
the obligations of the several Underwriters to purchase such Option Shares will
be subject (as of the date hereof and as of the date of payment and delivery for
such Option Shares) to the accuracy of and compliance with the representations,
warranties and agreements of the Company herein, to the accuracy of the
statements of the Company and officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder to the conditions set forth in Section 6 hereof, and to the condition
that all proceedings taken at or prior to the payment date in connection with
the sale and transfer of such Option Shares shall be satisfactory in form and
substance to you and to Underwriters' Counsel, and you shall have been furnished
with all such documents, certificates and opinions as you may request in order
to evidence the accuracy and completeness of any of the representations,
warranties or statements, the performance of any of the covenants or agreements
of the Company or the satisfaction of any of the conditions herein contained.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject (including, without limitation, in its
capacity as an Underwriter or as a "qualified independent underwriter" within
the meaning of Schedule E of the Bylaws of the NASD), under the Act, the
Exchange Act or otherwise, specifically including, but not limited to, losses,
claims, damages or liabilities (or actions in respect thereof) arising out of or
based upon (i) any breach of any representation, warranty, Agreement or covenant
of the Company herein contained, (ii) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or any
amendment or supplement thereto, including any Incorporated Document, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
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<PAGE> 22
misleading, and agrees to reimburse each Underwriter for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, such Preliminary Prospectus or the Prospectus, or
any such amendment or supplement thereto, in reliance upon, and in conformity
with, written information relating to any Underwriter furnished to the Company
by such Underwriter, directly or through you, specifically for use in the
preparation thereof and, provided further, that the indemnity Agreement provided
in this Section 8(a) with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any losses,
claims, damages, liabilities or actions based upon any untrue statement or
alleged untrue statement of material fact or omission or alleged omission to
state therein a material fact purchased Shares, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the time
required by the Act and the Rules and Regulations, unless such failure is the
result of noncompliance by the Company with Section 4(d) hereof.
The indemnity Agreement in this Section 8(a) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person, if any,
who controls any Underwriter within the meaning of the Act or the Exchange Act.
This indemnity Agreement shall be in addition to any liabilities which the
Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company against any losses, claims, damages or
liabilities, joint or several, to which the Company may become subject under the
Act, the Exchange Act or otherwise, specifically including, but not limited to,
losses, claims, damages or liabilities (or actions in respect thereof) arising
out of or based upon (i) any breach of any representation, warranty, Agreement
or covenant of such Underwriter herein contained, (ii) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment or supplement thereto, including any Incorporated
Document, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, in the case of
subparagraphs (ii) and (iii) of this Section 8(b) to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter, directly or through
you, specifically for use in the preparation thereof, and agrees to reimburse
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such loss, claim, damage,
liability or action.
The indemnity Agreement in this Section 8(b) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer of the
Company who signed the Registration Statement and each director of the Company,
and each person, if any, who controls the Company within the meaning of the Act
or the Exchange Act. This indemnity Agreement shall be in addition to any
liabilities which each Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it shall elect by written notice delivered to the
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<PAGE> 23
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of the indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with appropriate
local counsel) approved by the indemnifying party representing all the
indemnified parties under Section 8(a) or 8(b) hereof who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. In no event shall any
indemnifying party be liable in respect of any amounts paid in settlement of any
action unless the indemnifying party shall have approved the terms of such
settlement; provided that such consent shall not be unreasonably withheld. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnification
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on all claims that are the subject matter of such proceeding.
(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 8
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 8 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Underwriters
severally and not jointly are responsible pro rata for the portion represented
by the percentage that the underwriting discount bears to the initial public
offering price, and the Company are responsible for the remaining portion,
provided, however, that (i) no Underwriter shall be required to contribute any
amount in excess of the amount by which the underwriting discount applicable to
the Shares purchased by such Underwriter exceeds the amount of damages which
such Underwriter has otherwise required to pay and (ii) no person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. The contribution Agreement in this Section 8(d)
shall extend upon the same terms and conditions to, and shall inure to the
benefit of, each person, if any, who controls any Underwriter or the Company
within the meaning of the Act or the Exchange Act and each officer of the
Company who signed the Registration Statement and each director of the Company.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 8, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 8 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act.
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<PAGE> 24
9. Representations, Warranties, Covenants and Agreements to Survive
Delivery. All representations, warranties, covenants and agreements of the
Company and the Underwriters herein or in certificates delivered pursuant
hereto, and the indemnity and contribution agreements contained in Section 8
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter within the meaning of the Act or the Exchange Act, or by or on
behalf of the Company or any of its officers, directors or controlling persons
within the meaning of the Act or the Exchange Act, and shall survive the
delivery of the Shares to the several Underwriters hereunder or termination of
this Agreement.
10. Substitution of Underwriters. If any Underwriter or Underwriters
shall fail to take up and pay for the number of Firm Shares agreed by such
Underwriter or Underwriters to be purchased hereunder upon tender of such Firm
Shares in accordance with the terms hereof, and if the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters so agreed but failed to
purchase does not exceed 10% of the Firm Shares, the remaining Underwriters
shall be obligated, severally in proportion to their respective commitments
hereunder, to take up and pay for the Firm Shares of such defaulting Underwriter
or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters agreed
but failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for
twenty-four (24) hours to allow the several Underwriters the privilege of
substituting within twenty-four (24) hours (including non-business hours)
another underwriter or underwriters (which may include any nondefaulting
Underwriter) satisfactory to the Company. If no such underwriter or underwriters
shall have been substituted as aforesaid by such postponed Closing Date, the
Closing Date may, at the option of the Company, be postponed for a further
twenty-four (24) hours, if necessary, to allow the Company the privilege of
finding another underwriter or underwriters, satisfactory to you, to purchase
the Firm Shares which the defaulting Underwriter or Underwriters so agreed but
failed to purchase. If it shall be arranged for the remaining Underwriters or
substituted underwriter or underwriters to take up the Firm Shares of the
defaulting Underwriter or Underwriters as provided in this Section 10, (i) the
Company shall have the right to postpone the time of delivery for a period of
not more than seven (7) full business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or arrangements, and the Company agrees promptly to
file any amendments to the Registration Statement, supplements to the Prospectus
or other such documents which may thereby be made necessary, and (ii) the
respective number of Firm Shares to be purchased by the remaining Underwriters
and substituted underwriter or underwriters shall be taken as the basis of their
underwriting obligation. If the remaining Underwriters shall not take up and pay
for all such Firm Shares so agreed to be purchased by the defaulting Underwriter
or Underwriters or substitute another underwriter or underwriters as aforesaid
and the Company shall not find or shall not elect to seek another underwriter or
underwriters for such Firm Shares as aforesaid, then this Agreement shall
terminate.
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section 10, neither the Company shall be liable to
any Underwriter (except as provided in Sections 5 and 8 hereof) nor shall any
Underwriter (other than an Underwriter who shall have failed, otherwise than for
some reason permitted under this Agreement, to purchase the number of Firm
Shares agreed by such Underwriter to be purchased hereunder, which Underwriter
shall remain liable to the Company, and the other Underwriters for damages, if
any, resulting from such default) be liable to the Company (except to the extent
provided in Sections 5 and 8 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section 10.
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<PAGE> 25
11. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at the earlier of (i) 6:30
A.M., San Francisco time, on the first full business day following the date of
the this Agreement, or (ii) the time of the initial public offering of any of
the Shares by the Underwriters after the Registration Statement becomes
effective. The time of the initial public offering shall mean the time of the
release by you, for publication, of the first newspaper advertisement relating
to the Shares, or the time at which the Shares are first generally offered by
the Underwriters to the public by letter, telephone, telegram or telecopy,
whichever shall first occur. By giving notice as set forth in Section 12 before
the time this Agreement becomes effective, you, as Representatives of the
several Underwriters, or the Company, may prevent this Agreement from becoming
effective without liability of any party to any other party, except as provided
in Sections 4(j), 5 and 8 hereof.
(b) You, as Representatives of the several Underwriters, shall have the
right to terminate this Agreement by giving notice as hereinafter specified at
any time on or prior to the Closing Date or on or prior to any later date on
which Option Shares are to be purchased, as the case may be, (i) if the Company
shall have failed, refused or been unable to perform any Agreement on its part
to be performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled is not fulfilled, including, without
limitation, any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company from that set forth in
the Registration Statement or Prospectus, which, in your sole judgment, is
material and adverse, or (ii) if additional material governmental restrictions,
not in force and effect on the date hereof, shall have been imposed upon trading
in securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock Exchange or
in the over the counter market by the NASD, or trading in securities generally
shall have been suspended on either such exchange or in the over the counter
market by the NASD, or if a banking moratorium shall have been declared by
federal, New York or California authorities, or (iii) if the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as to interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured, or (iv) if there shall have been a material adverse change in the
general political or economic conditions or financial markets as in your
reasonable judgment makes it inadvisable or impracticable to proceed with the
offering, sale and delivery of the Shares, or (v) if there shall have been an
outbreak or escalation of hostilities or of any other insurrection or armed
conflict or the declaration by the United States of a national emergency which,
in the reasonable opinion of the Representatives, makes it impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated by
the Prospectus. In the event of termination pursuant to subparagraph (i) above,
the Company shall remain obligated to pay costs and expenses pursuant to
Sections 4(j), 5 and 8 hereof. Any termination pursuant to any of subparagraphs
(ii) through (v) above shall be without liability of any party to any other
party except as provided in Sections 5 and 8 hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 11, you shall promptly
notify the Company by telephone, telecopy or telegram, in each case confirmed by
letter. If the Company shall elect to prevent this Agreement from becoming
effective, the Company shall promptly notify you by telephone, telecopy or
telegram, in each case, confirmed by letter.
12. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, telegraphed (and confirmed by letter) or telecopied (and
confirmed by letter) to you c/o Robertson, Stephens & Company, L.P., 555
California Street, Suite 2600, San Francisco, California 94104, telecopier
number (415) 781-0278, Attention: General Counsel with a copy to Wilson,
Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California
94304-1050, telecopier number (415) 493-6811, Attention: Alan K. Austin; if sent
to the Company, such notice shall be mailed, delivered, telegraphed (and
confirmed by letter) or telecopied (and confirmed by letter) to 960 Hamilton
Court, Menlo Park, California 94205, telecopier number (415) 323-9106,
Attention: I. Craig
-25-
<PAGE> 26
Henderson, Chief Executive Officer with a copy to Heller Ehrman White &
McAuliffe, 525 University Avenue, Palo Alto, California 94301, telecopier number
(415) 324-0638, Attention Martina W. Knee.
13. Parties. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters and the Company and their respective executors,
administrators, successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person or entity, other
than the parties hereto and their respective executors, administrators,
successors and assigns, and the controlling persons within the meaning of the
Act or the Exchange Act, officers and directors referred to in Section 8 hereof,
any legal or equitable right, remedy or claim in respect of this Agreement or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective executors, administrators,
successors and assigns and said controlling persons and said officers and
directors, and for the benefit of no other person or entity. No purchaser of any
of the Shares from any Underwriter shall be construed a successor or assign by
reason merely of such purchase.
In all dealings with the Company under this Agreement, you shall act
on behalf of each of the several Underwriters, and the Company shall be entitled
to act and rely upon any statement, request, notice or Agreement made or given
by you jointly or by Robertson, Stephens & Company, L.P. on behalf of you.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
15. Counterparts. This Agreement may be signed in several counterparts,
each of which will constitute an original.
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<PAGE> 27
If the foregoing correctly sets forth the understanding among the
Company and the several Underwriters, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
Agreement among the Company and the several Underwriters.
Very truly yours,
SEQUUS PHARMACEUTICALS, INC.
By___________________________
Name_________________________
Title________________________
Accepted as of the date first above written:
ROBERTSON, STEPHENS & COMPANY, L.P.
DILLON, READ & CO. INC.
OPPENHEIMER & CO., INC.
PUNK, ZIEGEL & KNOELL, L.P.
On their behalf and on behalf of each of the
several Underwriters named in Schedule A hereto.
ROBERTSON, STEPHENS & COMPANY, L.P.
By ROBERTSON, STEPHENS & COMPANY, INC.
By________________________________________________
Authorized Signatory
<PAGE> 28
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Firm Shares
To Be
Underwriters Purchased
- --------------------------------------------- ----------------
<S> <C>
Robertson, Stephens & Company, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dillon, Read & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oppenheimer & Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Punk, Ziegel & Knoell, L.P.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
=========
</TABLE>
-1-
<PAGE> 1
EXHIBIT 4.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
LIPOSOME TECHNOLOGY, INC.
Liposome Technology, Inc., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows: The original name of
the corporation was Liposome Technology (Delaware), Inc. The original
Certificate of Incorporation of this corporation was filed with the Delaware
Secretary of State on February 13, 1987.
1. This Restated Certificate of Incorporation restates and further amends
the Certificate of Incorporation of this corporation to read as set forth
herein.
2. The text of the Certificate of Incorporation as heretofore amended or
supplemented is hereby further amended and restated to read in full as follows:
FIRST: The name of this corporation is LIPOSOME TECHNOLOGY, INC.
SECOND: The address of its registered office in the State of Delaware is
15 East North Street, Dover, Delaware 19901, County of Kent. The name of its
registered agent at such address in Incorporating Services, Ltd.
THIRD: The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of capital stock which
the corporation shall have authority to issue is Thirty Nine Million
(39,000,000) shares, comprised of Thirty Five Million (35,000,000) shares of
Common Stock with a par value of One One-Hundredth of One Cent ($.0001) per
share (the "Common Shares") and Four Million (4,000,000) shares of Preferred
Stock with a par value of One Cent ($.01) per share (the "Preferred Shares").
Common Shares. Subject in all cases to ARTICLE FIFTH, a statement of the
designations, preferences, voting powers (or no voting powers), relative,
participating, optional or other special rights and privileges and the
qualifications, limitations and restrictions of the Common Shares is as follows:
-1-
<PAGE> 2
4.1 Voting Rights. Except as otherwise provided by law, the holders of
Common Shares shall have one vote for each Common Share on all matters submitted
to a vote of the holders of this corporation's Common Shares.
4.2 Distributions. The holders of Common Shares shall receive, out of any
funds legally available therefor, distributions as declared thereon by the board
of directors of this corporation. For purposes of this Restated Certificate of
Incorporation, unless the context otherwise requires, distribution shall mean
the transfer of cash or property to any holder of Common Shares without
consideration, whether by way of dividend or otherwise, payable other than in
Common Shares of this corporation; provided, however, that a repurchase of
Common Shares shall not be deemed a distribution.
FIFTH: The Preferred Shares may be issued in one or more series at such
time or times and for such consideration or considerations as the board of
directors may determine. Each series shall be so designated as to distinguish
the shares thereof from the shares of all other series and classes. Except as
may be expressly provided in this Restated Certificate of Incorporation,
including any certificate of designations for a series of Preferred Shares,
different series of Preferred Shares shall not be construed to constitute
different classes of shares for the purpose of voting by classes.
The board of directors is expressly authorized, subject to the limitations
prescribed by law and the provisions of this Restated Certificate of
Incorporation, to provide for the issuance of all or any of the Preferred Shares
in one or more series, each with such designations, preferences, voting powers
(or no voting powers), relative, participating, optional or other special rights
and privileges and such qualifications, limitations or restrictions thereof as
shall be stated in the resolution or resolutions adopted by the board of
directors to create such series, and a certificate of designations setting forth
a copy of said resolution or resolutions shall be filed in accordance with the
General Corporation Law of the State of Delaware. The authority of the board of
directors with respect to each such series shall include without limitation of
the foregoing the right to specify the number of shares of each such series and
to authorize an increase or decrease in such number of shares and the right to
provide that the shares of each such series may be: (i) subject to redemption at
such time or times and at such price or prices; (ii) entitled to receive
dividends (which may be cumulative or non-cumulative) at such rates, on such
conditions, and at such times, and payable in preference to, or in such relation
to, the dividends payable on any other class or classes or any other series;
(iii) entitled to such rights upon the dissolution of, or upon any distribution
of the assets of, the corporation; (iv) convertible into, or exchangeable for,
shares of any other class or classes of stock, or of any other series of the
same or any other class or classes of stock of the corporation at such price or
prices or at such rates of exchange
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<PAGE> 3
and with such adjustments, if any; (v) entitled to the benefit of such
limitations, if any, on the issuance of additional shares of such series or
shares of any other series of Preferred Shares; or (vi) entitled to such other
preferences, powers, qualifications, rights and privileges, all as the board of
directors may deem advisable and as are not inconsistent with law and the
provisions of this Restated Certificate of Incorporation.
SIXTH: The corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware:
A. The board of directors of the corporation is expressly authorized:
(i) To make, alter or repeal the by-laws of the corporation.
(ii) To authorize and cause to be executed mortgages and liens upon
the real and personal property of the corporation.
(iii) To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
(iv) By a majority of the whole board, to designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member of any
committee. The by-laws may provide that in the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
or in the by-laws of the corporation, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Restated Certificate of
Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of the State of Delaware, fix any of the preferences or rights
of such shares relating to dividends, redemption, dissolution, any distribution
of assets of the corporation or the conversion into, or the exchange of such
shares for, shares of any other class or classes or any other series of the same
or any other class or classes of stock of the
-3-
<PAGE> 4
corporation), adopting an agreement of merger or consolidation under Sections
251 or 252 of the General Corporation Law of the State of Delaware, recommending
to the stockholders the sale, lease or exchange, of all or substantially all of
the corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or by-laws expressly so
provide, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of stock, or to adopt a certificate of
ownership and merger pursuant to Section 253 of the General Corporation Law of
the State of Delaware.
(v) When and as authorized by the stockholders in accordance with
statute, to sell, lease or exchange all or substantially all of the property and
assets of the corporation, including its good will and its corporate franchises,
upon such terms and conditions and for such consideration, which may consist in
whole or in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the corporation.
B. Elections of directors need not be by written ballot unless the by-laws
of the corporation shall so provide.
C. The books of the corporation may be kept at such place within or
without the State of Delaware as the by-laws of the corporation may provide or
as may be designated from time to time by the board of directors of the
corporation.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders
-4-
<PAGE> 5
or class of stockholders, of this corporation, as the case may be, and also on
this corporation.
NINTH: A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended hereafter
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the corporation shall not adversely affect any right or protection of a
director of the corporation existing at the time of such repeal or modification.
TENTH:
A. RIGHT OF INDEMNIFICATION
Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative ("proceeding"), by reason of the fact
that he or she or a person of whom he or she is the legal representative, is or
was a director or officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director or officer, employee or
agent of another corporation, or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended, (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said Law permitted
the corporation to provide prior to such amendment) against all expenses,
liability and loss including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however,
-5-
<PAGE> 6
that the corporation shall indemnify any such person seeking indemnity in
connection with an action, suit or proceeding (or part thereof) initiated by
such person only if such action, suit or proceeding (or part thereof) was
authorized by the board of directors of the corporation. Such right shall be a
contract right and shall include the right to be paid by the corporation
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that the payment of such expenses incurred by a
director or officer of the corporation in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of such
proceeding, shall be made only upon delivery to the corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it should be determined ultimately that such director or officer
is not entitled to be indemnified under this Section or otherwise.
B. RIGHT OF CLAIMANT TO BRING SUIT
If a claim under Paragraph A of Article TENTH is not paid in full by
the corporation within ninety (90) days after a written claim has been received
by the corporation, the claimant may at any time thereafter bring suit against
the corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expenses of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to this corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant.for the amount
claimed, and the burden of proving that such standards were net shall be on the
claimant. Neither the failure of the corporation (including its board of
directors, independent legal counsel, or its stockholders) to have made a
determination prior to the Commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the corporation (including its board of
directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that claimant has not met the applicable standard of
conduct.
C. NON-EXCLUSIVITY OF RIGHTS
The rights conferred on any person by Paragraphs A and B of Article
TENTH shall not be exclusive of any other right which such persons may have or
hereafter acquire under any statute, provision of the Restated Certificate of
Incorporation,
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<PAGE> 7
by-law, agreement, vote of stockholders or disinterested directors or otherwise.
D. INSURANCE
The corporation may maintain insurance, at its expense, to protect
itself and any such director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
ELEVENTH: The corporation reserves the right to amend or repeal any
provision contained in this Restated Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon a
stockholder herein are granted subject to this reservation.
3. This Restated Certificate of Incorporation was duly adopted by the
stockholders at the corporation's annual meeting of stockholders in accordance
with the applicable provisions of Sections 242 and 245 of the General
corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Liposome Technology, Inc. has caused this
certificate to be signed by its officer duly authorized, and attested by its
Secretary, this 28th day of June, 1991.
LIPOSOME TECHNOLOGY, INC.
By: /s/ NICOLAOS V. ARVANITIDIS
---------------------------
Nicolaos V. Arvanitidis
Chairman of the Board and
Chief Executive Officer
ATTEST:
By: /s/ SALLY A. DAVENPORT
----------------------
Sally A. Davenport
Secretary
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<PAGE> 8
CERTIFICATE OF DESIGNATION OF
RIGHTS, PREFERENCES AND PRIVILEGES OF
SERIES A CONVERTIBLE RESET PREFERRED STOCK
OF LIPOSOME TECHNOLOGY, INC.
A DELAWARE CORPORATION
Pursuant to Section 151 of
the General Corporation Law of the State of Delaware
The undersigned Nicolaos V. Arvanitidis hereby certifies that:
(a) He is the duly elected and acting Chairman of the Board of Directors
and Chief Executive Officer of Liposome Technology, Inc., a Delaware corporation
(the "Corporation");
(b) Pursuant to the authority conferred upon the Board of Directors of the
Corporation by the Corporation's Restated Certificate of Incorporation (the
"Certificate"), the Board of Directors of the Corporation as of March 29, 1995
adopted the following resolution creating a series of preferred stock designated
as Series A Convertible Reset Preferred Stock:
WHEREAS, the Certificate provides for a class of shares known as
Preferred Stock, issuable from time to time in one or more series; and
WHEREAS, the Board of Directors of the Corporation is authorized by
the Certificate to determine the powers, preferences, rights, qualifications,
limitations and restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock, to fix the number of shares constituting any such
series, and to determine the designation thereof, or any of them; and
WHEREAS, the Board of Directors of the Corporation desires, pursuant
to its authority as aforesaid, to determine and fix the powers, preferences,
rights, qualifications, limitations and restrictions relating to series of
Preferred Stock and the number of shares constituting, and the designation of,
each such series:
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority vested
in the Board of Directors of the Corporation in accordance with the provisions
of the Certificate, a series of Preferred Stock is hereby created, and the Board
of Directors hereby fixes and determines the designation of, the number of
shares constituting, and the powers, preferences, rights, qualifications,
limitations and restrictions relating to, such series of Preferred Stock as
follows:
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<PAGE> 9
1. Designation and Amount. The shares of such series of Preferred Stock of
the Corporation shall be designated Series A Convertible Reset Preferred Stock
and the number of shares constituting such series shall be 600,000.
2. Dividend Provisions.
Except as set forth in the next succeeding sentence, the holders of the
Series A Convertible Reset Preferred Stock shall not be entitled to receive a
dividend. Subject to the rights of holders of stock with a dividend preference
senior to that of the Series A Convertible Reset Preferred Stock (to the extent
such stock has been issued consistent with the provisions of Section 6.2
hereof), the holders of the Series A Convertible Reset Preferred Stock shall be
entitled to receive dividends from the Corporation on an as converted into
Common Stock basis, when, as and if declared on the Common Stock by the Board of
Directors of the Corporation out of funds legally available therefor.
3. Liquidation Preference.
3.1 Preference. In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the holders of the
outstanding shares of Series A Convertible Reset Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Common Stock by
reason of their ownership of such shares, an amount equal to $25.00 per
outstanding share of Series A Convertible Reset Preferred Stock (subject to
adjustment in the event of any stock dividend, stock split, stock distribution
or combination with respect to such shares), plus any accrued but unpaid
dividends. After payment of such amount, the holders of the Series A Convertible
Reset Preferred Stock shall have no further rights to participate in any
remaining assets of the Corporation. Subject to the rights of holders of stock
with a liquidation preference senior to that of the Series A Convertible Reset
Preferred Stock, if there are insufficient assets to satisfy the liquidation
preference amount of the outstanding shares of Series A Convertible Reset
Preferred Stock and any other series of Preferred Stock entitled to payments on
liquidation on a pari passu basis with the Series A Convertible Reset Preferred
Stock, then all of the assets and funds of the Corporation legally available for
distribution shall be distributed among the holders of the outstanding shares of
Series A Convertible Reset Preferred Stock and of any other series of Preferred
Stock entitled to payments on liquidation on a pari passu basis with the Series
A Convertible Reset Preferred Stock in proportion to the aggregate liquidation
preference of outstanding shares of Series A Convertible Reset Preferred Stock
and such other series of Preferred Stock then held by them.
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<PAGE> 10
3.2 Transactions Treated as Liquidation. For purposes of Section 3.1,
an acquisition, merger or other similar transaction or series of transactions
involving the Corporation will not be deemed a liquidation (effective upon the
closing of such transaction or series of transactions) unless such transaction
or series of transactions would result in the holders of the Series A
Convertible Reset Preferred Stock receiving securities (i) for which no public
trading market then exists and (ii) which may not then be resold (A) pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), or (B) in a transaction exempt from the registration
requirements of the Securities Act.
4. Conversion. The holders of Series A Convertible Reset Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
4.1 Right to Convert. Each share of Series A Convertible Reset
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time beginning 60 days following the date of issuance of such share, and
prior to the close of business on any redemption date with respect to such
share, at which time the right to convert shall terminate, at the office of the
Corporation or any transfer agent for the Series A Convertible Reset Preferred
Stock. Each share of Series A Convertible Reset Preferred Stock shall be
convertible into the number of fully paid and nonassessable shares of Common
Stock as is determined by dividing $25.00 by the conversion price per share in
effect for the Series A Convertible Reset Preferred Stock at the time of the
conversion (the "Conversion Price") (determined as hereinafter provided). The
Conversion Price at which shares of Common Stock shall be initially issuable
upon conversion of the shares of Series A Convertible Reset Preferred Stock (the
"Initial Conversion Price") shall be $7.425 per share. Such Initial Conversion
Price shall be adjusted as hereinafter provided.
4.2 Mechanics of Conversion. Before any holder of Series A Convertible
Reset Preferred Stock shall be entitled to convert the same into shares of
Common Stock, he or she shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Series A Convertible Reset Preferred Stock, and shall give written
notice by mail, postage prepaid, to the Corporation at its principal corporate
office, of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued; provided, however, that in the event of a conversion at the election
of the Corporation pursuant to Section 5.1 or Section 5.2, the outstanding
shares of Series A Convertible Reset Preferred Stock shall be converted
automatically without any further action by the holders of such shares
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<PAGE> 11
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent; and provided further, that the
Corporation shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon such automatic conversion unless and until the
certificates evidencing such shares of Series A Convertible Reset Preferred
Stock are either delivered to the Corporation or its transfer agent as provided
above, or the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. The Corporation shall, as
soon as practicable after such delivery, or such agreement and indemnification
in the case of a lost certificate, issue and deliver at such office to such
holder of Series A Convertible Reset Preferred Stock, a certificate or
certificates for the number of shares of Common Stock to which the holder shall
be entitled as aforesaid, subject to Section 4.7 below. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Series A Convertible Reset Preferred Stock to
be converted, or in the case of an automatic conversion on the date of such
automatic conversion as set forth above, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date. In the event fewer than all the shares represented by
any certificate are converted, a new certificate shall be issued representing
the shares that have not been converted.
4.3 Reset of Conversion Price. On March 25, 1996, the Conversion Price
with respect to all outstanding shares of Series A Convertible Reset Preferred
Stock shall be reset to an amount equal to the lesser of (i) the Initial
Conversion Price or (ii) the lowest average Closing Price (as defined below) of
the Corporation's Common Stock for any 30 consecutive Trading Days (as defined
below) in the preceding one-year period; provided, however, that in no event
shall the Conversion Price be reset to a Conversion Price less than $3.713; and
provided further, that the Conversion Price shall not be reset with respect to
any shares of Series A Convertible Reset Preferred Stock that have been
converted or redeemed prior to March 25, 1996.
In addition, upon the occurrence, if any, after March, 1996, of the
first "Material Adverse Event" (as defined below), the Conversion Price shall be
reset to an amount equal to 90% of the Conversion Price in effect on the date of
such first Material Adverse Event.
For the purposes of this resolution (i) "Trading Day" means a day on
which the principal national securities exchange on which the Common Stock is
listed is open for the transaction
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<PAGE> 12
of business; (ii) the "Closing Price" of the Corporation's Common Stock shall be
the last reported sale price of the Common Stock on the Nasdaq National Market
and (iii) a "Material Adverse Event" shall mean (A) the failure by the
Corporation to make any material required filing under the Securities Exchange
Act of 1934 on a timely basis and (B) delivery of a "qualified" report by the
Corporation's independent public accountants.
4.4 Adjustments of Conversion Price. In the event that the Corporation
at any time or from time to time after the issuance of the Series A Convertible
Reset Preferred Stock shall declare or pay, without consideration, any dividend
on the Common Stock payable in Common Stock or in any right to acquire Common
Stock for no consideration, or shall effect a subdivision of the outstanding
shares of Common Stock into a greater number of shares of Common Stock (by stock
split, reclassification or otherwise than by payment of a dividend in Common
Stock or in any right to acquire Common Stock), or in the event the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then the Conversion
Price in effect immediately prior to such event shall, concurrently with the
effectiveness of such event, be proportionately decreased or increased, as
appropriate. In the event that the Corporation shall declare or pay, without
consideration, any dividend on the Common Stock payable in any right to acquire
Common Stock for no consideration, then the Corporation shall be deemed to have
made a dividend payable in Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to acquire Common
Stock.
4.5 Adjustments for Reclassification and Reorganization. If the Common
Stock issuable upon conversion of the Series A Convertible Reset Preferred Stock
shall be changed into the same or a different number of shares of any other
class or classes of stock, whether by capital reorganization, reclassification
or otherwise (other than a subdivision or combination of shares provided for in
Section 4.4 or a merger or other reorganization referred to in Section 3.2
above), the Conversion Price then in effect shall, concurrently with the
effectiveness of such reorganization or reclassification, be proportionately
adjusted so that the Series A Convertible Reset Preferred Stock shall be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of
Common Stock that would have been subject to receipt by the holders upon
conversion of the Series A Convertible Reset Preferred Stock immediately before
that change.
4.6 No Impairment. The Corporation will not, by amendment of the
Certificate or through any reorganization,
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<PAGE> 13
recapitalization, consolidation, merger, dissolution or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Corporation, but will at all times
in good faith assist in the carrying out of all the provisions of this Section 4
and in the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Rights of the holders of the Series A Convertible
Reset Preferred Stock against impairment.
4.7 No Fractional Shares. No fractional shares shall be issued upon
conversion or redemption of the Series A Convertible Reset Preferred Stock and
the number of shares of any Common Stock to be issued shall be rounded down to
the nearest whole share. Whether or not fractional shares would be issuable upon
such conversion shall be determined on the basis of the total number of shares
of Series A Convertible Reset Preferred Stock the holder is at the time
converting into Common Stock and the number of shares of Common Stock issuable
upon such aggregate conversion.
4.8 Certificate as to Reset and Adjustments. Upon the occurrence of the
reset of the Conversion Price and upon each adjustment or readjustment of the
Conversion Price of the Series A Convertible Reset Preferred Stock pursuant to
this Section 4, the Corporation, at its expense, shall promptly compute such
reset, adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of record of Series A Convertible Reset
Preferred Stock a certificate setting forth such reset, adjustment or
readjustment and showing in detail the facts upon which such reset, adjustment
or readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series A Convertible Reset Preferred Stock, but in no
event more than two times in any one-year period, furnish or cause to be
furnished to such holder a like certificate setting forth (A) such reset,
adjustment and readjustment, (B) the Conversion Price at the time in effect, and
(C) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of the Series A
Convertible Reset Preferred Stock.
4.9 Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of record of Series A Convertible Reset Preferred
Stock, at least 15 calendar days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such
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<PAGE> 14
dividend, distribution or right, and the amount and character of such dividend,
distribution or right.
4.10 Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
Series A Convertible Reset Preferred Stock such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Convertible Reset Preferred Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all the then outstanding Series A
Convertible Reset Preferred Stock, in addition to such other remedies as shall
be available to the holder of such Series A Convertible Reset Preferred Stock,
the Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes.
5. Redemption.
5.1 Terms of Redemption and Conversion at the Election of the
Corporation.
5.1.1 Stock Trading at Premium. The Series A Convertible Reset
Preferred Stock shall automatically convert to Common Stock at the Conversion
Price then in effect, with the Series A Convertible Reset Preferred Stock being
deemed to have a value of $25.00 per share, at any time on or after 60 days from
the date of issuance of the Series A Convertible Reset Preferred Stock, on the
fifth day following the day on which the Corporation gives notice to the holders
of record of the Series A Convertible Reset Preferred Stock that (i) the Closing
Price of the Corporation's Common Stock for 20 out of 30 consecutive Trading
Days has been in excess of 175% of the Conversion Price on the last day of any
such consecutive Trading Day period and (ii) the Common Stock may immediately be
resold pursuant to an effective registration statement under the Securities Act
or pursuant to Rule 144(k) of the Securities Act.
5.1.2 In the Event of Merger or After Two Years. The Corporation
may redeem the Series A Convertible Reset Preferred Stock, in whole or in part,
for cash or may, at its election, convert the Series A Convertible Reset
Preferred Stock, in whole or in part, to Common Stock at the Conversion Price
then in effect, in each case with the Series A Convertible Reset Preferred Stock
being deemed to have a value of $25.00 per share (a) at any time on or after two
years from the date of issuance of the Series A Convertible Reset Preferred
Stock or (b) in the event of a merger of the Corporation, a sale of all or
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<PAGE> 15
substantially all of the Corporation's assets, or such other transaction in
which all or substantially all of the Corporation is effectively sold; provided
that, if the Series A Convertible Reset Preferred Stock is converted to Common
Stock, the Common Stock may immediately be resold pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144(k) of
the Securities Act.
5.2 Mandatory Redemption or Conversion After Five Years. All shares of
Series A Convertible Reset Preferred Stock which have not previously been
converted into Common Stock, redeemed by the Corporation or repurchased by the
Corporation shall be redeemed for cash or, at the Corporation's election,
automatically converted into Common Stock at the Conversion Price then in
effect, in each case with the Series A Convertible Reset Preferred Stock being
deemed to have a value of $25.00 per share, on March 31, 2000. On such date, all
rights with respect to the Series A Convertible Reset Preferred Stock will
terminate, except only the rights of the holders thereof, upon surrender of
their certificate or certificates therefor, to receive certificates for the
number of shares of Common Stock into which such Series A Convertible Reset
Preferred Stock has been converted or cash, as applicable. In the event that. as
a result of a merger, acquisition or other similar transaction, all of the
Corporation's Common Stock has been exchanged or purchased for cash, then the
Corporation shall not have the option to convert the Series A Convertible Reset
Preferred Stock to Common Stock under this Section 5.2.
5.3 Redemption Procedures. At least 30 days prior to any redemption
date or conversion into Common Stock at the election of the Corporation (in
either case, the "Redemption Date"), written notice shall be mailed, first
class, postage prepaid, to each holder of record of Series A Convertible Reset
Preferred Stock to be redeemed or converted into Common Stock, at such holder's
address last shown on the records of the Corporation, specifying whether the
Series A Convertible Reset Preferred Stock is to be redeemed or converted, the
number of shares to be redeemed or converted, the redemption date or conversion
date and, in the event of redemption, the date on which such holder's conversion
rights (pursuant to Section 4 hereof) as to such shares terminate and calling
upon such holder to surrender to the Corporation, in the manner and at the place
designated, such holder's certificate or certificates representing the shares to
be redeemed (such notice is hereinafter referred to as the "Redemption Notice").
On or prior to each Redemption Date, a holder of shares of Series A Convertible
Reset Preferred Stock to be redeemed or converted shall surrender his or its
certificate or certificates representing such shares to the Corporation, in the
manner and at the place designated in such Redemption Notice, and thereupon, at
the election of the Corporation, either the redemption price of
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<PAGE> 16
such shares shall be payable or Common Stock shall be issued to the person whose
name appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In the event of a conversion into
Common Stock at the election of the holder or at the election of the
Corporation, the number of shares of Common Stock to be issued for each share of
Series A Convertible Reset Preferred Stock shall be determined by dividing
$25.00 by the average of the Closing Prices of the Common Stock over the five
consecutive Trading Days immediately preceding the date on which the Redemption
Notice is mailed. In the event fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares. From and after the Redemption Date, unless there shall have
been a default in payment of the redemption price or issuance of Common Stock,
all rights of the holders of the Series A Convertible Reset Preferred Stock
designated in the Redemption Notice for redemption or conversion into Common
Stock as holders of Series A Convertible Reset Preferred Stock of the
Corporation (except the right to receive the redemption price without interest
or Common Stock upon surrender of their certificate or certificates) shall cease
with respect to such shares, and such shares shall not thereafter be transferred
on the books of the Corporation or be deemed to be outstanding for any purpose
whatsoever.
6. Voting Rights.
6.1 General. Each holder of shares of Series A Convertible Reset
Preferred Stock shall be entitled to the number of votes equal to the number of
shares of Common Stock into which each such share of Series A Convertible Reset
Preferred Stock could then be converted pursuant to Section 4 hereof with
respect to any and all matters presented to the stockholders of the Corporation
for their action or consideration. Except as provided by law, or by the
provisions of Section 6.2 below, holders of Series A Convertible Reset Preferred
Stock shall vote together with the holders of Common Stock as a single class.
Fractional votes shall not, however, be permitted and any fractional voting
rights resulting from the above formula (after aggregating all shares into which
shares of Series A Convertible Reset Preferred Stock held by each holder could
be converted) shall be rounded to the nearest whole number (with one-half being
rounded upward).
6.2 Adverse Effect on Series A Convertible Preferred Stock. In addition
to any other rights provided by law, the consent of the holders of a majority of
the holders of the outstanding shares of Series A Convertible Reset Preferred
Stock shall be required for the Corporation to take any action that amends or
repeals any provision of the Corporation's charter if such action would
materially and adversely change the rights, preferences or privileges of the
Preferred Stock; provided that
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<PAGE> 17
the foregoing does not create a right to vote other than in accordance with
Section 6.1 with respect to (i) any event that would constitute a merger or
other sale of the Corporation, liquidation, dissolution or winding up or with
respect to any authorization of any class or series of stock or (ii) any series
of Preferred Stock with rights, privileges or preferences senior to the Series A
Convertible Reset Preferred Stock.
7. No Reissuance of Series A Convertible Reset Preferred Stock. In the
event any Series A Convertible Reset Preferred Stock shall be acquired by the
Corporation by reason of redemption, conversion, or otherwise, such shares shall
be canceled and shall not be reissued by the Corporation. The Certificate shall
be appropriately amended to effect the corresponding reduction in the
Corporation's authorized capital stock.
* * *
RESOLVED FURTHER, that the Chief Executive Officer, the President or
any Vice President, and the Secretary, the Chief Financial Officer, the
Treasurer, or any Assistant Secretary or Assistant Treasurer of this Corporation
are each authorized to execute, verify, and file a Certificate of Designation of
Rights, Preferences and Privileges of Series A Convertible Reset Preferred Stock
in accordance with Delaware law.
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<PAGE> 18
IN WITNESS WHEREOF, the undersigned have executed this certificate on
March 29, 1995.
/s/ NICOLAOS V. ARVANITIDIS
-----------------------------
Nicolaos V. Arvanitidis
Chairman of the Board of
Directors and Chief Executive
Officer
/s/ SALLY A. DAVENPORT
-----------------------------
Sally A. Davenport, Secretary
The undersigned certify under penalty of perjury that they have read
the foregoing Certificate of Designation of Rights, Preferences and Privileges
of Series A Convertible Reset Preferred Stock and know the contents thereof, and
that the statements therein are true.
Executed at Menlo Park, California on March 29, 1995.
/s/ NICOLAOS V. ARVANITIDIS
-----------------------------
Nicolaos V. Arvanitidis
Chairman of the Board of
Directors and Chief Executive
Officer
/s/ SALLY A. DAVENPORT
-----------------------------
Sally A. Davenport, Secretary
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<PAGE> 19
CERTIFICATE OF OWNERSHIP AND MERGER
OF
SEQUUS PHARMACEUTICALS, INC.
A DELAWARE CORPORATION
INTO
LIPOSOME TECHNOLOGY, INC.,
A DELAWARE CORPORATION
IT IS HEREBY CERTIFIED THAT:
1. LIPOSOME TECHNOLOGY, INC., (the "Corporation") is a business
corporation of the State of Delaware.
2. The Corporation is the owner of all of the outstanding shares of
the stock of SEQUUS PHARMACEUTICALS, INC. (the "Subsidiary"), which is also a
business corporation of the State of Delaware.
3. On June 6, 1995, the Board of Directors of the Corporation adopted
the following resolutions to merge the Subsidiary into the Corporation pursuant
to Section 253 of the General Corporation Law of the State of Delaware and in
connection with this merger to change the corporate name of the Corporation to
SEQUUS Pharmaceuticals, Inc.:
WHEREAS, the Board of Directors of Liposome Technology, Inc. (the
"Company") deems it to be in the best interest of the Company to cause the
formation of a wholly-owned subsidiary of the Company to be named SEQUUS
Pharmaceuticals, Inc. (the "Subsidiary"), as a Delaware Corporation;
WHEREAS, the Board of Directors of the Company deems it to be in the
best interest of the Company to merge the Subsidiary with and into the
Company;
WHEREAS, the Board of Directors of the Company deem it to be in the
best interest of the Company to change its name to SEQUUS Pharmaceuticals,
Inc. upon the merger of the Subsidiary with and into the Company;
NOW, THEREFORE, BE IT RESOLVED, that the officers of the Company take
all actions necessary to form SEQUUS Pharmaceuticals, Inc. as a
wholly-owned subsidiary of the Company;
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<PAGE> 20
RESOLVED FURTHER, that after formation of the Subsidiary, the
subsidiary be merged with and into the Company, and that all of the
estate, property, rights, privileges, powers and franchises of the
Subsidiary be vested in and held and enjoyed by the Company as fully and
entirely and without change or diminution as the same were before held and
enjoyed by the Subsidiary in its name;
RESOLVED FURTHER, that the Company shall assume all of the
liabilities and obligations of the Subsidiary;
RESOLVED FURTHER, that, by virtue of the merger and without any
action on the part of the holder thereof, each issued and outstanding
share of capital stock of the Subsidiary shall be cancelled and no
consideration issued in respect thereof;
RESOLVED FURTHER, that, by virtue of the merger and without any
action on the part of the holders thereof, each issued and outstanding
share of capital stock of the Company shall remain unchanged and continue
to be such issued and outstanding share of capital stock of the Company;
RESOLVED FURTHER, that the company change its name to SEQUUS
Pharmaceuticals, Inc. upon the merger of the Subsidiary with and into the
Company;
RESOLVED FURTHER, that this Company shall cause to be executed and
filed and/or recorded the documents prescribed by the laws of the State of
Delaware and by the laws of any other appropriate jurisdiction and will
cause to be performed all necessary acts within the State of Delaware and
within any other appropriate jurisdiction for the purpose of effecting the
foregoing resolutions;
RESOLVED FURTHER, that the officers of the Company be, and each of
them, singly and not jointly, hereby is, authorized and directed, in the
name and on behalf of the Company, to take any action and to execute and
deliver any instrument, document, certificate, or agreement appropriate or
desirable to carry out the intent and purposes of the foregoing
resolutions, and such action, execution and delivery have been authorized
by the Board of Directors of the Company, to be conclusively evidenced by
either the taking of any such action or the execution and delivery of any
such instrument; and
RESOLVED FURTHER, that the authority and power given under the
foregoing resolutions shall be deemed retroactive and any and all acts
authorized thereunder performed prior to adoption of these resolutions be
and they hereby are, in all respects, ratified, confirmed, and approved.
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<PAGE> 21
Executed as of June 26, 1995.
LIPOSOME TECHNOLOGY, INC.,
a Delaware corporation
By: /s/ SALLY A. DAVENPORT
-----------------------------
Sally A. Davenport, Secretary
By: /s/ DONALD J. STEWART
-----------------------------
Donald J. Stewart,
Vice President, Finance
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<PAGE> 22
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF SEQUUS PHARMACEUTICALS, INC.
SEQUUS Pharmaceuticals, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows: The original
name of the corporation was Liposome Technology (Delaware), Inc. The original
Certificate of Incorporation of this corporation was filed with the Delaware
Secretary of State on February 13, 1987.
1. This Certificate of Amendment of Certificate of Incorporation amends
the Certificate of Incorporation of this corporation as set forth herein.
2. The first sentence of Section 4 of the Certificate of Incorporation of
this corporation is hereby deleted and replaced with the following:
"The total number of shares of all classes of capital stock which the
corporation shall have authority to issue is Forty- Nine Million (49,000,000)
shares comprised of Forty-Five Million (45,000,000) shares of Common Stock with
a par value of One One- Hundredth of One Cent ($.0001) per share (the "Common
Shares") and Four Million (4,000,000) shares of Preferred Stock with a par value
of One Cent ($.01) per share (the "Preferred Shares").
3. This Certificate of Amendment of Certificate of Incorporation was duly
adopted by the stockholders at the corporation's annual meeting of stockholders
in accordance with the applicable provisions of Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said SEQUUS Pharmaceuticals, Inc. has caused this
certificate to be signed by its officer duly authorized, and attested by its
Secretary, this 12th day of September, 1995.
SEQUUS PHARMACEUTICALS, INC.
By: /s/ I. CRAIG HENDERSON
-------------------------
I. Craig Henderson
Chief Executive Officer
and Chairman of the Board
ATTEST:
By: /s/ SALLY A. DAVENPORT
----------------------
Sally A. Davenport
Secretary
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<PAGE> 1
EXHIBIT 5.1
September 27, 1995
SEQUUS Pharmaceuticals, Inc.
960 Hamilton Court
Menlo Park, CA 94025
Registration Statement No. 33-58495
-----------------------------------
Ladies and Gentlemen:
We have acted as counsel to SEQUUS Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), in connection with the sale of up to 3,450,000
shares (the "Shares") of Common Stock, $.0001 par value per share (the "Common
Stock"), registered under the Securities Act of 1933, as amended, pursuant to a
Registration Statement on Form S-3 (Registration No. 33-58495) filed with the
Securities and Exchange Commission ("SEC") on April 7, 1995, as amended by
amendment number one thereto filed with the SEC on May 11, 1995, and amendment
number two thereto filed with the SEC on May 26, 1995, and as supplemented by a
prospectus supplement expected to be filed with the SEC on October 4, 1995
(collectively, the "Registration Statement"). The Shares are to be sold pursuant
to an Underwriting Agreement (the "Underwriting Agreement") among the Company
and the following as representatives of the several underwriters named in
schedule A to the Underwriting Agreement: Robertson, Stephens & Company, L.P.,
Dillon, Read & Co. Inc., Oppenheimer & Co., Inc., and Punk, Ziegel & Knoell,
L.P.
We have assumed the authenticity of all records, documents and
instruments submitted to us as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
records, documents and instruments submitted to us as copies. In rendering our
opinion, we have examined the following documents:
(a) The Restated Certificate of Incorporation of the Company certified
by the Secretary of State of the State of Delaware as of
September 21, 1995, and certified to us by an officer of the
Company as being complete and in full force and effect as of the
date of this opinion;
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SEQUUS Pharmaceuticals, Inc.
September 27, 1995 Page 2
(b) The Bylaws of the Company certified to us by an officer of the
Company as being complete and in full force and effect as of the
date of this opinion;
(c) A Certificate of the Vice President for Finance and Treasurer of
the Company: (i) attaching records certified to us as constituting
all records of proceedings and actions of the Board of Directors
of the Company, including any committee thereof, relating to the
issuance of the Shares; and (ii) certifying as to certain factual
matters;
(d) A Certificate dated September 21, 1995 from Chemical Mellon
Shareholder Services, the transfer agent for the Common Stock, as
to the number of shares of Common Stock outstanding as of September
21, 1995;
(e) The Registration Statement; and
(f) The current draft of the Underwriting Agreement.
This opinion is limited to the laws of the State of Delaware, and we
disclaim any opinion as to the laws of any other jurisdiction. We further
disclaim any opinion as to any other statute, rule, regulation, ordinance,
order or other promulgation of any other jurisdiction or any regional or local
governmental body or as to any related judicial or administrative opinion.
Based upon the foregoing and our examination of such questions of law
as we have deemed necessary or appropriate for the purpose of this opinion, and
assuming that: (i) the Registration Statement became and remains effective
during the period when the Shares are offered and sold; (ii) the Underwriting
Agreement signed by the parties thereto conforms in all material respects to
the current draft; (iii) the Shares are issued, delivered and paid for in
accordance with the terms of the Underwriting Agreement; (iv) the Public
Offering Committee of the Board of Directors of the Company approves the price
at which the Shares are sold to the Underwriters and the other terms of the
Underwriting Agreement; and (v) all applicable securities laws are complied
with, it is our opinion that the Shares, when sold by the Company, will be
legally issued, fully paid and nonassessable.
This opinion is rendered to you in connection with the Registration
Statement, and is solely for your benefit. This opinion may not be relied upon
by you for any other purpose, or
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SEQUUS Pharmaceuticals, Inc.
September 27, 1995
Page 3
relied upon by any other person, firm, corporation or other entity for any
purpose, without our prior written consent. We disclaim any obligation to
advise you of any change of law that occurs, or any facts of which we become
aware, after the date of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Heller, Ehrman, White & McAuliffe
-------------------------------------
Heller, Ehrman, White & McAuliffe
<PAGE> 1
EXHIBIT 23.2
CONSENT OF PETER J. DEHLINGER, ESQ.
I consent to the reference to my name under the caption "Experts" in the
Prospectus Supplement to the Prospectus included in the Registration Statement
on Form S-3 (Registration No. 33-58495) of SEQUUS Pharmaceuticals, Inc.
Dated: September 27, 1995
/s/ PETER J. DEHLINGER
----------------------------
Peter J. Dehlinger, Esq.
Palo Alto, California
