<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 24, 1997
REGISTRATION NO. 333-33473
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
TEXAS BIOTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3532643
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
7000 FANNIN STREET, SUITE 1920
HOUSTON, TEXAS 77030
(713) 796-8822
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
---------------------
DAVID B. MCWILLIAMS
TEXAS BIOTECHNOLOGY CORPORATION
7000 FANNIN STREET, SUITE 1920
HOUSTON, TEXAS 77030
(713) 796-8822
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
With copies to:
<TABLE>
<S> <C>
ROBERT G. REEDY, ESQ. JI HOON HONG, ESQ.
PORTER & HEDGES, L.L.P. SHEARMAN & STERLING
700 LOUISIANA, SUITE 3500 599 LEXINGTON AVENUE
HOUSTON, TEXAS 77002 NEW YORK, NEW YORK 10022
(713) 226-0600 (212) 848-4000
</TABLE>
Approximate date of commencement of proposed sale to the public: as soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant estimates that expenses in connection with the offering
described in this Registration Statement will be as follows:
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<S> <C>
Commission registration fee................................. $ 9,910
National Association of Securities Dealers, Inc. fee........ 3,344
AMEX listing fees........................................... 17,500
Legal fees and expenses..................................... 150,000
Accounting fees and expenses................................ 50,000
Printing expenses........................................... 100,000
Blue sky fees and expenses (including legal fees)........... 10,000
Transfer agent and registrar fees and expenses.............. 5,000
Miscellaneous............................................... 4,246
--------
Total............................................. $350,000
========
</TABLE>
All such expenses are estimated except for the Commission registration fee,
the National Association of Securities Dealers, Inc. fee and the AMEX listing
fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the DGCL permits a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action.
In an action brought to obtain a judgment in the corporation's favor,
whether by the corporation itself or derivatively by a stockholder, the
corporation may only indemnify for expenses, including attorney's fees, actually
and reasonably incurred in connection with the defense or settlement of such
action, and the corporation may not indemnify for amounts paid in satisfaction
of a judgment or in settlement of the claim. In any such action, no
indemnification may be paid in respect of any claim, issue or matter as to which
such person shall have been adjudged liable to the corporation except as
otherwise approved by the Delaware Court of Chancery or the court in which the
claim was brought. In any other type of proceeding, the indemnification may
extend to judgments, fines and amounts paid in settlement, actually and
reasonably incurred in connection with such other proceeding, as well as to
expenses (including attorneys' fees).
The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation and, in the
case of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful. There are additional limitations applicable to
criminal actions and to actions brought by or in the name of the corporation.
The determination as to whether a person seeking indemnification has met the
required standard of conduct is to be made (i) by a majority vote of a quorum of
disinterested members of the board of directors, (ii) by independent legal
counsel in a written opinion, if such a quorum does not exist or if the
disinterested directors so direct, or (iii) by the stockholders.
As permitted by the DGCL, the Company's Bylaws provide that it will
indemnify the directors, officers, employees and agents of the Company against
certain liabilities that they may incur in their capacities as directors,
officers, employees and agents. Furthermore, the Company's Certificate of
Incorporation, as
II-1
<PAGE> 3
amended, indemnifies the directors, officers, employees, and agents of the
Company to the maximum extent permitted by the DGCL. The Company has also
entered into Indemnification Agreements with its officers and directors
providing for indemnification to the maximum extent permitted under the DGCL.
The Company has director and officer liability insurance policies that provide
coverage of up to $5.0 million except that no current coverage is provided for
any liabilities arising from the existing lawsuits. The existing lawsuits are
covered under prior policies.
ITEM 16. EXHIBITS
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<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1+ -- Form of Underwriting Agreement
2.1* -- Plan and Agreement of Merger, dated June 17, 1994, among
the Company, TBC Acquisition Company No. 1 and certain
major shareholders of ImmunoPharmaceutics, Inc.
(Incorporated by reference to Exhibit A to the Company's
Form 8-K (File No. 0-20117) filed with the Commission on
October 5, 1994, as amended.)
4.1 -- Article Fourth and Ninth of the Certificate of
Incorporation, as amended (Incorporated by reference to
Exhibit 3.1 to the Company's Form 10 (File No. 0-20117)
effective June 26, 1992, as amended.)
4.2 -- Article Fourth of the Amendment to the Certificate of
Incorporation dated November 30, 1993 (Incorporated by
reference to Exhibit 3.4 to the Company's Form 10-Q (File
No. 0-20117) filed with the Commission on November 14,
1994.)
4.3 -- Article Fourth of the Amendment to the Certificate of
Incorporation dated May 20, 1994 (Incorporated by
reference to Exhibit 3.5 to the Company's Form 10-Q (File
No. 0-20117) filed with the Commission on November 14,
1994.)
4.4 -- Article Fourth of the Certificate of Amendment of
Certificate of Incorporation (Incorporated by reference
to Exhibit 3.6 to the Company's Form 10-Q (File No.
1-12574) for the quarter ended June 30, 1996.)
4.5 -- Article II of the Amended and Restated By-laws
(Incorporated by reference to Exhibit 3.7 to the
Company's Form 10-Q (File No. 1-12574) for the quarter
ended September 30, 1996.)
5+ -- Opinion of Porter & Hedges, L.L.P. with respect to
legality of the securities, including consent.
23.1++ -- Consent of KPMG Peat Marwick LLP
23.2+ -- Consent of Porter & Hedges, L.L.P. (included in Exhibit
5)
23.3++ -- Consent of Dressler, Rockey, Milnamow & Katz, Ltd.
24++ -- Power of Attorney
27.1 -- Financial Data Schedule for 1996 (Incorporated by
reference to Exhibit 27 to the Company's Form 10-K for
the year ended December 31, 1996.)
27.2 -- Financial Data Schedule for the six months ended June 30,
1997 (Incorporated by reference to Exhibit 27 to the
Company's Form 10-Q for the quarter period ended June 30,
1997.)
</TABLE>
- ---------------
+ Filed herewith.
++ Previously filed.
* The Company has omitted certain portions of this agreement in reliance on
Rule 24b-2 under the Securities and Exchange Act of 1934, as amended.
II-2
<PAGE> 4
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned Registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act, the information omitted from
the form of prospectus filed as part of a registration statement in reliance
upon Rule 430A and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of the registration statement as of the time it was declared
effective; and (2) for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston and State of Texas on the 24th day of
September, 1997.
TEXAS BIOTECHNOLOGY CORPORATION
By: /s/ DAVID B. MCWILLIAMS
----------------------------------
David B. McWilliams
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act, Amendment No. 2 to this
Registration Statement has been signed below by the following persons and in the
capacities indicated on the 24th day of September, 1997.
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SIGNATURE TITLE
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<C> <C>
* Director, Chairman of the Board of Directors
- -----------------------------------------------------
John M. Pietruski
* Director, President and Chief Executive
- ----------------------------------------------------- Officer
David B. McWilliams (Principal Executive Officer)
* Director, Vice President of Research
- -----------------------------------------------------
Richard A.F. Dixon, Ph.D.
* Vice President of Administration
- ----------------------------------------------------- Secretary and Treasurer
Stephen L. Mueller (Principal Financial and Accounting Officer)
* Director and Chairman of the
- ----------------------------------------------------- Scientific Advisory Board
James T. Willerson, M.D.
* Director
- -----------------------------------------------------
Frank C. Carlucci
* Director
- -----------------------------------------------------
Rita R. Colwell, Ph.D., D.Sc.
* Director
- -----------------------------------------------------
Robert J. Cruikshank
* Director
- -----------------------------------------------------
James A. Thomson, Ph.D.
*By: /s/ STEPHEN L. MUELLER
------------------------------------------------
Individually and as attorney in fact
</TABLE>
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<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1+ -- Form of Underwriting Agreement
2.1* -- Plan and Agreement of Merger, dated June 17, 1994, among
the Company, TBC Acquisition Company No. 1 and certain
major shareholders of ImmunoPharmaceutics, Inc.
(Incorporated by reference to Exhibit A to the Company's
Form 8-K (File No. 0-20117) filed with the Commission on
October 5, 1994, as amended.)
4.1 -- Article Fourth and Ninth of the Certificate of
Incorporation, as amended (Incorporated by reference to
Exhibit 3.1 to the Company's Form 10 (File No. 0-20117)
effective June 26, 1992, as amended.)
4.2 -- Article Fourth of the Amendment to the Certificate of
Incorporation dated November 30, 1993 (Incorporated by
reference to Exhibit 3.4 to the Company's Form 10-Q (File
No. 0-20117) filed with the Commission on November 14,
1994.)
4.3 -- Article Fourth of the Amendment to the Certificate of
Incorporation dated May 20, 1994 (Incorporated by
reference to Exhibit 3.5 to the Company's Form 10-Q (File
No. 0-20117) filed with the Commission on November 14,
1994.)
4.4 -- Article Fourth of the Certificate of Amendment of
Certificate of Incorporation (Incorporated by reference
to Exhibit 3.6 to the Company's Form 10-Q (File No.
1-12574) for the quarter ended June 30, 1996.)
4.5 -- Article II of the Amended and Restated By-laws
(Incorporated by reference to Exhibit 3.7 to the
Company's Form 10-Q (File No. 1-12574) for the quarter
ended September 30, 1996.)
5+ -- Opinion of Porter & Hedges, L.L.P. with respect to
legality of the securities, including consent.
23.1++ -- Consent of KPMG Peat Marwick LLP
23.2+ -- Consent of Porter & Hedges, L.L.P. (included in Exhibit
5)
23.3++ -- Consent of Dressler, Rockey, Milnamow & Katz, Ltd.
24++ -- Power of Attorney
27.1 -- Financial Data Schedule for 1996 (Incorporated by
reference to Exhibit 27 to the Company's Form 10-K for
the year ended December 31, 1996.)
27.2 -- Financial Data Schedule for the six months ended June 30,
1997 (Incorporated by reference to Exhibit 27 to the
Company's Form 10-Q for the quarter period ended June 30,
1997.)
</TABLE>
- ---------------
+ Filed herewith.
++ Previously filed.
* The Company has omitted certain portions of this agreement in reliance on
Rule 24b-2 under the Securities and Exchange Act of 1934, as amended.
<PAGE> 1
EXHIBIT 1.1
S&S DRAFT
9/19/97
5,000,000 SHARES
TEXAS BIOTECHNOLOGY CORPORATION
COMMON STOCK
($.005 PAR VALUE)
UNDERWRITING AGREEMENT
September o, 1997
LEHMAN BROTHERS INC.,
PAINEWEBBER INCORPORATED
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Texas Biotechnology Corporation, a Delaware corporation (the
"Company"), proposes to sell 5,000,000 shares (the "Firm Stock") of the
Company's Common Stock, par value $.005 per share (the "Common Stock"). In
addition, the Company proposes to grant to the Underwriters named in Schedule 1
hereto (the "Underwriters") an option to purchase up to an additional 750,000
shares of the Common Stock on the terms and for the purposes set forth in
Section 2 (the "Option Stock"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "Stock." This is to confirm
the agreement concerning the purchase of the Stock from the Company by the
Underwriters.
1. Representations, Warranties and Agreements of the
Company. The Company represents, warrants and agrees that:
(a) A registration statement on Form S-3 (File No.
333-33473), with respect to the Stock has (i) been prepared by the
Company in conformity with the requirements of the United States
Securities Act of 1933 (the "Securities Act") and the rules and
Draft: September 19, 1997
<PAGE> 2
2
regulations (the "Rules and Regulations") of the United States
Securities and Exchange Commission (the "Commission") thereunder, (ii)
been filed with the Commission under the Securities Act and (iii)
become effective under the Securities Act. If any post-effective
amendment to such registration statement has been filed with the
Commission prior to the execution and delivery of this agreement, the
most recent such amendment has been declared effective by the
Commission. Copies of such registration statement and all amendments
thereto, including post-effective amendments, if any, have been
delivered by the Company to you as the representatives (the
"Representatives") of the Underwriters. As used in this Agreement,
"Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time; "Preliminary Prospectus"
means each prospectus included in such registration statement, or
amendments thereof, before it became effective under the Securities
Act and any prospectus filed with the Commission by the Company with
the consent of the Representatives pursuant to Rule 424(a) of the
Rules and Regulations; "Registration Statement" means such
registration statement, as amended at the Effective Time, including
any documents incorporated by reference therein at such time and all
information contained in the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations in
accordance with Section 5 hereof and deemed to be a part of the
registration statement as of the Effective Time pursuant to paragraph
(b) of Rule 430A of the Rules and Regulations; if the Company has
filed or files a registration statement under Rule 462(b) of the Rules
and Regulations ("Rule 462(b)") to register additional shares (a
"462(b) Registration Statement"), then, after the filing of such Rule
462(b) Registration Statement, the term "Registration Statement" shall
be deemed to include the 462(b) Registration Statement; and
"Prospectus" means such final prospectus, as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Rules and Regulations. Reference made herein to any Preliminary
Prospectus or to the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the date of such
Preliminary Prospectus or the Prospectus, as the case may be, and any
reference to any amendment or supplement to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include any document
filed under the United States Securities Exchange Act of 1934 (the
"Exchange Act") after the date of such Preliminary Prospectus or the
Prospectus, as the case may be, and incorporated by reference in such
Preliminary Prospectus or the Prospectus, as the case may be; and any
reference to any amendment to the Registration Statement shall be
deemed to include any annual report of the Company filed with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
after the Effective Time that is incorporated by reference in the
Registration Statement. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
Draft: September 19, 1997
<PAGE> 3
3
(b) The Company meets the requirements for use of Form
S-3 under the Securities Act, and the Registration Statement and any
Rule 462(b) Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement,
any Rule 462(b) Registration Statement or the Prospectus will, when
they become effective or are filed with the Commission, as the case
may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement, any Rule
462(b) Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that
no representation or warranty is made as to information contained in
or omitted from the Registration Statement, any Rule 462(b)
Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company through
the Representatives by or on behalf of any Underwriter specifically
for inclusion therein. There is no contract or document required to
be described in the Registration Statement and the Prospectus or to be
filed as an exhibit to the Registration Statement which is not
described or filed as required.
(c) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents become effective or
are filed with Commission, as the case may be, will conform in all
material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) The Company and each of its subsidiaries (as defined
in Section 15) have been duly incorporated and are validly existing as
corporations in good standing under their respective jurisdictions of
incorporation, are duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power
and authority necessary to own or hold their respective properties and
to conduct the businesses in which they are engaged, except
Draft: September 19, 1997
<PAGE> 4
4
where the failure to so qualify would not have a material adverse
effect on the condition (financial or other), results of operations,
business or prospects of the Company; and none of the subsidiaries of
the Company is a "significant subsidiary", as such term is defined in
Rule 405 of the Rules and Regulations.
(e) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the outstanding shares of capital
stock of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and conform to the description
thereof contained in the Prospectus. There are no preemptive rights
or other rights to subscribe for or to purchase, or any restriction
upon the voting or transfer of, any shares of capital stock of each
subsidiary of the Company pursuant to the Company's Certificate of
Incorporation, By-laws or other governing documents or any agreement
or other instrument to which the Company is a party or by which it may
be bound, except as described in the Prospectus. All of the
outstanding shares of capital stock of each subsidiary have been duly
and validly authorized and issued and are fully paid and
non-assessable and (except for directors' qualifying shares) are
owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims.
(f) The shares of the Stock to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued, fully paid and
non-assessable and not be subject to preemptive rights; and the Stock
will conform to the description thereof contained in the Prospectus.
(g) The Company has full right, corporate power and
authority to enter into this Agreement and to perform and discharge
its obligations hereunder, and this Agreement has been duly
authorized, executed and delivered by the Company.
(h) The execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such actions
result in any violation of the provisions of the charter or by-laws of
the Company or any of its subsidiaries or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets; and except for the registration of the
Stock under the Securities Act and such consents, approvals,
Draft: September 19, 1997
<PAGE> 5
5
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state or Canadian securities
laws in connection with the purchase and distribution of the Stock by
the Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby.
(i) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities
registered pursuant to any other registration statement filed by the
Company under the Securities Act (other than rights which have been
waived or satisfied).
(j) Except as described in the Prospectus, the Company
has not sold or issued any shares of Common Stock during the six-month
period preceding the date of the Prospectus, including any sales
pursuant to Rule 144A under, or Regulations D or S of, the Securities
Act, other than shares issued pursuant to employee benefit plans,
qualified stock options plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants.
(k) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since such
date, there has not been any change in the capital stock or long-term
debt of the Company (except as a result of the exercise of outstanding
options or warrants, the conversion of outstanding preferred stock or
the issuance of shares of Common Stock and warrants to purchase Common
Stock to Genentech, Inc. ("Genentech") as described in the
Prospectus) or any of its subsidiaries or any material adverse change,
or any development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus.
(l) The financial statements (including the related notes
and supporting schedules) filed as part of the Registration Statement
or included or incorporated by reference in the Prospectus present
fairly the financial condition and results of
Draft: September 19, 1997
<PAGE> 6
6
operations of the entities purported to be shown thereby, at the dates
and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated.
(m) KPMG Peat Marwick LLP, who have certified certain
financial statements of the Company, whose report appears in the
Prospectus and who have delivered the initial letter referred to in
Section 7(g) hereof, are independent public accountants as required by
the Securities Act and the Rules and Regulations during the periods
covered by the financial statements on which they reported contained
or incorporated in the Prospectus.
(n) The Company and each of its subsidiaries have good
and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially affect
the value of such property and do not materially interfere with the
use made and proposed to be made of such property by the Company and
its subsidiaries; and all real property and buildings held under lease
by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries.
(o) Except as described in the Prospectus, the Company
and each of its subsidiaries carry, or are covered by, insurance in
such amounts and covering such risks as is adequate for the conduct of
their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar
businesses in similar industries.
(p) Except as described in the Prospectus, the Company
and each of its subsidiaries own or possess adequate licenses or other
rights to use all material patents (or foreign equivalents), patent
applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights and licenses
necessary for the conduct of their respective businesses and have,
except as described in the Prospectus, no reason to believe that the
conduct of their respective businesses will conflict with, and have
not received any notice of any claim of conflict with, any such rights
of others, except for such conflicts that would not have a material
adverse effect on the condition (financial or other), results of
operations, business or prospects of the Company.
Draft: September 19, 1997
<PAGE> 7
7
(q) Except as described in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property or assets of
the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, might
have a material adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(r) The conditions for use of Form S-3, as set forth in
the General Instructions thereto, have been satisfied.
(s) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed
as exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations.
(t) No relationship, direct or indirect, exists between
or among the Company on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand,
which is required to be described in the Prospectus which is not so
described.
(u) No labor disturbance by the employees of the Company
exists or, to the knowledge of the Company, is imminent which might be
expected to have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries.
(v) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in Section 4043 of ERISA) for which the Company would have
any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder
(the "Code"); and each "pension plan" for which the Company would have
any liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
Draft: September 19, 1997
<PAGE> 8
8
(w) The Company has filed all federal, state and local
income and franchise tax returns required to be filed through the date
hereof and has paid all taxes due thereon except, in each case, for
those contested in good faith, and no tax deficiency has been
determined adversely to the Company or any of its subsidiaries which
has had (nor does the Company have any knowledge of any tax deficiency
which, if determined adversely to the Company or any of its
subsidiaries, might have) a material adverse effect on the
consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries.
(x) Since the date as of which information is given in
the Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities (except pursuant to the exercise of outstanding options
and warrants, the conversion of outstanding preferred stock, or the
issuance of shares of Common Stock and warrants to purchase Common
Stock to Genentech as described in the Prospectus), (ii) incurred any
liability or obligation, direct or contingent, other than liabilities
and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary
course of business or (iv) declared or paid any dividend on its
Common Stock.
(y) The Company (i) makes and keeps accurate books and
records and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing
assets at reasonable intervals.
(z) Neither the Company nor any of its subsidiaries is
(i) in violation of its Certificate of Incorporation or By-laws, (ii)
is in default in any respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets is
subject or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to which it or
its property or assets may be subject or has failed to obtain any
material license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or
to the conduct of its business, except where such default, violation or
failure would not have a material adverse effect on the condition
(financial or other), results of operations, business or prospects of
the Company.
Draft: September 19, 1997
<PAGE> 9
9
(aa) Neither the Company nor any of its subsidiaries, nor
any director, officer, agent, employee or other person associated with
or acting on behalf of the Company or any of its subsidiaries, has
used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political
activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(bb) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of
toxic wastes, medical wastes, hazardous wastes or hazardous substances
by the Company or any of its subsidiaries (or, to the knowledge of the
Company, any of their predecessors in interest) at, upon or from any
of the property now or previously owned or leased by the Company or
its subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or
remedial action which would not have, or could not be reasonably
likely to have, singularly or in the aggregate with all such
violations and remedial actions, a material adverse effect on the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries; there
has been no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to
or caused by the Company or any of its subsidiaries or with respect to
which the Company or any of its subsidiaries have knowledge, except
for any such spill, discharge, leak, emission, injection, escape,
dumping or release which would not have or would not be reasonably
likely to have, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and
releases, a material adverse effect on the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; and the terms
"hazardous wastes", "toxic wastes", "hazardous substances" and
"medical wastes" shall have the meanings specified in any applicable
local, state, federal and foreign laws or regulations with respect to
environmental protection.
(cc) Neither the Company nor any subsidiary is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
Draft: September 19, 1997
<PAGE> 10
10
(ad) The Common Stock of the Company is quoted on the
American Stock Exchange under the symbol TXB, and the Stock is
approved for listing on the American Stock Exchange, subject only to
prior notice of issuance.
(ae) The Company has not taken, directly or indirectly,
any action designed to cause or result in, or which has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate
the sale or resale of the Stock.
2. Purchase of the Stock by the Underwriters. On the
basis of the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, the Company agrees to sell 5,000,000
shares of the Firm Stock to the several Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase the number of
shares of the Firm Stock set opposite that Underwriter's name in Schedule 1
hereto. The respective purchase obligations of the Underwriters with respect
to the Firm Stock shall be rounded among the Underwriters to avoid fractional
shares, as the Representatives may determine.
In addition, the Company hereby grants to the Underwriters an
option to purchase up to 750,000 shares of Option Stock. Such option is
granted solely for the purpose of covering over-allotments in the sale of Firm
Stock and is exercisable as provided in Section 4 hereof. Shares of Option
Stock shall be purchased severally for the account of the Underwriters in
proportion to the number of shares of Firm Stock set opposite the name of such
Underwriters in Schedule 1 hereto. The respective purchase obligations of each
Underwriter with respect to the Option Stock shall be adjusted by the
Representatives so that no Underwriter shall be obligated to purchase Option
Stock other than in 100 share amounts. The price of ____ shares of the Firm
Stock and any Option Stock shall be $_____ per share. The price of ______
shares of Firm Stock to be sold in the offering by the Underwriters to
SmithKline Beecham plc, an English public limited company, shall be $_____ per
share.
The Company shall not be obligated to deliver any of the Stock
to be delivered on the First Delivery Date or the Second Delivery Date (as
hereinafter defined), as the case may be, except upon payment for all the Stock
to be purchased on such Delivery Date as provided herein.
3. Offering of Stock by the Underwriters. Upon
authorization by the Representatives of the release of the Firm Stock, the
several Underwriters propose to offer the Firm Stock for sale upon the terms
and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Stock. Delivery of
and payment for the Firm Stock shall be made at the office of Shearman &
Sterling, at 10:00 A.M., New York
Draft: September 19, 1997
<PAGE> 11
11
time, on the [THIRD] [FOURTH] full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Representatives and the Company. This date and time are sometimes
referred to as the "First Delivery Date." On the First Delivery Date, the
Company shall deliver or cause to be delivered certificates representing the
Firm Stock to the Representatives for the account of each Underwriter against
payment to the Company of the purchase price by wire transfer of immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Firm Stock shall
be registered in such names and in such denominations as the Representatives
shall request in writing not less than two full business days prior to the
First Delivery Date. For the purpose of expediting the checking and packaging
of the certificates for the Firm Stock, the Company shall make the certificates
representing the Firm Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York time, on the business
day prior to the First Delivery Date.
At any time on or before the forty-fifth day after the date of
this Agreement the option granted in Section 2 may be exercised by written
notice being given to the Company by the Representatives. Such notice shall
set forth the aggregate number of shares of Option Stock as to which the option
is being exercised, the names in which the shares of Option Stock are to be
registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been
exercised nor later than the fifth business day after the date on which the
option shall have been exercised. The date and time the shares of Option Stock
are delivered are sometimes referred to as the "Second Delivery Date" and the
First Delivery Date and the Second Delivery Date are sometimes each referred to
as a "Delivery Date."
Delivery of and payment for the Option Stock shall be made at
the place specified in the first sentence of the first paragraph of this
Section 4 (or at such other place as shall be determined by agreement between
the Representatives and the Company) at 10:00 A.M., New York time, on the
Second Delivery Date. On the Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Stock to the
Representatives for the account of each Underwriter against payment to the
Company of the purchase price by wire transfer of immediately available funds.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Option Stock shall be registered in
such names and in such denominations as the Representatives shall request in
the aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Stock, the Company shall make the
certificates representing the Option Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York time,
on the business day prior to the Second Delivery Date.
Draft: September 19, 1997
<PAGE> 12
12
5. Further Agreements of the Company. The Company
agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Securities Act; to make no
further amendment or any supplement to the Registration Statement or to
the Prospectus prior to the last Delivery Date except as permitted
herein; to advise the Representatives, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement (including any filing under Rule 462(b)) has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with
copies thereof; to file promptly all reports and any definitive proxy
or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Stock; to advise the Representatives, promptly
after it receives notice thereof, of the issuance by the Commission of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional
information; and, in the event of the issuance of any stop order or of
any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, to
use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives
and to counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith (including all documents incorporated by reference
into the Prospectus pursuant to Form S-3 under the 1933 Act);
(c) To deliver promptly to the Representatives such
number of the following documents as the Representatives shall
reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the Commission and each amendment
thereto (including all documents incorporated by reference into the
Prospectus pursuant to Form S-3 under the 1933 Act); and (ii) each
Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus and if the delivery of a prospectus is
Draft: September 19, 1997
<PAGE> 13
13
required at any time after the Effective Time in connection with the
offering or sale of the Stock or any other securities relating thereto
and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus
in order to comply with the Securities Act or the Exchange Act, to
notify the Representatives and, upon their request, to file such
document and to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as the Representatives
may from time to time reasonably request of an amended or supplemented
Prospectus which will correct such statement or omission or effect
such compliance;
(d) To file promptly with the Commission any amendment to
the Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to
the Registration Statement or supplement to the Prospectus, any
document incorporated by reference in the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Representatives and counsel for the Underwriters and
obtain the consent of the Representatives to the filing, which consent
shall not be unreasonably withheld;
(f) As soon as practicable after the Effective Date (but
in any event not later than 45 days after the end of the Company's
fiscal quarter in which the first anniversary of the Effective Date
occurs), to make generally available to the Company's security holders
and to deliver to the Representatives an earnings statement of the
Company and its subsidiaries (which need not be audited) complying
with Section 11(a) of the Securities Act and the Rules and
Regulations;
(g) For a period of five years following the Effective
Date, to furnish to the Representatives copies of all materials
furnished by the Company to its shareholders and all public reports
and all reports and financial statements furnished by the Company to
the principal national securities exchange upon which the Common Stock
may be listed pursuant to requirements of or agreements with such
exchange or to the Commission pursuant to the Exchange Act or any rule
or regulation of the Commission thereunder;
Draft: September 19, 1997
<PAGE> 14
14
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for
offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Stock; provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or
to file a general consent to service of process in any jurisdiction;
(i) For a period of 90 days after the date of the
Prospectus not to offer, sell, contract to sell, or grant any option
to purchase or otherwise dispose of, directly or indirectly, any
shares of capital stock of the Company or any securities convertible
into or exercisable or exchangeable for any capital stock of the
Company, except (i) for the shares of Common Stock offered hereby,
(ii) with the prior written consent of Lehman Brothers Inc., (iii) for
the Company's issuance of shares of Common Stock upon the exercise of
options or outstanding warrants or the conversion of the 5% Cumulative
Convertible Preferred Stock , (iv) for the Company's grant of options
to purchase shares of Common Stock or (v) for the Company's issuance
of shares of Common Stock and warrants to purchase shares of Common
Stock to Genentech, as described in the Prospectus;
(j) Prior to the Effective Date, to apply for the listing
of the Stock on the American Stock Exchange and to use its best
efforts to complete that listing, subject only to official notice of
issuance, prior to the First Delivery Date.
(k) To apply the net proceeds from the sale of the Stock
being sold by the Company as set forth in the Prospectus; and
(l) To take such steps as shall be necessary to ensure
that neither the Company nor any subsidiary shall become an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
6. Expenses. The Company agrees to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus or any document incorporated by reference therein, all as provided
in this Agreement; (d) the costs of producing and distributing this Agreement
and any other related documents in connection with
Draft: September 19, 1997
<PAGE> 15
15
the offering, purchase, sale and delivery of the Stock; (e) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of sale of the Stock; (f) any applicable
American Stock Exchange listing or other fees; (g) the fees and expenses of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 5(h) and of preparing, printing and distributing a Blue Sky
Memorandum (including related fees and expenses of counsel to the
Underwriters); and (h) all other costs and expenses incident to the performance
of the obligations of the Company under this Agreement; provided that, except
as provided in this Section 6 and in Section 11 the Underwriters shall pay
their own costs and expenses, including the costs and expenses of their
counsel, any transfer taxes on the Stock which they may sell and the expenses
of advertising any offering of the Stock made by the Underwriters.
7. Conditions of Underwriters' Obligations. The
respective obligations of the Underwriters hereunder are subject to the
accuracy, as of the date hereof and on each Delivery Date (as if made on such
date), of the representations and warranties of the Company contained herein,
to the performance by the Company of its obligations hereunder, and to each of
the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending
the effectiveness of the Registration Statement, any Rule 462(b)
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus
or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to
the Company on or prior to such Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of
Shearman & Sterling, counsel for the Underwriters, is material or
omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement,
the Stock, the Registration Statement and the Prospectus, and all
other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material
respects to counsel for the Underwriters, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
Draft: September 19, 1997
<PAGE> 16
16
(d) On each Delivery Date, there shall have been
furnished to you the written opinion of Porter & Hedges, LLP, counsel
to the Company, addressed to the Underwriters and dated such Delivery
Date, in form and substance reasonably satisfactory to the
Representatives and their counsel, to the effect that:
(i) The Company and each of its subsidiaries have
been duly incorporated and are validly existing as
corporations in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified
to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their
respective businesses requires such qualification except where
the failure to be so licensed or qualified would not have a
material adverse effect on the condition (financial or other),
results of operations, business or prospects of the Company;
the Company and each of its subsidiaries have all power and
authority necessary to own or hold their respective properties
and conduct the businesses in which they are engaged;
(ii) The Company has an authorized capitalization
as set forth in the Prospectus, and all of the outstanding
shares of capital stock of the Company have been, and the
Stock, when issued and delivered to and paid for by the
Underwriters, will be duly and validly authorized and issued,
fully paid and non-assessable and conform to the description
thereof contained in the Prospectus; and all the outstanding
shares of capital stock of each subsidiary of the Company have
been duly and validly authorized and issued and are fully paid
and non-assessable and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims;
(iii) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of the Stock pursuant to the
Company's charter or by-laws or any agreement or other
instrument known to such counsel;
(iv) To such counsel's knowledge there are no
legal or governmental proceedings pending or threatened
against the Company or any of its subsidiaries or any of their
respective properties or assets which are required to be
described in the Prospectus but are not so described;
(v) The Registration Statement, including any
Rule 462(b) Registration Statement and all post-effective
amendments thereto, if any, have
Draft: September 19, 1997
<PAGE> 17
17
been declared effective under the Securities Act as of the
date and time specified in such opinion, the Prospectus was
filed with the Commission pursuant to the subparagraph of Rule
424(b) of the Rules and Regulations specified in such opinion
on the date specified therein and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued and, to the knowledge
of such counsel, no proceeding for that purpose is pending or
threatened by the Commission;
(vi) The Registration Statement, including any
Rule 462(b) Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company
prior to such Delivery Date (other than the financial
statements and related schedules and other financial and
statistical data contained or incorporated by reference
therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the
requirements of the Securities Act and the Rules and
Regulations, and the documents incorporated by reference in
the Prospectus and any further amendment or supplement to any
such incorporated document made by the Company prior to such
Delivery Date (other than the financial statements and related
schedules and other financial and statistical data contained
or incorporated by reference therein, as to which such counsel
need express no opinion), when they became effective or were
filed with the Commission, as the case may be, complied as to
form in all material respects with the requirements of
the Exchange Act and the rules and regulations of the
Commission promulgated thereunder;
(vii) To such counsel's knowledge, there are no
contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules
and Regulations which have not been described or filed as
exhibits to the Registration Statement or incorporated therein
by reference as permitted by the Rules and Regulations;
(viii) This Agreement has been duly authorized,
executed and delivered by the Company;
(ix) The issue and sale of the shares of Stock
being delivered on such Delivery Date by the Company and the
compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument
Draft: September 19, 1997
<PAGE> 18
18
known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the properties or
assets of the Company or any of its subsidiaries is subject,
which violation would have a material adverse effect on the
condition (financial or other), results of operations,
business or prospects of the Company or its Subsidiaries, nor
will such actions result in any violation of the provisions of
(i) the charter or by-laws of the Company or any of its
subsidiaries or (ii) any statute or any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of
subsidiaries or any of their properties or assets which
violation, in the case of clause (ii), would have a material
adverse effect on the condition (financial or other), results
of operations, business or prospects of the Company or its
subsidiaries; and, except for the registration of the Stock
under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state or
Canadian securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required
for the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions
contemplated hereby;
(x) Except as described in the Prospectus, to
such counsel's knowledge, there are no contracts, agreements
or understandings between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in
the securities registered pursuant to the Registration
Statement or in any securities registered pursuant to any other
registration statement filed by the Company under the
Securities Act (other than rights which have been waived or
satisfied); and
(xi) The statements under the captions "Prospectus
Summary -- The Company -- Licensing and Collaboration
Agreements," "Risk Factors -- Shares Eligible for Future Sale;
Registration Rights." "Business -- The Company -- Licensing
and Collaboration Agreements," "-- Research and Development
Collaborations and Licensing Agreements," "-- Government
Regulation," "-- Legal Proceedings" and "-- Hazardous
Materials and Environmental Matters" in the Prospectus and
Registration Statement, insofar as such statements constitute
a summary of the legal matters or documents referred to
therein, correctly summarize such legal matters and documents
in all material respects.
In rendering such opinion, such counsel may (i) state
that its opinion is limited to matters governed by the federal laws of
the United States of America, the
Draft: September 19, 1997
<PAGE> 19
19
laws of the State of Texas and the General Corporation Law of the
State of Delaware and that such counsel is not admitted in the State
of Delaware. Such counsel shall also state in its opinion, in form
and substance satisfactory to the Representatives, to the effect that
(x) such counsel has acted as counsel to the Company in connection
with the preparation of the Registration Statement (although the
Company is also represented with respect to certain intellectual
property matters by other outside counsel), (y) such counsel has
participated in conferences with officers and other representatives of
the Company, other counsel for the Company, representatives of the
independent public accountants of the Company and the representatives
of the Underwriters and (z) based on the foregoing, no facts have come
to the attention of such counsel which lead it to believe that (I) the
Registration Statement, as of the Effective Date, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, or (II) that the Prospectus
contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading or (III) any document incorporated by
reference in the Prospectus or any further amendment or supplement to
any such incorporated document made by the Company prior to such
Delivery Date, when they became effective or were filed with the
Commission, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading (except in any case referred to
in I, II or III above, for the financial statements other financial
and statistical data contained or incorporated by reference therein
for which such counsel need express no opinion). The foregoing
opinion may be qualified by a statement to the effect that such
counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus except as set forth in
paragraph (xi) above.
(e) On each Delivery Date, there have been furnished to
you the written opinion of Dressler, Goldsmith, Milnamow & Katz, Ltd.,
intellectual property counsel to the Company, addressed to the
Underwriters and dated such Delivery Date, in form and substance
reasonably satisfactory to the Representatives and their counsel, to
the effect of the form of opinion appearing as Schedule 2 hereof.
(f) The Representatives shall have received from Shearman
& Sterling, counsel for the Underwriters, such opinion or opinions,
dated such Delivery Date, with respect to the issuance and sale of the
Stock, the Registration Statement, the Prospectus and other related
matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
Draft: September 19, 1997
<PAGE> 20
20
(g) At the time of execution of this Agreement, the
Representatives shall have received from KPMG Peat Marwick LLP a
letter, in form and substance satisfactory to the Representatives,
addressed to the Underwriters and dated the date hereof (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior to
the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings.
(h) With respect to the letter of KPMG Peat Marwick LLP
referred to in the preceding paragraph and delivered to the
Representatives concurrently with the execution of this Agreement (the
"initial letter"), the Company shall have furnished to the
Representatives a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated such Delivery
Date (i) confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date of the bring-down letter (or, with respect to
matters involving changes or developments since the respective dates
as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date of
the bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by the
initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(i) The Company shall have furnished to the
Representatives a certificate, dated such Delivery Date, of its
President and its Vice President of Administration, Treasurer and
Secretary stating that:
(i) The representations, warranties and
agreements of the Company in Section 1 are true and correct as
of such Delivery Date; the Company has complied with all its
agreements contained herein; and the conditions set forth in
Sections 7(a) and 7(j) have been fulfilled; and
(ii) They have examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the
Effective Date, the Registration Statement and Prospectus did
not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated
therein or
Draft: September 19, 1997
<PAGE> 21
21
necessary to make the statements therein not misleading, and
(B) since the Effective Date no event has occurred which
should have been set forth in a supplement or amendment to the
Registration Statement or the Prospectus.
(j) (i) Neither the Company nor any of its subsidiaries
shall have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or (ii) since such
date there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause
(i) or (ii), is, in the judgment of the Representatives, so material
and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Stock being delivered on
such Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(k) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market, or trading
in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum prices
shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United States or
there shall have been a declaration of a national emergency or war by
the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the judgment of a
majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the
Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(l) The American Stock Exchange shall have approved the
Stock for listing, subject only to official notice of issuance.
Draft: September 19, 1997
<PAGE> 22
22
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Stock), to which that Underwriter,
officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto or (B) in any blue sky application or other document
prepared or executed by the Company (or based upon any written information
furnished by the Company) specifically for the purpose of qualifying any or all
of the Stock under the securities laws of any state or other jurisdiction (any
such application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (iii) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Stock or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action arising
out of or based upon matters covered by clause (i) or (ii) above (provided that
the Company shall not be liable under this clause (iii) to the extent that it
is determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, liability or action resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such Underwriter
through its gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that Underwriter,
officer, employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; 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, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or in
any such amendment or supplement, or in any Blue Sky Application, in reliance
upon and in conformity with written information concerning such Underwriter
furnished to the Company through the Representatives by or on behalf of
Draft: September 19, 1997
<PAGE> 23
23
any Underwriter specifically for inclusion therein. The foregoing indemnity
agreement is in addition to any liability which the Company may otherwise have
to any Underwriter or to any officer, employee or controlling person of that
Underwriter.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of
its directors, and each person, if any, who controls the Company within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company or any such director, officer or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or in
any Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of that Underwriter specifically for inclusion
therein, and shall reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company or any such director, officer, employee or
controlling person.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the indemnifying
party shall not be
Draft: September 19, 1997
<PAGE> 24
24
liable to the indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that the Representatives shall have the right to employ counsel to
represent jointly the Representatives and those other Underwriters and their
respective officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Underwriters against the Company under this Section 8 if, in the
reasonable judgment of the Representatives, it is advisable for the
Representatives and those Underwriters, officers, employees and controlling
persons to be jointly represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the Company. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if
there be a final judgment of the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Stock or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Stock purchased under this Agreement (before deducting
expenses) received by the Company, on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
shares of the Stock purchased
Draft: September 19, 1997
<PAGE> 25
25
under this Agreement, on the other hand, bear to the total gross proceeds from
the offering of the shares of the Stock under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section shall be deemed to
include, for purposes of this Section 8(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Stock underwritten
by it and distributed to the public was offered to the public exceeds the
amount of any damages which such Underwriter has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 8(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Underwriters severally confirm that the
statements with respect to the public offering of the Stock by the Underwriters
set forth on the cover page of, the legend concerning stabilizing transactions
on the inside front cover page of and the information in the table and
paragraphs 2, 3, 7 and 8 appearing under the caption "Underwriting" in, the
Prospectus are correct; the Underwriters severally confirm and the Company
acknowledges that these statements and information constitute the only
information concerning such Underwriters furnished in writing to the Company
by or on behalf of the Underwriters specifically for inclusion in the
Registration Statement and the Prospectus.
9. Defaulting Underwriters. If, on either Delivery
Date, any Underwriter defaults in the performance of its obligations under this
Agreement, the remaining non-defaulting Underwriters shall be obligated to
purchase the Stock which the defaulting Underwriter agreed but failed to
purchase on such Delivery Date in the respective proportions which the number
of shares of the Firm Stock set opposite the name of each remaining non-
defaulting Underwriter in Schedule 1 hereto bears to the total number of shares
of the Firm Stock set opposite the names of all the remaining non-defaulting
Underwriters in Schedule 1 hereto; provided, however, that the remaining non-
defaulting Underwriters shall not be
Draft: September 19, 1997
<PAGE> 26
26
obligated to purchase any of the Stock on such Delivery Date if the total
number of shares of the Stock which the defaulting Underwriter or Underwriters
agreed but failed to purchase on such date exceeds 9.09% of the total number of
shares of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 2. If the foregoing maximums are
exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Representatives who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the Stock to be purchased on such Delivery Date.
If the remaining Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery
Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any non-
defaulting Underwriter or the Company, except that the Company will continue to
be liable for the payment of expenses to the extent set forth in Sections 6 and
11. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule 1 hereto who, pursuant to this Section 9, purchases Firm
Stock which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company for damages caused by
its default. If other underwriters are obligated or agree to purchase the
Stock of a defaulting or withdrawing Underwriter, either the Representatives or
the Company may postpone the Delivery Date for up to seven full business days
in order to effect any changes that in the opinion of counsel for the Company
or counsel for the Underwriters may be necessary in the Registration Statement,
the Prospectus or in any other document or arrangement.
10. Termination. The obligations of the Underwriters
hereunder may be terminated by the Representatives by notice given to and
received by the Company prior to delivery of and payment for the Firm Stock if,
prior to that time, any of the events described in Sections 7(j) or 7(k) shall
have occurred or if the Underwriters shall decline to purchase the Stock for
any reason permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If (a) the
Company shall fail to tender the Stock for delivery to the Underwriters by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be fulfilled
by the Company is not fulfilled, the Company will reimburse the Underwriters
for all reasonable out-of-pocket expenses (including fees and disbursements of
counsel) incurred by
Draft: September 19, 1997
<PAGE> 27
27
the Underwriters in connection with this Agreement and the proposed purchase of
the Stock, and upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 9 by
reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
12. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three
World Financial Center, New York, New York 10285, Attention:
Syndicate Department (Fax: 212-526-6588), with a copy, in the case of
any notice pursuant to Section 11(d), to the Director of Litigation,
Office of the General Counsel, Lehman Brothers Inc., 3 World Financial
Center, 10th Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company
set forth in the Registration Statement, Attention: Stephen L.
Mueller (Fax: (713 796- 8232);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by
the Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement
given or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf
of the Representatives.
13. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters,
the Company, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any Underwriter within the meaning of
Section 15 of the Securities Act and (B) the indemnity agreement of the
Underwriters contained in Section 8(b) of this Agreement shall be deemed to be
for the benefit of directors and officers and employees of the Company,
officers of the Company who have signed the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
Draft: September 19, 1997
<PAGE> 28
28
14. Survival. The respective indemnities,
representations, warranties and agreements of the Company and the Underwriters
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Stock and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
15. Definition of the Terms "Business Day" and
"Subsidiary". For purposes of this Agreement, (a) "business day" means any day
on which the New York Stock Exchange, Inc. is open for trading and (b)
"subsidiary" has the meaning set forth in Rule 405 of the Rules and
Regulations.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.
17. Counterparts. This Agreement may be executed in one
or more counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but all such
counterparts shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
Draft: September 19, 1997
<PAGE> 29
29
If the foregoing correctly sets forth the agreement between
the Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
TEXAS BIOTECHNOLOGY CORPORATION
By
------------------------------------
David B. McWilliams
President and Chief Executive
Officer
Accepted:
LEHMAN BROTHERS INC.
PAINEWEBBER INCORPORATED
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By LEHMAN BROTHERS INC.
By
-----------------------------------
Authorized Representative
Draft: September 19, 1997
<PAGE> 30
SCHEDULE 1
<TABLE>
<CAPTION>
Number of
Underwriters Shares
- ------------ -----------
<S> <C>
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000
=========
</TABLE>
Draft: September 19, 1997
<PAGE> 31
SCHEDULE 2
FORM OF OPINION OF DRESSLER,
ROCKEY, MILNAMOW & KATZ, LTD.
(i) To the best of such counsel's knowledge, the Company owns, or
possesses adequate and enforceable rights to use, the Patents and
all other intangibles necessary for the conduct of its business as
now being conducted and as described in the Registration Statement
and Prospectus. To the best of our knowledge, neither the Company
nor any of its subsidiaries has infringed, is infringing or has
received any notice of infringement of or conflict with any
intangibles of any other person that we believe will have a
material adverse effect on the conduct of its business as now being
conducted and as described in the Registration Statement and
Prospectus. Nothing herein shall be construed as a representation
that any infringement searching or investigation has been conducted
to discover unknown intangibles of third parties.
(ii) Except as described in the Prospectus and except for processing and
examination of patent and trademark applications before
governmental bodies, there is no litigation or governmental or
other proceeding relating to the Patents or any other intangibles
necessary for the conduct of the Company's business as now being
conducted and as described in the Registration Statement and
Prospectus before any court or before or by any public body or
board pending to which the Company or its subsidiaries is a party
or threatened against the Company or any of its subsidiaries;
neither the Company nor its subsidiaries has given notice to any
third party of any claim of infringement of its patents or any
intangibles.
(iii) The statements in the Registration Statement and Prospectus under
"Business Licenses and Patents," and "Risk Factors - Uncertainty
Regarding Patents and Proprietary Information;" "Business -
Government Regulation," "Risk Factors - No Assurance of Regulatory
Approval; Need for Extensive Clinical Trials," insofar as they
purport to summarize the provisions of statutes, regulations,
contracts, agreements, patents, patent applications or other
documents therein described, have been prepared or reviewed by us
and accurately reflect the provisions purported to be summarized
and are correct in all material respects.
Draft: September 19, 1997
<PAGE> 1
September 23, 1997
Securities and Exchange Commission
Judiciary Plaza
450 5th Street, N.W.
Washington, D.C. 20549
Re: Texas Biotechnology Corporation -- Form S-3 Registration Statement
No. 333-33473 (the "Registration Statement")
Ladies and Gentlemen:
We have acted as counsel to Texas Biotechnology Corporation, a Delaware
corporation (the "Company"), in connection with the registration on Form S-3
under the Securities Act of 1933, as amended, of 5,750,000 shares of the
Company's common stock, par value $.005 per share (the "Common Stock"). In
such capacity, we have examined the certificate of incorporation, as amended,
the bylaws, and corporate proceedings of the Company, and based on such
examination and having regard for applicable legal principles, it is our
opinion that the 5,750,000 shares of Common Stock to be offered and sold
pursuant to the Registration Statement will, when sold, be validly issued,
fully-paid and nonassessable outstanding shares of Common Stock.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to the reference to our firm under the heading "Legal Matters" in
the Prospectus included in the Registration Statement.
This opinion is conditioned upon the Registration Statement being
declared effective and upon compliance by the Company with all applicable
provisions of the Securities Act of 1933, as amended, and such state securities
rules, regulations and laws as may be applicable.
Very truly yours,
/s/ PORTER & HEDGES, L.L.P.
PORTER & HEDGES, L.L.P.
