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Exhibit 1.1
GENVEC, INC.
4,000,000 SHARES OF COMMON STOCK
Underwriting Agreement
December __, 2000
J.P. Morgan Securities Inc.
UBS Warburg LLC
A.G. Edwards & Sons, Inc.
As Representatives of several
underwriters listed in Schedule I
hereto
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
GenVec, Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters listed in Schedule I hereto (the
"UNDERWRITER"), for whom you are acting as representatives (the
"REPRESENTATIVES"), an aggregate of 4,000,000 shares of Common Stock, par
value $0.001 per share, of the Company (the "UNDERWRITTEN SHARES") and, for
the sole purpose of covering over-allotments in connection with the sale of
the Underwritten Shares, at the option of the Underwriters, up to an
additional 600,000 shares of Common Stock of the Company (the "OPTION
SHARES"). The Underwritten Shares and the Option Shares are herein referred
to as the "SHARES". The shares of Common Stock of the Company to be
outstanding after giving effect to the sale of the Shares are herein referred
to as the "STOCK".
As part of the offering contemplated by this Agreement, J.P. Morgan
Securities Inc. (the "DESIGNATED UNDERWRITER") has agreed to reserve out of the
Underwritten Shares purchased by them under this Agreement, up to five percent
or 200,000 shares, for sale to the Company's directors, officers, employees and
other parties associated with the Company (collectively, "PARTICIPANTS"), as set
forth in the Prospectus (as defined herein) under the heading "Underwriting"
(the "DIRECTED SHARE PROGRAM"). The Underwritten Shares to be sold by the
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Designated Underwriter pursuant to the Directed Share Program (the "DIRECTED
SHARES") will be sold by the Designated Underwriter pursuant to this
Agreement at the public offering price. Any Directed Shares not orally
confirmed for purchase by a Participant by the end of the business day on
which this Agreement is executed will be offered to the public by the
Underwriters as set forth in the Prospectus.
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement, including a prospectus, relating to the Shares. The registration
statement as amended at the time when it shall become effective including
information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the Securities Act, is
referred to in this Agreement as the "REGISTRATION STATEMENT", and the
prospectus in the form first used to confirm sales of Shares is referred to
in this Agreement as the "PROSPECTUS". If the Company has filed an
abbreviated registration statement pursuant to Rule 462(b) under the
Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference
herein to the term "Registration Statement" shall be deemed to include such
Rule 462 Registration Statement.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Shares to
the several Underwriters as hereinafter provided, and each Underwriter, upon
the basis of the representations and warranties herein contained, but subject
to the conditions hereinafter stated, agrees to purchase, severally and not
jointly, from the Company the respective number of Underwritten Shares set
forth opposite such Underwriter's name in Schedule I hereto at a purchase
price per share (the "PURCHASE PRICE") of $______.
In addition, the Company agrees to issue and sell the Option Shares
to the several Underwriters as hereinafter provided, and the Underwriters on
the basis of the representations and warranties herein contained, but subject
to the conditions hereinafter stated, shall have the option to purchase,
severally and not jointly, from the Company up to an aggregate of 600,000
Option Shares at the Purchase Price, for the sole purpose of covering
over-allotments (if any) in the sale of Underwritten Shares by the several
Underwriters.
If any Option Shares are to be purchased, the number of Option Shares
to be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased as
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the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject, however, to
such adjustments to eliminate any fractional Shares as the Representatives in
their sole discretion shall make.
The Underwriters may exercise the option to purchase the Option
Shares at any time (but not more than once) on or before the thirtieth day
following the date of this Agreement, by written notice from the
Representatives to the Company. Such notice shall set forth the aggregate
number of Option Shares as to which the option is being exercised and the
date and time when the Option Shares are to be delivered and paid for which
may be the same date and time as the Closing Date (as hereinafter defined)
but shall not be earlier than the Closing Date nor later than the tenth full
Business Day (as hereinafter defined) after the date of such notice (unless
such time and date are postponed in accordance with the provisions of Section
9 hereof). Any such notice shall be given at least two Business Days prior to
the date and time of delivery specified therein.
2. The Company understands that the Underwriters intend (i) to
make a public offering of the Shares as soon after (A) the Registration
Statement has become effective and (B) the parties hereto have executed and
delivered this Agreement, as in the judgment of the Representatives is
advisable and (ii) initially to offer the Shares upon the terms set forth in
the Prospectus.
3. Payment for the Shares shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Representatives in the case of the Underwritten Shares, on December __, 2000,
or at such other time on the same or such other date, not later than the
fifth Business Day thereafter, as the Representatives and the Company may
agree upon in writing or, in the case of the Option Shares, on the date and
time specified by the Representatives in the written notice of the
Underwriters' election to purchase such Option Shares. The time and date of
such payment for the Underwritten Shares is referred to herein as the
"CLOSING DATE" and the time and date for such payment for the Option Shares,
if other than the Closing Date, are herein referred to as the "ADDITIONAL
CLOSING DATE". As used herein, the term "BUSINESS DAY" means any day other
than a day on which banks are permitted or required to be closed in New York
City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery
to the Representatives for the respective accounts of the several
Underwriters of the Shares to be purchased on such date registered in such
names and in such
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denominations as the Representatives shall request in writing not later than
two full Business Days prior to the Closing Date or the Additional Closing
Date, as the case may be, with any transfer taxes payable in connection with
the transfer to the Underwriters of the Shares duly paid by the Company. The
certificates for the Shares will be made available for inspection and
packaging by the Representatives at the office of J.P. Morgan Securities Inc.
set forth above not later than 1:00 P.M., New York City time, on the Business
Day prior to the Closing Date or the Additional Closing Date, as the case may
be.
4. The Company represents and warrants to each Underwriter that:
(a) no order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission, and each
preliminary prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed pursuant
to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act, and did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; PROVIDED that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Company in writing by such Underwriter through the Representatives
expressly for use therein;
(b) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Company,
threatened by the Commission; and the Registration Statement and
Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) comply, or will
comply, as the case may be, in all material respects with the
Securities Act and do not and will not, as of the applicable effective
date as to the Registration Statement and any amendment thereto and as
of the date of the Prospectus and any amendment or supplement thereto,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented, if applicable, at the Closing Date or Additional Closing
Date, as the case may be, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; except that the foregoing representations and
warranties shall not apply to statements or omissions
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in the Registration Statement or the Prospectus made in reliance
upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein;
(c) the financial statements, and the related notes thereto,
included in the Registration Statement and the Prospectus present
fairly in all material respects the financial position of the Company
as of the dates indicated and the results of its operations and changes
in its consolidated cash flows for the periods specified; said
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis, and the
supporting schedules, if any, included in the Registration Statement
present fairly in all material respects the information required to be
stated therein;
(d) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change in the capital stock or long-term debt of the Company,
or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the business,
prospects, management, financial position, stockholders' equity or
results of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus (a "MATERIAL ADVERSE CHANGE"); and
except as set forth or contemplated in the Prospectus the Company has
not entered into any transaction or agreement (whether or not in the
ordinary course of business) material to the Company;
(e) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to
own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not have
a material adverse effect on the business, prospects, management,
financial position, stockholders' equity or results of operations of
the Company (a "MATERIAL ADVERSE EFFECT");
(f) the Company has no subsidiaries;
(g) this Agreement has been duly authorized, executed and
delivered by the Company;
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(h) upon the filing of an amended and restated certificate of
incorporation with the Secretary of State of the State of Delaware, the
Company will have an authorized capitalization as set forth in the
Prospectus and such authorized capital stock will conform as to legal
matters to the description thereof set forth in the Prospectus, and all
of the outstanding shares of capital stock of the Company have been
duly authorized and validly issued, are fully-paid and non-assessable
and are not subject to any pre-emptive or similar rights; and, except
as described in or expressly contemplated by the Prospectus, there are
no outstanding rights (including, without limitation, pre-emptive
rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity
interest in the Company, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of
any capital stock of the Company, any such convertible or exchangeable
securities or any such rights, warrants or options;
(i) the Shares to be issued and sold by the Company hereunder
have been duly authorized, and, when issued and delivered to and paid
for by the Underwriters in accordance with the terms of this Agreement,
will be duly issued and will be fully paid and non-assessable and will
conform in all material respects to the descriptions thereof in the
Prospectus; and the issuance of the Shares is not subject to any
preemptive or similar rights;
(j) the Company is not, and with the giving of notice or lapse
of time or both will not be, in violation of or in default under, its
certificate of incorporation or by-laws or any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Company is a party or by which it or any of its properties is
bound, except for violations and defaults which individually and in the
aggregate are not material to the Company; the issue and sale of the
Shares and the performance by the Company of its obligations under this
Agreement and the consummation of the transactions contemplated herein
will not conflict with or result in a breach 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 is a party or by which the Company is bound or to which any
of the property or assets of the Company is subject, nor will any such
action result in any violation of the provisions of the certificate of
incorporation or the by-laws of the Company or any applicable law or
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or
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any of its properties; and no consent, approval, authorization,
order, license, registration or qualification of or with any such
court or governmental agency or body is required for the issue and
sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act and
as may be required under state securities or Blue Sky Laws in
connection with the purchase and distribution of the Shares by the
Underwriters;
(k) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the Company's knowledge, threatened against
or affecting the Company or any of its properties or to which the
Company is or may be a party or to which any property of the Company is
or may be the subject which, if determined adversely to the Company,
could individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect and, to the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others; and there are no statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required;
(l) the Company owns no real property and has good title to
all personal property owned by it, in each case free and clear of all
liens, encumbrances and defects except such as are described or
referred to in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made or
proposed to be made of such property by the Company; and any real
property and buildings held under lease by the Company are held by it
under valid, existing and enforceable leases with such exceptions as
are not material and do not interfere with the use made or proposed to
be made of such property and buildings by the Company;
(m) 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 by the Securities Act to be described in the
Registration Statement and the Prospectus which is not so described;
(n) no person has the right to require the Company to register
any securities for offering and sale under the Securities Act by reason
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of the filing of the Registration Statement with the Commission or the
issue and sale of the Shares, except for rights that have been waived;
(o) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or
an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT");
(p) KPMG LLP, independent auditors, who have certified certain
financial statements of the Company, are independent public accountants
with respect to the Company as required by the Securities Act;
(q) the Company has filed all federal, state, local and
foreign tax returns which have been required to be filed and has paid
all taxes shown thereon and all assessments received by it to the
extent that such taxes have become due and are not being contested in
good faith, except where such failure to file tax returns or pay such
taxes and assessments would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and there is
no tax deficiency which has been or might reasonably be expected to be
asserted or threatened against the Company which would reasonably be
expected to have a Material Adverse Effect;
(r) the Company has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Common Stock;
(s) the Company owns, possesses or has obtained all licenses,
permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with,
all federal, state, local and other governmental authorities (including
foreign regulatory agencies), all self-regulatory organizations and all
courts and other tribunals, domestic or foreign, necessary to own or
lease, as the case may be, and to operate its properties and to carry
on its business as conducted as of the date hereof, except where such
failure to make declarations and filings would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect, and the Company has not received any actual notice of any
proceeding relating to revocation or modification of any such license,
permit, certificate, consent, order, approval or other authorization,
except as described in the Registration Statement and the Prospectus;
and the Company is in compliance in all material respects with
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all laws and regulations relating to the conduct of its business as
conducted as of the date hereof;
(t) there are no existing or, to the best knowledge of the
Company, threatened labor disputes with the employees of the Company
which could reasonably be expected to have a Material Adverse Effect;
(u) the Company (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) has received all permits, licenses or
other approvals required of them under applicable Environmental Laws to
conduct its businesses and (iii) is in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a Material Adverse Effect;
(v) each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended, ("ERISA") that is maintained, administered or contributed to
by the Company or any of its affiliates for employees or former
employees of the Company and its affiliates has been maintained in
compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended, ("CODE"); no
prohibited transaction, within the meaning of Section 406 of ERISA or
Section 4975 of the Code has occurred with respect to any such plan
excluding transactions effected pursuant to a statutory or
administrative exemption. For any such plan which is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA, no
"accumulated funding deficiency" as defined in Section 412 of the Code
has been incurred, whether or not waived, and the fair market value of
the assets of each such plan (excluding for these purposes accrued but
unpaid contributions) exceeded the present value of all benefits
accrued under such plan determined using reasonable actuarial
assumptions;
(w) except as described in the Prospectus, the Company owns,
is licensed to use or otherwise possesses adequate right to use the
patents, patent rights, licenses, inventions, trademarks, service
marks, trade names, copyrights and know-how, including trade secrets
and other unpatented
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and/or unpatentable proprietary or confidential information,
systems, processes or procedures (collectively, the "INTELLECTUAL
PROPERTY") reasonably necessary to carry on the business conducted
by it, except to the extent that the failure to own, be licensed to
use or otherwise possess adequate rights to use such Intellectual
Property would not reasonably be expected to have a Material
Adverse Effect; except as described in the Prospectus, the Company
has not received any notice of infringement of or conflict with,
and the Company has no knowledge of any infringement of or conflict
with, asserted rights of others with respect to its Intellectual
Property which could reasonably be expected to result in a Material
Adverse Effect; except as described in the Prospectus, the
discoveries, inventions, products or processes of the Company
referred to in the Registration Statement and the Prospectus do
not, to the knowledge of the Company, infringe or conflict with any
right or patent of any third party, or any discovery, invention,
product or process which is the subject of a patent application
filed by any third party, which infringement or conflict could
reasonably be expected to have a Material Adverse Effect; except as
described in the Prospectus, the Company is not obligated to pay a
royalty, grant a license or provide other consideration to any
third party in connection with its patents, patent rights,
licenses, inventions, trademarks, service marks, trade names,
copyrights and know-how; and no third party, including any academic
or governmental organization, possesses rights to the Intellectual
Property which, if exercised would reasonably be expected to have a
Material Adverse Effect;
(x) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, the studies,
tests and preclinical and clinical trials conducted by or on behalf of
the Company that are described in the Registration Statement and the
Prospectus were and, if still pending, are being conducted in all
material respects in accordance with experimental protocols, procedures
and controls pursuant to, where applicable, accepted professional
scientific standards; the descriptions of the results of such studies,
tests and trials contained in the Registration Statement and the
Prospectus are accurate in all material respects; the Company has not
received any notices or correspondence from the United States Food and
Drug Administration (the "FDA") or any foreign, state or local
governmental body exercising comparable authority requiring the
termination, suspension or material modification of any studies, tests
or preclinical or clinical trials conducted by or on behalf of the
Company which termination, suspension or material modification would
reasonably be expected to have a Material Adverse Effect;
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(y) the statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources which are believed by the Company to be reliable;
(z) the Company carries, or is covered by, insurance in such
amounts and covering such risks as it reasonably believes in the
judgment of its management is adequate for the conduct of its business
and the value of its properties and as is customary for companies
engaged in similar businesses in similar industries;
(aa) the Company maintains a system of internal accounting
sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences;
(bb) (i) the Registration Statement, the Prospectus and any
preliminary prospectus comply, and any further amendments or
supplements thereto will comply, with any applicable laws or
regulations of foreign jurisdictions in which the Prospectus or any
preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the Directed Share Program, and (ii) no
authorization, approval, consent, license, order, registration or
qualification of or with any government, governmental instrumentality
or court, other than such as have been obtained, is necessary under the
securities laws and regulations of foreign jurisdictions in which the
Directed Shares are offered outside the United States; and
(cc) the Company has not offered, or caused the Underwriters to
offer, any Shares to any person pursuant to the Directed Share Program
with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or
type of business with the Company or (ii) a trade journalist or
publication to write or publish favorable information about the Company
or its products.
5. The Company covenants and agrees with each of the several
Underwriters as follows:
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(a) to use its best efforts to cause the Registration
Statement to become effective at the earliest possible time and, if
required, to file the final Prospectus with the Commission within the
time periods specified by Rule 424(b) and Rule 430A under the
Securities Act and to furnish copies of the Prospectus to the
Underwriters in New York City prior to 10:00 a.m., New York City time,
on the Business Day next succeeding the date of this Agreement in such
quantities as the Representatives may reasonably request;
(b) to deliver, at the expense of the Company, to the
Representatives four signed copies of the Registration Statement (as
originally filed) and each amendment thereto, in each case including
exhibits and to each other Underwriter a conformed copy of the
Registration Statement (as originally filed) and each amendment
thereto, in each case without exhibits and, during the period mentioned
in Section 5(e) below, to each of the Underwriters as many copies of
the Prospectus (including all amendments and supplements thereto) as
the Representatives may reasonably request;
(c) before filing any amendment or supplement to the
Registration Statement or the Prospectus, whether before or after the
time the Registration Statement becomes effective, to furnish to the
Representatives a copy of the proposed amendment or supplement for
review and not to file any such proposed amendment or supplement to
which the Representatives reasonably object;
(d) to advise the Representatives promptly, and to confirm
such advice in writing (i) when the Registration Statement has become
effective, (ii) when any amendment to the Registration Statement has
been filed or becomes effective, (iii) when any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof, (iv) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus or
the Prospectus or the initiation or threatening of any proceeding for
that purpose, (vi) of the occurrence of any event, within the period
referenced in Section 5(e) below, 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 when the
Prospectus is delivered to a
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purchaser, not misleading, and (vii) of the receipt by the Company
of any notification with respect to any suspension of the
qualification of the Shares for offer and sale in any jurisdiction
or the initiation or threatening of any proceeding for such
purpose; and to use commercially reasonable efforts to prevent the
issuance of any such stop order, or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus,
or of any order suspending any such qualification of the shares, or
notification of any such order thereof and, if issued, to obtain as
soon as possible the withdrawal thereof;
(e) if, during such period of time after the first date of the
public offering of the Shares as in the opinion of counsel for the
Underwriters a prospectus relating to the Shares is required by law to
be delivered in connection with sales by the Underwriters or any
dealer, any event shall occur as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with law, forthwith to
prepare and furnish, at the expense of the Company, to the Underwriters
and to the dealers (whose names and addresses the Representatives will
furnish to the Company) to which Shares may have been sold by the
Representatives on behalf of the Underwriters and to any other dealers
upon request, such amendments or supplements to the Prospectus as may
be necessary so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law;
(f) to endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and to continue such
qualification in effect so long as reasonably required for distribution
of the Shares; PROVIDED that the Company shall not be required to file
a general consent to service of process, to register as a broker or
dealer, or to expose itself to taxation, in any jurisdiction;
(g) to make generally available to its security holders and to
the Representatives as soon as practicable an earnings statement
covering a period of at least twelve months beginning with the first
fiscal quarter of the Company occurring after the effective date of the
Registration Statement, which shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Commission promulgated
thereunder;
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(h) during the period of three years after the date of this
Agreement, to furnish to the Representatives copies of all reports or
other communications (financial or other) furnished to holders of the
Shares, and copies of any reports and financial statements furnished to
or filed with the Commission or any national securities exchange;
(i) for a period of 180 days after the date of the initial
public offering of the Shares not to (i) offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of Stock or any securities of the
Company which are substantially similar to the Common Stock, including,
but not limited to, any securities convertible into or exercisable or
exchangeable for, or that represent the right to receive, Stock or any
such substantially similar securities (including, but not limited to,
any securities which may be issued upon exercise of a stock option or
warrant) or (ii) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of
the Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Stock or such other securities,
in cash or otherwise without the prior written consent of the
Representatives, other than the Shares to be sold hereunder and any
shares of Stock of the Company issued upon the exercise of options
granted or to be granted under the Company's employee or director stock
plans existing on the date of or described in the Prospectus or shares
of Stock issued upon exercise of warrants existing on the date of the
Prospectus;
(j) to use the net proceeds received by the Company from the
sale of the Shares pursuant to this Agreement in the manner specified
in the Prospectus under the caption "Use of Proceeds";
(k) to use its best efforts to list for quotation the Shares
on the National Association of Securities Dealers Automated Quotations
National Market (the "NASDAQ NATIONAL MARKET");
(l) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all costs and expenses incident to the performance of
its obligations hereunder, including without limiting the generality of
the foregoing, all costs and expenses (i) incident to the preparation,
issuance, execution and delivery of the Shares, (ii) incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement,
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the Prospectus and any preliminary prospectus (including in each
case all exhibits, amendments and supplements thereto), (iii)
incurred in connection with the registration or qualification of
the Shares under the laws of such jurisdictions as the
Representatives may designate (including fees of counsel for the
Underwriters and its disbursements), (iv) in connection with the
listing of the Shares on the Nasdaq National Market, (v) related to
the filing with, and clearance of the offering by, the National
Association of Securities Dealers, Inc. (including fees of counsel
for the Underwriters and its disbursements), (vi) in connection
with the printing (including word processing and duplication costs)
and delivery of this Agreement, the Preliminary and Supplemental
Blue Sky Memoranda and the furnishing to the Underwriters and
dealers of copies of the Registration Statement and the Prospectus,
including mailing and shipping, as herein provided, (vii) any
expenses incurred by the Company in connection with a "road show"
presentation to potential investors, (viii) the cost of preparing
stock certificates and (ix) the cost and charges of any transfer
agent and any registrar; PROVIDED HOWEVER, that the Company's
obligation for fees of counsel for the Underwriters and its
disbursements described in clauses (iii) and (v) shall not exceed
$25,000 in the aggregate;
(m) in connection with the Directed Share Program, to ensure
that the Directed Shares will be restricted to the extent required by
the National Association of Securities Dealers, Inc. (the "NASD") or
the NASD rules from sale, transfer, assignment, pledge or hypothecation
for a period of three months following the date of the effectiveness of
the Registration Statement. The Designated Underwriter will notify the
Company as to which Participants will need to be so restricted. The
Company will direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time;
(n) to pay all reasonable fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share
Program and stamp duties, similar taxes or duties or other taxes, if
any, incurred by the Underwriters in connection with the Directed Share
Program; PROVIDED HOWEVER, that the Company's obligation for any such
fees and disbursements of counsel shall not exceed $10,000; and
(o) to comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in
which the Directed Shares are offered in connection with the Directed
Share Program.
15
<PAGE>
6. The several obligations of the Underwriters hereunder to purchase
the Shares on the Closing Date or the Additional Closing Date, as the case may
be, are subject to the performance by the Company of its obligations hereunder
and to the following additional conditions:
(a) the Registration Statement shall have become effective (or
if a post-effective amendment is required to be filed under the
Securities Act, such post-effective amendment shall have become
effective) not later than 5:00 P.M., New York City time, on the date
hereof; and no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission; the Prospectus shall have been filed with
the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and regulations under
the Securities Act and in accordance with Section 5(a) hereof; and all
requests for additional information shall have been complied with to
the satisfaction of the Representatives;
(b) the representations and warranties of the Company
contained herein are true and correct on and as of the Closing Date or
the Additional Closing Date, as the case may be, as if made on and as
of the Closing Date or the Additional Closing Date, as the case may be,
and the Company shall have complied with all agreements and all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date or the Additional Closing Date, as the case
may be;
(c) subsequent to the execution and delivery of this Agreement
and prior to the Closing Date or the Additional Closing Date, as the
case may be, there shall not have occurred any downgrading, nor shall
any notice have been given of (i) any downgrading, (ii) any intended or
potential downgrading or (iii) any review or possible change that does
not indicate an improvement, in the rating accorded any securities of
or guaranteed by the Company by any "nationally recognized statistical
rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is
given in the Prospectus there shall not have been any change in the
capital stock or long-term debt of the Company or any Material Adverse
Change, or any development involving a prospective Material Adverse
Change, otherwise than as set forth or contemplated in the Prospectus,
the effect of which in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares on the
16
<PAGE>
Closing Date or the Additional Closing Date, as the case may be, on
the terms and in the manner contemplated in the Prospectus; and the
Company has not sustained since the date of the latest audited
financial statements included 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;
(e) the Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, a
certificate of an executive officer of the Company, with specific
knowledge about the Company's financial matters, satisfactory to the
Representatives to the effect set forth in Sections 6(a), 6(b), 6(c)
and 6(d) (with respect to the respective representations, warranties,
agreements and conditions of the Company) and to the further effect
that there has not occurred any Material Adverse Change, or any
development involving a prospective Material Adverse Change, from that
set forth or contemplated in the Registration Statement;
(f) Arnold & Porter, special counsel for the Company, shall
have furnished to the Representatives their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in
form and substance satisfactory to the Representatives, to the effect
that:
(i) the Company is validly existing as a corporation
in good standing under the laws of the state of Delaware, with
corporate power and authority to own its properties and
conduct its business as described in the Prospectus;
(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of Maryland;
(iii) this Agreement has been duly authorized, executed
and delivered by the Company;
(iv) the authorized capital stock of the Company
conforms in all material respects as to legal matters to the
description thereof contained in the Prospectus;
(v) the Shares to be issued and sold by the Company
hereunder have been duly authorized, and when delivered to and
17
<PAGE>
paid for by the Underwriters in accordance with the terms of
this Agreement, will be validly issued, fully paid and
non-assessable and the issuance of the Shares is not subject
to any preemptive or, to our knowledge, similar rights;
(vi) the statements in the Prospectus under "Business
- Strategic Alliances - Our Collaboration with the
Warner-Lambert Company", "Business - Governmental Regulation",
"Management - Limitation of Directors' and Officers'
Liability", "Description of Capital Stock", "Shares Eligible
for Future Sale", and "Underwriting", and in the Registration
Statement in Item 14, insofar as such statements constitute a
summary of the terms of the Stock, legal matters or documents
referred to therein, accurately summarize the information
called for with respect to such terms, legal matters or
documents;
(vii) the Registration Statement and the Prospectus and
any amendments and supplements thereto (other than the
financial statements and related schedules and other financial
or statistical data 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;
(viii) the issue and sale of the Shares being delivered
on the Closing Date or the Additional Closing Date, as the
case may be, and the performance by the Company of its
obligations under this Agreement and the consummation of the
transactions contemplated herein will not conflict with or
result in a breach of any of the terms or provisions of, or
constitute a default under, any agreement or instrument filed
as an exhibit to the Registration Statement, nor will any such
action result in any violation of the provisions of the
certificate of incorporation or the by-laws of the Company or
any applicable law or statute or, to the knowledge of such
counsel, any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company or any of its properties;
(ix) no consent, approval, authorization, order,
license, registration or qualification of or with any court or
governmental agency or body is required for the issue and sale
of the Shares or the consummation of the other transactions
contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained or made under the
Securities Act and as may be required
18
<PAGE>
under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the
Underwriters;
(x) the Company is not and, after giving effect to
the offering and sale of the Shares, will not be an
"investment company" or entity "controlled" by an "investment
company", as such terms are defined in the Investment Company
Act; and
(xi) the issuance of shares of Common Stock in the
amount of $5,000,000 to Warner-Lambert, Inc. in a private
placement to close concurrently with the Closing Date of the
initial public offering, pursuant to the terms and conditions
of the Stock Purchase Agreement dated as of July 21, 1997
between the Company and Warner-Lambert, Inc., will be exempt
from all registration requirements of the Securities Act and
applicable state securities laws;
In rendering such opinions, such counsel may rely as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and certificates or other written statements of
officials of jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company. The opinion of such
counsel for the Company shall state that the opinion of any such other
counsel upon which they relied is in form satisfactory to such counsel and,
in such counsel's opinion, the Underwriters and they are justified in relying
thereon. Such counsel shall also separately deliver a letter stating that (i)
no facts have come to their attention that have caused them to believe that
the Registration Statement and the prospectus included therein (other than
the financial statements and related schedules and other financial or
statistical data therein, as to which such counsel need express no belief) at
the time the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and the Prospectus, as amended or supplemented, if applicable, as of its date
and as of the Closing Date or the Additional Closing Date, as the case may
be, contained or contains any untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (ii) to such counsel's knowledge, other than as set forth or
contemplated in the Registration Statement or Prospectus, there are no legal
proceedings pending or threatened or contemplated against the Company by
governmental authorities or others; and (iii) such counsel does not know of
any contracts or other documents of a character that are required to be
described in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
19
<PAGE>
With respect to the matters to be covered above counsel may state
their opinion and belief is based upon their participation in the preparation
of the Registration Statement and the Prospectus and any amendment or
supplement thereto and review and discussion of the contents thereof but is
without independent check or verification except as specified.
The opinion of Arnold & Porter described above shall be rendered to the
Underwriters at the request of the company and shall so state therein.
(g) Leydig Voit & Mayer, Ltd., counsel for the Company, shall
have furnished to the Representatives their written opinion, dated the
Closing Date or Additional Closing Date, as the case may be, in form
and substance satisfactory to the Representatives, to the effect that:
(i) the statements in the Prospectus under "Risk
Factors - Risks Related to Our Industry - If we are unable to
adequately protect our intellectual property rights, our
competitors may be able to take advantage of our research and
development efforts to compete with us," "- If our potential
products conflict with intellectual property rights of
competitors, universities or others, then we may be prevented
from developing those product candidates," "- If our right to
use intellectual property we license from others is affected,
our ability to develop and commercialize our product
candidates may be harmed," and "Business - Patents and
Proprietary Rights" insofar as such statements constitute a
summary of the legal matters, documents or proceedings
referred to herein, fairly present the information called for
with respect thereto;
(ii) to the best knowledge of such counsel, after due
inquiry, except as described in the Prospectus, the Company
owns, possesses or has the right to use the Intellectual
Property employed by it in connection with the business
conducted by it as of the date hereof;
(iii) to the best knowledge of such counsel, after due
inquiry, except as described in the Prospectus, the Company
has not received any notice of infringement of or conflict
with, and such counsel has no knowledge of any infringement of
or conflict with, asserted rights of others with respect to
the Company's Intellectual Property which could reasonably be
expected to result in a material adverse effect on the
Company;
20
<PAGE>
(iv) to the best knowledge of such counsel, after due
inquiry, except as described in the Prospectus, the
discoveries, inventions, products or processes of the Company
referred to in the Prospectus do not infringe or conflict with
any right or patent of any third party, or any discovery,
invention, product or process which is the subject of a patent
application filed by any third party;
(v) to the best knowledge of such counsel, after due
inquiry, except as described in the Prospectus, the Company is
not obligated to pay a royalty, grant a license or provide
other consideration to any third party in connection with its
patents, patent rights, licenses, inventions, trademarks,
service marks, trade names, copyrights and know-how;
(vi) to the best knowledge of such counsel, after due
inquiry, no third party, including any academic or
governmental organization, possesses rights to the Company's
Intellectual Property which, if exercised, could enable such
third party to develop products competitive with those of the
Company or could reasonably be expected to have a material
adverse effect on the Company;
(vii) based on the information brought to such
counsel's attention by the Company with respect to the
Company's investigation, if any, of the published literature
and patent references relating to the inventions claimed in
its patent applications, such counsel will disclose all
references known to it to the Patent and Trademark Office in
accordance with 37 C.F.R. Section 1.56; to the best of such
counsel's knowledge, all information submitted to the U.S.
Patent and Trademark Office in the relevant applications, and
in connection with the prosecution of the relevant
applications, was accurate; neither such counsel, nor to the
best of its knowledge, the Company, made any misrepresentation
or concealed any material information from the Patent and
Trademark office in any of such applications, or in connection
with the prosecution of such applications in the violation of
37 C.F.R. Section 1.56;
(viii) to the best knowledge of such counsel, after due
inquiry, there are no legal or governmental proceedings
pending (other than prosecution of the Company's patent
applications) relating to the Company, the claimed inventions
of the Company's patent or patent applications and no such
proceedings are
21
<PAGE>
threatened or contemplated by governmental authorities or
others; and
(ix) such counsel shall state that no facts have come
to their attention to cause them to believe that (A) the
portions of the Registration Statement and the Prospectus
included therein under the captions "Risk Factors - Risks
Related to Our Industry - If we are unable to adequately
protect our intellectual property rights, our competitors may
be able to take advantage of our research and development
efforts to compete with us," " - If our potential products
conflict with intellectual property rights of competitors,
universities or others, then we may be prevented from
developing those product candidates," "- If our right to use
intellectual property we license from others is affected, our
ability to develop and commercialize our product candidates
may be harmed," and "Business - Patents and Proprietary
Rights" at the time the Registration Statement became
effective contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
and (B) the portions of the Prospectus under the captions
"Risk Factors C Risks Related to Our Industry - If we are
unable to adequately protect our intellectual property rights,
our competitors may be able to take advantage of our research
and development efforts to compete with us," "- If our
potential products conflict with intellectual property rights
of competitors, universities or others, then we may be
prevented from developing those product candidates," "- If our
right to use intellectual property we license from others is
affected, our ability to develop and commercialize our product
candidates may be harmed," and "Business - Patents and
Proprietary Rights" as of its date and as of the Closing Date
or the Additional Closing Date, as the case may be, contained
or contains any untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading.
The opinion of Leydig Voit & Mayer, Ltd., described above shall be
rendered to the Underwriters at the request of the Company and shall so state
therein.
(h) on the effective date of the Registration Statement and
the effective date of the most recently filed post-effective amendment
to the Registration Statement and also on the Closing Date or
Additional Closing
22
<PAGE>
Date, as the case may be, KPMG LLP shall have furnished to you
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, containing statements and information
of the type customarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and
the Prospectus;
(i) the Representatives shall have received on and as of the
Closing Date or Additional Closing Date, as the case may be, an opinion
of Davis Polk & Wardwell, counsel to the Underwriters, with respect to
the due authorization and valid issuance of the Shares, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(j) the Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved
for quotation on the Nasdaq National Market;
(k) on or prior to the Closing Date or Additional Closing
Date, as the case may be, the Company shall have furnished to the
Representatives such further certificates and documents as the
Representatives shall reasonably request; and
(l) The "lock-up" agreements, each substantially in the form
of Exhibit A hereto, between you and the shareholders, officers and
directors of the Company relating to sales and certain other
dispositions of shares of Stock or certain other securities, delivered
to you on or before the date hereof, shall be in full force and effect
on the Closing Date or Additional Closing Date, as the case may be,
7. The Company agrees to indemnify and hold harmless each
Underwriter, each affiliate of any Underwriter which assists such Underwriter
in the distribution of the Shares and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, the legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted) caused
by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) or any
23
<PAGE>
preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly
for use therein; PROVIDED HOWEVER, that the foregoing indemnity agreement
with respect to any preliminary prospectus shall not inure to the benefit of
any Underwriter (or affiliate of such Underwriter which assists such
Underwriter in the distribution of the Shares) from whom the persons
asserting any such losses, claims, damages or liabilities purchased Shares,
or any person controlling such Underwriter, if a copy of the Prospectus (as
then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Shares
to such person, and if the Prospectus (as so amended or supplemented) would
have cured the defect giving rise to such loss, claim, damage or liability.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person who controls the Company within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any preliminary
prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "INDEMNIFIED
PERSON") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PERSON") in writing, and the Indemnifying Person,
upon request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person
and any others the Indemnifying Person may designate in such proceeding and
shall pay the reasonable fees and expenses of such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to
the contrary, (ii) the Indemnifying Person
24
<PAGE>
has failed within a reasonable time to retain counsel reasonably satisfactory
to the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and
the Indemnified Person and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Underwriters, each affiliate of any Underwriter which assists such
Underwriter in the distribution of the Shares and such control persons of
Underwriters shall be designated in writing by J.P. Morgan Securities Inc.
and any such separate firm for the Company, its directors, its officers who
sign the Registration Statement and such control persons of the Company shall
be designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by
the second and third sentences of this paragraph, the Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than
60 days after receipt by such Indemnifying Person of the aforesaid request
and (ii) such Indemnifying Person shall not have reimbursed the Indemnified
Person in accordance with such request prior to the date of such settlement.
No Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement includes an unconditional release of such
Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraph, in
lieu of indemnifying such Indemnified Person thereunder, shall contribute to
the amount paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the
25
<PAGE>
offering of the Shares or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters
on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and the total
underwriting discounts and the commissions received by the Underwriters, in
each case as set forth in the table on the cover of the Prospectus, bear to
the aggregate public offering price of the Shares. The relative fault of the
Company on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company by the
Underwriters and the parties' relative intent, 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 contribution pursuant to this Section 7 were determined by PRO
RATA allocation (even if the Underwriters were treated as one entity for such
purposes) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses incurred by such Indemnified
Person in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages
that such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 7 are several in
proportion to the respective number of Shares set forth opposite their names
in Schedule I hereto, and not joint.
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<PAGE>
The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section
7 and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or
on behalf of the Company, its officers or directors or any other person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
8. Notwithstanding anything herein contained, this Agreement (or
the obligations of the several Underwriters with respect to the Option
Shares) may be terminated in the absolute discretion of the Representatives,
by notice given to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (or, in the case of the Option
Shares, prior to the Additional Closing Date) (i) trading generally shall
have been suspended or materially limited on or by, as the case may be, any
of the New York Stock Exchange or the American Stock Exchange, or the
National Association of Securities Dealers, Inc., (ii) trading of any
securities of or guaranteed by the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities, or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or
any calamity or crisis that, in the judgment of the Representatives, is
material and adverse and which, in the judgment of the Representatives, makes
it impracticable to market the Shares being delivered at the Closing Date or
the Additional Closing Date, as the case may be, on the terms and in the
manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case
may be, any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they have agreed to purchase hereunder on such date, and
the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate number of Shares to be purchased on such date, the
other Underwriters shall be obligated severally in the proportions that the
number of Shares set forth opposite their
27
<PAGE>
respective names in Schedule I bears to the aggregate number of Underwritten
Shares set forth opposite the names of all such non-defaulting Underwriters,
or in such other proportions as the Representatives may specify, to purchase
the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; PROVIDED that in no event shall
the number of Shares that any Underwriter has agreed to purchase pursuant to
Section 1 be increased pursuant to this Section 9 by an amount in excess of
one-tenth of such number of Shares without the written consent of such
Underwriter. If on the Closing Date or the Additional Closing Date, as the
case may be, any Underwriter or Underwriters shall fail or refuse to purchase
Shares which it or they have agreed to purchase hereunder on such date, and
the aggregate number of Shares with respect to which such default occurs is
more than one-tenth of the aggregate number of Shares to be purchased on such
date, and arrangements satisfactory to the Representatives and the Company
for the purchase of such Shares are not made within 36 hours after such
default, this Agreement (or the obligations of the several Underwriters to
purchase the Option Shares, as the case may be) shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In
any such case either you or the Company shall have the right to postpone the
Closing Date (or, in the case of the Option Shares, the Additional Closing
Date), but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement,
or if for any reason the Company shall be unable to perform its obligations
under this Agreement or any condition of the Underwriters' obligations cannot
be fulfilled, the Company agrees to reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and expenses of
its counsel) reasonably incurred by the Underwriter in connection with this
Agreement or the offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding
upon the Company, the Underwriters, each affiliate of any Underwriter which
assists such Underwriter in the distribution of the Shares, any controlling
persons referred to herein and their respective successors and assigns.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. No purchaser of
28
<PAGE>
Shares from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by J.P. Morgan Securities Inc. alone on behalf of
the Underwriters, and any such action taken by the Representatives jointly or
by J.P. Morgan Securities Inc. alone shall be binding upon the Underwriters.
All notices and other communications hereunder shall be in writing and shall
be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o J.P. Morgan Securities Inc., 60 Wall Street, New York,
New York 10260 (telefax: 212-648-5705), Attention: Syndicate Department, copy
to Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017
(telefax: 212-450-5759), Attention: Jeffrey Small, Esq. Notices to the
Company shall be given to it at 65 West Watkins Mill Road, Gaithersburg,
Maryland, 20878 (telefax: 240-632-0735), Attention: Paul H. Fischer,
President and Chief Executive Officer, copy to Arnold & Porter, 555 Twelfth
Street, NW, Washington, DC 20004 (telefax: 202-942-6166), Attention: Steven
Kaplan, Esq.
13. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the
same instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF.
29
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
GenVec, Inc.
By:
-------------------------------
Title:
Accepted: December __, 2000
J.P. Morgan Securities Inc.
UBS Warburg LLC
A.G. Edwards & Sons, Inc.
Acting severally on behalf of themselves
and the several Underwriters listed
in Schedule I hereto.
By: J.P. Morgan Securities Inc.
Acting on behalf of itself and the several
Underwriters listed in Schedule I
hereto.
By:
---------------------------------------------------------------------------
Title:
30
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITER TO BE PURCHASED
----------- ----------------
<S> <C>
J.P. Morgan Securities Inc...............
UBS Warburg LLC..........................
A.G. Edwards & Sons, Inc.................
Total........................... 4,000,000
</TABLE>
