<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 1997
REGISTRATION NO. 333-30005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
VIROPHARMA INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 2834 23-2789550
(STATE OR OTHER (PRIMARY STANDARD (I.R.S.EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
76 GREAT VALLEY PARKWAY
MALVERN, PA 19355
(610) 651-0200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
CLAUDE H. NASH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
VIROPHARMA INCORPORATED
76 GREAT VALLEY PARKWAY
MALVERN, PA 19355
(610) 651-0200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
DAVID R. KING, ESQ. ALAN DEAN, ESQ.
MORGAN, LEWIS & BOCKIUS LLP DAVIS POLK & WARDWELL
2000 ONE LOGAN SQUARE 450 LEXINGTON AVENUE
PHILADELPHIA, PA 19103 NEW YORK, NY 10017
(215) 963-5000 (212) 450-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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, check the following box. [_]
If this Form is filed to register additional securities for an offering pur-
suant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier effec-
tive registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the expenses to be incurred by
the Company in connection with the sale of Common Stock being registered. All
amounts are estimates except the Securities and Exchange Commission registra-
tion fee, the National Association of Securities Dealers filing fee and the
Nasdaq National Market filing fee:
<TABLE>
<CAPTION>
--------
<S> <C>
Securities and Exchange Commission registration fee............ $ 11,152
National Association of Securities Dealers, Inc. Filing Fee.... 4,180
The Nasdaq Stock Market Listing Fee............................ 17,500
Transfer Agent and Registrar Fees.............................. 5,000
Printing and engraving expenses................................ 100,000
Legal fees and expenses........................................ 100,000
Accounting fees and expenses................................... 45,000
Blue Sky fees and expenses (including legal fees).............. 15,000
Miscellaneous.................................................. 2,168
--------
Total........................................................ $300,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law and the Company's By-Laws provide for
indemnification of the Company's directors and officers for liabilities and
expenses that they may incur in such capacities. In general, directors and
officers are indemnified with respect to actions taken in good faith in a
manner reasonably believed to be in, or not opposed to, the best interests of
the Company, and with respect to any criminal action or proceeding, actions
that the indemnitee had no reasonable cause to believe were unlawful. Reference
is made to the Company's By-Laws filed as Exhibit 3.2 hereto.
In addition, certain directors of the Company are parties to indemnification
agreements with the Company. Pursuant to the agreements, such directors are to
be indemnified against liabilities and expenses incurred in connection with
their services to the Company to the fullest extent permitted by Delaware law.
Such indemnification is subject to the director's meeting the applicable stan-
dard of care and to a determination to indemnify by a majority of disinterested
directors (as defined in the agreements) or by independent counsel (also as
defined in the agreements).
The Underwriting Agreement provides that the Underwriter is obligated, under
certain circumstances, to indemnify directors, officers and controlling persons
of the Company against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Act"). Reference is made to the form
of Underwriting Agreement filed as Exhibit 1 hereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since December 1994, the registrant has issued and sold the following unregis-
tered securities:
1. Upon the founding of the Company in December 1994, certain founders of
the Company purchased an aggregate of 675,750 shares of Common Stock pur-
suant to restricted stock purchase agreements. Each purchaser paid $0.002
per share of Common Stock, then valued at $0.10 per share. In addition, an
affiliate of a founder purchased 165,750 shares of Common Stock. The affil-
iate paid $0.002 per share.
2. From December 1994 to January 1995, the Company sold 350,000 shares of
Series A Preferred Stock for an aggregate price of $175,000, or $0.50 per
share, to certain of the founders of the Company. All of such outstanding
shares of Series A Preferred Stock converted into an aggregate of 178,500
shares of Common Stock upon completion of the Company's initial public
offering.
3. In December 1994, the Company sold an 8.5% Convertible Demand Promissory
Note in the principal amount of $162,500 to an affiliate of a founder of
the Company. In December 1994, the founder assigned the note to two affili-
ates of another founder, who converted their notes into a total of 325,000
shares of Series A Preferred Stock at $0.50 per share in June 1995. All of
such outstanding shares of Series A Preferred Stock converted into an
aggregate of 165,750 shares of Common Stock upon completion of the
Company's initial public offering.
II-1
<PAGE>
4. Pursuant to a right granted in December 1994, a director purchased
51,000 shares of Common Stock under a January 1996 restricted stock pur-
chase agreement at $0.10 per share.
5. In March and May 1995, the Company sold two 9.5% Convertible Demand
Promissory Notes in the principal amounts of $100,000 and $50,000 to each
of three private investors and one 9.5% Convertible Promissory Note in the
principal amount of $30,000 to an executive officer. All the notes were
cancelled in connection with such investors' and executive officer's pur-
chase of Series B Preferred Stock described in paragraph 7 below, in par-
tial or full payment for the shares.
6. In connection with the purchase of the 9.5% Convertible Demand Promis-
sory Notes, the Company issued warrants to purchase 49,998 shares of Series
B Preferred Stock, respectively, to each of the three private investors and
10,000 shares to the executive officer. Two of the private investors subse-
quently transferred all or portions of the warrants to successors or affil-
iates. Upon the closing of the Company's initial public offering, the war-
rants automatically became exercisable for 25,499 shares of Common Stock
for each of the private investors and 5,100 shares for the chief executive
officer.
7. Between June 1995 and October 1995, the Company sold 7,060,000 shares of
Series B Preferred Stock for an aggregate of $7,060,000, or $1.00 per
share, to private investors and an executive officer of the Company. All of
such outstanding shares of Series B Preferred Stock converted into an
aggregate of 3,600,600 shares of Common Stock upon the closing of the
Company's initial public offering.
8. In September 1995, the Company issued a warrant to purchase 42,500
shares of Series B Preferred Stock at $1.50 per share to an equipment sup-
plier in connection with a Master Lease Agreement between the Company and
the equipment supplier. Upon the closing of the Company's initial public
offering, the warrant automatically became exercisable for 21,675 shares of
Common Stock at $2.94 per share.
9. In May 1996, the Company sold 3,222,222 shares of Series C Preferred
Stock for an aggregate of $7,249,999.50, or $2.25 per share, to private
investors and the executive officers of the Company. All of such out-
standing shares of Series C Preferred Stock converted into an aggregate of
1,643,333 shares of Common Stock upon the closing of the Company's initial
public offering.
10. From 1994 to the present, the Company has granted options to acquire an
aggregate of 728,712 shares of Common Stock, at exercise prices ranging
from $0.10 to $13.25, to various directors, officers, employees and non-
employees. To date, options to purchase 21,675 shares of Common Stock have
been exercised.
11. In June 1997, the Company issued 71,795 shares of Common Stock pursuant
to a cashless exercise of warrants that were otherwise exercisable on a
cash basis for 81,597 shares of Common Stock.
The Company believes that the transactions described above were exempt from
registration under Sections 3(a)(9), 3(b) or 4(2) of the Securities Act because
the subject securities were, respectively, either (i) exchanged by the issuer
with its existing security holders exclusively, with no commission or other
remuneration being paid or given directly or indirectly for soliciting such
exchange, (ii) issued pursuant to a compensatory benefit plan pursuant to Rule
701 under the Securities Act or (iii) sold to a limited group of persons, each
of whom was believed to have been a sophisticated investor or had a pre-
existing business or personal relationship with the Company or its management
and was purchasing for investment without a view to further distribution.
Restrictive legends were placed on stock certificates evidencing the shares
and/or agreements relating to the right to purchase such shares described
above.
Specifically, the Company believes that the transactions described in paragraph
1 and certain transactions described in paragraphs 2, 3, 5, 6, 7, 8, 9 and 11
were exempt from registration under Section 4(2) of the Securities Act. The
Company believes that the transactions relating to the conversion of the pre-
ferred stock and the notes described in paragraphs 2, 3, 5, 6, 7 and 9 were or
will be exempt from registration under Section 3(a)(9) of the Securities Act.
In respect of the right described in paragraph 4 and the options described in
paragraph 10, the Company is relying upon the fact that such grants were not
sales or, if such grants were sales, they and the exercises described were
exempt from registration under Sections 4(2) and 3(b) of the Securities Act.
The Company intends to file registration statements on Form S-8 under the Secu-
rities Act to register all of the shares of Common Stock underlying the
Company's outstanding options.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
(A)EXHIBIT DESCRIPTION
---------- -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Second Amended and Restated Certificate of Incorporation of the
Company.(1) (Exhibit 3.1)
3.2++ By-Laws of the Company, as amended.(1) (Exhibit 3.2)
5** Opinion of Morgan, Lewis & Bockius LLP regarding legality of the
shares of Common Stock being offered.
10.1++ 1995 Stock Option Plan.(1) (Exhibit 10.1)
10.2 ViroPharma 401(k) Employee Savings Plan, effective July 1, 1995.(1)
(Exhibit 10.2)
10.3 Lease dated September 19, 1995 between the Company and Centocor
Property Management Corp.(1)
(Exhibit 10.3)
10.4 Master Lease Agreement dated September 13, 1995 between the Company
and Comdisco, Inc.(1) (Exhibit 10.4)
10.5 Master Equipment Lease No. 053-0005 dated December 1, 1995 between
the Company and Phoenix Leasing Incorporated.(1) (Exhibit 10.5)
10.6(a)+ Agreement dated December 22, 1995 between the Company and
Sanofi.(1) (Exhibit 10.6)
10.7+ Collaborative Research Agreement dated as of August 15, 1996
between the Company and Boehringer Ingelheim Pharmaceuticals,
Inc.(1) (Exhibit 10.7)
10.8 Form of Employment Agreement.(1) (Exhibit 10.8)
10.9 Form of Indemnification Agreement.(1) (Exhibit 10.9)
10.10 Form of Employee Stock Purchase Agreement.(1) (Exhibit 10.10)
10.11 Restricted Stock Purchase Agreement dated as of January 17, 1996,
by and between the Company and Frank Baldino, Jr.(1) (Exhibit 10.11)
10.12 Series B Convertible Preferred Stock Purchase Agreement dated as of
June 16, 1995 among the Company and each of the entities on the
"Schedule of Purchasers" attached thereto as Schedule A.(1)
(Exhibit 10.12)
10.13 Series C Convertible Preferred Stock Purchase Agreement dated as of
May 30, 1996 among the Company and each of the individuals and
entities on the "Schedule of Purchasers" attached thereto as
Schedule A.(1)
(Exhibit 10.13)
10.14 Form of Warrants to Purchase Series B Preferred Stock dated March
3, 1995 and May 12, 1995.(1)
(Exhibit 10.14)
10.15 Warrant Agreement dated as of September 13, 1995 between the
Company and Comdisco, Inc.(1)
(Exhibit 10.15)
10.16 Amended and Restated Investors' Rights Agreement, dated as of May
30, 1996, by and among the Company and the persons identified on
Schedule A, Schedule B and the Schedule of Founders thereto.(1)
(Exhibit 10.16)
10.17 Form of Amendment to Employee Stock Purchase Agreement.(1) (Exhibit
10.17)
10.18 Amendment to Restricted Stock Purchase Agreement dated as of
January 17, 1996, among the Company and Frank Baldino, Jr., dated
as of January 17, 1996.(1) (Exhibit 10.18)
10.19** Development Agreement dated as of April 16, 1997, by and among
SELOC AG, SICOR, S.A. and the Company.
10.20** First Amendment to Agreement dated as of February 21, 1997 by and
between Sanofi and the Company.
10.21** Promissory Note of Jon M. Rogers and Traci J. Rogers, dated as of
June 12, 1997.
10.22** Letter Agreement dated May 6, 1997, by and between the Company and
Centocor, Inc.
23.1** Consent of KPMG Peat Marwick LLP.
23.2** Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5).
24** Power of Attorney (included on signature page).
27** Financial Data Schedule.
</TABLE>
(b) No Financial Statement Schedules filed.
- -------
* Filed herewith.
** Previously filed.
+ Portions of this exhibit were omitted and filed separately with the Secretary
of the Commission pursuant to an application for confidential treatment filed
with the Commission pursuant to Rule 406 under the Securities Act of 1933, as
amended.
++ Compensation plans and arrangements for executives and others.
(1) Filed as an Exhibit to Registration Statement on Form S-1 (File No. 333-
12407), as amended, initially filed on September 20, 1996.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
A. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Regis-
trant pursuant to the foregoing provisions, or otherwise, the Registrant has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is, there-
fore, unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the suc-
cessful defense of any action, suit or proceeding) is asserted by such direc-
tor, officer or controlling person in connection with the securities being reg-
istered, the Registrant 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.
B. 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 this Reg-
istration Statement in reliance upon Rule 430A and contained in a 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 this Regis-
tration Statement as of the time it was declared effective.
(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.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS
DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN MALVERN, PENNSYLVANIA
ON JULY 9, 1997.
Viropharma Incorporated
/s/ Claude H. Nash, Ph.D.
By: ___________________________________
CLAUDE H. NASH, PH.D.
PRESIDENT, CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
/s/ Claude H. Nash, Ph.D. President, Chief
- --------------------------------------- Executive Officer July 9, 1997
CLAUDE H. NASH, PH.D. and Chairman of the
Board (Principal
Executive Officer)
/s/ Vincent J. Milano Vice President,
- --------------------------------------- Finance and July 9, 1997
VINCENT J. MILANO Administration
(Principal
Financial and
Accounting Officer)
Director
* July 9, 1997
- ---------------------------------------
FRANK BALDINO, JR., PH.D.
Director
* July 9, 1997
- ---------------------------------------
STEVE DOW
Director
* July 9, 1997
- ---------------------------------------
JON N. GILBERT
Director
* July 9, 1997
- ---------------------------------------
ANN H. LAMONT
Director
* July 9, 1997
- ---------------------------------------
CHRISTOPHER MOLLER, PH.D.
July 9, 1997
/s/ Claude H. Nash, Ph.D.
*By: _________________________
CLAUDE H. NASH, PH.D. AS
ATTORNEY-IN-FACT
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Second Amended and Restated Certificate of Incorporation of the
Company.(1) (Exhibit 3.1)
3.2++ By-Laws of the Company, as amended.(1) (Exhibit 3.2)
5** Opinion of Morgan, Lewis & Bockius LLP regarding legality of shares
of Common Stock being registered.
10.1++ 1995 Stock Option Plan.(1) (Exhibit 10.1)
10.2 ViroPharma 401(k) Employee Savings Plan, effective July 1, 1995.(1)
(Exhibit 10.2)
10.3 Lease dated September 19, 1995 between the Company and Centocor
Property Management Corp.(1)
(Exhibit 10.3)
10.4 Master Lease Agreement dated September 13, 1995 between the Company
and Comdisco, Inc.(1) (Exhibit 10.4)
10.5 Master Equipment Lease No. 053-0005 dated December 1, 1995 between
the Company and Phoenix Leasing Incorporated.(1) (Exhibit 10.5)
10.6(a)+ Agreement dated December 22, 1995 between the Company and Sanofi.(1)
(Exhibit 10.6)
10.7+ Collaborative Research Agreement dated as of August 15, 1996 between
the Company and Boehringer Ingelheim Pharmaceuticals, Inc.(1)
(Exhibit 10.7)
10.8 Form of Employment Agreement.(1) (Exhibit 10.8)
10.9 Form of Indemnification Agreement.(1) (Exhibit 10.9)
10.10 Form of Employee Stock Purchase Agreement.(1) (Exhibit 10.10)
10.11 Restricted Stock Purchase Agreement dated as of January 17, 1996, by
and between the Company and Frank Baldino, Jr.(1) (Exhibit 10.11)
10.12 Series B Convertible Preferred Stock Purchase Agreement dated as of
June 16, 1995 among the Company and each of the entities on the
"Schedule of Purchasers" attached thereto as Schedule A.(1) (Exhibit
10.12)
10.13 Series C Convertible Preferred Stock Purchase Agreement dated as of
May 30, 1996 among the Company and each of the individuals and
entities on the "Schedule of Purchasers" attached thereto as Schedule
A.(1)
(Exhibit 10.13)
10.14 Form of Warrants to Purchase Series B Preferred Stock dated March 3,
1995 and May 12, 1995.(1)
(Exhibit 10.14)
10.15 Warrant Agreement dated as of September 13, 1995 between the Company
and Comdisco, Inc.(1)
(Exhibit 10.15)
10.16 Amended and Restated Investors' Rights Agreement, dated as of May 30,
1996, by and among the Company and the persons identified on Schedule
A, Schedule B and the Schedule of Founders thereto.(1) (Exhibit 10.16)
10.17 Form of Amendment to Employee Stock Purchase Agreement.(1) (Exhibit
10.17)
10.18 Amendment to Restricted Stock Purchase Agreement dated as of January
17, 1996, among the Company and Frank Baldino, Jr., dated as of
January 17, 1996.(1) (Exhibit 10.18)
10.19** Development Agreement dated as of April 16, 1997, by and among SELOC
AG, SICOR, S.A. and the Company.
10.20** First Amendment to Agreement dated as of February 21, 1997 by and
between Sanofi and the Company.
10.21** Promissory Note of Jon M. Rogers and Traci J. Rogers, dated as of
June 12, 1997.
10.22** Letter Agreement dated May 6, 1997, by and between the Company and
Centocor, Inc.
23.1** Consent of KPMG Peat Marwick LLP.
23.2** Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1).
24** Power of Attorney (included on signature page).
27** Financial Data Schedule.
</TABLE>
- -------
* Filed herewith.
** Previously filed.
+ Portions of this exhibit were omitted and filed separately with the Secretary
of the Commission pursuant to an application for confidential treatment filed
with the Commission pursuant to Rule 406 under the Securities Act of 1933, as
amended.
++ Compensation plans and arrangements for executives and others.
(1) Filed as an Exhibit to Registration Statement on Form S-1 (File No. 333-
12407), as amended, initially filed on September 20, 1996.
<PAGE>
Exhibit 1.1
UNDERWRITING AGREEMENT
VIROPHARMA INCORPORATED
2,000,000 Shares of Common Stock
Underwriting Agreement
July , 1997
J.P. Morgan Securities Inc.
Cowen & Company
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:
Viropharma Incorporated, a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters listed in Schedule I
hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives") an aggregate of 2,000,000 shares of Common Stock, par value
$0.002 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
300,000 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".
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
<PAGE>
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 300,000 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
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
<PAGE>
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 at 10:00 A.M., New York City time, on
________ 1997, 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
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, other than any
noncompliance or untrue statement or omission of a material fact in a
preliminary prospectus that has been corrected in the final prospectus;
provided that this representation and warranty shall not apply to any
statements or omissions made
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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 in the Registration
Statement, any preliminary prospectus 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 cash flows
for the periods specified; and said financial statements have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis, and the supporting schedules included in the Registration
Statement present fairly 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 general affairs, business,
prospects, management, financial position, stockholders' equity or results
of operations of the Company, otherwise than as set forth or contemplated
in the Prospectus; 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;
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(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 power and authority (corporate and other) 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
Company;
(f) this Agreement has been duly authorized, executed and delivered
by the Company;
(g) the Company has an authorized capitalization as set forth in the
Prospectus and such authorized capital stock conforms in all material
respects 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 preemptive or similar rights;
and, other than as described in or expressly contemplated by the Prospectus
and except for options granted subsequent to the date as of which
information is provided in the Prospectus pursuant to the Company's stock
option plans or otherwise, there are no outstanding rights (including,
without limitation, preemptive 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;
(h) 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;
(i) the Company is not, or with the giving of notice or lapse of time
or both would not be, in violation of or in default under its Second
Amended and Restated 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
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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 Second Amended and Restated 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 any of their respective 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;
(j) 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 knowledge of the Company, threatened against or
affecting the Company or 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, management of the Company
reasonably expects could individually or in the aggregate have a material
adverse effect on the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of the
Company, and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others; and there are no statutes or regulations to the best of the
Company's knowledge, or 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;
(k) The Company does not own any real property. The Company has good
and marketable title to all personal property owned by it, in each case
free and clear of all liens, encumbrances and defects except for purchase
money security interests arising in the ordinary course of business or such
as are described or referred to in the Prospectus or such as would not have
a material adverse affect the value on the Company 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;
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<PAGE>
(l) 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;
(m) no person has the right to require the Company to register any
securities for offering and sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or the issue and
sale of the Shares, except for persons and entities who have expressly
waived such right or who have been given proper notice and have failed to
exercise such right within the time or times required under the terms and
conditions of such right;
(n) 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");
(o) to the Company's knowledge, KPMG Peat Marwick LLP who have
certified certain financial statements of the Company are independent
public accountants as required by the Securities Act;
(p) the Company has filed all federal, state, local and foreign tax
returns which have been required to be filed and have paid all taxes shown
thereon and all assessments received by them or any of them to the extent
that such taxes have become due and are not being contested in good faith
except in such cases where the failure to file such returns or make such
payments would not have a material adverse affect on the financial
position, business or operations of the Company; and, except as disclosed
in the Registration Statement and the Prospectus, there is no material tax
deficiency which has been asserted or, to the knowledge of the Company,
threatened against the Company;
(q) 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;
(r) the Company owns or possesses the right to use all patents,
trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by it or necessary
for the conduct of its business, and the Company is not aware of any claim
to the contrary or any challenge by any other person to the rights of the
Company with respect to the foregoing; to the Company's knowledge, the
Company's business as now conducted does not, in any material respect,
infringe or conflict with
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<PAGE>
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses or other intellectual property or franchise right of any person;
except as described in the Prospectus, the Company is not aware of any
claim against the Company alleging the infringement by the Company of any
patent, trademark, service mark, trade name, copyright, trade secret,
license or other intellectual property right or franchise right of any
person;
(s) there are no existing or threatened labor disputes with the
employees of the Company which are likely to have a material adverse effect
on the Company; the Company is not aware that (i) any executive, key
employee or significant group of employees of the Company plans to
terminate employment with the Company or (ii) any such executive or key
employee is subject to any noncompete, nondisclosure, confidentiality,
employment, consulting or similar agreement that would be violated by the
present or proposed business activities of the Company;
(t) 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 for
employees or former employees of the Company has been maintained in
compliance in all material respects 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 that resulted in a liability to the Company excluding transactions
effected pursuant to a statutory or administrative exemption; for each 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.
(u) the Company owns, possesses or has obtained all material
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all material 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 in all material respects as conducted as of the date hereof,
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 with all laws and regulations relating to its business as
conducted as of the date hereof; and
(v) the Company (i) is in compliance in all material respects with
any and all
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<PAGE>
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 material permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and (iii) is in compliance with all material 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 on the Company.
5. The Company covenants and agrees with each of the several Underwriters
as follows:
(a) to use commercially reasonable 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
three 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 paragraph (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
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<PAGE>
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 paragraph (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 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 its best 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 qualify to do business or file a
general consent (other than that arising out of the offering or sale of the
shares) to service of process in any jurisdiction;
(g) to make generally available to its security holders and to the
Representatives
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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;
(h) during the five-year period commencing on the date hereof, to
furnish to the Representatives upon their request 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 90 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 convertible into or exercisable or
exchangeable for Stock 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 (i) the Shares to be sold hereunder, (ii) the
issuance of any shares of Common Stock of the Company upon the exercise of
options granted under the Company's 1995 Stock Option Plan, (iii) the grant
of options under the 1995 Stock Option Plan or (iv) the issuance of any
shares of Common Stock of the Company upon exercise of warrants held as of
the date hereof by Comdisco, Inc.;
(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) commercially reasonable 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, the
Prospectus and any preliminary prospectus (including in each case all
exhibits,
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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 reasonable
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., (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.
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 by the Commission 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) since the respective dates as of which information is given in
the Prospectus there shall not have been any material 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 general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the
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Company, 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 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 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;
(d) 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, executed to such executive officer's
knowledge and satisfactory to the Representatives, to the effect set forth
in subsections (a) through (d) (with respect to the respective
representations, warranties, agreements and conditions of the Company) of
this Section and to the further effect that there has not occurred any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
prospects, management, financial position, stockholders' equity or results
of operations of the Company from that set forth or contemplated in the
Registration Statement;
(e) Morgan, Lewis & Bockius LLP, 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;
In rendering its opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the States of Delaware and Pennsylvania, to the extent such counsel deems proper
and to the extent specified in such opinion, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to the Representatives)
of other counsel reasonably acceptable to the Underwriters' counsel, familiar
with the applicable laws; (B) 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.
The opinion of Morgan, Lewis & Bockius LLP described above shall be
rendered to
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the Underwriters at the request of the company and shall so state therein.
(f) Dann, Dorfman, Herrell & Skillman, patent 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) such counsel is not aware of any challenge by any person
to the right of the Company to use any patent, trademark, trademark
registration, service mark, service mark registrations, tradename,
copyright, license, invention, trade secret or rights described in the
Prospectus as being owned by it or necessary for the conduct of it
business;
(ii) such counsel is not aware of any claim against the Company
alleging the infringement by the Company of any patent, trademark,
service mark, tradename, copyright, trade secret, license or other
intellectual property right or franchise right of any person;
(iii) the statements in the Prospectus under "Patents" insofar
as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, fairly represent the
information called for with respect to such legal matters, documents
or proceedings; and
(iv) such counsel believes that the Registration Statement and
the Prospectus included therein at the time the Registration Statement
became effective and as of the date of this Agreement insofar as it
relates to the intellectual property position of the Company did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statement therein not misleading, and that the Prospectus, as amended
or supplemented, if applicable, insofar as it relates to the
intellectual property position of the Company, does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(g) 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
Date, as the case may be, KPMG Peat Marwick 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
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respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus;
(h) the Representatives shall have received on and as of the
Closing Date or the 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;
(i) the Shares to be delivered on the Closing Date or Additional
Closing Date, as the case may be, shall have been approved for listing on
the Nasdaq National Market, subject to official notice of issuance;
(j) 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
(k) The "lock-up" agreements, each substantially in the form of
Exhibit B hereto, between you and the officers and directors of the Company
and certain shareholders related to the directors, 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
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 Exchange Act, from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the legal fees and other expenses reasonably 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
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.
15
<PAGE>
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 or 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 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 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
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 (including fees and
expenses of the Indemnified Person's counsel) 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. 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
16
<PAGE>
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 applicable by its terms but 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 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
or 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 ll(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such
17
<PAGE>
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.
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, 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 respective names in Schedule I bears to the aggregate
number of Underwritten Shares set forth opposite the
18
<PAGE>
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 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 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
19
<PAGE>
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:______); Attention: Syndicate Department. Notices to the
Company shall be given to it at Viropharma Incorporated, 76 Great Valley
Parkway, Malvern, Pennsylvania 19355 (telefax: (610) 651-0588);
Attention:____________.
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.
20
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return four counterparts hereof.
Very truly yours,
VIROPHARMA INCORPORATED
By:
-----------------------------
Name:
Title:
Accepted:_________, 1997
J.P. Morgan Securities Inc.
Cowen & Company
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:
21
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Underwriter Number of Shares
To Be Purchased
<S> <C>
J.P. Morgan Securities Inc.............
Cowen & Company........................
</TABLE>
Total
================
22
