Underwriting Agreement

Exhibit 1.1


6,000,000 Shares


CERUS CORPORATION


COMMON STOCK, PAR VALUE $.001 PER SHARE


UNDERWRITING AGREEMENT


June 5, 2003


June 5, 2003


Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036


Dear Sirs and Mesdames:


Cerus Corporation, a Delaware corporation (the " Company"), proposes to issue and sell to Morgan Stanley & Co. Incorporated (the " Underwriter") 6,000,000 shares of its common stock, par value $.001 per share (the " Firm Shares"). The Company also proposes to issue and sell to the Underwriter not more than an additional 900,000 shares of its common stock, par value $.001 per share (the " Additional Shares") if and to the extent that the Underwriter shall have determined to exercise the right to purchase such shares of common stock granted to the Underwriter in Section 2 hereof. The Firm Shares and the Additional Shares are hereinafter collectively referred to as the " Shares." The shares of common stock, par value $.001 per share, of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the " Common Stock." Each share of Common Stock has rights (the " Rights") attached thereto to purchase Series C junior participating preferred stock (" Series C Preferred Stock") issued pursuant to a Stockholder Rights Plan dated November 3, 1999 (the " Rights Agreement"),


The Company has filed with the Securities and Exchange Commission (the " Commission") a registration statement, including a prospectus (the " Base Prospectus"), relating to the Shares, and has filed with, or transmitted for filing to, or shall promptly hereafter file with or transmit for filing to, the Commission a final prospectus supplement (the " Prospectus Supplement") specifically relating to the Shares pursuant to Rule 424 under the Securities Act of 1933, as amended (the " Securities Act"). The term " Registration Statement" means such registration statement, including the exhibits thereto, as amended to the date of this Agreement. If the Company has filed an abbreviated registration statement to register additional shares of Common Stock 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 term " Prospectus" means the Base Prospectus together with the Prospectus Supplement. All references to the Registration Statement, Base Prospectus, or Prospectus shall include documents incorporated therein by reference. The terms " supplement" and " amendment" or " amend" as used in this Agreement with respect to the Registration Statement or the Prospectus shall include all documents subsequently filed by the Company with the Commission


pursuant to the Securities Exchange Act of 1934, as amended (the " Exchange Act"), that are deemed to be incorporated by reference in the Prospectus.


1. Representations and Warranties . Except as described in the Registration Statement or Prospectus, the Company represents and warrants to and agrees with the Underwriter that:


(a) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the Commission.


(b) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Prospectus complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and regulations of the Commission thereunder, (ii) the Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will 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 statements therein not misleading, (iii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder and (iv) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement or the Prospectus based upon information relating to the Underwriter furnished to the Company in writing by the Underwriter expressly for use therein.


(c) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company.


(d) The Company does not own or control, directly or indirectly, any interest in any other corporation, association or other business entity.


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(e) This Agreement has been duly authorized, executed and delivered by the Company.


(f) The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus.


(g) The shares of Common Stock outstanding prior to the issuance of the Shares have been duly authorized and are validly issued, fully paid and non-assessable, and the Rights attached to such shares of Common Stock have been duly authorized, and the Series C Preferred Stock related to such Rights has been duly authorized and validly reserved for issuance upon the exercise of the Rights in accordance with the terms of the Rights Agreement.


(h) The Shares have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar rights and the Rights attached to those Shares have been duly authorized, and the Series C Preferred Stock related to such Rights has been duly authorized and validly reserved for issuance upon the exercise of the Rights in accordance with the terms of the Rights Agreement.


(i) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or any agreement or other instrument binding upon the Company that is material to the Company, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may be required by the securities or Blue Sky laws of the various states or the Commission or the Nasdaq National Market in connection with the offer and sale of the Shares.


(j) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement).


(k) There are no legal or governmental proceedings pending or threatened to which the Company is a party or to which any of the properties of the Company is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or


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any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not so described or filed as required.


(l) The Company is not, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus will not be, required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended.


(m) To the best of the Company's knowledge, 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 it under applicable Environmental Laws to conduct its business 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 on the Company.


(n) To the best of the Company's knowledge, there are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a material adverse effect on the Company.


(o) There are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company or to require the Company to include such securities with the Shares registered pursuant to the Registration Statement, except as have been or prior to the Closing will be appropriately waived pursuant to the terms and provisions of such contracts, agreements and understandings.


(p) The Company has all consents, approvals, orders, certificates, authorizations and permits issued by, and has made all declarations and filings with, all appropriate federal, state or foreign governmental or self-regulatory authorities and all courts and other tribunals necessary to conduct its business and to own, lease or license and use its properties in the manner described in the Prospectus, except for


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such consents, approvals, orders, certificates, authorizations, permits, declarations and filings the failure of which to have, maintain or make would not have a material adverse effect on the Company, and the Company has not received any notice of proceedings relating to the revocation or modification of any such consent, approval, order, certificate, authorization or permit.


(q) Except as disclosed in the Registration Statement or Prospectus, the Company owns or possesses, or has rights to all material patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names currently employed by it in connection with the business now operated by it or proposed to be operated by it as described in the Registration Statement or Prospectus, and the Company has not received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the Company.


(r) There are no contracts or other documents, relating to patents or patent applications owned or licensed by, or licenses of patents or patent applications held by, the Company of a character required to be filed as an exhibit to the Registration Statement, to the Company's annual report on Form 10-K for fiscal 2002 or to the Company's quarterly reports on Form 10-Q for the first fiscal quarters of 2003, or required to be described in the Registration Statement or Prospectus or in such Form 10-K or Forms 10-Q that are not so filed or described.


(t) The clinical trials and the human and animal studies conducted by or on behalf of the Company or in which the Company has participated that are described in the Prospectus were and, if still pending, are being conducted in accordance with standard medical and scientific research procedures and any applicable rules, regulations and policies of the U.S. Food and Drug Administration (the " FDA").


(u) The Company has operated and currently is in compliance in all material respects with all applicable rules, regulations and policies of the FDA and comparable regulatory agencies in Canada and in each European country in which the Company's products are marketed (collectively, the " Regulators").


(v) Except as described in the Registration Statement and the Prospectus, the Company is not required to file or obtain any registration, application, license, request for exemption, permit or other regulatory authorization with the Regulators in order to conduct its business as described in the Registration Statement and Prospectus.


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(w) Except as described in the Registration Statement and the Prospectus, to the knowledge of the Company, the Company holds, and is operating in compliance in all material respects with, all franchises, grants, authorizations, licenses, permits, consents, certificates and orders of the Regulators required to conduct its business as described in the Registration Statement and Prospectus, and all such franchises, grants, authorizations, licenses, permits, consents, certifications and orders are valid and in full force and effect; and, as of the date of this Agreement and except as described in the Registration Statement and the Prospectus, to the knowledge of the Company, the Company is in compliance in all material respects with all applicable federal, state, local and foreign laws, regulations, orders and decrees.


(x) Neither the Company nor, to the knowledge of the Company, its distribution partners, have received notification of the violation of any applicable statute, rule, regulation or order administered or issued by any of the Regulators.


2. Agreements to Sell and Purchase. The Company hereby agrees to sell to the Underwriter, and the Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, to purchase from the Company the Firm Shares at $9.05 a share (the " Purchase Price").


On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to sell to the Underwriter the Additional Shares, and the Underwriter shall have the right to purchase up to 900,000 Additional Shares at the Purchase Price. The Underwriter may exercise this right in whole or from time to time in part by giving written notice not later than 30 days after the date of this Agreement. Any exercise notice shall specify the number of Additional Shares to be purchased by the Underwriter and the date on which such shares are to be purchased. Each purchase date must be at least two business days after the written notice is given and may not be earlier than the closing date for the Firm Shares nor later than ten business days after the date of such notice. Additional Shares may be purchased as provided in Section 4 hereof solely for the purpose of covering over-allotments made in connection with the offering of the Firm Shares. On each day, if any, that Additional Shares are to be purchased (an " Option Closing Date"), the Underwriter agrees to purchase the Additional Shares.


The Company hereby agrees that, without the prior written consent of the Underwriter, it will not, during the period ending 90 days after the date of the Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (ii) enter into any swap or


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other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the Shares to be sold hereunder, (B) the issuance by the Company of shares of Common Stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof of which the Underwriter has been advised in writing, (C) the grant of options to purchase Common Stock under the Company's stock option plans or (D) the issuance by the Company of shares of Common Stock under the Company's employee stock purchase plan.


3. Terms of Public Offering . The Company is advised that the Underwriter proposes to make a public offering of the Shares as soon after the Registration Statement and this Agreement have become effe ...