Exhibit 1.1
PARADIGM GENETICS, INC.
5,000,000 Shares/1/
Common Stock
UNDERWRITING AGREEMENT
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_____ __, 2000
Chase Securities Inc.
X.X. Xxxxxx & Co., Incorporated
Pacific Growth Equities, Inc.
Xxxxxxxx Inc.
c/o Chase Securities Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Paradigm Genetics, Inc., a Delaware corporation (herein called the
"Company"), proposes to issue and sell 5,000,000 shares of its authorized but
unissued Common Stock, $.001 par value (herein called the "Common Stock") (said
5,000,000 shares of Common Stock being herein called the "Underwritten Stock")
to the Underwriters named in Schedule I hereto. The Company proposes to grant
to the Underwriters (as hereinafter defined) an option to purchase up to 750,000
additional shares of Common Stock (herein called the "Option Stock" and with the
Underwritten Stock herein collectively called the "Stock"). The Common Stock is
more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.
The Company and the Underwriters hereby agree with respect to the purchase
of the Stock by the several underwriters, for whom you are acting, named in
Schedule I hereto (herein collectively called the "Underwriters", which term
shall also include any underwriter purchasing Stock pursuant to Section 3(c)
hereof). You represent and warrant that you have been authorized by each of the
other Underwriters to enter into this Agreement on its behalf and to act for it
in the manner herein provided.
1. Registration Statement. The Company has filed with the Securities and
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Exchange Commission (herein called the "Commission") a registration statement on
Form S-1 (No. 333-30758), including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (herein called the
"Securities Act") of the Stock. Copies of such registration statement and of
each amendment thereto, if any, including the related preliminary prospectus
(meeting the requirements of Rule 430A of the rules and regulations of the
Commission) heretofore filed by the Company with the Commission have been
delivered to you.
The term Registration Statement as used in this agreement shall mean such
registration statement, including all exhibits and financial statements, all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b)
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/1/ Plus an option to purchase from the Company up to 750,000 additional shares
to cover over-allotments.
registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the "Effective
Date"), shall also mean (from and after the effectiveness of such amendment)
such registration statement as so amended (including any Rule 462(b)
registration statement). The term Prospectus as used in this Agreement shall
mean the prospectus relating to the Stock first filed with the Commission
pursuant to Rule 424(b) and Rule 430A (or if no such filing is required, as
included in the Registration Statement) and, in the event of any supplement or
amendment to such prospectus after the Effective Date, shall also mean (from and
after the filing with the Commission of such supplement or the effectiveness of
such amendment) such prospectus as so supplemented or amended. The term
Preliminary Prospectus as used in this Agreement shall mean each preliminary
prospectus included in such registration statement prior to the time it becomes
effective.
The Registration Statement has been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. The Company has caused to be delivered
to you copies of each Preliminary Prospectus and has consented to the use of
such copies for the purposes permitted by the Securities Act.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants as follows:
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has full corporate power and corporate authority to own or
lease its properties and conduct its business as described in the
Registration Statement and the Prospectus as being conducted, and is duly
qualified as a foreign corporation and in good standing in all jurisdictions
in which the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary (except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company (a "Material Adverse Effect")).
(b) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
materially adverse change in the business, properties, financial condition or
results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, other than as set forth in
the Registration Statement and the Prospectus, and since such dates, except
in the ordinary course of business, the Company has not entered into any
material transaction not referred to in the Registration Statement and the
Prospectus.
(c) The Registration Statement and the Prospectus comply, and on the
Closing Date (as hereinafter defined) and any later date on which Option
Stock is to be purchased, the Prospectus will comply, in all material
respects, with the provisions of the Securities Act and the rules and
regulations of the Commission thereunder; on the Effective Date, the
Registration Statement did not contain any untrue statement of a material
fact and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading;
and, on the Effective Date the Prospectus did not and, on the Closing Date
and any later date on which Option Stock is to be purchased, will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties in this subparagraph (iii)
shall apply to statements in, or omissions from, the Registration Statement
or the Prospectus made in reliance upon and in conformity with information
herein or otherwise furnished in writing to the Company by or on behalf of
the
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Underwriters for use in the Registration Statement or the Prospectus.
(d) As of the date of the Prospectus, the Company had an authorized
capitalization as set forth in the Prospectus and all of the issued shares of
capital stock of the Company have been duly and validly authorized and issued
in accordance with all applicable federal and state securities laws, rules
and regulations, are fully paid and non-assessable, are free of and were not
issued in violation of any preemptive or similar rights, and conform to the
description thereof contained in the Prospectus. The Prospectus accurately
sets forth, in all material respects, as of its date, all outstanding
options, warrants and other rights calling for the issuance of capital stock
of the Company and any security convertible into or exchangeable or
exercisable for capital stock of the Company. Except as described in the
Prospectus, there are no commitments to issue any shares of capital stock of
the Company and any security convertible into or exchangeable or exercisable
for capital stock of the Company. Except as described in the Prospectus, and
except with respect to rights that have been waived in writing, there is no
holder of any securities of the Company or any other person who has the
right, contractual or otherwise, to cause the Company to sell or otherwise
issue to him or her, or permit him or her to underwrite the sale of, any of
the Stock.
(e) The Stock has been duly and validly authorized and, when issued
and sold to the Underwriters as provided herein, will be duly and validly
issued, fully paid and non-assessable, will be free of and will not have been
issued in violation of any preemptive or other similar rights, and will
conform to the description thereof contained in the Prospectus. No further
approval or authority of any stockholder or the Board of Directors of the
Company will be required for the issuance and sale of the Stock as provided
herein.
(f) The Stock to be sold by the Company has been approved for
quotation by the Nasdaq National Market upon official notice of issuance.
(g) The issuance and sale of the Stock by the Company and the
compliance by the Company with all of the provisions of this Agreement and
the consummation of the transactions contemplated hereby (i) have been duly
authorized and approved by all requisite corporate action on the part of the
Company, (ii) do not and will not as of the Closing Date and any later date
on which Option Stock is to be purchased, conflict with, or result in a
breach or violation of, constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets
of the Company pursuant to, any of the terms and provisions of 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 or any of its properties
or assets are bound or affected (each, a "Conflict"), (iii) do not and will
not as of the Closing Date and any later date on which Option Stock is to be
purchased, result in the violation of any provision of the Certificate of
Incorporation or By-laws of the Company, (iv) will not result in the
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction of the Company or any of its
properties or assets (each, a "Violation"), and (v) do not and will not as of
the Closing Date and any later date on which Option Stock is to be purchased
require the consent, approval, authorization or other order of, or
registration, filing or qualification with, any such court or governmental
agency or body or other third party (each, a "Consent") except, (A) in the
case of clause (v) as may be required for the registration of the Stock under
the Securities Act and the Exchange Act and compliance with state securities
or Blue Sky laws and by the NASD, all of which have been or will be effected
in accordance with this Agreement and (B) in the case of clauses (ii) and
(iv) any such Conflict or Violation that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect or
materially impair or materially delay the
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Company's ability to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company and constitutes
the valid and binding agreement of the Company, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium or similar laws, now or hereafter in effect affecting the rights
and remedies of creditors generally, and to equitable principles.
(h) The Company is not (i) in violation of its Certificate of
Incorporation or By-laws, or (ii) in violation of any statute, law,
ordinance, administrative or governmental rule or regulation applicable to
the Company or any judgment, injunction, order or decree of any court or
governmental agency or body having jurisdiction over the Company, except for
any such violation which would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect and (iii) in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other material agreement or instrument to which it is a
party or by which it or any of its properties may be bound, including,
without limitation, the Monsanto Agreement and the Bayer Agreement, each as
hereinafter defined, except for any such default which would not, singly or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
(i) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or to which
any property of the Company is the subject which, if determined adversely to
the Company, would individually or in the aggregate have a Material Adverse
Effect; and, to the Company's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others.
(j) The Company is not and, after giving effect to the sale of the
Stock and the application of the proceeds therefrom as described in the
Prospectus, will not be an "investment company", as such term is defined in
the Investment Company Act of 1940, as amended.
(k) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and delivered their reports with respect to the
audited financial statements and schedules contained or incorporated by
reference in the Registration Statement and the Prospectus, are independent
public accountants as required by the Securities Act and Exchange Act and the
rules and regulations of the Commission thereunder.
(l) The financial statements and schedules of the Company and the
related notes thereto, included in the Registration Statement and the
Prospectus present fairly in all material aspects the financial position of
the Company as of the respective dates of such financial statements and
schedules, and the results of operations and changes in financial position of
the Company for the respective periods covered thereby. Such statements,
schedules and related notes have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis and (where
audited) as certified by the independent accountants named in Section 2(k).
No other financial statements or schedules are required to be included in the
Registration Statement or the Prospectus. The summary and selected financial
data set forth in the Prospectus under the captions "Capitalization,"
"Summary Financial Data" and "Selected Financial Data" fairly present in all
material respects the information shown on the basis stated in Registration
Statement.
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(m) There are no contracts or other documents required to be described
in the Registration Statement or the Prospectus or to be filed as an exhibit
to the Registration Statement that have not been described or filed as
required by the Securities Act or the rules and regulations of the Commission
thereunder. The contracts so described in the Prospectus are in full force
and effect on the date hereof, and neither the Company nor, to the Company's
knowledge, any other party is in breach of or default under any of such
contracts where such breach or default, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect. The
descriptions of such contracts in the Registration Statement are true
summaries thereof and fairly presents in all material respects the
information required to be shown in all material respects.
(n) Except as disclosed in the Prospectus, the Company owns or has
obtained licenses for or other rights to sufficient and requisite trademarks,
trade names, patent rights, copyrights and licenses and approvals
("Intellectual Property Rights") to conduct its business as now conducted (as
described in the Prospectus). Without limiting the generality of the
foregoing, the Company is unaware of any limitations with respect to its
Intellectual Property Rights not described in the Prospectus that would
prevent it from (a) performing its obligations under the Monsanto Agreement
or Bayer Agreement (each, as hereinafter defined) or any other agreements
with third parties, and (b) engaging in its contemplated activities, as
described in the Prospectus. The Company does not have any Intellectual
Property Rights material to the operations of the Company's business except
as described in the Prospectus and such Intellectual Property Rights will not
expire earlier than as disclosed in the Prospectus. The Company has no
knowledge of any material infringement by it of Intellectual Property Rights
of others and, to its knowledge, there are no outstanding claims against the
Company regarding Intellectual Property Rights or other infringement which,
if adversely determined, could have a Material Adverse Effect. The Company
has no knowledge of any material infringement by others of its Intellectual
Property Rights.
(o) The Company has taken usual and customary measures for a company
of its size and resources and in its line of business to protect the secrecy,
confidentiality and value of all of its intellectual property (including the
Intellectual Property Rights and any trade secrets necessary or useful in the
conduct of its business) in all material respects.
(p) The Company possesses all certificates, authorizations, and
permits issued by the appropriate federal, state, or local regulatory
authorities necessary to conduct its business as presently conducted,
including without limitation, all such certificates, authorizations, and
permits required by the United States Food and Drug Administration ("FDA"),
United States Department of Agriculture ("USDA"), or any other federal,
state, or local agency or body engaged in the regulation of activities
related to our functional genomics system, genetically engineered
agricultural products, and related technologies, except where the failure to
possess such certificates, authorizations, and permits would not, singly or
in the aggregate, be reasonably expected to have a Material Adverse Effect;
and the Company has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization, or permit,
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling, or finding, would reasonably be expected to result in a Material
Adverse Effect.
(q) Without limiting the generality of (q) above, the Company: (i) is
in material compliance with any and all applicable foreign, United States,
state and local laws, rules, regulations, treaties, statutes and codes
promulgated by any and all governmental authorities relating to the
protection of human health and safety, the environment or toxic substances or
wastes, pollutants or contaminates ("Environmental Laws"); (ii) is in
material compliance with any and all applicable foreign, United States, state
and local laws,
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rules, regulations, treaties, statutes and codes promulgated by any and all
governmental authorities (including pursuant to the Occupational Health and
Safety Act) relating to the protection of human health and safety in the
workplace ("Occupational Laws" and, together with Environmental Laws,
"Environmental and Occupational Laws"); (iii) has received all material
permits, licenses or other approvals required of it under applicable
Environmental and Occupational Laws to conduct its business as currently
conducted; and (iv) is in compliance with all terms and conditions of such
permit, license or approval, except where, with respect to all such cases set
forth in subsections (i)-(iv) above, such noncompliance with the applicable
Environmental and Occupational Laws or failure to receive or act in
compliance with the required permit, license or other approval would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect. No action, proceeding, revocation proceeding, writ,
injunction or claim is pending or, to the Company's knowledge, threatened
against the Company relating to Environmental and Occupational Laws or to the
Company's activities involving Hazardous Materials, which would reasonably be
expected to have a Material Adverse Effect. The term "Hazardous Materials" as
used in this Agreement means any material or substance that: (A) is
prohibited or regulated by any environmental law, rule, regulation, order,
treaty, statute or code promulgated by any governmental authority, or any
amendment or modification thereto; or (B) has been designated or regulated by
any governmental authority as radioactive, toxic, hazardous or otherwise a
danger to health, reproduction or the environment.
(r) The Company has filed on a timely basis all necessary tax returns
required to be filed with any taxing authority, which returns are complete
and correct in all material respects and, to the Company's knowledge, are not
the subject of any audit proceedings, and the Company is not in default in
the payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto, except for such taxes as are being
contested in good faith and as to which adequate reserves have been provided.
(s) The Company maintains insurance with insurers of recognized
financial responsibility of the types and in the amounts which it believes
are reasonable, all of which insurance is in full force and effect, and there
are no claims by the Company under any such policy or instrument as to which
any insurer is denying liability or defending under a reservation of rights
clause.
(t) Neither the Company nor, to the Company's knowledge, any agent or
employee of the Company has, at any time during the last five years, (a) made
any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (b) made any payment
to any federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
(u) Except for the e-mails dated February 28 and March 13, 2000,
transmitted by Xxxxx Xxxxxx to the employees of the Company, the Company has
not distributed and, prior to the later to occur of the Closing Date and
completion of the distribution of the Stock, will not distribute any offering
material in connection with the offering and sale of the Stock other than the
Registration Statement, the Preliminary Prospectus, the Prospectus or other
materials, if any, permitted by the Securities Act.
(v) The execution, delivery and performance by the Company of each of
(i) the Monsanto/Paradigm Genetics Collaboration Agreement, dated November
17, 1999, between the Company and Monsanto Company (the "Monsanto Agreement")
and (ii) the Agreement, dated September 22, 1998, between the Company and
Xxxxx XX, as amended
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(the "Bayer Agreement"), were duly authorized and approved by all requisite
corporate and other action on the part of the Company, and will not
constitute or give rise to a Conflict or Violation or require a Consent,
except where any such Conflict or Violation, or failure to obtain a Consent,
would not, individually or in the aggregate, have a Material Adverse Effect,
or materially impair or materially delay the Company's ability to consummate
the transactions contemplated thereby.
(w) There is (i) no significant unfair labor practice complaint
pending against the Company or, to its knowledge, threatened against it
before the National Labor Relations Board or any state or local labor
relations board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against the Company or threatened against it, (ii) no labor dispute
in which the Company is involved nor is any labor dispute imminent, other
than routine disciplinary and grievance matters, and (iii) no union
representation question existing with respect to the employees of the Company
and no union organizing activities are taking place, except, in each case
singly or in the aggregate, such as would not have a Material Adverse Effect.
3. Purchase of the Stock by the Underwriters.
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(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and
sell 750,000 shares of the Underwritten Stock to the several Underwriters
and each of the Underwriters agrees to purchase from the Company the
respective aggregate number of shares of Underwritten Stock set forth
opposite its name in Schedule I. The price at which such shares of
Underwritten Stock shall be sold by the Company and purchased by the
several Underwriters shall be $___ per share. In making this Agreement,
each Underwriter is contracting severally and not jointly; except as
provided in paragraphs (c) and (d) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) It is understood that approximately _________ shares of the
Underwritten Stock ("Directed Shares") will initially be reserved by the
Underwriters for offer and sale to employees and persons having business
relationships with the Company ("Directed Share Participants") upon the
terms and conditions set forth in the Prospectus and in accordance with the
rules and regulations of the National Association of Securities Dealers,
Inc. (the "Directed Share Program"). Under no circumstances will Chase
Securities Inc. or any Underwriter be liable to the Company or to any
Directed Share Participant for any action taken or omitted to be taken in
good faith, without gross negligence or willful misconduct, in connection
with such Directed Share Program. To the extent that any Directed Shares
are not affirmatively reconfirmed for purchase by any Directed Share
Participant on or by the end of the first business day after the date of
this Agreement, such Directed Shares may be offered to the public as part
of the public offering contemplated hereby.
(c) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination
of this Agreement under the provisions of Section 8 or 9 hereof) to
purchase and pay for the number of shares of the Stock agreed to be
purchased by such Underwriter or Underwriters, upon the Company's awareness
of such failure or refusal, the Company shall immediately give notice
thereof to you, and the non-defaulting Underwriters shall have the right
within 24 hours after the receipt by you of such notice to purchase, or
procure one or more other Underwriters to purchase, in such proportions as
may be agreed upon between you and such purchasing Underwriter or
Underwriters and upon the terms herein set forth, all or
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any part of the shares of the Stock which such defaulting Underwriter or
Underwriters agreed to purchase. If the non-defaulting Underwriters fail so
to make such arrangements with respect to all such shares and portion, the
number of shares of the Stock which each non-defaulting Underwriter is
otherwise obligated to purchase under this Agreement shall be automatically
increased on a pro rata basis to absorb the remaining shares and portion
which the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be
obligated to purchase the shares and portion which the defaulting
Underwriter or Underwriters agreed to purchase if the aggregate number of
such shares of the Stock exceeds 10% of the total number of shares of the
Stock which all Underwriters agreed to purchase hereunder. If the total
number of shares of the Stock which the defaulting Underwriter or
Underwriters agreed to purchase shall not be purchased or absorbed in
accordance with the two preceding sentences, the Company shall have the
right, within 24 hours next succeeding the 24-hour period above referred
to, to make arrangements with other underwriters or purchasers satisfactory
to you for purchase of such shares and portion on the terms herein set
forth. In any such case, either you or the Company shall have the right to
postpone the Closing Date determined as provided in Section 5 hereof for
not more than seven business days after the date originally fixed as the
Closing Date pursuant to said Section 5 in order that any necessary changes
in the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If neither the non-defaulting Underwriters nor
the Company shall make arrangements within the 24-hour periods stated above
for the purchase of all the shares of the Stock which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement
shall be terminated without further act or deed and without any liability
on the part of the Company to any Underwriter and without any liability on
the part of any non-defaulting Underwriter to the Company. Nothing in this
paragraph (b), and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter
under this Agreement.
(d) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth,
the Company grants an option to the several Underwriters to purchase,
severally and not jointly, up to ____ shares in the aggregate of the Option
Stock from the Company at the same price per share as the Underwriters
shall pay for the Underwritten Stock. Said option may be exercised only to
cover over-allotments in the sale of the Underwritten Stock by the
Underwriters and may be exercised in whole or in part at any time (but not
more than once) on or before the thirtieth day after the date of this
Agreement upon written or telegraphic notice by you to the Company setting
forth the aggregate number of shares of the Option Stock as to which the
several Underwriters are exercising the option. Delivery of certificates
for the shares of Option Stock, and payment therefor, shall be made as
provided in Section 5 hereof. The number of shares of the Option Stock to
be purchased by each Underwriter shall be the same percentage of the total
number of shares of the Option Stock to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Stock,
as adjusted by you in such manner as you deem advisable to avoid fractional
shares.
4. Offering by Underwriters.
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(a) The terms of the initial public offering by the Underwriters of
the Stock to be purchased by them shall be as set forth in the Prospectus.
The Underwriters may from time to time change the public offering price
after the closing of the initial public offering and increase or decrease
the concessions and discounts to dealers as they may determine.
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(b) The information set forth in the last paragraph on the front cover
page and under "Underwriting" in the Registration Statement, any
Preliminary Prospectus and the Prospectus relating to the Stock filed by
the Company (insofar as such information relates to the Underwriters)
constitutes the only information furnished by the Underwriters in writing
to the Company for inclusion in the Registration Statement, any Preliminary
Prospectus, and the Prospectus, and you on behalf of the respective
Underwriters represent and warrant to the Company that the statements made
therein are correct.
5. Delivery of and Payment for the Stock.
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(a) Delivery of certificates for the shares of the Underwritten Stock
and the Option Stock (if the option granted by Section 3(c) hereof shall
have been exercised not later than 10:00 A.M., New York time, on the date
two business days preceding the Closing Date), and payment therefor, shall
be made at the office of Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 at 10:00 a.m., New York time, on the fourth business
day after the date of this Agreement, or at such time on such other day,
not later than seven full business days after such fourth business day, as
shall be agreed upon in writing by the Company and you. The date and hour
of such delivery and payment (which may be postponed as provided in Section
3(b) hereof) are herein called the Closing Date.
(b) If the option granted by Section 3(d) hereof shall be exercised
after 10:00 a.m., New York time, on the date two business days preceding
the Closing Date, delivery of certificates for the shares of Option Stock,
and payment therefor, shall be made at the office of Xxxxxx, Xxxxx &
Bockius LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New
York time, on the third business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made to
the Company or its order by one or more certified or official bank check or
checks in same day funds or, at the Company's request, by wire transfer of
immediately available funds. Such payment shall be made upon delivery of
certificates for the Stock to you for the respective accounts of the
several Underwriters against receipt therefor signed by you. Certificates
for the Stock to be delivered to you shall be registered in such name or
names and shall be in such denominations as you may request at least two
business day before the Closing Date, in the case of Underwritten Stock,
and at least two business day prior to the purchase thereof, in the case of
the Option Stock. Such certificates will be made available to the
Underwriters for inspection, checking and packaging at the offices of Lewco
Securities Corporation, 0 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the
business day prior to the Closing Date or, in the case of the Option Stock,
by 3:00 p.m., New York time, on the business day preceding the date of
purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or any later date on which Option Stock is
purchased for the account of such Underwriter. Any such payment by you shall
not relieve such Underwriter from any of its obligations hereunder.
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6. Further Agreements of the Company. The Company covenants and agrees
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as follows:
(a) The Company will (i) prepare and timely file with the Commission
under Rule 424(b) a Prospectus containing information previously omitted at
the time of effectiveness of the Registration Statement in reliance on Rule
430A and (ii) not file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been
advised and furnished with a copy or to which you shall have reasonably
objected in writing or which is not in compliance with the Securities Act
or the rules and regulations of the Commission.
(b) The Company will promptly notify each Underwriter in the event of
(i) the request by the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, (ii) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, (iii) the
institution or notice of intended institution of any action or proceeding
for that purpose, (iv) the receipt by the Company of any notification with
respect to the suspension of the qualification of the Stock for sale in any
jurisdiction or (v) the receipt by it of notice of the initiation or
threatening of any proceeding for such purpose. The Company will make
every reasonable effort to prevent the issuance of such a stop order and,
if such an order shall at any time be issued, to obtain the withdrawal
thereof at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you
a signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement
becomes effective and, promptly upon the filing thereof, a signed copy of
each post-effective amendment, if any, to the Registration Statement
(together with, in each case, all exhibits thereto unless previously
furnished to you) and will also deliver to you, for distribution to the
Underwriters, a sufficient number of additional conformed copies of each of
the foregoing (but without exhibits) so that one copy of each may be
distributed to each Underwriter, (ii) as promptly as possible deliver to
you and send to the several Underwriters, at such office or offices as you
may designate, as many copies of the Prospectus as you may reasonably
request, and (iii) thereafter from time to time during the period in which
a prospectus is required by law to be delivered by an Underwriter or
dealer, likewise send to the Underwriters as many additional copies of the
Prospectus and as many copies of any supplement to the Prospectus and of
any amended prospectus, filed by the Company with the Commission, as you
may reasonably request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing
by you, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of counsel for the Underwriters, to supplement
or amend the Prospectus in order to make the Prospectus not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser of the Stock, the Company will forthwith prepare and file with
the Commission a supplement to the Prospectus or an amended prospectus so
that the Prospectus as so supplemented or amended will not contain any
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 existing at the time such Prospectus is delivered to such
purchaser, not misleading. If, after the initial public offering of the
Stock by the Underwriters and during such period, the Underwriters shall
propose to
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vary the terms of offering thereof by reason of changes in general market
conditions or otherwise, you will advise the Company in writing of the
proposed variation, and, if in the opinion either of counsel for the
Company or of counsel for the Underwriters such proposed variation requires
that the Prospectus be supplemented or amended, the Company will forthwith
prepare and file with the Commission a supplement to the Prospectus or an
amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the
several Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance with
the applicable provisions of the Securities Act and the applicable rules
and regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment
to the Registration Statement and any supplement to the Prospectus or any
amended prospectus proposed to be filed.
(f) The Company will cooperate in the qualification of the Stock for
offer and sale under the securities or blue sky laws of such jurisdictions
as you may designate and, during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, in keeping
such qualifications in good standing under said securities or blue sky
laws; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. The
Company will, from time to time, prepare and file such statements, reports,
and other documents as are or may be required to continue such
qualifications in effect for so long a period as you may reasonably request
for distribution of the Stock.
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to
stockholders of the Company and of all information, documents and reports
filed with the Commission.
(h) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date,
the Company will make generally available to its security holders an
earning statement in accordance with Section 11(a) of the Securities Act
and Rule 158 thereunder.
(i) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, including all costs
and expenses incident to (i) the preparation, printing and filing with the
Commission and the National Association of Securities Dealers, Inc. of the
Registration Statement, any Preliminary Prospectus and the Prospectus, (ii)
the furnishing to the Underwriters of copies of any Preliminary Prospectus
and of the several documents required by paragraph (c) of this Section 6 to
be so furnished, (iii) the printing of this Agreement and related documents
delivered to the Underwriters, (iv) the preparation, printing and filing of
all supplements and amendments to the Prospectus referred to in paragraph
(d) of this Section 6, (v) the furnishing to you and the Underwriters of
the reports and information referred to in paragraph (g) of this Section 6,
(vi) the printing and issuance of stock certificates, including the
transfer agent's fees and (vii) all fees and disbursements incurred by the
Underwriters in connection with the Directed Share Program, including
counsel fees and any stamp duties or other taxes incurred by the
Underwriters in connection with the Directed Share Program.
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(j) The Company agrees to reimburse you, for the account of the
several Underwriters, for blue sky fees and related disbursements
(including counsel fees and disbursements and cost of printing memoranda
for the Underwriters) paid by or for the account of the Underwriters or
their counsel in qualifying the Stock under state securities or blue sky
laws and in the review of the offering by the NASD; provided, however,
-------- -------
counsel fees with respect to the review by the NASD shall not exceed
$15,000.
(k) The Company hereby agrees that, without the prior written consent
of Chase Securities Inc. on behalf of the Underwriters, the Company will
not, for a period of 180 days following the commencement of the public
offering of the Stock by the Underwriters, directly or indirectly, (i)
sell, offer, contract to sell, make any short sale, pledge, 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
any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or acquire Common
Stock or (ii) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences or ownership of 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 Stock
to be sold to the Underwriters pursuant to this Agreement, (B) shares of
Common Stock issued by the Company upon the exercise of options granted
under the stock option or stock purchase plans of the Company granted prior
to the date of this Agreement (the "Option Plans") or upon the exercise of
warrants outstanding as of the date hereof in the Prospectus, (C) options
to purchase Common Stock granted under the Option Plans, provided that,
without prior written consent of Chase Securities Inc., such additional
options shall not be exercisable during such period, (D) any shares of
Common Stock or other rights to acquire shares of Common Stock issued
pursuant to equipment or lease financing activities entered into in the
ordinary course of the Company's business or (E) any securities issued in
connection with any strategic alliance, collaboration, license,
acquisition, marketing agreement, distribution agreement, advertising
arrangement, promotional arrangement or similar agreement, arrangement or
transaction, provided that the total amount of securities issued pursuant
to subsections (D) and (E), would not exceed 2 million shares of Common
Stock of the Company or securities exchangeable or convertible into shares
of Common Stock of the Company and provided further that securities may
only be issued pursuant to subsections (D) and (E) to the extent the
recipient of such securities agrees to the same transfer restrictions
imposed on the Company by the Underwriters under this section 6(k).
(l) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price for the Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after
written notice from you advising the Company to the effect set forth above,
forthwith prepare, consult with you concerning the substance of, and
disseminate a press release or other public statement, reasonably
satisfactory to you, responding to or commenting on such rumor, publication
or event.
(m) The Company is familiar with the Investment Company Act of 1940,
as amended, and has in the past conducted its affairs, and will in the
future conduct its affairs, in such a manner to ensure that the Company was
not and will not be an
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"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder.
7. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person (including each partner or officer thereof) who controls
any Underwriter within the meaning of Section 15 of the Securities Act from
and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become
subject under the Securities Act, the Securities Exchange Act of 1934, as
amended (herein called the Exchange Act), or the common law or otherwise,
and the Company agrees to reimburse each such Underwriter and controlling
person for any legal or other expenses (including, except as otherwise
hereinafter provided, reasonable fees and disbursements of counsel)
reasonably incurred by the respective indemnified parties in connection
with defending against any such losses, claims, damages or liabilities or
in connection with any investigation or inquiry of, or other proceeding
which may be brought against, the respective indemnified parties, in each
case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule
462(b) registration statement), or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus or the Prospectus (as amended or as supplemented if the Company
shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
In connection with the offer and sale of the Directed Shares, the
Company agrees, promptly upon request in writing, to indemnify and hold
harmless Chase Securities Inc. and the other Underwriters from and against
any loss, claim, damage, expense, liability or action with (i) arises out
of, or is based upon, any untrue statement or alleged untrue statement of a
material fact contained in any material prepared by or with the approval of
the Company for distribution to Directed Share Participants in connection
with the Directed Share Program or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein no misleading, (ii) arises out of the failure
of any Directed Share Program participant to pay for and accept delivery of
Directed Shares that the Participant agreed to purchase or (iii) is
otherwise related to the Directed Share Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted directly from the bad faith or gross
negligence of Chase Securities Inc.
The indemnity agreements of the Company contained in the first two
paragraphs of this Section 7(a) shall not apply to any such losses, claims,
damages, liabilities or expenses if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated
or otherwise furnished in writing to the Company by or on behalf of any
Underwriter for use in any Preliminary Prospectus or the Registration
Statement or the Prospectus or any such amendment thereof or supplement
thereto and (2) the indemnity agreement contained in this Section 7 (a)
with respect to any Preliminary Prospectus shall not inure to the benefit
of any Underwriter
-13-
from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Stock which is the subject thereof
(or to the benefit of any person controlling such Underwriter) if at or
prior to the written confirmation of the sale of such Stock a copy of the
Prospectus (or the Prospectus as amended or supplemented) was not sent or
delivered to such person and the untrue statement or omission of a material
fact contained in such Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented) unless the
failure is the result of noncompliance by the Company with paragraph (c) of
Section 6 hereof. The indemnity agreements of the Company contained in this
Section 7(a) and the representations and warranties of the Company
contained in Section 2 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the
Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its officers who signs the Registration Statement on
his own behalf or pursuant to a power of attorney, each of its directors,
each other Underwriter and each person (including each partner or officer
thereof) who controls the Company or any such other Underwriter within the
meaning of Section 15 of the Securities Act, from and against any and all
losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities
Act, the Exchange Act, or the common law or otherwise and to reimburse each
of them for any legal or other expenses (including, except as otherwise
hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection
with any investigation or inquiry of, or other proceeding which may be
brought against, the respective indemnified parties, in each case arising
out of or based upon (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (including the
Prospectus as part thereof and any Rule 462(b) registration statement) or
any post-effective amendment thereto (including any Rule 462(b)
registration statement) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus or the Prospectus (as amended or as supplemented if the Company
shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, if such statement
or omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company
by or on behalf of such indemnifying Underwriter for use in the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto. The indemnity agreement of each Underwriter contained
in this paragraph (b) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified
party and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and
(b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it
or upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in
such paragraphs, it will promptly give written notice (herein called the
Notice) of such service or notification to the party or parties from whom
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indemnification may be sought hereunder. No indemnification provided for
in such paragraphs shall be available to any party who shall fail so to
give the Notice if the party to whom such Notice was not given was unaware
of the action, suit, investigation, inquiry or proceeding to which the
Notice would have related and was prejudiced by the failure to give the
Notice, but the omission so to notify such indemnifying party or parties of
any such service or notification shall not relieve such indemnifying party
or parties from any liability which it or they may have to the indemnified
party for contribution or otherwise than on account of such indemnity
agreement. Any indemnifying party shall be entitled at its own expense to
participate in the defense of any action, suit or proceeding against, or
investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt
of the Notice by giving written notice (herein called the Notice of
Defense) to the indemnified party, to assume (alone or in conjunction with
any other indemnifying party or parties) the entire defense of such action,
suit, investigation, inquiry or proceeding, in which event such defense
shall be conducted, at the expense of the indemnifying party or parties, by
counsel chosen by such indemnifying party or parties and reasonably
satisfactory to the indemnified party or parties; provided, however, that
(i) if the indemnified party or parties reasonably determine that there may
be a conflict between the positions of the indemnifying party or parties
and of the indemnified party or parties in conducting the defense of such
action, suit, investigation, inquiry or proceeding or that there may be
legal defenses available to such indemnified party or parties different
from or in addition to those available to the indemnifying party or
parties, then counsel for the indemnified party or parties shall be
entitled to conduct the defense to the extent reasonably determined by such
counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties
participate in, but not conduct, the defense. If, within a reasonable time
after receipt of the Notice, an indemnifying party gives a Notice of
Defense and the counsel chosen by the indemnifying party or parties is
reasonably satisfactory to the indemnified party or parties, the
indemnifying party or parties will not be liable under paragraphs (a)
through (c) of this Section 7 for any legal or other expenses subsequently
incurred by the indemnified party or parties in connection with the defense
of the action, suit, investigation, inquiry or proceeding, except that (A)
the indemnifying party or parties shall bear the reasonable legal and other
expenses incurred in connection with the conduct of the defense as referred
to in clause (i) of the proviso to the preceding sentence and (B) the
indemnifying party or parties shall bear such other expenses as it or they
have authorized to be incurred by the indemnified party or parties. If, 30
days after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any reasonable legal
or other expenses incurred by the indemnified party or parties in
connection with the defense of the action, suit, investigation, inquiry or
proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in paragraph (a) or (b) of this
Section 7 (i) in such proportion as is appropriate to reflect the relative
benefits received by each indemnifying party from the offering of the Stock
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of each indemnifying party in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, or
-15-
actions in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same respective proportions as
the total net proceeds from the offering of the Stock received by the
Company and the total underwriting discount received by the Underwriters,
as set forth in the table on the cover page of the Prospectus, bear to the
aggregate public offering price of the Stock. Relative fault 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 each
indemnifying party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro
rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to in the first sentence of
this paragraph (d). The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities, or actions in respect thereof,
referred to in the first sentence of this paragraph (d) shall be deemed to
include any reasonable legal or other expenses reasonably incurred by such
indemnified party in connection with investigation, preparing to defend or
defending against any action or claim which is the subject of this
paragraph (d). Notwithstanding the provisions of this paragraph (d), no
Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Stock purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted
against it in respect of which contribution may be sought, it will promptly
give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in paragraph (c) of this Section
7).
(e) The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect
of which indemnification may be sought hereunder (whether or not such
Underwriter or any person who controls such Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act is a
party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of such Underwriter
and each such controlling person from all liability arising out of such
claim, action, suit or proceeding.
8. Termination. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company if after the
date of this Agreement trading in the Common Stock shall have been suspended, or
if there shall have occurred (i) the engagement in hostilities or an escalation
of major hostilities by the United States or the declaration of war or a
national emergency by the United States on or after the date hereof, if the
Underwriters, in their reasonable judgment, believe the offering or delivery of
the Stock is
-16-
impracticable, (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change in economic or
political conditions in the financial markets of the United States would, in the
Underwriters' reasonable judgment, make the offering or delivery of the Stock
impracticable, (iii) suspension of trading in securities generally or a material
adverse decline in value of securities generally on the New York Stock Exchange,
the American Stock Exchange, The Nasdaq Stock Market, or limitations on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such exchange or system, (iv) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order
of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company to the Underwriters
and no liability of the Underwriters to the Company; provided, however, that in
the event of any such termination the Company agrees to indemnify and hold
harmless the Underwriters from all costs or expenses incident to the performance
of the obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (i) and (j) of Section 6 hereof.
9. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company of all its obligations to be performed hereunder at
or prior to the Closing Date or any later date on which Option Stock is to be
purchased, as the case may be, and to the following further conditions:
(a) The Registration Statement shall have become effective; and no
stop order suspending the effectiveness thereof shall have been issued and
no proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock hereunder
and the validity and form of the certificates representing the Stock, all
corporate proceedings and other legal matters incident to the foregoing,
and the form of the Registration Statement and of the Prospectus (except as
to the financial statements contained therein), shall have been approved at
or prior to the Closing Date by Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel for
the Underwriters.
(c) You shall have received from Mintz, Levin, Cohn, Ferris, Glovsky &
Popeo, P.C., counsel for the Company, and from ____________, patent counsel
for the Company, opinions, addressed to the Underwriters and dated the
Closing Date, covering the matters set forth in Annex A and Annex B hereto,
respectively, and if Option Stock is purchased at any date after the
Closing Date, additional opinions from each such counsel, addressed to the
Underwriters and dated such later date, confirming that the statements
expressed as of the Closing Date in such opinions remain valid as of such
later date.
(d) (i) As of the Effective Date, the statements made in the
Registration Statement and the Prospectus were true and correct and neither
the Registration Statement nor the Prospectus omitted to state any material
fact required to be stated therein or necessary in order to make the
statements therein, respectively, not
-17-
misleading, (ii) since the Effective Date, no event has occurred which
should have been set forth in a supplement or amendment to the Prospectus
which has not been set forth in such a supplement or amendment, (iii) since
the respective dates as of which information is given in the Registration
Statement in the form in which it originally became effective and the
Prospectus contained therein, there has not been any material adverse
change or any development involving a prospective material adverse change
in or affecting the business, properties, financial condition or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business, and, since such dates, except in the ordinary
course of business, the Company does not have nor has it entered into any
material transaction not referred to in the Registration Statement in the
form in which it originally became effective and the Prospectus contained
therein, (iv) the Company does not have any material contingent obligations
which are not disclosed in the Registration Statement and the Prospectus,
(v) there are not any pending or known threatened legal proceedings to
which the Company is a party or of which property of the Company is the
subject which are material and which are not disclosed in the Registration
Statement and the Prospectus, (vi) there are not any franchises, contracts,
leases or other documents which are required to be filed as exhibits to the
Registration Statement which have not been filed as required and (vii) the
representations and warranties of the Company herein are true and correct
in all material respects as of the Closing Date or any later date on which
Option Stock is to be purchased, as the case may be.
(e) You shall have received on the Closing Date and on any later date
on which Option Stock is purchased a certificate, dated the Closing Date or
such later date, as the case may be, and signed by the President and the
Chief Financial Officer of the Company, stating that the respective signers
of said certificate have carefully examined the Registration Statement in
the form in which it originally became effective and the Prospectus
contained therein and any supplements or amendments thereto, and that the
statements included in clauses (i) through (vii) of paragraph (d) of this
Section 9 are true and correct.
(f) You shall have received from PricewaterhouseCoopers LLC, a letter
or letters, addressed to the Underwriters and dated the Closing Date and
any later date on which Option Stock is purchased, confirming that they are
independent public accountants with respect to the Company within the
meaning of the Securities Act and the applicable published rules and
regulations thereunder and based upon the procedures described in their
letter delivered to you concurrently with the execution of this Agreement
(herein called the Original Letter), but carried out to a date not more
than three business days prior to the Closing Date or such later date on
which Option Stock is purchased (i) confirming, to the extent true, that
the statements and conclusions set forth in the Original Letter are
accurate as of the Closing Date or such later date, as the case may be, and
(ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to reflect
any changes in the facts described in the Original Letter since the date of
the Original Letter or to reflect the availability of more recent financial
statements, data or information. The letters shall not disclose any
change, or any development involving a prospective change, in or affecting
the business or properties of the Company which, in your sole judgment,
makes it impractical or inadvisable to proceed with the public offering of
the Stock or the purchase of the Option Stock as contemplated by the
Prospectus.
(g) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (f) of Section 6 hereof.
-18-
(h) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been approved for quotation on the Nasdaq National
Market upon official notice of issuance.
(i) On or prior to the Closing Date, you shall have received from all
directors, officers, and beneficial holders of more than 5% of the
outstanding Common Stock, agreements, in form reasonably satisfactory to
Chase Securities Inc., stating that without the prior written consent of
Chase Securities Inc. on behalf of the Underwriters, each such person or
entity will not, for a period of 180 days following the effective date of
the Registration Statement, directly or indirectly, sell, offer, contract
to sell, transfer the economic risk of ownership, make any short sale,
pledge or otherwise dispose of any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for or any rights to
purchase or acquire Common Stock or whether any such transaction is to be
settled by delivery of Common Stock or such other securities.
All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel for the
Underwriters, shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all out-of-pocket costs or
expenses incident to the performance of the obligations of the Company under
this Agreement, including all costs and expenses referred to in paragraphs (i)
and (j) of Section 6 hereof, and (ii) if this Agreement is terminated by you
because of any refusal, inability or failure on the part of the Company to
perform in all material respects any agreement of the Company herein, to fulfill
in all material respects any of the conditions of the Company herein, or to
comply in all material respects with any provision hereof other than by reason
of a material breach or default by any of the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the transactions contemplated hereby.
10. Conditions of the Obligation of the Company. The obligation of the
-------------------------------------------
Company to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective, (b) no stop order suspending
the effectiveness thereof shall be in effect and no proceedings therefor shall
be pending or threatened by the Commission and (c) you and the Underwriters
shall have performed all obligations hereunder.
In case the conditions specified in this Section 10 shall not be fulfilled,
this Agreement may be terminated by the Company by giving notice to you. Any
such termination shall be without liability of the Company to the Underwriters
and, except in the case of a breach of subsection (c), without liability of the
Underwriters to the Company; provided, however, that in the event of any such
termination the Company agrees to indemnify and hold harmless the Underwriters
from all out-of-pockets costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in paragraphs (i) and (j) of Section 6 hereof.
-19-
11. Reimbursement of Certain Expenses. In addition to its other
---------------------------------
obligations under Section 7 of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure
----------------------------------------
to the benefit of the Company and the several Underwriters and, with respect to
the provisions of Section 7 hereof, the several parties (in addition to the
Company and the several Underwriters) indemnified under the provisions of said
Section 7, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the Stock from any of the several Underwriters.
13. Notices. Except as otherwise provided herein, all communications
-------
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Chase Securities Inc., Xxx Xxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000; and if to the Company, shall be mailed,
telegraphed or delivered to it at its office, Paradigm Genetics, Inc., 000
Xxxxxxxxx Xxxxx, Xxxxxxxx 0, X.X. Xxx 00000, Research Triangle Park, NC 27709-
4528, Attention: Xxxx Xxxxx with a copy to Xxxxx X. Xxxxxxxx at Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, XX 00000.
All notices given by telegraph shall be promptly confirmed by letter.
14. Miscellaneous. The reimbursement, indemnification and contribution
-------------
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or their respective directors or officers, and (c) delivery and
payment for the Stock under this Agreement; provided, however, that if this
-------- -------
Agreement is terminated prior to the Closing Date, the provisions of paragraph
(k) of Section 6 hereof shall be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
-20-
Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
PARADIGM GENETICS, INC.
By __________________________
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
CHASE SECURITIES INC.
X.X. XXXXXX & CO., INCORPORATED
PACIFIC GROWTH EQUITIES, INC.
XXXXXXXX INC.
By: CHASE SECURITIES INC.
By _________________________
Name:
Title: Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
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SCHEDULE I
UNDERWRITERS
Number of
Shares to be
Purchased
---------
Chase Securities Inc.
X.X. Xxxxxx & Co., Incorporated
Pacific Growth Equities, Inc.
Xxxxxxxx Inc.
Total. . . . . . . . . . . . . . . . . . . .
-22-
ANNEX A
Matters to be Covered in the Opinion of Mintz, Levin, Cohn, Ferris, Glovsky &
Popeo, P.C.,
Counsel for the Company
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, is duly qualified as a foreign corporation and in good
standing in [insert states], and has full corporate power and authority to
own or lease its properties and conduct its business as described in the
Registration Statement;
(ii) the authorized capital stock of the Company consists of
____shares of Preferred Stock, of which there are no outstanding shares,
and ____ shares of Common Stock, $.001 par value; proper corporate
proceedings have been taken validly to authorize such authorized capital
stock; all of the outstanding shares of such capital stock have been duly
and validly issued, are nonassessable and, to such counsel's knowledge,
fully paid; the Underwritten Stock and Option Stock, if any, when issued
and delivered to and paid for by the Underwriters as provided in the
Underwriting Agreement, will have been duly and validly issued
nonassessable and, to such counsel's knowledge, fully paid; and no
preemptive rights of, or rights of refusal in favor of, stockholders exist
with respect to the Stock, or the issue and sale thereof, pursuant to the
Certificate of Incorporation or Bylaws of the Company and, to the knowledge
of such counsel, there are no contractual preemptive rights that have not
been waived, rights of first refusal or rights of co-sale which exist with
respect to the issue and sale of the Stock;
(iii) the Registration Statement has become effective under the
Securities Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus is in effect and no proceedings for
that purpose have been instituted or are pending or contemplated by the
Commission;
(iv) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial data contained
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Securities Act
and with the rules and regulations of the Commission thereunder;
(v) the information required to be set forth in the Registration
Statement under the captions "Description of Capital Stock" and "Interests
of Named Experts and Counsel" (insofar as it relates to such counsel) and
under the caption "Legal Proceedings", to the best of such counsel's
knowledge in each case constitutes general summaries of the legal matters,
documents or proceedings referred to therein and fairly presents the
information set forth with respect thereto,
(vi) such counsel do not know of any franchises, contracts, leases,
documents or legal proceedings, pending or threatened, which in the opinion
of such counsel are of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement, which are not described and filed as required;
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(vii) the Underwriting Agreement has been duly authorized, executed
and delivered by the Company;
(viii) the issue and sale by the Company of the shares of Stock sold
by the Company as contemplated by the Underwriting Agreement will not
conflict with, or result in a breach of, (i) the Certificate of
Incorporation or By-laws of the Company or (ii) any agreement or instrument
known to such counsel to which the Company is a party or (iii) any
applicable law or regulation, or so far as is known to such counsel, any
order, writ, injunction or decree, of any jurisdiction, court or
governmental instrumentality, except with respect to clauses (ii) and
(iii), for any breach or conflict that would not reasonable be expected to
have a Material Adverse Effect;
(ix) all holders of securities of the Company having rights to the
registration of shares of Common Stock, or other securities, because of the
filing of the Registration Statement by the Company have waived such rights
with respect to the offering of the Stock or such rights have expired by
reason of lapse of time following notification of the Company's intent to
file the Registration Statement;
(x) to such counsel's knowledge, no consent, approval, authorization
or order of any court or governmental agency or body is required for the
consummation of the transactions contemplated in the Underwriting
Agreement, except such as have been obtained under the Securities Act and
such as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Stock by the
Underwriters and by the NASD; and
(xi) the Stock issued and sold by the Company has been duly
authorized for quotation on the Nasdaq National Market upon official notice
of issuance.
____________________________________
Such counsel have no reason to believe that the Registration Statement
(except as to the financial statements and schedules and other financial
and statistical data contained or incorporated by reference therein, as to
which such counsel need not express any opinion or belief) at the Effective
Date contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus (except as to the
financial statements and schedules and other financial and statistical data
contained or incorporated by reference therein, as to which such counsel
need not express any opinion or belief) as of its date or at the Closing
Date (or any later date on which Option Stock is purchased), contained or
contains any untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
-24-
ANNEX B
Matters to be Covered in the Opinion of ______________,
Patent Counsel for the Company
Such counsel are familiar with the technology and intellectual property
used by the Company in its business and the manner of its use thereof and have
read the Registration Statement and the Prospectus, including particularly the
portions of the Registration Statement and the Prospectus referring to patents,
trade secrets, trademarks, service marks or other proprietary information or
materials and:
(i) such counsel have no reason to believe that the Registration Statement
or the Prospectus: (A) contains any untrue statement of a material fact
with respect to patents, trade secrets, trademarks, service marks or other
proprietary information or materials owned or used by the Company, or the
manner of its use thereof, or any allegation on the part of any person that
the Company is infringing any patent rights, trade secrets, trademarks,
service marks or other proprietary information or materials of any such
person; or (B) omits to state any material fact relating to patents, trade
secrets, trademarks, service marks or other proprietary information or
materials owned or used by the Company, or the manner of its use thereof,
or any allegation of which such counsel have knowledge, that is required to
be stated in the Registration Statement or the Prospectus or is necessary
to make the statements therein not misleading;
(ii) to the best of such counsel's knowledge, there are no actions, suits,
claims, or legal or governmental proceedings pending relating to patent
rights, trade secrets, trademarks, service marks or other proprietary
information or materials of the Company, and to the best of such counsel's
knowledge no such proceedings are threatened or contemplated by
governmental authorities or others;
(iii) to the best of such counsel's knowledge, there are no contracts or
other documents, relating to the Company's patents, trade secrets,
trademarks, service marks or other proprietary information or materials, of
a character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or the
Prospectus that are not filed or described as required;
(iv) to the best of such counsel's knowledge, the Company is not
infringing or otherwise violating any valid and enforceable patents, trade
secrets, trademarks, service marks or other proprietary information or
materials, of others, and to the best of such counsel's knowledge there are
no infringements by others of any of the Company's patents, trade secrets,
trademarks, service marks or other proprietary information or materials
which in the judgment of such counsel could affect materially the use
thereof by the Company;
(v) to the best of such counsel's knowledge, the Company owns or possesses
sufficient licenses or other rights to use all patents, trade secrets,
trademarks, service marks or other proprietary information or materials
necessary to conduct the business now being or proposed to be conducted by
the Company as described in the Prospectus;
-25-
(vi) to the best of such counsel's knowledge, the Company is identified in
the records of the U.S. Patent and Trademark Office (PTO) as the holder of
record of the patents, patent applications, trademark registrations and
trademark registration applications listed on an attached schedule; the
Company is similarly listed in the records of corresponding foreign
agencies with respect to the foreign counterparts of the foregoing; and
such patents and patent applications have been assigned by the inventors to
the Company;
(vii) to the best of such counsel's knowledge, there are no material
defects in form in the preparation and filing of the patents, patent
applications, trademark registrations and trademark registration
applications listed on the attached schedule; the Company has complied with
any applicable duties of disclosure at the PTO or elsewhere; and the
Company is pursuing and/or maintaining the patents, patent applications,
trademark registrations and trademark registration applications listed on
the attached schedule;
(viii) with respect to any patents, patent applications, trademark rights
or other proprietary information or materials licensed by the Company from
third parties (individually, a "Licensor"), to the best of such counsel's
knowledge, there is no reason why the Company would not have a valid
license from any such Licensor; and, specifically with respect to patents
and patent applications, such counsel is unaware of any facts that would
cause it to believe that any such Licensor has failed to comply with
applicable duties of disclosure at the PTO or elsewhere;
(ix) such counsel knows of no reason why the patents and trademark
registrations listed on the attached schedule or licensed by the Company
from a Licensor are invalid or unenforceable as issued or would not afford
the Company useful patent and trademark protection; and
(x) to the best of such counsel's knowledge, there are no claims of third
parties to any ownership interest or lien with respect to any of the
patents, patent applications, trademark rights or other proprietary
information or materials listed on the attached schedule or licensed by the
Company from a Licensor.
-26-
