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EXHIBIT 1.1
5,000,000 Shares
VIROLOGIC, INC.
Common Stock
UNDERWRITING AGREEMENT
April __, 2000
CIBC WORLD MARKETS CORP.
ING BARINGS LLC
PRUDENTIAL SECURITIES INCORPORATED
on behalf of the Several
Underwriters named on
Schedule I attached hereto
c/o CIBC World Markets Corp.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
ViroLogic, Inc., a Delaware corporation (the "Company"), proposes, subject
to the terms and conditions contained herein, to sell to you and the other
underwriters named on Schedule I to this Agreement (the "Underwriters"), for
whom you are acting as Representatives (the "Representatives"), an aggregate of
5,000,000 shares (the "Firm Shares") of the Company's Common Stock, with a par
value of $0.001 per share (the "Common Stock"). The respective amounts of the
Firm Shares to be purchased by each of the several Underwriters are set forth
opposite their names on Schedule I attached hereto. In addition, the Company
proposes to grant to the Underwriters an option to purchase up to an additional
750,000 shares (the "Option Shares") of Common Stock from the Company for the
sole purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are together called the "Shares."
As part of the offering contemplated by this Agreement, the Representatives
have agreed to reserve out of the Firm Shares purchased by them up to 250,000
shares (the "Directed Shares") for sale to the Company's directors, officers,
employees and other parties associated with the Company, as determined by the
Company (each, individually a "Participant" and, collectively, the
"Participants") under the terms of the friends and family directed sales program
(the "Friends and Family Program"). Shares to be sold pursuant to the Friends
and Family Program shall be sold pursuant to this Agreement at the public
offering price. Any Directed Shares not confirmed for purchase by a Participant
by 5:00 p.m. (New York time) on the date of this Agreement will be offered to
the public by the Representatives as set forth in the Prospectus (as such term
is hereinafter defined).
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1. Sale and Purchase of the Shares.
On the basis of the representations, warranties and agreements contained
in, and subject to the terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at a price of $_____ per share (the "Initial Price"), the number
of Firm Shares set forth opposite the name of such Underwriter under the
column "Number of Firm Shares to be Purchased from the Company" on Schedule
I to this Agreement, subject to adjustment in accordance with Section 10
hereof.
(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares
at the Initial Price. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage (adjusted by the Representatives
to eliminate fractions) of the total number of Option Shares to be
purchased by the Underwriters as such Underwriter is purchasing of the Firm
Shares. Such option may be exercised only to cover over-allotments in the
sales of the Firm Shares by the Underwriters and may be exercised in whole
or in part at any time on or before 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date (as defined below), and
from time to time thereafter within 30 days after the date of this
Agreement, in each case upon written, facsimile or telegraphic notice, or
verbal or telephonic notice confirmed by written, facsimile or telegraphic
notice, by the Representatives to the Company no later than 12:00 noon, New
York City time, on the business day before the Firm Shares Closing Date or
at least two business days before the Option Shares Closing Date (as
defined below), as the case may be, setting forth the number of Option
Shares to be purchased and the time and date (if other than the Firm Shares
Closing Date) of such purchase.
2. Delivery and Payment. Delivery by the Company of the Firm Shares to the
Representatives for the respective accounts of the Underwriters, and payment of
the purchase price by certified or official bank check or checks payable in New
York Clearing House (same day) funds drawn to the order of the Company for the
shares purchased from the Company, against delivery of the respective
certificates therefor to the Representatives, shall take place at the offices of
CIBC World Markets Corp., Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
at 10:00 a.m., New York City time, on the third business day following the date
of this Agreement, or at such time on such other date, not later than 10
business days after the date of this Agreement, as shall be agreed upon by the
Company and the Representatives (such time and date of delivery and payment are
called the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares is exercised in
whole or in part on one or more occasions, delivery by the Company of the Option
Shares to the Representatives for the respective accounts of the Underwriters
and payment of the purchase price thereof in immediately available funds by wire
transfer or by certified or official bank check or checks payable in New York
Clearing House (same day) funds to the Company shall take place at the offices
of CIBC World Markets Corp. specified above at the time and on the date (which
may be the same date as, but in no event shall be earlier than, the Firm Shares
Closing Date) specified in the notice referred to in Section 1(b) hereof (such
time and date of delivery and payment are called the "Option Shares
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Closing Date"). The Firm Shares Closing Date and the Option Shares Closing Date
are called, individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names and
shall be in such denominations as the Representatives shall request at least two
full business days before the Firm Shares Closing Date or, in the case of Option
Shares, on the day of notice of exercise of the option as described in Section
l(b) hereof and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The Company has
prepared and filed in conformity with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the published rules and regulations
thereunder (the "Rules") adopted by the Securities and Exchange Commission (the
"Commission") a Registration Statement (as hereinafter defined) on Form S-1 (No.
333-30896), including a preliminary prospectus relating to the Shares, and such
amendments thereof as may have been required to the date of this Agreement.
Copies of such Registration Statement (including all amendments thereof) and of
the related Preliminary Prospectus (as hereinafter defined) have heretofore been
delivered by the Company to you. The term "Preliminary Prospectus" means any
preliminary prospectus (as described in Rule 430 of the Rules) included at any
time as a part of the Registration Statement or filed with the Commission by the
Company with the consent of the Representatives pursuant to Rule 424(a) of the
Rules. The term "Registration Statement" as used in this Agreement means the
initial registration statement (including all exhibits, financial schedules and
information deemed to be a part of the Registration Statement through
incorporation by reference or otherwise), as amended at the time and on the date
it becomes effective (the "Effective Date") including the information (if any)
deemed to be part thereof at the time of effectiveness pursuant to Rule 430A of
the Rules. If the Company has filed an abbreviated registration statement to
register additional Shares pursuant to Rule 462(b) under the Rules (the "462(b)
Registration Statement") then any reference herein to the Registration Statement
shall also be deemed to include such 462(b) Registration Statement. The term
"Prospectus" as used in this Agreement means the prospectus in the form included
in the Registration Statement at the time of effectiveness or, if Rule 430A of
the Rules is relied on, the term Prospectus shall also include the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules.
The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed the Preliminary
Prospectus, dated as of March 27, 2000, and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement complied, and on
the date of the Prospectus, the date any post-effective amendment to the
Registration Statement becomes effective, the date any supplement or
amendment to the Prospectus is filed with the
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Commission and each Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will comply,
in all material respects, with the applicable provisions of the Securities
Act and the Rules. The Registration Statement did not, as of the Effective
Date, contain any untrue statement of a material fact or 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 and the
other dates referred to above neither the Registration Statement nor the
Prospectus, nor any amendment thereof or supplement thereto, will contain
any untrue statement of a material fact or will omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading. When any related preliminary prospectus
was first filed with the Commission (whether filed as part of the
Registration Statement or any amendment thereto or pursuant to Rule 424(a)
of the Rules) and when any amendment thereof or supplement thereto was
first filed with the Commission, such preliminary prospectus as amended or
supplemented complied in all material respects with the applicable
provisions of the Securities Act and the Rules and did not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading except as may have been corrected in all material
respects by subsequent amendment or supplement prior to or as a part of the
Registration Statement and Prospectus. Notwithstanding the foregoing, none
of the representations and warranties in this Section 4(a) 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 by the Representatives on behalf
of the several Underwriters for use in the Registration Statement or the
Prospectus. With respect to the preceding sentence, the Company
acknowledges that the only information furnished in writing by the
Representatives on behalf of the several Underwriters for use in the
Registration Statement or the Prospectus is the paragraph with respect to
stabilization on the inside front cover page of the Prospectus and the
statements contained under the caption "Underwriting" in the Prospectus.
(b) The Registration Statement is effective under the Securities Act
and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the
Prospectus has been issued and no proceedings for that purpose have been
instituted or are threatened under the Securities Act. Any required filing
of the Prospectus and any supplement thereto pursuant to Rule 424(b) of the
Rules has been or will be made in the manner and within the time period
required by such Rule 424(b).
(c) The financial statements of the Company (including all notes and
schedules thereto) included in the Registration Statement and Prospectus
present fairly the financial position, the results of operations, the
statements of cash flows and the statements of stockholders' equity and the
other information purported to be shown therein of the Company at the
respective dates and for the respective periods to which they apply; and
such financial statements and related schedules and notes have been
prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved, and all adjustments
necessary for a fair presentation of the results for such periods have been
made. The "Summary Financial Data" and "Selected Financial Data" included
in the Prospectus present fairly the information shown therein as at the
respective dates and for the respective periods specified and the summary
and selected financial data have been
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presented on a basis consistent with the consolidated financial statements
so set forth in the Prospectus and other financial information.
(d) Ernst & Young LLP, whose reports are filed with the Commission as
a part of the Registration Statement, are and, during the periods covered
by their reports, were independent public accountants as required by the
Securities Act and the Rules.
(e) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Company has
no subsidiary or subsidiaries and does not control, directly or indirectly,
any corporation, partnership, joint venture, association or other business
organization. The Company is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted by it or location of the assets or properties
owned, leased or licensed by it requires such qualification, except for
such jurisdictions where the failure to so qualify would not have a
material adverse effect on the assets or properties, business, results of
operations or financial condition of the Company (a "Material Adverse
Effect"). The Company does not own, lease or license any asset or property
or conduct any business outside the United States of America. The Company
has all requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates and
permits of and from all governmental or regulatory bodies or any other
person or entity (collectively, the "Permits"), to own, lease and license
its assets and properties and conduct its business, all of which are valid
and in full force and effect, as described in the Registration Statement
and the Prospectus, except where the lack of such Permits, individually or
in the aggregate, would not have a Material Adverse Effect. The Company has
fulfilled and performed in all respects all of its obligations with respect
to such Permits and no event has occurred that allows, or after notice or
lapse of time would allow, revocation or termination thereof or results in
any other impairment of the rights of the Company thereunder except for
such failure to fulfill and for such events as would not, individually or
in the aggregate, have a Material Adverse Effect. Except as may be required
under the Securities Act and state and foreign Blue Sky laws, no other
Permits are required to enter into, deliver and perform this Agreement and
to issue and sell the Shares.
(f) The Company owns or possesses adequate and enforceable rights to
use all patent, patent applications, trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge (collectively,
"Intangibles") described in the Prospectus as being owned by it reasonably
necessary for the conduct of its business. The Company has not received any
notice of, or is not aware of, any infringement of or conflict with
asserted rights of others with respect to any Intangibles. No departed
employee of the Company has a right of reverter, or any other interest,
with respect to any Intangible.
(g) The Company has good and marketable title in fee simple to all
items of real property and good and marketable title to all personal
property described in the Prospectuses as being owned by it except where
the lack of such good and marketable title would not have a Material
Adverse Effect. Any real property and buildings described in the
Prospectuses as being held under lease by the Company is held by it under
valid, existing and enforceable leases, free and clear of all liens,
encumbrances, claims, security interests and defects, except
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such as are described in the Registration Statement and the Prospectus or
where the failure to have such leases would not have a Material Adverse
Effect.
(h) There are no litigation or governmental proceedings to which the
Company is subject or which is pending or, to the knowledge of the Company,
threatened, against the Company, which, individually or in the aggregate,
might have a Material Adverse Effect, prevent or delay the consummation of
this Agreement or which is required to be disclosed in the Registration
Statement and the Prospectus that is not so disclosed.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as described
therein, (a) there has not been any loss or adverse change with regard to
the assets or properties, business, results of operations or financial
condition of the Company except as would not have a Material Adverse
Effect; (b) the Company has not sustained any loss or interference with its
assets, businesses or properties (whether owned or leased) from fire,
explosion, earthquake, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree which would have a Material Adverse
Effect; and (c) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, except as reflected therein, the
Company has not (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business,
(ii) entered into any material transaction not in the ordinary course of
business or (iii) declared or paid any dividend or made any distribution on
any shares of its stock or redeemed, purchased or otherwise acquired or
agreed to redeem, purchase or otherwise acquire any shares of its stock.
(j) There is no document, contract or other agreement of a character
required to be described in the Registration Statement or Prospectus or to
be filed as an exhibit to the Registration Statement which is not described
or filed as required by the Securities Act or Rules. Each description of a
contract, document or other agreement in the Registration Statement and the
Prospectus accurately reflects in all respects the terms of the underlying
document, contract or agreement. Each agreement described in the
Registration Statement and Prospectus or listed in the Exhibits to the
Registration Statement or incorporated by reference is in full force and
effect and is valid and enforceable by and against the Company in
accordance with its terms. Neither the Company, nor to the Company's
knowledge, any other party is in default in the observance or performance
of any term or obligation to be performed by it under any such agreement,
and no event has occurred which with notice or lapse of time or both would
constitute such a default, in any such case which default or event,
individually or in the aggregate, would have a Material Adverse Effect. No
default exists, and no event has occurred which with notice or lapse of
time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company of any other
agreement or instrument to which the Company is a party or by which it or
its properties or business may be bound or affected which default or event,
individually or in the aggregate, would have a Material Adverse Effect.
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(k) The Company is not in violation of any term or provision of its
charter or by-laws or of any franchise, license, permit, judgment, decree,
order, statute, rule or regulation, where the consequences of any such
violation, individually or in the aggregate, would have a Material Adverse
Effect.
(l) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company
of the Shares) will give rise to a right to terminate or accelerate the due
date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or assets
of the Company pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is a party or
by which it or any of its properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or violate any provision of the
charter or by-laws of the Company, except for such consents or waivers
which have already been obtained and are in full force and effect.
(m) The Company's authorized and outstanding capital stock conforms in
all material respects to the description thereof contained under the
caption "Capitalization" in the Prospectus. The certificates evidencing the
Shares are in due and proper legal form and have been duly authorized for
issuance by the Company. All of the issued and outstanding shares of Common
Stock have been duly and validly issued and are fully paid and
nonassessable. There are no statutory preemptive or other similar rights to
subscribe for or to purchase or acquire any shares of Common Stock of the
Company or any such rights pursuant to its Certificate of Incorporation or
by-laws or, except for any rights which do not apply to the transactions
contemplated hereby and which will expire on the Firm Shares Closing Date,
any agreement or instrument to or by which the Company is a party or bound.
The Shares, when issued and sold pursuant to this Agreement, will be duly
and validly issued, fully paid and nonassessable and none of them will be
issued in violation of any preemptive or other similar right. Except as
disclosed in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of, and
there is no commitment, plan or arrangement to issue, any share of stock of
the Company or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock and the Shares conform in
all material respects to all statements in relation thereto contained under
the heading "Description of Capital Stock" in the Registration Statement
and the Prospectus.
(n) No holder of any security of the Company has the right to have any
security owned by such holder included in the Registration Statement or to
demand registration of any security owned by such holder during the period
ending 180 days after the date of this Agreement, except for such rights as
have been waived. Each five percent stockholder, director and executive
officer of the Company, and each person listed on Schedule 4(n) attached
hereto, has delivered to the Representatives such person's enforceable
written lock-up agreement in the form attached to this Agreement ("Lock-Up
Agreement").
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(o) All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of this
Agreement and the issuance and sale of the Shares by the Company. This
Agreement has been duly and validly authorized, executed and delivered by
the Company and constitutes and will constitute the legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforcement
is considered in a proceeding in equity or at law).
(p) The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which dispute
would have a Material Adverse Effect. The Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
principal suppliers or contractors which would have a Material Adverse
Effect. The Company is not aware of any threatened or pending litigation
between the Company and any of its executive officers which, if adversely
determined, could have a Material Adverse Effect and, to the knowledge of
the Company, no such officer has a present intention to leave the
employment of the Company.
(q) No transaction has occurred between or among the Company and any
of its officers or directors or five percent stockholders or any affiliate
or affiliates of any such officer or director or five percent stockholder
that is required to be described in and is not described in the
Registration Statement and the Prospectus.
(r) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of any of the
Shares.
(s) The Company has filed all Federal, state, local and foreign tax
returns which are required to be filed through the date hereof, or has
received extensions thereof, and has paid all taxes shown on such returns
and all assessments received by it to the extent that the same are material
and have become due. There are no tax audits or investigations pending,
which if adversely determined would have a Material Adverse Effect; nor are
there any material proposed additional tax assessments against the Company.
(t) The Shares have been duly authorized for quotation on the National
Association of Securities Dealers Automated Quotation ("Nasdaq") National
Market System, subject to official Notice of Issuance. A registration
statement has been filed on Form 8-A pursuant to Section 12 of the Exchange
Act, which registration statement complies in all material respects with
the Exchange Act.
(u) The books, records and accounts of the Company accurately and
fairly reflect, in reasonable detail, the transactions in, and dispositions
of, the assets of, and the results of operations of, the Company. The
Company maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in
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accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and
to maintain asset accountability, (iii) access to assets is permitted only
in accordance with management's general or specific authorization and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(v) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which it is engaged or propose to engage
after giving effect to the transactions described in the Prospectus; all
policies of insurance and fidelity or surety bonds insuring the Company or
any of its subsidiaries or the Company's or its subsidiaries' respective
businesses, assets, employees, officers and directors are in full force and
effect; the Company and each of its subsidiaries are in compliance with the
terms of such policies and instruments in all material respects; and the
Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect. The
Company has not been denied any insurance coverage which it has sought or
for which it has applied.
(w) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws) has been obtained or made and
is in full force and effect.
(x) There are no affiliations with the NASD among the Company's
officers, directors or, to the knowledge of the Company, any five percent
or greater stockholder of the Company, except as set forth in the
Registration Statement or otherwise disclosed in writing to the
Representatives.
(y) (i) The Company is in compliance in all material respects with all
rules, laws and regulations relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the environment
("Environmental Law") which are applicable to its business; (ii) the
Company has not received any notice from any governmental authority or
third party of an asserted claim under Environmental Laws; (iii) the
Company has received all permits, licenses or other approvals required of
it under applicable Environmental Laws to conduct its business and is in
compliance with all terms and conditions of any such permit, license or
approval; (iv) to the Company's knowledge, no facts currently exist that
will require the Company to make future material capital expenditures to
comply with Environmental Laws; and (v) no property which is or has been
owned, leased or occupied by the Company has been designated as a Superfund
site pursuant to the Comprehensive Environmental Response, Compensation of
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.) or
otherwise designated as a contaminated site under applicable state
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or local law. The Company has not been named as a "potentially responsible
party" under the Comprehensive Environmental Response, Compensation of
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.).
(z) In the ordinary course of its business, the Company has
periodically conducted a reasonable due diligence investigation of the
effect of Environmental Laws on the business, operations and properties of
the Company to identify and evaluate associated costs and liabilities
(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). On the basis of such investigation, the Company has reasonably
concluded that such associated costs and liabilities would not,
individually or in the aggregate, have a Material Adverse Effect.
(aa) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of proceeds thereof as described in
the Prospectus in the Section titled "Use of Proceeds," will not be subject
to registration as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(bb) The Company or any other person associated with or acting on
behalf of the Company including, without limitation, any director, officer,
agent or employee of the Company has not, directly or indirectly, while
acting on behalf of the Company (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (iii) violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
bribe, unlawful rebate, payoff, influence payment, kickback or other
unlawful payment in connection with the business of the Company.
(cc) (i) The Company has no reason to believe that the Year 2000
Problem has had or will have a Material Adverse Effect on the business or
operations of the Company. The Year 2000 Problem, as used herein, means
computer or other technological problems resulting from the transition from
December 31, 1999 to January 1, 2000.
(dd) Neither the Company nor any other person associated with or
acting on behalf of the Company, including, without limitation, any
director, officer, agent or employee of the Company has offered or caused
the Underwriters to offer any of the Shares to any person pursuant to the
Friends and Family Program with the specific intent to unlawfully influence
(i) a customer or supplier of the Company to alter the customer's or
supplier's level or type of business with the Company or (ii) a trade
journalist or publication to write or publish favorable information about
the Company or its products.
(ee) The Company has not distributed and, prior to the later of (i)
the Closing Date or (ii) the completion of the distribution of the Shares,
will not distribute any offering material in connection with the offering
and sale of the Shares other than the Registration
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Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or other materials, if
any permitted by the Act.
5. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become effective
shall have been received by the Representatives and the Prospectus shall
have been timely filed with the Commission in accordance with Section 6(a)
of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Commission and the Representatives.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 5(d)
shall be true and correct when made and on and as of each Closing Date as
if made on such date. The Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by it at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that (i)
the signers of such certificate have carefully examined the Registration
Statement, the Prospectus and this Agreement and that the representations
and warranties of the Company in this Agreement are true and correct on and
as of such Closing Date with the same effect as if made on such Closing
Date and the Company has performed all covenants and agreements and
satisfied all conditions contained in this Agreement required to be
performed or satisfied by it at or prior to such Closing Date, and (ii) no
stop order suspending the effectiveness of the Registration Statement has
been issued and to the best of their knowledge, no proceedings for that
purpose have been instituted or are pending under the Securities Act.
(e) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from Ernst &
Young LLP addressed to the Representatives and dated, respectively, the
date of this Agreement and each such Closing Date, in form and substance
reasonably satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Securities Act and the
Rules, that the response to Item 10 of the Registration Statement is
correct insofar as it relates to them and stating in effect that:
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(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in
the Registration Statement and the Prospectus and reported on by them
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules;
(ii) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings "Summary
Financial Information" and "Selected Financial Data," carrying out
certain procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter, a reading of the minutes of the meetings of the
stockholders and directors of the Company, and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company as to transactions and events
subsequent to the date of the latest audited financial statements,
except as disclosed in the Registration Statement and the Prospectus,
nothing came to their attention which caused them to believe that:
(A) the amounts in "Summary Financial Information," and
"Selected Financial Data" included in the Registration Statement
and the Prospectus do not agree with the corresponding amounts in
the audited and unaudited financial statements from which such
amounts were derived; or
(B) with respect to the Company, there were, at a specified
date not more than three business days prior to the date of the
letter, any increases in the current liabilities and long-term
liabilities of the Company or any decreases in net income or in
working capital or the stockholders' equity in the Company, as
compared with the amounts shown on the Company's audited balance
sheet for the fiscal year ended December 31, 1999;
(iii) they have performed certain other procedures as may be
permitted under Generally Acceptable Auditing Standards as a result of
which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth in the Registration
Statement and the Prospectus and reasonably specified by the
Representatives agrees with the accounting records of the Company; and
(iv) based upon the procedures set forth in clauses (ii) and
(iii) above and a reading of the amounts included in the Registration
Statement under the headings "Summary Financial Information" and
"Selected Financial Data" included in the Registration Statement and
Prospectus and a reading of the financial statements from which
certain of such data were derived, nothing has come to their attention
that gives them reason to believe that the "Summary Financial
Information" and "Selected Financial Data" included in the
Registration Statement and Prospectus do not comply as to the form in
all material respects with the applicable accounting requirements of
the Securities Act and the Rules or that the information set forth
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therein is not fairly stated in relation to the financial statements
included in the Registration Statement or Prospectus from which
certain of such data were derived are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement and Prospectus.
References to the Registration Statement and the Prospectus in
this paragraph (e) are to such documents as amended and supplemented
at the date of the letter.
(f) The Representatives shall have received on each Closing Date from
Xxxxxx Godward LLP, counsel for the Company, an opinion, addressed to the
Representatives and dated such Closing Date, and stating in effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware. To the best of such counsel's knowledge, the Company has
no subsidiary and does not control, directly or indirectly, any
corporation, partnership, joint venture, association or other business
organization. The Company is duly qualified and in good standing as a
foreign corporation in California, and to such counsel's knowledge, in
each other jurisdiction in which the character or location of its
assets or properties (owned or leased) or the nature of its businesses
makes such qualification necessary, except for such jurisdictions
where the failure to so qualify, individually or in the aggregate,
would not have a Material Adverse Effect.
(ii) The Company has all requisite corporate power to own, lease
and license its assets and properties and conduct its business as now
being conducted and as described in the Registration Statement and the
Prospectus and to enter into, deliver and perform this Agreement and
to issue and sell the Shares, other than those required under the
state and foreign securities laws (as to which such counsel need
express no opinion).
(iii) The Company has authorized and issued (as of the dates
indicated) capital stock as set forth in the Registration Statement
and the Prospectus under the caption "Capitalization"; the
certificates evidencing the Shares are in due and proper legal form
and have been duly authorized for issuance by the Company; all of the
outstanding shares of Common Stock of the Company have been duly and
validly authorized and issued and are fully paid and nonassessable
and, to the best of such counsel's knowledge, none of them was issued
in violation of any preemptive or other similar right. The Shares when
issued and sold for the stated consideration pursuant to this
Agreement will be duly and validly issued, outstanding, fully paid and
nonassessable and, to the best of such counsel's knowledge, none of
them will have been issued in violation of any preemptive or other
similar right. To the best of such counsel's knowledge, except as
disclosed in the Registration Statement and the Prospectus, there are
no preemptive or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any securities of the
Company pursuant to (a) the Company's Certificate of Incorporation or
by-laws, or (b) except
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for any rights which do not apply to the transactions contemplated
hereby and which will expire on the Firm Shares Closing Date, other
governing documents or any agreements or other instruments to which
the Company is a party or by which it is bound. To the best of such
counsel's knowledge, except as disclosed in the Registration Statement
and the Prospectus, there is no outstanding option, warrant or other
right calling for the issuance of, and no commitment, plan or
arrangement to issue, any share of stock of the Company or any
security convertible into, exercisable for, or exchangeable for stock
of the Company.
(iv) This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(v) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with notice
or lapse of time, or both, would constitute a default) under, or
require consent or waiver under, or result in the execution or
imposition of any lien, charge, claim, security interest or
encumbrance upon any properties or assets of the Company pursuant to
the terms of any indenture, mortgage, deed of trust, note or other
agreement or instrument filed as an Exhibit to the Registration
Statement and to which the Company is a party or by which it or any of
its properties or businesses is bound, or violate (a) any franchise,
license, permit, judgment, decree or order known to such counsel, or
(b) any statute, rule or regulation, or (c) any provision of the
charter or by-laws of the Company.
(vi) No consent, approval, authorization or order of any court or
governmental agency or regulatory body is required for the execution,
delivery or performance of this Agreement by the Company or the
consummation of the transactions contemplated hereby or thereby,
except such as have been obtained under the Securities Act and such as
may be required under state or foreign securities laws in connection
with the purchase and distribution of the Shares by the several
Underwriters (as to which such counsel need express no opinion).
(vii) To the best of such counsel's knowledge, there is no
litigation or governmental or other proceeding or investigation,
before any court or before or by any public body or board pending or
threatened against, or involving the assets, properties or businesses
of, the Company which would have a Material Adverse Effect.
(viii) The statements in the Prospectus under the captions
"Description of Capital Stock" and "Shares Eligible for Future Sale,"
insofar as such statements constitute a summary of documents referred
to therein or matters of law, are fair summaries in all material
respects of such documents or matters of law.
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(ix) The Registration Statement and the Prospectus and each
amendment or supplement thereto (except for the financial statements
and schedules and other financial and statistical data included
therein, as to which such counsel expresses no opinion) comply as to
form in all material respects with the requirements of the Securities
Act and the Rules.
(x) The Registration Statement is effective under the Securities
Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
threatened, pending or contemplated. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under
the Securities Act has been made in the manner and within the time
period required by such Rule 424(b).
(xi) The Shares have been approved, upon issuance as contemplated
by this Agreement, for quotation on the Nasdaq National Market.
(xii) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus under
the caption "Description of Capital Stock."
(xiii) The Company is not an "investment company" or an entity
controlled by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials. Such counsel shall not be obligated to opine as to any
opinions of other counsel or laws other than the laws of the State of
California, the General Corporation Law of the State of Delaware and the Federal
laws of the United States.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and their counsel, and
representatives of the independent certified public accountants of the Company,
at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel has not
verified and is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as specified in the foregoing
opinion), on the basis of the foregoing, no facts have come to the attention of
such counsel which lead such counsel to believe that the Registration Statement
at the time it became effective (except with respect to the financial statements
and notes and schedules thereto and other statistical and financial data, as to
which such counsel need express no belief) 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 as amended or supplemented (except with respect to the financial
statements, notes and schedules thereto and other statistical and financial
data, as to which such counsel need make no statement) on the date thereof
contained any untrue statement of
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a material fact or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
(g) The Representatives shall have received on each Closing Date from
Xxxxxx & Xxxxxx LLP, special patent counsel to the Company, an opinion,
addressed to the Representatives and dated such Closing Date, in
substantially the form attached hereto as Exhibit 5(g).
(h) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives, and their
counsel and the Underwriters shall have received from XxXxxxxxx, Will &
Xxxxx a favorable opinion, addressed to the Representatives and dated such
Closing Date, with respect to the Shares, the Registration Statement and
the Prospectus, and such other related matters, as the Representatives may
reasonably request, and the Company shall have furnished to XxXxxxxxx, Will
& Xxxxx such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(i) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section 4(n).
(j) The Company shall have furnished or caused to be furnished to the
Representatives such further certificates or documents as the
Representatives shall have reasonably requested.
6. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, and any amendments thereto, to become effective as
promptly as possible. The Company shall prepare the Prospectus in a
form approved by the Representatives and file such Prospectus pursuant
to Rule 424(b) under the Securities Act within the prescribed time
period and will provide evidence satisfactory to you of such timely
filing.
(ii) The Company shall promptly advise the Representatives in
writing (i) when any amendment to the Registration Statement shall
have become effective, (ii) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for any
additional information, (iii) of the prevention or suspension of the
use of any preliminary prospectus or the Prospectus or of the issuance
by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the institution or threatening of any
proceeding for that purpose and (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company shall not
file any amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the Representatives a copy
for its review prior to filing and shall not file any such proposed
amendment or supplement to which the
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Representatives reasonably object. The Company shall use its best
efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company
promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (ii) of this Section 6(a), an amendment
or supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
(iv) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not
later than 45 days after the end of the 12-month period beginning at
the end of the fiscal quarter of the Company during which the
Effective Date occurs (or 90 days if such 12-month period coincides
with the Company's fiscal year), an earning statement (which need not
be audited) of the Company, covering such 12-month period, which shall
satisfy the provisions of Section 11(a) of the Securities Act or Rule
158 of the Rules.
(v) The Company shall furnish to the Representatives and counsel
for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and amendments
thereof) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and all amendments thereof and,
so long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and any amendments thereof
and supplements thereto as the Representatives may reasonably request.
(vi) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and sale
in connection with the offering under the laws of such jurisdictions
as the Representatives may designate and shall maintain such
qualifications in effect so long as required for the distribution of
the Shares; provided, however, that the Company shall not be required
in connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction in which it is not now so required.
(vii) Without the prior written consent of CIBC World Markets
Corp., on behalf of the Underwriters, for a period of 180 days after
the date of this Agreement, the Company and each of its individual
directors and executive officers shall not issue, sell or register
with the Commission (other than on Form S-8 or on any successor form),
or otherwise dispose of, directly or indirectly, any equity securities
of the Company (or any securities convertible into, exercisable for or
exchangeable
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for equity securities of the Company), except for the issuance of the
Shares pursuant to the Registration Statement and the issuance of
shares pursuant to the Company's existing stock plans or bonus plan as
described in the Registration Statement and the Prospectus. In the
event that during this period, (i) any shares are issued pursuant to
the Company's existing stock plans or bonus plan that are exercisable
during such 180 day period or (ii) any registration is effected on
Form S-8 or on any successor form relating to shares that are
exercisable during such 180 period, the Company shall obtain the
written agreement of such grantee or purchaser or holder of such
registered securities that, for a period of 180 days after the date of
this Agreement, such person will not, without the prior written
consent of CIBC World Markets Corp., on behalf of the Underwriters,
offer for sale, sell, distribute, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, or exercise any
registration rights with respect to, any shares of Common Stock (or
any securities convertible into, exercisable for, or exchangeable for
any shares of Common Stock) owned by such person.
(viii) On or before completion of the offering of the Shares, the
Company shall make all filings required under applicable securities
laws and by the Nasdaq National Market (including any required
registration under the Exchange Act).
(ix) The Company will apply the net proceeds to the Company from
the offering of the Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(x) The Company will comply with all applicable securities laws
and other applicable laws, rules and regulations in each foreign
jurisdiction in which the Directed Shares are offered in connection
with the Friends and Family Program.
(xi) The Company will ensure that the Directed Shares will be
restricted, to the extent required by the NASD or the NASD rules, from
sale, transfer, assignment, pledge or hypothecation for a period of
three months following the date of the effectiveness of the
Registration Statement. The Representatives will notify the Company as
to which Participants will need to be so restricted. The Company shall
direct the transfer agent to place stop transfer restrictions upon
such securities for such period of time.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities or Blue
Sky laws of the various jurisdictions referred to in Section 6(a)(vi),
including the reasonable fees and disbursements of counsel for the
Underwriters in
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connection with such registration and qualification and the preparation,
printing, distribution and shipment of preliminary and supplementary Blue
Sky memoranda, if any; (iv) the furnishing (including costs of shipping and
mailing) to the Representatives and to the Underwriters of copies of each
preliminary prospectus, the Prospectus and all amendments or supplements to
the Prospectus, and of the several documents required by this Section to be
so furnished, as may be reasonably requested for use in connection with the
offering and sale of the Shares by the Underwriters or by dealers to whom
Shares may be sold; (v) the filing fees of the NASD in connection with its
review of the terms of the public offering and reasonable fees and
disbursements of counsel for the Underwriters in connection with such
review; (vi) inclusion of the Shares for quotation on the Nasdaq National
Market; (vii) all transfer taxes, if any, with respect to the sale and
delivery of the Shares by the Company to the Underwriters; and (viii)
payments to counsel for costs incurred by the Underwriters in connection
with the Friends and Family Program and payment of any stamp duties,
similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Friends and Family Program. Subject to
the provisions of Section 9 hereof, the Underwriters agree to pay, whether
or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the performance
of the obligations of the Underwriters under this Agreement not payable by
the Company pursuant to the preceding sentence, including, without
limitation, the fees and disbursements of counsel for the Underwriters.
(c) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Shares
Closing Date, any rumor, publication or event relating to or affecting the
Company shall occur as a result of which in the Representatives' opinion
the market price of the Common 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 and any
integrated prospectus), the Company will, after notice from the
Representatives advising the Company to the effect set forth above,
forthwith prepare, consult with the Representatives concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to the Representatives, responding to or commenting
on such rumor, publication or event.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against
any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal and other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act or other Federal
or state law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto, or arise out of
or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) in whole or in part upon any breach
of the
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representations and warranties set forth in Section 4 hereof, (iii) in
whole or in part upon any failure of the Company to perform any of its
obligations hereunder or under law or (iv) any untrue statement of any
material fact contained in any audio or visual materials prepared by the
Company or based upon written information furnished by or on behalf of the
Company, including (without limitation) slides, videos, films, tape
recordings used in connection with the marketing of the Shares, including
(without limitation) statements communicated to securities analysts
employed by the Underwriters; provided, however, that such indemnity shall
not inure to the benefit of any Underwriter (or any person controlling such
Underwriter) on account of any losses, claims, damages or liabilities
arising from the sale of the Shares to any person by such Underwriter if
such untrue statement or omission or alleged untrue statement or omission
was made in such preliminary prospectus, the Registration Statement or the
Prospectus, or such amendment or supplement thereto, in reliance upon and
in conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use therein.
This indemnity agreement will be in addition to any liability which the
Company may otherwise have. Notwithstanding the foregoing, with regard to
any preliminary prospectus, the benefit of this Section 7(a) will not
accrue to any Underwriter from whom the person asserting the loss purchased
the shares if such person was not delivered the final prospectus by such
Underwriter (when such Underwriter was delivered the final prospectus in a
timely manner by the Company).
The Company agrees to indemnify and hold harmless the Representatives
and each person, if any, who controls any Representative within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages, expenses and liabilities
(including any reasonable investigation, legal and other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted) (i) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained
in any material prepared by or with the consent of the Company for
distribution to Participants in connection with the Friends and Family
Program or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) arising out of or based
upon the failure of any Participant to pay for and accept delivery of
Directed Shares otherwise reserved for such Participant pursuant to the
Friends and Family Program, and (iii) related to, arising out of, or in
connection with the Friends and Family Program, other than losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross
negligence of the Representatives.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, each director of the Company, and each officer of
the Company who signs the Registration Statement, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only insofar
as such losses, claims, damages or liabilities arise out of or are based
upon any untrue statement or omission or alleged untrue statement or
omission which was made in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment thereof or supplement
thereto, contained in the (i) concession and reallowance figures appearing
under the caption "Underwriting" and (ii) the stabilization information
contained
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under the caption "Underwriting" in the Prospectus; provided, however, that
the obligation of each Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) shall be limited to the
net proceeds received by the Company from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 7(a) or 7(b) shall be available to
any party who shall fail to give notice as provided in this Section 7(c) if
the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
that it may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and the approval by
the indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except as
provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to it which
are different from or in addition to those available to the indemnifying
party (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or
(iii) the indemnifying parties shall not have employed counsel to assume
the defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action,
suit, proceeding or claim effected without its written consent, which
consent shall not be unreasonably withheld or delayed.
8. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 7(a) or 7(b)
is due in accordance with its terms but for any reason is held to be unavailable
to or insufficient to hold harmless an indemnified party under Section 7(a) or
7(b), then each indemnifying party shall contribute to the aggregate losses,
claims, damages and liabilities (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) to which the
indemnified party
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may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Underwriters from the offering of the
Shares or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 7 hereof, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, 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 proportion as (x) the total proceeds from the offering
(net of underwriting discounts but before deducting expenses) received by the
Company, as set forth in the table on the cover page of the Prospectus, bear to
(y) the underwriting discounts received by the Underwriters, as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company or
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact related to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were 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 account of the equitable considerations referred to above. Notwithstanding
the provisions of this Section 8, (i) in no case shall any Underwriter (except
as may be provided in the Agreement Among Underwriters) be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder and (ii) the Company shall be liable and
responsible for any amount in excess of such underwriting discount; provided,
however, that 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. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as such Underwriter, and each person, if any, who controls the Company within
the meaning of the Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) in the
immediately preceding sentence of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 8,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent, which consent
shall not be unreasonably withheld. The Underwriter's obligations to contribute
pursuant to this Section 8 are several in proportion to their respective
underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with respect to the Shares
to be purchased on a Closing Date by the Representatives by notifying the
Company at any time:
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(a) in the absolute discretion of the Representatives at or before any
Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with the
offering; (iii) if there shall be such a material adverse change in general
financial, political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as to make
it, in the judgment of the Representatives, inadvisable or impracticable to
market the Shares; (iv) if trading in the Shares has been suspended by the
Commission or trading generally on the New York Stock Exchange, Inc., on
the American Stock Exchange, Inc. or the Nasdaq National Market has been
suspended or limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for
securities have been required, by said exchanges or by order of the
Commission, the National Association of Securities Dealers, Inc., or any
other governmental or regulatory authority; or (v) if a banking moratorium
has been declared by any state or Federal authority; or (vi) if, in the
judgment of the Representatives, there has occurred a Material Adverse
Effect, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 hereof shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall be under no liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that (y) if this
Agreement is terminated by the Representatives or the Underwriters because
of any failure, refusal or inability on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, the
Company will reimburse the Underwriters for all out-of-pocket expenses
(including the reasonable fees and disbursements of their counsel) incurred
by them in connection with the proposed purchase and sale of the Shares or
in contemplation of performing their obligations hereunder and (z) no
Underwriter who shall have failed or refused to purchase the Shares agreed
to be purchased by it under this Agreement, without some reason sufficient
hereunder to justify cancellation or termination of its obligations under
this Agreement, shall be relieved of liability to the Company or to the
other Underwriters for damages occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the Underwriters shall
fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
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(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase such
Shares on the terms herein set forth in proportion to their respective
obligations hereunder; provided, that in no event shall the maximum number
of Shares that any Underwriter has agreed to purchase pursuant to Section 1
hereof be increased pursuant to this Section 10 by more than one-ninth of
such number of Shares without the written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to two additional business days within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares upon
the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more
than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration
Statement or Prospectus) may be effected by the Representatives and the
Company. If the number of Shares to be purchased on such Closing Date by
such defaulting Underwriter or Underwriters shall exceed 10% of the Shares
that all the Underwriters are obligated to purchase on such Closing Date,
and none of the nondefaulting Underwriters or the Company shall make
arrangements pursuant to this Section within the period stated for the
purchase of the Shares that the defaulting Underwriters agreed to purchase,
this Agreement shall terminate with respect to the Shares to be purchased
on such Closing Date without liability on the part of any nondefaulting
Underwriter to the Company and without liability on the part of the
Company, except in both cases as provided in Sections 6(b), 7, 8 and 9.
Notwithstanding the foregoing, if any default occurs with respect to the
Option Shares Closing Date, this Agreement will not terminate with respect
to the Firm Shares purchased prior to such time. The provisions of this
Section 10 shall not in any way affect the liability of any defaulting
Underwriter to the Company or the nondefaulting Underwriters arising out of
such default. A substitute underwriter hereunder shall become an
Underwriter for all purposes of this Agreement.
11. Miscellaneous. The respective agreements, representations, warranties,
indemnities and other statements of the Company, or its officers, and of the
Underwriters set forth in or made pursuant to this Agreement shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of the officers, directors or controlling
persons referred to in Sections 7 and 8 hereof, and shall survive delivery of
and payment for the Shares. The provisions of Sections 6(b), 7, 8 and 9 hereof
shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters,
the Company and their respective successors and assigns, and, to the extent
expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
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have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Representatives, c/o CIBC World Markets Corp., Xxx Xxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxxx Xxxxxx, with a copy to
XxXxxxxxx, Will & Xxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxxxxxx, Esq. and (b) if to the Company,
to its agent for service as such agent's address appears on the cover page of
the Registration Statement with a copy Xxxxxx Godward LLP, 0000 Xxxxxxxxx Xxxxx,
Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxxx X. Xxxx, Esq.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflict of laws.
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement among
us.
Very truly yours,
VIROLOGIC, INC.
By:
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
ING BARINGS LLC
PRUDENTIAL SECURITIES INCORPORATED Acting severally on behalf of themselves and
as representatives of the several Underwriters named on Schedule I attached
hereto
By: CIBC WORLD MARKETS CORP.
By:
Title:
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SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
CIBC World Markets Corp.
ING Barings LLC
Prudential Securities Incorporated
--------------
TOTAL
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EXHIBIT 5(H) TO UNDERWRITING AGREEMENT
LEGAL OPINION OF XXXXXX & XXXXXX LLP
STATEMENTS:
We have acted as patent counsel to the Company with respect to the
patent matters reflected on Schedule A attached hereto (the "Relevant
Patent Matters").
We have read the Registration Statement and the Prospectus, including
in particular the portions of the Registration Statement and the
Prospectus under the captions "Risk Factors The intellectual property
underlying our PhenoSense technology may not be adequate, allowing
third parties to use our PhenoSense technology and thus reducing our
ability to compete in the market" and "Business - Background, Our
Solution, Our Strategy and Patents and Proprietary Rights" (such
portions being referred to herein, collectively, as the "Technology
Portions").
OPINIONS:
1. The statements in the Technology Portions are accurate and fairly
present the matters of law and legal conclusions stated therein.
2. Nothing has come to our attention which has caused us to believe that
the Technology Portions contain any untrue statement of a material
fact with respect to the patent position of the Company, or omit to
state any material fact relating to the patent position of the
Company.
3. Nothing has come to our attention which has caused us to believe that
(a) any patent application referred to in the Relevant Patent Matters
was not properly prepared and filed, in accordance with all applicable
legal and procedural requirements, or is not in good standing, (b) the
issued patent (the "Issued Patent") referred to in the Relevant Patent
Matters was not properly obtained, in accordance with all applicable
legal and procedural requirements, or is not in good standing, (c)
that any invention described in any patent application or the issued
patent is not held by the Company, or (d) any [relevant] prior art has
not been disclosed promptly to the appropriate governmental agency.
4. To our knowledge, the Company has not received any notice asserting
any ownership rights contrary to those of the Company in any of the
Relevant Patent Matters.
5. To our knowledge, the Company has not received any notice challenging
the validity or enforceability of any Relevant Patent Matter.
6. To our knowledge, the Company has not received any notice of
infringement of, or conflict with, rights or claims of others with
respect to any patent, trademark, service xxxx, trade name, copyright
or know-how.
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7. To our knowledge, other than proceedings (except re-examination,
reissue or interference proceedings) of the various patent and
trademark offices, there are no legal or governmental proceedings
pending relating to any patent, patent application, trade secret,
trademark, service xxxx or other proprietary information or materials
of the Company and, to our knowledge, no such proceedings are
threatened or contemplated by governmental authorities or others.
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SCHEDULE 4(n)
1. Viridian Capital, L.P.
2. CMEA Life Sciences Fund, L.P.
3. Xxxxxxx Capital Group LLC
4. BioTech Growth S.A.
5. Xxxxxxxx X. Xxxxxx
6. Palm Finance Corporation
7. Xxxxxx X. Xxxxx
8. Xxxxxxx X. Xxxxxxx
9. Capital Management Services
10. Xxxxxx X. Xxxxxxx
11. Xxxxxx Xxxxxxx for Bank Invest
12. Harbinger / Aurora QP Venture Fund
13. Harbinger / Aurora Venture Fund
14. Aurora Ventures, LLC
15. Invemed Associates LLC
16. Xxxxxxx Capital Group
17. Xxxxxxx X. Xxxxx
18. Xxxxxx X. Xxxxxxxxx
19. Xxxxxxxx X. Xxxxxxx
20. Xxxxx Xxxx
21. Xxxxxxxx Xxxxxxxxxxx
22. Xxxxxx Xxxxxxxx
23. Xxxxxx Biomed, LP
24. Merlin Biomed International
25. Xxxxxx Piedement
26. Xxxx Xxxxx & Xx./Xxxxx xx Xxxxxx
