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EXHIBIT 1.1
DISCOVERY PARTNERS INTERNATIONAL, INC.
___________ SHARES
COMMON STOCK
UNDERWRITING AGREEMENT
_____ __, 2000
CHASE SECURITIES INC.
Co-Manager
c/o Chase Securities Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Discovery Partners International, Inc., a Delaware corporation
(herein called the Company), proposes to issue and sell ________________ shares
of its authorized but unissued Common Stock, $.001 par value (herein called the
Common Stock) (said ___________ shares of Common Stock being herein called the
Underwritten Stock). The Company proposes to grant to the Underwriters (as
hereinafter defined) an option to purchase up to ____________ 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. As a
part of this offering contemplated by this Underwriting Agreement (this
"Agreement"), Chase Securities Inc. agreed to reserve out of the Underwritten
Stock set forth opposite its name on the Schedule I to this Agreement, up to
_________________ shares, for sale to the Company's employees, officers, and
directors and other parties associated with the Company, as set forth in the
Prospectus under the heading "Underwriting" (the "Directed Share Program"). The
Stock to be sold by Chase Securities pursuant to the Directed Share Program (the
"Directed Shares") will be sold by Chase Securities pursuant to this Agreement
at the public offering price.
The Company hereby confirms the agreements made 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(b) 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 Exchange Commission (herein called the Commission) a registration statement
on Form S-1 (No. 333-36638), 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) 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
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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 AND ITS
SUBSIDIARIES. The Company and is subsidiaries hereby represents and warrants as
follows:
(a) Due Incorporation. Each of the Company and its
subsidiaries 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 authority to own or
lease its properties and conduct its business as described in the
Registration Statement and the Prospectus and 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 and its
subsidiaries, taken as a whole ( a "Material Adverse Effect")).
(b) The Underwriting Agreement. This Agreement has been
duly authorized, executed and delivered by, and is a valid and
binding agreement of, the Company, enforceable in accordance with its
terms, except as rights to indemnification hereunder may be limited
by applicable law and except as the enforcement hereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles.
(c) No Applicable Registration or Other Similar Rights.
There are no persons with (i) registration or other similar rights to
have any equity or debt securities registered for sale under the
Registration Statement or included in the offering contemplated by
this Agreement or (ii) registration rights as a result of the filing
of the Registration Statement, except for such rights as have been
duly waived.
(d) No Material Adverse Change. 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 and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business (a "Material Adverse Change"), other than as set forth in
the Registration Statement and the Prospectus, and since such dates,
except in the ordinary course of business, neither the Company nor
any of its subsidiaries has entered into any material transaction not
referred to in the Registration Statement and the Prospectus.
(e) Independent Accountants. Ernst & Young LLP who have
expressed their opinion with respect to the financial statements
(which term as used in this Agreement includes the related notes) and
supporting schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus, are
independent public or certified public accountants as required by the
Securities Act.
(f) Preparation of the Financial Statements. The financial
statements filed with the Commission as a part of the Registration
Statement and included in the Prospectus present fairly the
consolidated financial position of the Company as of and at the dates
indicated and the results of its operations and cash flows for the
periods specified. The supporting schedules included in the
Registration Statement present fairly the information required to be
stated therein. Such financial statements and supporting schedules
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes
thereto. No
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other financial statements or supporting schedules are required to be
included in the Registration Statement. The financial data set forth
in the Prospectus under the captions "Summary--Summary Selected
Financial Data," "Selected Financial Data" and "Capitalization"
fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained in
the Registration Statement.
(g) Company's Accounting System. The Company maintains a
system of accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles as
applied in the United States and to maintain accountability for
assets; (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 existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(h) Capitalization and Other Capital Stock Matters. The
authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization" (other
than for subsequent issuances, if any, pursuant to employee benefit
plans described in the Prospectus or upon exercise of outstanding
options or warrants described in the Prospectus). The Common Stock
(including the Stock) conforms in all material respects to the
description thereof contained in the Prospectus. All of the issued
and outstanding Common Stock has been duly authorized and validly
issued, is fully paid and nonassessable and has been issued in
compliance with federal and state securities laws. None of the
outstanding Common Stock was issued in violation of any preemptive
rights, rights of first refusal or other similar rights to subscribe
for or purchase securities of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital
stock of the Company other than those accurately described in the
Prospectus. The description of the Company's stock option, stock
bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, set forth in the Prospectus accurately and
fairly presents the information required to be shown with respect to
such plans, arrangements, options and rights.
(i) No Consents, Approvals or Authorizations Required. No
consent, approval, authorization, filing with or order of any court
or governmental agency or regulatory body is required in connection
with the transactions contemplated herein, except such as have been
obtained or made under the Securities Act and such as may be required
(i) under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Stock by the Underwriters in the
manner contemplated here and in the Prospectus, (ii) by the National
Association of Securities Dealers, LLC and (iii) by the federal and
provincial laws of Canada and (iv) other applicable foreign
securities laws.
(j) Non-Contravention of Existing Instruments, Agreements,
etc. Neither the issue and sale of the Stock nor the consummation of
any other of the transactions herein contemplated nor the fulfillment
of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company (except, in the case of sub-item
(ii), for such conflicts, breaches, violations, liens, charges or
encumbrances that, singly or in the aggregate, would not result in a
Material Adverse Effect) pursuant to, (i) the charter or by-laws of
the Company, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company is a party or bound or to which its property is subject or
(iii) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or any of its
properties.
(k) No Defaults or Violations. The Company and its
subsidiaries are not in violation or default of (i) any provision of
its charter or by-laws, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to
which it is a party or bound or to which its property is subject or
(iii) any statute, law, rule, regulation, judgment, order or decree
of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the
Company or its subsidiaries or any of its properties
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except any such violation or default which would not, singly or in
the aggregate, result in a Material Adverse Change and except as
otherwise disclosed in the Prospectus.
(l) No Actions, Suits or Proceedings. Except as otherwise
disclosed in the Prospectus, no action, suit or proceeding by or
before any court or governmental agency, authority or body or any
arbitrator involving the Company or its subsidiaries or the Company's
or its subsidiaries' property is pending or, to the best knowledge of
the Company, threatened that (i) could reasonably be expected to have
a Material Adverse Effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (ii)
could reasonably be expected to result in a Material Adverse Effect.
(m) All Necessary Permits, Etc. Except as otherwise
disclosed in the Prospectus, the Company possesses such valid and
current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct its business, and the Company has not received
any notice of proceedings relating to the revocation or modification
of, or non-compliance with, any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material
Adverse Change.
(n) Title to Properties. Except as otherwise disclosed in
the Prospectus, and except for sales of inventory and other
transactions in the ordinary course of business (or related to the
sale of the Stock) since the date of such financial statements, the
Company has good and marketable title to all of the properties and
assets reflected as owned in the financial statements referred to in
Section 2(f) above, in each case free and clear of any security
interests, mortgages, liens, encumbrances, equities, claims and other
defects, except such as do not materially and adversely affect the
value of such property and do not materially interfere with the use
made or proposed to be made of such property by the Company. The real
property, improvements, equipment and personal property held under
lease by the Company are held under valid and enforceable leases,
with such exceptions as are not material and do not materially
interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by the
Company.
(o) Tax Law Compliance. Except to the extent the failure to
do so would not cause a Material Adverse Effect, the Company has
filed all necessary federal, state and foreign income and franchise
tax returns and paid all taxes required to be paid by it and, if due
and payable, any related or similar assessment, fine or penalty
levied against it. The Company has made adequate charges, accruals
and reserves in the applicable financial statements referred to in
Section 2(f) above in respect of all federal, state and foreign
income and franchise taxes for all periods as to which the tax
liability of the Company has not been finally determined. The Company
is not aware of any tax deficiency that has been or might be asserted
or threatened against the Company that could result in a Material
Adverse Change.
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(p) Compliance with Registration Requirements. 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 Section 2(p) 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 Underwriters for use in the Registration
Statement or the Prospectus.
(q) Authorization of the Stock. The Stock, when issued and
sold to the Underwriters as provided herein, will be duly and validly
issued, fully paid and nonassessable and conforms to the description
thereof
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in the Prospectus. No further approval or authority of the
stockholders or the Board of Directors of the Company will be
required for the issuance and sale of the Stock as contemplated
herein.
(r) Stock Exchange Listing. Prior to the Closing Date the
Stock to be issued and sold by the Company will be authorized for
listing by the Nasdaq National Market upon official notice of
issuance.
(s) Intellectual Property Rights. Except for matters which
do not, singly or in the aggregate, have a Material Adverse Effect
and except as disclosed in the Prospectus, the Company and its
subsidiaries owns or possesses adequate rights to use all patents,
patent rights or licenses, inventions, collaborative research
agreements, trade secrets, know-how, trademarks, service marks, trade
names and copyrights which are necessary to conduct its businesses as
described in the Registration Statement and Prospectus; the
expiration before 2005 of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights would not result
in a Material Adverse Change that is not otherwise disclosed in the
Prospectus; except for matters which do not, singly or in the
aggregate, have a Material Adverse Effect and except as disclosed in
the Prospectus, the Company and its subsidiaries have not received
any notice of, and, has no knowledge of, any infringement of or
conflict with asserted rights of the Company or its subsidiaries by
others with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or
copyrights; and the Company and its subsidiaries have not received
any notice of, and have no knowledge of, any infringement of or
conflict with asserted rights of others with respect to any patent,
patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, might have a Material Adverse Change. Except for matters
which do not, singly or in the aggregate, have a Material Adverse
Effect and except as disclosed in the Prospectus, there is no claim
being made against the Company or its subsidiaries regarding patents,
patent rights or licenses, inventions, collaborative research, trade
secrets, know-how, trademarks, service marks, trade names or
copyrights. The Company and its subsidiaries do not in the conduct of
its business as now or proposed to be conducted as described in the
Prospectus infringe or conflict with any right or patent of any third
party, or any discovery, invention, product or process which is the
subject of a patent application filed by any third party, known to
the Company or its subsidiaries, which infringement or conflict is
reasonably likely to result in a Material Adverse Change.
(t) No Transfer Taxes or Other Fees. There are no transfer
taxes or other similar fees or charges under Federal law or the laws
of any state, or any political subdivision thereof, required to be
paid in connection with the execution and delivery of this Agreement
or the issuance and sale by the Company of the Stock.
(u) Company Not an "Investment Company". The Company has
been advised of the rules and requirements under the Investment
Company Act of 1940, as amended (the "Investment Company Act"). The
Company is not, and after receipt of payment for the Stock will not
be, an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act
and will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(v) Insurance. The Company is insured by recognized,
financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for its business including,
but not limited to, policies covering real and personal property
owned or leased by the Company against theft, damage, destruction,
acts of vandalism and earthquakes, general liability and Directors
and Officers liability. The Company has no reason to believe that it
will not be able (i) to renew its existing insurance coverage as and
when such policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at a cost that would not result in
a Material Adverse Change. The Company has not been denied any
insurance coverage which it has sought or for which it has applied.
(w) Labor Matters. To the best of Company's knowledge, no
labor disturbance by the employees of the Company exists or is
imminent; and the Company is not aware of any existing or imminent
labor
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disturbance by the employees of any of its principal suppliers that
might be expected to result in a Material Adverse Change.
(x) No Price Stabilization or Manipulation. The Company has
not taken and will not take, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Stock.
(y) Lock-Up Agreements. Each officer and director of the
Company and each beneficial owner of one or more percent of the
outstanding issued share capital of the Company and each holder of
options to purchase more than one percent of the outstanding issued
share capital of the Company has agreed to sign an stockholders
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, such person or entity 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 "Lock-up Agreement"). The Company has provided to
counsel for the Underwriters a complete and accurate list of all
securityholders of the Company and the number and type of securities
held by each securityholder. The Company has provided to counsel for
the Underwriters true, accurate and complete copies of all of the
Lock-up Agreements presently in effect or effected hereby. The
Company hereby represents and warrants that it will not purport to
release any of its officers, directors or other stockholders from any
Lock-up Agreements currently existing or hereafter effected without
the prior written consent of Chase Securities Inc.
(z) Environmental Laws. The Company and its subsidiaries
are in compliance with all rules, laws and regulations relating to
the use, generation, manufacture, refinement, transportation,
handling, treatment, storage and disposal of toxic wastes, hazardous
wastes, hazardous substances and medical wastes and protection of
health or the environment ("Environmental Laws") which are applicable
to its business, except where the failure to comply would not result
in a Material Adverse Change. The Company and its subsidiaries have
not received a notice from any governmental authority or third party
of an asserted claim under Environmental Laws, which claim is
required to be disclosed in the Registration Statement and the
Prospectus. The Company and its subsidiaries are not currently aware
that they will be required to make specific future material capital
expenditures to comply with Environmental Laws. No property which is
owned, leased or occupied by the Company or its subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive
Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601, et seq.), or otherwise designated as a
contaminated site under applicable local, state, federal and foreign
laws or regulations. There has been no use, storage, disposal,
generation, manufacture, refinement, transportation, handling or
treatment of toxic wastes, medical wastes, hazardous wastes or
hazardous substances by the Company or its subsidiaries (or, to the
knowledge of the Company or its subsidiaries, any of its predecessors
in interest) at, upon or from any of the property now or previously
owned or leased by the Company or its subsidiaries in violation of
any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order, judgment, decree
or permit, except for any violation or remedial action which would
not have, or could not be reasonably likely to have, singularly or in
the aggregate with all such violations and remedial actions, a
Material Adverse Effect; there has been no material spill, discharge,
leak, emission, injection, escape, dumping or release of any kind
onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes
or hazardous substances due to or caused by the Company or its
subsidiaries or with respect to which the Company or its subsidiaries
has knowledge, except for any such spill, discharge, leak, emission,
injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate with
all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a Material Adverse Effect; and the terms
"hazardous wastes", "toxic
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wastes", "hazardous substances" and "medical wastes" shall have the
meanings specified in any applicable local, state, federal and
foreign laws or regulations with respect to environmental protection.
(aa) ERISA Compliance. The Company and any "employee
benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or
maintained by the Company or its "ERISA Affiliates" (as defined
below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company, any member of any
group of organizations described in Sections 414(b), (c), (m) or (o)
of the Internal Revenue Code of 1986, as amended, and the regulations
and published interpretations thereunder (the "Code") of which the
Company is a member. No "reportable event" (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any
"employee benefit plan" established or maintained by the Company or
any of its ERISA Affiliates. No "employee benefit plan" established
or maintained by the Company or any of its ERISA Affiliates, if such
"employee benefit plan" were terminated, would have any "amount of
unfounded benefit liabilities" (as defined under ERISA). Neither the
Company nor any of its ERISA Affiliates has incurred or reasonably
expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit
plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each
"employee benefit plan" established or maintained by the Company or
any of its ERISA Affiliates that is intended to be qualified under
Section 401(a) of the Code is so qualified and nothing has occurred,
whether by action or failure to act, which would cause the loss of
such qualification.
(bb) No Improper Influence in Connection with the Directed
Share Program. The Company has not offered, or caused Chase
Securities Inc. to offer, Stock to any person pursuant to the
Directed Share Program with the specific intent to unlawfully
influence (i) a customer or supplier of the Company to alter the
customer's or supplier's level or type of business with the Company
or (ii) a trade journalist or publication to write or publish
favorable information about the Company or its products.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(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
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 (b) and (c) 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) 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, 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 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
reasonably satisfactory to you for purchase of such shares and portion on the
terms herein set forth. In
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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
(in the over 10% scenario) 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 non-defaulting 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.
(c) 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 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.
(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.
(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 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.
(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 7:00 a.m., California time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of Xxxxxx Xxxxxxx XXX, Xxx Xxxxx, XX 00000, at 7:00 a.m.,
California 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(c) hereof shall be exercised
after 7:00 a.m., California 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 Xxxxxxx XXX, Xxx Xxxxx,
XX 00000, at 7:00 a.m., California 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 official bank check or checks in same
day 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
8.
9
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 one business day before the Closing Date, in the case of
Underwritten Stock, and at least one business day prior to the purchase thereof,
in the case of the Option Stock.
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.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and
agrees 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 you on behalf of all
the Underwriters 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 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
9.
10
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. Until such filing, such variation shall
not be implemented. 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, when and as requested by
you, 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 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 earnings 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 without limitation 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)
all costs and expenses incurred by Underwriters counsel in connection
with the Directed Share Program, (v) the preparation, printing and
filing of all supplements and amendments to the Prospectus referred
to in paragraph (d) of this Section 6, (vi) the furnishing to you and
the Underwriters of the reports and information referred to in
paragraph (g) of this Section 6, (vii) the printing and issuance of
stock certificates, including the transfer agent's fees; (viii) the
fees and expenses associated with listing the Common Stock on the
Nasdaq National Market, (ix) all costs and expenses incident to the
travel and accommodation of the Company's employees on the
"roadshow", and (x) all other fees, costs and expenses referred to in
Item 13 of Part II of the Registration Statement.
(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.
(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
10.
11
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 plans of the Company (the "Option
Plans") or upon the exercise of warrants outstanding as of the date
hereof, all as described in the bullet points under the table under
the caption "Capitalization in the Preliminary Prospectus, and (C)
options to purchase Common Stock granted under the Option Plans.
(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 or stating that
the policy of the Company is not to comment on rumors.
(m) Directed Share Program. The Company will (i) will
comply with all applicable securities and other applicable laws,
rules and regulations in each jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program and
(ii) will pay all reasonable fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share
Program and any stamp duties, similar taxes or duties or other taxes,
if any, incurred by the underwriters in connection with the Directed
Share Program.
(n) The Company shall obtain Directors and Officers
liability insurance in the minimum amount of $10 million which shall
apply to the offering contemplated hereby.
(o) Use of Proceeds. The Company shall apply the net
proceeds from the sale of the Stock sold by it in the manner
described under the caption "Use of Proceeds" in the Prospectus.
(p) Transfer Agent. The Company shall engage and maintain,
at its expense, a registrar and transfer agent for the Company's
Common Stock.
(q) 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 "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,
and 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) 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
11.
12
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; provided, however, that (1) the indemnity agreements of
the Company contained in this paragraph (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 paragraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter 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 paragraph (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 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 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
12.
13
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 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, within a reasonable time
after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any 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 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 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'
13.
14
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 after the date of this Agreement (i) the engagement
in major 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, (ii) any outbreak of major 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
(other than in accordance with pre-established "circuit breakers") 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 Godward LLP, counsel for the Underwriters, unless the
withholding of such approval is unreasonable.
14.
15
(c) You shall have received from Xxxxxxx, Phleger &
Xxxxxxxx LLP, counsel for the Company, and from Brown, Martin, Xxxxxx
& XxXxxxx, 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) You shall be satisfied that (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 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 and its subsidiaries, taken
as a whole, whether or not arising from transactions in the ordinary
course of business, and, since such dates, except in the ordinary
course of business, neither the Company nor any of its subsidiaries
has 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) neither the
Company nor any of its subsidiaries has 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 or any of its subsidiaries is
a party or of which property of the Company or any of its
subsidiaries 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, (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,
and (viii) there has not been any material change in the market for
securities in general or in political, financial or economic
conditions from those reasonably foreseeable as to render it
impracticable in your reasonable judgment to make a public offering
of the Stock, or a material adverse change in market levels for
securities in general (or those of companies in particular) or
financial or economic conditions which render it inadvisable to
proceed.
(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 Ernst & Young LLP, 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 or any of its
15.
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subsidiaries 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 received from Ernst & Young LLP a letter
stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's
financial statements as at December 31, 1999, did not disclose any
weakness in internal controls that they considered to be material
weaknesses.
(h) 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 in the
seeking of which you and your counsel have provided reasonable
cooperation.
(i) Prior to the Closing Date, the Stock to be issued and
sold by the Company shall have been duly authorized for listing by
the Nasdaq National Market upon official notice of issuance.
(j) On or prior to the Closing Date, you shall have
received from all directors, officers, and each beneficial owner of
one or more percent of the outstanding issued share capital of the
Company and each holder of options to purchase more than one percent
of the outstanding issued share capital of the Company, photocopies
of signed Lock-up Agreements.
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 Godward LLP, counsel for the Underwriters,
shall be reasonably 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 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 any
agreement herein, to fulfill any of the conditions herein, or to comply with any
provision hereof other than by reason of a 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 and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of 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 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 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.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to its other
obligations under Section 7 and subject to Section 7 of this Agreement, if the
indemnifying party is not directly paying the costs related to such
indemnification, 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
16.
17
such payments might later be held to be improper; provided, however, that (i)
the persons receiving such payments undertake in writing that 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 and, if to the Underwriters, shall be mailed 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, 0000 Xxxxx Xxxxxx Xxxxx, Xxx Xxxxx, XX 00000, Attention: Chief
Executive Officer.
14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants (to the extent such covenants are on their face
intended to survive the Closing Date) 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 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 California.
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,
DISCOVERY PARTNERS INTERNATIONAL, INC.
By _____________________________________
Xxxxxxxx Xxxxxxxxx
Chief Executive Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
CHASE SECURITIES INC.
Co-Manager
By Chase Securities Inc.
17.
18
By __________________________
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
18.
19
SCHEDULE I
UNDERWRITERS
UNDERWRITERS NUMBER OF SHARES TO BE PURCHASED
------------ --------------------------------
Chase Securities Inc. ......................
Xxxxxx Brothers ............................
UBS Warburg LLC ............................
------------
Total ........................... *
============
19.
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ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF XXXXXXX, PHLEGER & XXXXXXXX LLP
COUNSEL FOR THE COMPANY
(i) Each of the Company and its subsidiaries 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 each
state of the United States of America in which its ownership or
leasing of property requires such qualification (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 and its subsidiaries, taken as a whole),
and has full corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement; all the issued and outstanding capital stock of each of
the subsidiaries of the Company has been duly authorized and validly
issued and is fully paid and nonassessable, and is owned by the
Company (except that not all of the capital stock of Structural
Proteomics, Inc. is so owned), and to the best of such counsel's
knowledge, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests
in such subsidiaries are outstanding;
(ii) the authorized capital stock of the Company consists
of 1,000,000 shares of Preferred Stock, $.001 par value, of which
there are outstanding no shares, and 100,000,000 shares of Common
Stock, $.001 par value, of which there are outstanding __________
shares (including the Underwritten Stock plus the number of shares of
Option Stock issued on the date hereof) and such additional number of
shares, if any, as may have been issued after _________ and prior to
the Closing Date, pursuant to _______; proper corporate proceedings
have been taken validly to authorize such authorized capital stock;
all of the outstanding shares of such capital stock (including the
Underwritten Stock, if previously issued, and the shares of Option
Stock previously issued, if any) have been duly and validly issued
and are nonassessable and (to such counsel's knowledge) fully paid;
(iii) the Underwritten Stock or the Option Stock, as the
case may be, to be issued by the Company pursuant to the terms of
this Agreement has been duly authorized and, upon issuance and
delivery against payment therefor in accordance with the terms
hereof, will be duly and validly issued and fully paid and
nonassessable, and will not have been issued in violation of or
subject to any preemptive right or (to such counsel's knowledge) any
co-sale right, right of first refusal or other similar right, other
than any registration rights described in Opinion (xii) hereof.
(iv) the Company has the corporate power and authority to
enter into this Agreement and to issue, sell and deliver to the
Underwriters the Stock to be issued and sold by it hereunder;
(v) this Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been
duly executed and delivered by the Company;
(vi) the 8-A Registration Statement complied as to form in
all material respects with the requirements of the Exchange Act; the
8-A Registration Statement has become effective under the Exchange
Act;
(vii) the Registration Statement has become effective under
the Securities Act and, to 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;
20.
21
(viii) the Registration Statement and the Prospectus
(except as to the financial statements and schedules and other
financial and statistical 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;
(ix) the information required to be set forth in the
Registration Statement in answer to Items 9, 10 (insofar as it
relates to such counsel) and 11(c) of Form S-1 is to such counsel's
knowledge accurately and adequately set forth therein in all material
respects or no response is required with respect to such Items, and,
to such counsel's knowledge, insofar as the Prospectus' description
of the Company's stock option plans and employee stock purchase plan
and the options granted and which may be granted thereunder and the
options granted otherwise than under such plans set forth in the
Prospectus and the common stock to be sold under the employee stock
purchase plan constitutes a summary of such legal matters, documents
or proceedings, it provides a fair summary of such legal matters,
documents or proceedings in all material respects to the extent
required by the Securities Act and the rules and regulations of the
Commission thereunder;
(x) such counsel do not know of any 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;
(xi) 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, the
Certificate of Incorporation or Bylaws of the Company or any of its
subsidiaries or any agreement or instrument that is filed as an
Exhibit to the Registration Statement to which the Company or any of
its subsidiaries is a party or any applicable federal, Delaware
corporate or California state law or regulation (other than
applicable state securities or blue sky laws, as to which such
counsel need express no opinion), or so far as is known to such
counsel, any order, writ, injunction or decree, of any jurisdiction,
court or governmental instrumentality;
(xii) 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 or such rights have expired by
reason of lapse of time following notification of the Company's
intent to file the Registration Statement;
(xiii) no consent, approval, authorization or order of any
United States federal, Delaware corporate or California state court
or United States federal, Delaware corporate or California state
governmental agency or body is required on the part of the Company
for the consummation of the transactions contemplated in the
Underwriting Agreement, except such as have been obtained under the
Securities and the Exchange 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
(xiv) the Stock issued and sold by the Company will been
duly authorized for listing by the Nasdaq National Market upon
official notice of issuance.
In addition to the matters set forth above, counsel rendering the
foregoing opinion shall also include a statement to the effect that nothing has
come to the attention of such counsel that leads them 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
21.
22
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
22.
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ANNEX B
MATTERS TO BE COVERED IN THE OPINION OF BROWN, MARTIN, XXXXXX & XXXXXXX
PATENT COUNSEL FOR THE COMPANY
Such counsel are familiar with the technology 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) The statements in the Registration Statement and the Prospectus
under the captions "Risk Factors - The intellectual property rights
we rely on to protect the technology underlying our products and
techniques may not be adequate, which could enable third parties to
use our technology or very similar technology and could reduce our
ability to compete in the market," "Risk Factors - The drug discovery
industry has a history of intellectual property litigation and we may
be involved in intellectual property lawsuits, which may be
expensive" and "Business - Intellectual Property" to the best of such
counsel's knowledge and belief, are accurate and complete statements
or summaries of the matters therein set forth and nothing has come to
such counsel's attention that causes such counsel to believe that the
above-described portions of the Registration Statement and the
Prospectus contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(ii) to the best of such counsel's knowledge, there are no legal or
governmental proceedings pending relating to any material 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) such counsel do not know of any contracts or other documents,
relating to governmental regulation affecting the Company or 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 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; and
(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.
1.
