EXHIBIT 1.1
7,200,000 SHARES
ATHEROGENICS, INC.
COMMON STOCK
(NO PAR VALUE)
UNDERWRITING AGREEMENT
January 28, 2003
January 28, 2003
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Brothers, Inc.
Lazard Freres & Co. LLC
Xxxxx, Xxxxxxxx & Xxxx, Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
AtheroGenics, a Georgia corporation (the "COMPANY"), proposes to issue
and sell to the several Underwriters named in Schedule I hereto (the
"UNDERWRITERS"), an aggregate of 7,200,000 shares of its Common Stock, no par
value (the "FIRM SHARES").
The Company also proposes to issue and sell to the several
Underwriters not more than an additional 1,080,000 shares of its Common Stock,
no par value (the "ADDITIONAL SHARES"), if and to the extent that you, as
managers of the offering, shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 2 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shares of Common
Stock, no par value, of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the "COMMON
STOCK."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus (the "BASE
Prospectus"), relating to the Shares, and has filed with, or transmitted for
filing to, or shall promptly hereafter file with or transmit for filing to, the
Commission a final prospectus supplement (the "PROSPECTUS SUPPLEMENT")
specifically relating to the Shares pursuant to Rule 424 under the Securities
Act of 1933, as amended (the "SECURITIES ACT"). The term "REGISTRATION
STATEMENT" means such registration statement, including the exhibits thereto,
as amended to the date of this Agreement. If the Company has filed an
abbreviated registration statement to register additional shares of Common
Stock pursuant to Rule 462(b) under the Securities Act (the "RULE 462
REGISTRATION STATEMENT"), then any reference herein to the term "REGISTRATION
STATEMENT" shall be deemed to include such Rule 462 Registration Statement.
The term "PROSPECTUS" means the Base Prospectus together with the
Prospectus Supplement. The term "PRELIMINARY PROSPECTUS" means a
preliminary prospectus supplement specifically relating to the Shares, together
with the Base Prospectus. All references to the Registration Statement, Base
Prospectus, preliminary prospectus or Prospectus shall include documents
incorporated therein by reference. The terms "SUPPLEMENT" and "AMENDMENT" or
"AMEND" as used in this Agreement with respect to the Registration Statement or
the Prospectus shall include all documents subsequently filed by the Company
with the Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), that are deemed to be incorporated by reference in the
Prospectus.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no
stop order suspending the effectiveness of the Registration Statement
is in effect, and no proceedings for such purpose are pending before
or threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed
pursuant to the Exchange Act and incorporated by reference in the
Prospectus complied or will comply when so filed in all material
respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder, (ii) the Registration
Statement, when it became effective, did not contain and, as amended
or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, (iii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder, and (iv) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this
paragraph do not apply to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by or on behalf of
such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing
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of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company.
(d) The Company does not have any subsidiaries;
provided, however, the Company has caused a charter to be filed in
Delaware under the name AGI Technologies, Inc., which entity has had
no operations and has incurred no liabilities.
(e) This Agreement has been duly authorized, executed
and delivered by the Company.
(f) The authorized capital stock of the Company conforms
as to legal matters to the description thereof contained in the
Prospectus.
(g) The shares of common stock, no par value, of the
Company outstanding prior to the issuance of the Shares to be sold by
the Company have been duly authorized and are validly issued, fully
paid and non-assessable.
(h) The Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms
of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to
any preemptive or similar rights.
(i) The execution and delivery by the Company of, and
the performance by the Company of its obligations under, this
Agreement will not contravene any provision of applicable U.S. law or
the articles of incorporation or by-laws of the Company, as each has
been amended to date, or any agreement or other instrument binding
upon the Company that is material to the Company, or any judgment,
order or decree of any U.S. governmental body, agency or court having
jurisdiction over the Company, and no consent, approval, authorization
or order of, or qualification with, any U.S. governmental body or
agency is required for the performance by the Company of its
obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares.
(j) There has not occurred any material adverse change,
or any development reasonably likely to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings,
business or operations of the Company from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement).
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(k) There are no legal or governmental proceedings
pending or, to the Company's knowledge, threatened to which the
Company is a party or to which any of the properties of the Company is
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described
or filed as required.
(l) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities
Act and the applicable rules and regulations of the Commission
thereunder.
(m) The Company is not, and after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(n) The Company (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to
conduct its business and (iii) is in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the
Company.
(o) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company.
(p) The Company has all consents, approvals, orders,
certificates, authorizations and permits issued by, and has made all
declarations and filings with, all appropriate federal, state or
foreign governmental or self-regulatory authorities and all courts and
other
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tribunals necessary to conduct its business and to own, lease or
license and use its properties in the manner described in the
Prospectus, except for such consents, approvals, orders, certificates,
authorizations, permits, declarations and filings the failure of which
to have, maintain or make would not have a material adverse effect on
the Company, and the Company has not received any notice of
proceedings relating to the revocation or modification of any such
consent, approval, order, certificate, authorization or permit.
(q) Except as disclosed in the Registration Statement or
Prospectus, the Company owns or possesses, or has rights to all
material patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently
employed by it in connection with the business now operated by it or,
with respect to AGI-1067, proposed to be operated by it as described
in the Registration Statement or Prospectus, and the Company has not
received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company.
(r) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to
require the Company to include such securities with the Shares
registered pursuant to the Registration Statement other than such
contracts, agreements or understandings as have been waived with
respect to the transactions contemplated hereunder.
(s) There are no contracts or other documents, relating
to patents or patent applications owned or licensed by, or licenses of
patents or patent applications held by, the Company of a character
required to be filed as an exhibit to the Registration Statement, to
the Company's annual report on Form 10-K for fiscal 2001 or to the
Company's quarterly reports on Form 10-Q for each of the first three
fiscal quarters of 2002, or required to be described in the
Registration Statement or Prospectus or in such Form 10-K or Forms
10-Q that are not so filed or described.
2. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
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Company the respective numbers of Firm Shares set forth in Schedule I hereto
opposite its name at $5.875 a share (the "PURCHASE PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to 1,080,000 Additional Shares
at the Purchase Price. You may exercise this right on behalf of the
Underwriters in whole or from time to time in part by giving written notice of
each election to exercise the option not later than 30 days after the date of
this Agreement. Any exercise notice shall specify the number of Additional
Shares to be purchased by the Underwriters and the date on which such shares
are to be purchased. Each purchase date must be at least two business days
after the written notice is given and may not be earlier than the closing date
for the Firm Shares nor later than ten business days after the date of such
notice. Additional Shares may be purchased as provided in Section 4 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. On each day, if any, that Additional Shares are to
be purchased (an "OPTION CLOSING DATE"), each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased on
such Option Closing Date as the number of Firm Shares set forth in Schedule I
hereto opposite the name of such Underwriter bears to the total number of Firm
Shares.
The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of the Prospectus Supplement,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise.
The restrictions contained in the preceding paragraph shall not apply
to (A) the Shares to be sold hereunder, (B) the issuance by the Company of
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof, (C) the grant of
options to purchase Common Stock under the Company's stock option plans or (D)
transactions by any person other than the Company relating to shares of Common
Stock or other securities acquired in open market transactions after the
completion of the offering of the Shares.
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3. Terms of Public Offering. The Company is advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
$6.25 a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by
you at a price that represents a concession not in excess of $.23 a share under
the Public Offering Price.
4. Payment and Delivery. Payment for the Firm Shares to be sold
by the Company shall be made to the Company in Federal or other funds
immediately available in New York City against delivery of such Firm Shares for
the respective accounts of the several Underwriters at 10:00 a.m., New York
City time, on February 3, 2003, or at such other time on the same or such other
date, not later than February 10, 2003, as shall be designated in writing by
you. The time and date of such payment are hereinafter referred to as the
"CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
corresponding notice described in Section 2 or at such other time on the same
or on such other date, in any event not later than March 4, 2003, as shall be
designated in writing by you.
The Firm Shares and Additional Shares shall be registered in such
names and in such denominations as you shall request in writing not later than
one full business day prior to the Closing Date or the applicable Option
Closing Date, as the case may be. The Firm Shares and Additional Shares shall
be delivered to you on the Closing Date or an Option Closing Date, as the case
may be, for the respective accounts of the several Underwriters, with any
transfer taxes payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The obligations
of the Company to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than 2:00 p.m. (New York City time) on the date
hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
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(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change,
or any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings,
business or operations of the Company from that set forth in
the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in
your judgment, is material and adverse and that makes it, in
your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect set forth in Section 5(a)(i)
above and to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing
Date an opinion of XxXxxxx Long & Xxxxxxxx LLP, outside counsel for
the Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing
in the State of Georgia;
(ii) the shares of common stock, no par value,
of the Company outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized
and are validly issued, fully paid and non-assessable;
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(iii) the Shares to be sold by the Company have
been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of
such Shares will not be subject to any preemptive or similar
rights;
(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) the execution and delivery by the Company
of, and the performance by the Company of its obligations
under, this Agreement will not contravene any provision of
applicable U.S. law or the articles of incorporation or
by-laws of the Company or, to such counsel's knowledge, any
agreement or other instrument binding upon the Company and
either (A) filed as an exhibit to the Registration Statement,
(B) filed as an exhibit to a document incorporated by
reference in the Registration Statement, or (C) material to
the Company and was entered into after September 30, 2002,
other than such provisions as have been waived with respect
to the transactions contemplated hereby, or, to such
counsel's knowledge, any judgment, order or decree of any
U.S. governmental body, agency or court having jurisdiction
over the Company, and no consent, approval, authorization or
order of, or qualification with, any U.S. governmental body
or agency is required for the performance by the Company of
its obligations under this Agreement, except such as may be
required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares;
(vi) the description of the rights and
preferences of the Company's capital stock included in the
Prospectus under the caption "Description of Capital Stock",
when read in conjunction with the other information contained
in the Registration Statement as amended or supplemented
fairly summarizes in all material respects, the rights and
preferences of such capital stock; provided, however, that
such counsel may rely on representations of officers of the
Company with respect to factual matters contained in such
statements;
(vii) to such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened to
which the Company is a party or to which any of the
properties of the Company is subject that are required to be
described in the Registration Statement or the Prospectus and
are not so described or of any statutes, regulations,
contracts or other documents that are required to be
described in the Registration Statement or the
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Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required;
(viii) the Company is not, and after giving effect
to the offering and sale of the Shares and the application of
the proceeds thereof as described in the Prospectus will not
be, required to register as an "investment company" as such
term is defined in the Investment Company Act of 1940, as
amended; and
(ix) nothing has come to the attention of such
counsel that causes such counsel to believe that (A) each
document filed pursuant to the Exchange Act and incorporated
by reference in the Registration Statement and the Prospectus
(except for the financial statements and financial schedules
and other financial and statistical data included therein, as
to which such counsel need not express any belief) did not
comply as to form when filed in all material respects with
the requirements of the Exchange Act and the applicable rules
and regulations of the Commission thereunder, (B) the
Registration Statement or the Prospectus (except for the
financial statements and financial schedules and other
financial and statistical data included therein, as to which
such counsel need not express any belief) do not comply as to
form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations of
the Commission thereunder.
The Underwriters shall also have received on the Closing Date
a statement by XxXxxxx Long & Xxxxxxxx LLP, outside counsel for the
Company, dated the Closing Date, to the effect that nothing has come
to the attention of such counsel that causes such counsel to believe
that (A) the Registration Statement or the prospectus included therein
(except for the financial statements and financial schedules and other
financial and statistical data included therein, as to which such
counsel need not express any belief) at the time the Registration
Statement became effective contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (B) the
Prospectus (except for the financial statements and financial
schedules and other financial and statistical data included therein,
as to which such counsel need not express any belief) as of its date
or as of the Closing Date contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Notwithstanding anything in such counsel's opinion to the
contrary, neither such counsel's opinion nor the statement
contemplated
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by the immediately preceding paragraph is intended to cover or include
the matters described in the sections "Risk Factors - Our failure to
protect adequately or enforce our intellectual property rights or
secure rights to third party patents could materially adversely affect
our proprietary position in the marketplace or prevent the
commercialization of our products" included in, or "Business - Patents
and Intellectual Property" included in the Company's Form 10-K for the
fiscal year ended December 31, 2001 and incorporated by reference
into, the Registration Statement and Prospectus, as may be
supplemented or amended, or any other matter relating to any patents,
patent applications or intellectual property rights associated
therewith or related thereto owned or used by or licensed to or from
the Company; provided, however, the immediately preceding paragraph is
intended to cover or include the ownership and use by the Company of
the trademarks "AtheroGenics" and associated design, "AGI," "Oxykine"
and "v-protectant" as described in the Prospectus.
(d) The Underwriters shall have received on the Closing
Date an opinion of King & Spalding LLP, patent counsel for the
Company, dated the Closing Date, in form and substance reasonably
satisfactory to the Underwriters and their counsel.
(e) The Underwriters shall have received on the Closing
Date an opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the
Underwriters, dated the Closing Date, (i) to the effect that the
statements relating to legal matters, documents or proceedings
included in the Prospectus under the caption "Underwriters," when read
in conjunction with the other information contained in the
Registration Statement as amended or supplemented, fairly summarizes
in all material respects such matters, documents or proceedings and
(ii) covering the matters referred to in clauses (A) and (B) of the
penultimate paragraph of Section 5(c) above.
With respect to Section 5(c)(ix) and the penultimate
paragraph of Section 5(c) above, XxXxxxx Long & Xxxxxxxx LLP may state
that their beliefs are based upon their participation in conferences
with officials and other representatives of the Company, the
Underwriters, Underwriters' counsel and the independent certified
public accountants of the Company, at which conferences the contents
of the Registration Statement and Prospectus and related matters were
discussed and in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and documents
incorporated therein by reference and review and discussion of the
contents thereof, but are without independent investigation or
verification, and without assumption of any responsibility for the
factual accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus or any amendment or
supplement thereto, except as specified. With respect to clauses (A)
and (B) of the penultimate paragraph of Section 5(c) above,
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Xxxxx Xxxx & Xxxxxxxx may state that their beliefs are based upon
their participation in the preparation of the Registration Statement
and Prospectus and any amendments or supplements thereto (other than
the documents incorporated by reference) and upon review and
discussion of the contents thereof (including documents incorporated
by reference), but are without independent check or verification,
except as specified.
The opinions of XxXxxxx Long & Xxxxxxxx LLP and King &
Spalding LLP described in Sections 5(c) and 5(d) above shall be
rendered to the Underwriters at the request of the Company and shall
so state therein.
(f) The Underwriters shall have received, on each of the
date hereof and the Closing Date, a letter dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from Ernst & Young LLP, independent
public accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in or incorporated by reference into the
Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier
than the date hereof.
(g) The "lock-up" agreements, each substantially in the
form of Exhibit A hereto, between you and the executive officers and
directors of the Company relating to sales and certain other
dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to
the good standing of the Company, the due authorization and issuance of the
Additional Shares to be sold on such Option Closing Date and other matters
related to the issuance of such Additional Shares.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with
each Underwriter as follows:
(a) To furnish to you, without charge, three signed
copies of the Registration Statement (including exhibits thereto and
documents incorporated by reference) and for delivery to each other
Underwriter a conformed copy of the Registration Statement (without
exhibits thereto but including documents incorporated by reference)
and, to furnish to you in New York City, without charge, prior to
10:00 a.m. New York City
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time on the second business day next following the date of this
Agreement and during the period mentioned in paragraph (c) below, as
many copies of the Prospectus, any documents incorporated therein by
reference and any supplements and amendments thereto as you may
reasonably request.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement with a reasonable opportunity, under
the circumstances, to review and provide comments on such amendment or
supplement, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the
public offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to
a purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the
Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments
or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request; 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.
(e) To make generally available to the Company's
security holders and to you as soon as practicable an earning
statement covering the twelve-month period ending March 31, 2004 that
satisfies the provisions of Section 11(a) of the Securities Act and
the rules and regulations of the Commission thereunder.
7. Expenses. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
13
agrees to pay or cause to be paid all expenses incident to the performance of
their obligations under this Agreement, including: (i) the fees, disbursements
and expenses of the Company's counsel and the Company's accountants in
connection with the registration and delivery of the Shares under the
Securities Act and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any
Blue Sky or Legal Investment memorandum in connection with the offer and sale
of the Shares under state securities laws and all expenses in connection with
the qualification of the Shares for offer and sale under state securities laws
as provided in Section 6(d) hereof, including filing fees and the reasonable
fees (up to an aggregate of $5,000) and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky or Legal Investment memorandum, (iv) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares by
the National Association of Securities Dealers, Inc., (v) all fees and expenses
incident to listing the Shares on the Nasdaq National Market, (vi) the cost of
printing certificates representing the Shares, (vii) the costs and charges of
any transfer agent, registrar or depositary, (viii) the costs and expenses of
the Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Shares, including, without
limitation, expenses associated with the production of road show slides and
graphics, and one-half of the cost of any aircraft chartered in connection with
the road show, and (ix) subject to the foregoing, all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 8 entitled "Indemnity
and Contribution", and the last paragraph of Section 10 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements of
their counsel, stock transfer taxes payable on resale of any of the Shares by
them and any advertising expenses connected with any offers they may make.
8. Indemnity and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act which affiliate directly or
indirectly participated in the distribution of the Shares from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending or
investigating any
14
such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by or on behalf of such Underwriter through
you expressly for use therein; provided, however, that the foregoing indemnity
agreement 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 or liabilities purchased Shares, or any person controlling such
Underwriter or any affiliate of any Underwriter within the meaning of Rule 405
under the Securities Act which affiliate directly or indirectly participated in
the distribution of the Shares, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages or liabilities, unless such failure is the
result of noncompliance by the Company with Section 6(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the directors of the Company, the
officers of the Company who sign the Registration Statement and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by or on behalf of such Underwriter through you expressly for use in
the Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
15
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act or who are affiliates of any Underwriter within the meaning of
Rule 405 under the Securities Act which affiliates directly or indirectly
participated in the distribution of the Shares and (ii) the fees and expenses
of more than one separate firm (in addition to any local counsel) for the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the Underwriters and such
control persons and such affiliates of any Underwriters, such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated. In the case of any
such separate firm for the Company, and such directors, officers and control
persons of the Company, such firm shall be designated in writing by the
Company. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance
16
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section
8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 8(d)(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 8(d)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other hand in connection with the offering of the Shares shall be deemed
to be in the same respective proportions as the net proceeds from the offering
of the Shares (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the
Company on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this Section 8
are several in proportion to the respective number of Shares they have
purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account
of the equitable considerations referred to in Section 8(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred
17
to in the immediately preceding paragraph shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages that such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 8 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter, any person controlling
any Underwriter or any affiliate of any Underwriter which affiliate directly or
indirectly participated in the distribution of the Shares, or the Company, its
officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares.
9. Termination. The Underwriters may terminate this Agreement by
notice given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial
banking activities shall have been declared by Federal or New York State
authorities or (v) there shall have occurred any outbreak or escalation of
hostilities, or any change in financial markets or any calamity or crisis that,
in your judgment, is material and adverse and which, singly or together with
any other event specified in this clause (v), makes it, in your judgment,
impracticable or inadvisable to proceed with the offer, sale or delivery of the
Shares on the terms and in the manner contemplated in the Prospectus.
Notwithstanding anything to the contrary in this Agreement, in the event the
Underwriters shall terminate this Agreement pursuant to Section 9, the Company
shall only be required to pay the expenses to the Underwriters and
Underwriter's counsel
18
described in Section 7 hereof if such termination is solely due to the event
specified in clause (ii) of this Section 9 and within the control of the
Company.
10. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to
the aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify,
to purchase the Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date; provided that in no event shall
the number of Shares that any Underwriter has agreed to purchase pursuant to
this Agreement be increased pursuant to this Section 10 by an amount in excess
of one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased, and arrangements satisfactory
to you and the Company for the purchase of such Firm Shares are not made within
24 hours after such default, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter, or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date,
but in no event for longer than seven days, in order that the required changes,
if any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. If, on an Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Additional
Shares to be purchased on such Option Closing Date, the non-defaulting
Underwriters shall have the option to (i) terminate their obligation hereunder
to purchase the Additional Shares to be sold on such Option Closing Date or
(ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase in the
absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement within the
control of the
19
Company, or if for any reason the Company shall be unable to perform its
obligations under this Agreement due to circumstances within the control of the
Company, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
[Remainder of the page intentionally left blank]
20
Very truly yours,
ATHEROGENICS, INC.
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Brothers, Inc.
Lazard Freres & Co. LLC
Xxxxx, Xxxxxxxx & Xxxx, Inc.
Acting severally on behalf of themselves
and the several Underwriters named
in Schedule I hereto
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ XXXXX XXXXXXXXXXXX
------------------------------------
Name: Xxxxx Xxxxxxxxxxxx
Title: Executive Director
21
SCHEDULE I
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------------
Xxxxxx Xxxxxxx & Co. Incorporated.......................... 4,680,000
Xxxxxx Brothers, Inc....................................... 1,440,000
Lazard, Freres & Co. LLC................................... 720,000
Xxxxx, Xxxxxxxx & Xxxx, Inc................................ 360,000
---------
Total:............................................ 7,200,000
=========
EXHIBIT A
[FORM OF LOCK-UP LETTER]
January 18, 2003
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Brothers, Inc.
Lazard Freres & Co. LLC
Xxxxx, Xxxxxxxx & Xxxx, Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with AtheroGenics, Inc., a Georgia corporation (the
"COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by the
several Underwriters, including Xxxxxx Xxxxxxx (the "UNDERWRITERS"), of
6,000,000 shares (the "SHARES") of the Common Stock, no par value, of the
Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the final
prospectus supplement relating to the Public Offering (the "PROSPECTUS"), (1)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise; provided, however, that
this Lock-Up Agreement shall terminate immediately if the Public Offering is
not consummated by February 15, 2003. The foregoing sentence shall not apply to
(a) the sale of any Shares to the Underwriters pursuant to the Underwriting
Agreement or (b) transactions relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
Public Offering. In addition, the undersigned agrees that, without the prior
written consent of Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not,
during the
period commencing on the date hereof and ending 90 days after the date of the
Prospectus (unless this Lock-Up Agreement is earlier terminated as provided
above), make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the undersigned's shares of Common
Stock except in compliance with the foregoing restrictions. The undersigned
further agrees to suspend any existing trading plans or other arrangements
pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, and agrees
not to enter into any such plan or arrangement during the period commencing on
the date hereof and ending 90 days after the date of the Prospectus (unless
this Lock-Up Agreement is earlier terminated as provided above).
Notwithstanding the foregoing, the undersigned may exercise warrants
and stock options issued or granted by the Company; provided, however, that any
Common Stock received from the Company by the undersigned upon exercise of such
warrants and stock options shall be bound by the terms of this Lock-Up
Agreement.
Notwithstanding anything herein to the contrary, the undersigned may transfer
any Common Stock either during his or her lifetime or on death by will or by
intestacy to his or her immediate family or to a trust or other legal entity
the beneficiaries of which are the undersigned and/or a member of his or her
immediate family or to a charitable organization or other legal entity over
which such individual maintains control over the disposition and voting of such
Common Stock; provided, however, that in any case it shall be a condition to
the transfer that (i) the transferee execute and deliver to Xxxxxx Xxxxxxx an
agreement stating that the transferee is receiving and holding the Common Stock
so transferred subject to the provisions of this Lock-Up Agreement, (ii) there
shall be no further transfer of such Common Stock except in accordance with
this Lock-Up Agreement and (iii) no filing by any party (transferor or
transferee) under Section 16(a) of the Securities Exchange Act of 1934, as
amended, shall be required or shall be made voluntarily in connection with such
transfer or distribution (other than a filing on a Form 5 made after the
expiration of the 90-day period referred to above). For purposes of this
Lock-Up Agreement, "immediate family" shall mean spouse, lineal descendant,
father, mother, brother or sister of the transferor and "charitable
organization" shall mean an organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up
Agreement is irrevocable and shall be binding upon the undersigned's heirs,
legal representatives, successors and assigns.
2
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
----------------------------------
(Name)
----------------------------------
(Address)
3
