TRANSGENOMIC, INC.
4,480,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
July 18, 2000
CHASE SECURITIES INC.
Bear, Xxxxxxx & Co. Inc.
Xxxx Xxxxxxxx Incorporated
as representatives of the
Several Underwriters
c/o Chase Securities Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Transgenomic, Inc. a Delaware corporation (herein called the Company,
which term shall also include its direct and indirect subsidiaries, unless the
context otherwise requires), proposes to issue and sell 4,480,000 shares of its
authorized but unissued common stock, $0.01 par value (herein called the Common
Stock) (said 4,480,000 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 672,000 additional shares of
Common Stock (herein called the Option Stock and with the Underwritten Stock
herein collectively called the Stock). The Common Stock is more fully described
in the Registration Statement and the Prospectus hereinafter mentioned.
The Company 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. 333-32174), 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
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(1) Plus an option to purchase from the Company up to 672,000 additional shares
to cover over-allotments.
rules and regulations of the Commission under the Securities Act (herein called
the Rules and Regulations) 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 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. 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. The Company has
caused to be delivered to you copies of each Preliminary Prospectus and has
consented to the use of such copies for the purposes permitted by the Securities
Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants as follows:
(a) 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) (herein called a
Material Adverse Effect). The Company has no Subsidiary (as defined in
the Rules and Regulations) other than Transgenomic, Ltd., a U.K.
limited liability company, and Transgenomic St. Xxxxxx, Inc., a
corporation organized under the laws of the U.S. Virgin Islands (herein
called the Subsidiaries). Other than the Subsidiaries, the Company does
not own, directly or indirectly, any shares of capital stock or any
other equity interest in any firm, partnership, joint venture,
association or other entity.
(b) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, other than as
set forth in the Registration Statement and the Prospectus, (i) there
has not been any material adverse change, or any development involving
a prospective material 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, (ii) neither the
Company nor any of its Subsidiaries has incurred any material liability
or obligation, direct or contingent, and (iii) 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. Neither the Company
nor any of its Subsidiaries has any material
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contingent obligations which are not disclosed in the Prospectus or
provided for in the Company's consolidated financial statements that
are included in the Registration Statement.
(c) The Registration Statement and the Prospectus comply,
and on the Closing Date (as hereinafter defined) and any later date on
which Option Stock is to be purchased, the Prospectus will comply, in
all material respects, with the provisions of the Securities Act and
the Rules and Regulations; on the Effective Date, the Registration
Statement did not contain any untrue statement of a material fact and
did not omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading;
and, on the Effective Date the Prospectus did not and, on the Closing
Date and any later date on which Option Stock is to be purchased, will
not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that none of the representations and
warranties in this subparagraph (c) 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.
(d) The shares of the Company's common stock, $.01 par
value, issued and outstanding prior to the offering of the Stock have
been duly authorized and are validly issued, fully paid and
nonassessable. The Stock, when issued and sold to the Underwriters as
provided herein, will be duly authorized and, when issued and paid for
as contemplated herein, will be validly issued, fully paid and
nonassessable and conform to the description thereof in the Prospectus.
No preemptive right, registration right, right of first refusal or
other similar rights of stockholders exists with respect to any Stock
or the issue or sale thereof, except as set forth 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. Except as described in the
Prospectus, neither the filing of the Registration Statement nor the
offering or sale of the Stock as contemplated by this Agreement gives
rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any shares of capital
stock. Except as described in the Prospectus, 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 owned or to be owned by such person or to
require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement filed by
the Company under the Securities Act. Except as described in the
Prospectus, there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sales or liens
related to or entitling any person to purchase or otherwise acquire any
shares of the capital stock of, or other ownership interest in the
Company.
(e) 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.
(f) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus relating
to the proposed offering of Stock, nor, to the best knowledge of the
Company, instituted proceedings for that purpose.
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(g) Each Preliminary Prospectus or 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 did not contain an untrue statement of a
material fact or omit 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; PROVIDED, HOWEVER, that none of
the representations and warranties contained in this subparagraph (g)
shall apply to the statements in, or omissions from, any Preliminary
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 such Preliminary Prospectus.
(h) The authorized and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization". The form of certificates for the Stock conforms to
the legal requirements of the state of Delaware, the Company's charter
and bylaws and the rules of the Nasdaq National Market.
(i) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering
of the Stock, nor, to the best knowledge of the Company, instituted
proceedings for that purpose.
(j) The financial statements of the Company, together
with related notes and schedules as set forth in the Registration
Statement, present fairly the consolidated financial position and the
results of operations and cash flows of the Company and its
Subsidiaries at the indicated dates and for the indicated periods. Such
financial statements and related schedules have been prepared in
accordance with generally accepted accounting principles, consistently
applied throughout the periods involved, and all adjustments necessary
for a fair presentation of results for such periods have been made. The
summary and selected financial data included in the Registration
Statement present fairly the information shown therein and such data
has been compiled on a basis consistent with the financial statements
presented therein and the books and records of the Company. The other
financial and statistical information and data set forth in the
Registration Statement are, in all material respects, accurately
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.
(k) Deloitte & Touche LLP, who have audited certain of
the financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required
by the Securities Act and the Rules and Regulations.
(l) Except as disclosed in the Registration Statement,
there is no action, suit, claim or proceeding pending, or, to the
knowledge of the Company, threatened against the Company, any of its
Subsidiaries, or any of their respective directors, officers or
properties, before any court or administrative agency or otherwise,
which if determined adversely to the Company or such Subsidiaries could
reasonably be expected to result in any Material Adverse Effect or
prevent the consummation of the transactions contemplated hereby.
(m) There are no agreements, contracts, leases or
documents of the Company of a character required to be described or
referred to in the Registration Statement or Prospectus or to be filed
as an exhibit to the Registration Statement by the Securities Act or
the Rules and Regulations which have not been accurately described in
all
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material respects or referred to in the Registration Statement or
Prospectus or filed as exhibits to the Registration Statement. The
agreements, contracts, leases or documents so described in the
Registration Statement and Prospectus are in full force and effect on
the date hereof (unless otherwise indicated in the Registration
Statement and the Prospectus), and neither the Company nor, to the best
of the Company's knowledge, any other party, is in breach of or default
under, and no event has occurred which with the giving of notice or
with the lapse of time would constitute a breach of or default under,
any of such agreements, contracts, leases or documents. Neither the
Company, nor to its knowledge, any other party has repudiated any
provision of such agreements, contracts, leases or documents.
(n) Each of the Company and its Subsidiaries has good and
marketable title to all of the properties and assets as described in
the Registration Statement or as reflected in the financial statements
filed with the Commission as part of the Registration Statement, free
and clear of any lien, mortgage, pledge, charge or encumbrance of any
kind except those reflected in such financial statements or as
described in the Registration Statement. All leases to which the
Company or any of its Subsidiaries is a party are valid and binding
obligations of the Company or such Subsidiary, as the case may be, and
no default by the Company or such Subsidiary has occurred or is
continuing thereunder which could reasonably be expected to result in a
Material Adverse Effect, and each of the Company and its Subsidiaries
enjoys peaceful and undisturbed possession under all such leases to
which it is a party as lessee. Such leases conform in all material
respects to the descriptions thereof set forth in the Prospectus.
(o) Each of the Company and its Subsidiaries has timely
filed all federal, state, local and foreign income tax returns which
have been required to be filed and have paid all taxes indicated by
said returns and all assessments received by them or any of them to the
extent that such taxes have become due and are not being contested in
good faith except where the failure to file such returns and pay such
taxes would not have a Material Adverse Effect. All tax liabilities
(including those being contested in good faith) for the periods covered
by the financial statements of the Company that are included in the
Registration Statement have been adequately provided for in such
financial statements. No tax deficiency has been, or to the best of the
Company's knowledge, might be, asserted or contemplated against the
Company or any of its Subsidiaries.
(p) The Company has full legal right, power and authority
to enter into this Agreement and to perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed
and delivered by the Company and (assuming due authorization and
delivery by the Underwriters) is a valid and binding agreement of the
Company, enforceable in accordance with its terms except insofar as
indemnification and contribution provisions may be limited by Federal
or state securities laws, principles of public policy or equitable
principles and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally or by general equitable
principles.
(q) Neither the Company nor any of its Subsidiaries is,
or with the giving of notice or lapse of time or both will be, in
violation of or in default under its charter or bylaws or under any
agreement, lease, contract, indenture or other instrument or obligation
to which it is a party or by which it, or any of its properties, is
bound and which default could have a Material Adverse Effect. The
execution and delivery of this Agreement by the Company and the
consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result in a
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breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party, or of the respective Second
Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") or Bylaws of the Company or any law, order, rule or
regulation, injunction, judgment, or decree applicable to the Company
or any of its Subsidiaries of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction
over the Company or any of its Subsidiaries, which conflict, breach or
default could have a Material Adverse Effect.
(r) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with
the execution and delivery by the Company of this Agreement and the
consummation of the transactions herein contemplated, including,
without limitation, any such approval, consent, order, authorization,
designation, declaration or filing which may be required in connection
with the offering of Stock reserved for sale to the Company's
directors, officers, employees, business associates and related persons
(herein called the Directed Shares) pursuant to a program established
for such purpose by the Company (herein called the Directed Share
Program) (except as may be required in connection with the registration
of the Stock under the Securities Act and such additional steps as may
be required by the National Association of Securities Dealers, Inc.
(herein called the NASD) or such additional steps as may be necessary
to qualify the Stock for public offering by the Underwriters under
state securities or blue sky laws) has been obtained or made and is in
full force and effect.
(s) The Company and each of its Subsidiaries now holds
and at the Closing Date and any later date on which the Option Stock is
purchased, as the case may be, will hold, all licenses, consents,
certificates, orders, approvals and permits from all state, United
States, foreign and other governmental or regulatory authorities, that
are required for the conduct of the business of the Company and its
Subsidiaries as such business is currently conducted and as proposed to
be conducted as described in the Prospectus, except for such licenses,
certificates approvals and permits the failure of which to maintain
would not have a Material Adverse Effect, all of which are valid and in
full force and effect (and there is no proceeding pending or, to the
best knowledge of the Company, threatened which may cause any such
license, consent, certificate, order, approval or permit to be
withdrawn, cancelled, suspended or not renewed). Neither the Company
nor any of its Subsidiaries is in violation or breach of any of its
obligations under, or of the terms of, any such license, consent,
certificate, order, approval or permit, except for such breach, default
or failure as would not reasonably be expected to result in a Material
Adverse Effect.
(t) The Company and each of its Subsidiaries is in
compliance with all of the laws, rules, regulations, orders, directives
or judgments issued or administered by any governmental agency or body
or any court, foreign or domestic having jurisdiction over the Company
or any of its Subsidiaries or any of their respective properties or
assets, except where any such failure to be in compliance would not
have a Material Adverse Effect.
(u) The Company and each of its Subsidiaries (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 (including, without limitation, all laws and
regulations relating to biohazardous substances) (herein called
Environmental Laws), (ii) has received all permits, licenses or other
approvals required of it under applicable Environmental Laws to conduct
its respective business and (iii) is in compliance with
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all terms and conditions of any such permit, license or approvals,
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.
(v) 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.
(w) To the best of Company's knowledge, no labor
disturbance by the employees of the Company or its Subsidiaries exists
or is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its principal
suppliers, authorized dealers or distributors that might be expected to
result in a Material Adverse Effect. No collective bargaining agreement
exists with any of the Company's or any of its Subsidiaries' employees
and, to the best of the Company's knowledge, no such agreement is
imminent.
(x) The Company is in compliance in all material respects
with all currently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder (herein called ERISA); no
"reportable event" (as defined in ERISA) has occurred with respect to
any "pension plan" (as defined in ERISA) for which the Company would
have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971
of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretation thereunder (herein called the
Code); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, that would cause the loss of
such qualification.
(y) The Company and each of its Subsidiaries owns or
possesses adequate licenses or other rights to the patents and patent
applications, copyrights, trademarks, service marks, trade names,
technology and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary rights) (herein collectively called
Intellectual Property) which are necessary to conduct, or currently
employed by them in connection with the conduct, of their businesses as
described in the Registration Statement and the Prospectus. Neither the
Company nor any of its Subsidiaries is obligated to pay a material
royalty, grant a material license or provide other material
consideration to any third party in connection with the Intellectual
Property, except as described in the Registration Statement and in the
Prospectus. Except as set forth in the Registration Statement and the
Prospectus, neither the Company nor any of its Subsidiaries has
received any notice of, or has any knowledge of, any infringement of or
conflict with any rights of the Company by others or any infringement
of or conflict with any rights of others, in each case with respect to
any Intellectual Property which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect. There are no legal or governmental proceedings
pending or threatened relating to Intellectual Property, which, singly
or in the aggregate, would have a Material Adverse Effect. To the
Company's best knowledge, none of the Intellectual Property licensed to
or by the Company or any of its Subsidiaries is unenforceable or
invalid; and neither the Company nor any of its Subsidiaries is aware
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of the granting of any patent rights to third parties or the filing of
any patent applications by third parties or of any other rights of
third parties to, or conflicting with, any Intellectual Property owned
by the Company or any of its Subsidiaries. Except as set forth in the
Registration Statement and the Prospectus, no third party, including
any academic or governmental organization, possesses rights to the
Intellectual Property which, if exercised, could reasonably be expected
to result in a Material Adverse Effect.
(z) To the best of the Company's knowledge, in connection
with the filing of all patent applications filed or caused to be filed
by the Company and its Subsidiaries with the United States Patent and
Trademark Office (herein called the PTO), the Company and each of its
Subsidiaries has complied with the PTO's duty of candor and disclosure
for their patent and has made no misrepresentation in any such
application or in any application filed with any applicable foreign and
international patent authorities. The Company is unaware of any facts
material to a determination of patentability regarding the Company's
and its Subsidiaries' patent applications not called to the attention
of the PTO and is unaware of any facts not called to the attention of
the PTO which would preclude the grant of a patent for such
applications. The Company has no knowledge of any facts which would
materially conflict with the Company's or its Subsidiaries' ownership
rights to the Company's patent applications.
(aa) The Company is not, and after giving effect to the
offer and sale of the Stock and the application of the proceeds thereof
as described in the Prospectus, will not be, an "investment company" or
a company "controlled" by an "investment company" within the meaning of
such terms under the Investment Company Act of 1940, as amended (herein
called the Investment Company Act), and the rules and regulations
thereunder.
(bb) The Company and each of its Subsidiaries maintains a
system of internal 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 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.
(cc) The Company and each of its Subsidiaries carries, or
is covered by, insurance with insurers of nationally recognized
reputability in such amounts and covering such risks as it believes is
customary for companies engaged in similar industries to protect it
from material liabilities; and neither the Company nor any of its
Subsidiaries (i) has received notice from any insurer or agent of such
insurer that substantial capital improvements or other material
expenditures will have to be made in order to continue such insurance
or (ii) has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers at a cost that would not,
singly or in the aggregate, have a Material Adverse Effect.
(dd) The statements in the Prospectus under the caption
"Related Party Transactions" set forth all existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings or transactions, between or among the
Company, on the one hand, and any officer, director or stockholder of
the Company, or with any partner, affiliate or associate of any of the
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foregoing persons or entities, on the other hand, required to be set
forth or described thereunder.
(ee) The Company has not and will not distribute prior to
the later of (i) the Closing Date, or any date on which Option Stock is
to be purchased, as the case may be, and (ii) completion of the
distribution of the Stock, any offering material (including, without
limitation, content on its website, if any, that may be deemed to be
offering material) in connection with the offering and sale of the
Stock other than any Preliminary Prospectuses, the Prospectus, the
Registration Statement and other materials, if any, permitted by the
Securities Act.
(ff) The Company has not incurred any liability for any
finder's fees or similar payments in connection with the transactions
contemplated hereby other than to the Underwriters.
(gg) The Company has not offered, or caused any
Underwriter 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.
(hh) All sales of the Company's securities prior to the
date hereof were at all relevant times duly registered under the
Securities Act and applicable foreign securities laws and state
securities or Blue Sky laws or were exempt from the registration
requirements of the Securities Act and applicable foreign and state
securities laws, or if such securities were not registered or exempt in
compliance with the Securities Act and applicable foreign and state
securities laws, any private rights of action for recission or damages
arising from the failure to register any such securities are time
barred by applicable statutes of limitations or equitable principles,
including laches.
(ii) The Company has obtained the agreement of (A) each of
its directors and officers, (B) certain holders of the outstanding
Common Stock; and (C) the holders of other securities convertible into
or exercisable or exchangeable for Common Stock or warrants or other
rights to purchase Common Stock (such that the aggregate of such
securities that are not subject to such agreement does not represent
more than 8% of the outstanding Common Stock), not to sell, contract to
sell, transfer the economic risk of ownership in, make any short sale,
pledge or otherwise dispose of, directly or indirectly, any shares of
Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock or warrants or other rights to purchase
Common Stock for a period of 180 days after the date of the Prospectus.
(jj) Each certificate signed by an officer of the Company
and delivered to the Underwriters or counsel for the Underwriters in
connection with the issuance and sale of the Common Stock shall be
deemed to be a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
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 4,480,000 shares of the Underwritten Stock to the several Underwriters and
each of the Underwriters agrees to purchase from the Company the respective
aggregate number of shares of Underwritten Stock set forth opposite its name in
SCHEDULE I. The price at which such shares of Underwritten Stock shall be sold
by the Company and purchased by the several Underwriters shall be $13.95 per
share. In
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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
satisfactory to you for purchase of such shares and portion on the terms herein
set forth. In any such case, either you or the Company shall have the right to
postpone the Closing Date determined as provided in Section 5 hereof for not
more than seven business days after the date originally fixed as the Closing
Date pursuant to said Section 5 in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made. If neither the non-defaulting Underwriters nor the Company shall
make arrangements within the 24-hour periods stated above for the purchase of
all the shares of the Stock which the defaulting Underwriter or Underwriters
agreed to purchase hereunder, this Agreement shall be terminated without further
act or deed and without any liability on the part of the Company to any
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 672,000 shares in the aggregate of the Option Stock from the
Company at the same price per share as the Underwriters shall pay for the
Underwritten Stock. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Stock by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before the
thirtieth day after the date of this Agreement upon written or telegraphic
notice by you to the Company setting forth the aggregate number of shares of the
Option Stock as to which the several Underwriters are exercising the option.
Delivery of certificates for the shares of Option Stock, and payment therefor,
shall be made as provided in Section 5 hereof. The number of shares of the
Option Stock to be purchased by each Underwriter shall be the same percentage of
the total number of shares of the Option Stock to be purchased by the several
Underwriters as such Underwriter is
10
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 under "Underwriting" in the
Registration Statement, any Preliminary Prospectus and the Prospectus (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 10:00 a.m., New York time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of Milbank, Tweed, Xxxxxx & XxXxxx LLP, Xxx Xxxxx Xxxxxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York time, on the third 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 10:00 a.m., New York time, on the date two business days
preceding the Closing Date, delivery of certificates for the shares of Option
Stock, and payment therefor, shall be made at the office of Milbank, Tweed,
Xxxxxx & XxXxxx LLP, Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at
10:00 a.m., New York time, on the third business day after the exercise of such
option.
(c) Payment for the Stock purchased from the Company shall be made
to the Company or its order by wire transfer of Federal or other funds
immediately available in New York City. Such payment shall be made upon delivery
of certificates for the Stock to you for the respective accounts of the several
Underwriters against receipt therefor signed by you. Certificates for the Stock
to be delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least 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. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of Lewco Securities Corporation, Two Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 on the business day prior to the Closing Date or, in the
case of the Option Stock, by 3:00 p.m., New York time, on the business day
preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or any later date on which Option Stock is
purchased for the account of such Underwriter. Any such payment by you shall not
relieve such Underwriter from any of its obligations hereunder.
11
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.
(b) The Company will promptly notify each Underwriter in
the event of (i) the request by the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any
additional information, (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, (iii)
the institution or notice of intended institution of any action or
proceeding for that purpose, (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt by it of notice
of the initiation or threatening of any proceeding for such purpose.
The Company will make every reasonable effort to prevent the issuance
of such a stop order and, if such an order shall at any time be issued,
to obtain the withdrawal thereof at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date,
deliver to you a signed copy of the Registration Statement as
originally filed and of each amendment thereto filed prior to the time
the Registration Statement becomes effective and, promptly upon the
filing thereof, a signed copy of each post-effective amendment, if any,
to the Registration Statement (together with, in each case, all
exhibits thereto unless previously furnished to you) and will also
deliver to you, for distribution to the Underwriters, a sufficient
number of additional conformed copies of each of the foregoing (but
without exhibits) so that one copy of each may be distributed to each
Underwriter, (ii) as promptly as possible deliver to you and send to
the several Underwriters, at such office or offices as you may
designate, as many copies of the Prospectus as you may reasonably
request, and (iii) thereafter from time to time during the period in
which a prospectus is required by law to be delivered by an Underwriter
or dealer, likewise send to the Underwriters as many additional copies
of the Prospectus and as many copies of any supplement to the
Prospectus and of any amended prospectus, filed by the Company with the
Commission, as you may reasonably request for the purposes contemplated
by the Securities Act.
(d) If at any time during the period in which a
prospectus is required by law to be delivered by an Underwriter or
dealer any event relating to or affecting the Company, or of which the
Company shall be advised in writing by you, shall occur as a result of
which it is necessary, in the opinion of counsel for the Company or of
counsel for the Underwriters, to supplement or amend the Prospectus in
order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser of
the Stock, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus or an amended prospectus so
that the Prospectus as so supplemented or amended will not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time such Prospectus is delivered to such
purchaser, not misleading. If, after the initial public offering of the
Stock by the Underwriters and during such period, the Underwriters
shall propose to
12
vary the terms of offering thereof by reason of changes in general
market conditions or otherwise, you will advise the Company in writing
of the proposed variation, and, if in the opinion either of counsel for
the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company
will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended prospectus setting forth such variation. The
Company authorizes the Underwriters and all dealers to whom any of the
Stock may be sold by the several Underwriters to use the Prospectus, as
from time to time amended or supplemented, in connection with the sale
of the Stock in accordance with the applicable provisions of the
Securities Act and the applicable rules and regulations thereunder for
such period.
(e) Prior to the filing thereof with the Commission, the
Company will submit to you, for your information, a copy of any
post-effective amendment to the Registration Statement and any
supplement to the Prospectus or any amended prospectus proposed to be
filed.
(f) The Company will cooperate, 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 three years commencing with the
date hereof, the Company will furnish to you, and to each Underwriter
who may so request in writing, copies of all periodic and special
reports furnished to stockholders of the Company and of all
information, documents and reports filed with the Commission.
(h) Not later than the 45th day following the end of the
fiscal quarter first occurring after the first anniversary of the
Effective Date, the Company will make generally available to its
security holders an 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 all costs and expenses incident to (i) the preparation,
printing and filing with the Commission and the NASD of the
Registration Statement, any Preliminary Prospectus and the Prospectus,
(ii) the furnishing to the Underwriters of copies of any Preliminary
Prospectus and of the several documents required by paragraph (c) of
this Section 6 to be so furnished, (iii) the printing of this Agreement
and related documents delivered to the Underwriters, (iv) the
preparation, printing and filing of all supplements and amendments to
the Prospectus referred to in paragraph (d) of this Section 6, (v) the
furnishing to you and the Underwriters of the reports and information
referred to in paragraph (g) of this Section 6 and (vi) the printing
and issuance of stock certificates, including the transfer agent's
fees. Except as specifically provided for in this Section 6, the
Underwriters will pay their own costs and expenses, including fees of
their counsel, any stock transfer taxes due upon any resale of Stock by
them and advertising costs incurred by them.
13
(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 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) shares of
Common Stock issued by the Company upon the exercise of options granted
under the Company's stock option plan or upon the exercise of warrants
outstanding as of the date hereof, all as described in the Preliminary
Prospectus, and (B) options to purchase Common Stock granted under the
Company's stock option plan. If this Agreement is terminated prior to
the Closing Date, the provisions of this Section 6(k) shall be of no
further force or effect.
(l) The Company agrees to use its best efforts to cause
all directors, officers and the beneficial owners of the outstanding
Common Stock identified on ANNEX C hereto to agree 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, sell, offer, contract to sell,
transfer the economic risk of ownership in, make any short sale, pledge
or otherwise dispose of any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for or any rights to
purchase or acquire Common Stock.
(m) 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.
(n) 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.
(o) The Company (i) will comply with all applicable
securities and other applicable laws, rules and regulations in each
jurisdiction in which the Directed Shares
14
are offered 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.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person (including each partner or officer thereof) who
controls any Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Securities Exchange Act of 1934, as amended
(herein called the Exchange Act), or the common law or otherwise, and the
Company agrees to reimburse each such Underwriter and controlling person for any
legal or other expenses (including, except as otherwise hereinafter provided,
reasonable fees and disbursements of counsel) 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; (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; (iii) any untrue
statement or alleged untrue statement of a material fact contained in any
material prepared by or with the consent of the Company for distribution to
participants in connection with the Directed Share Program, 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; (iv)
the failure of any participant under the Directed Share Program to pay for and
accept delivery of Directed Shares that such participant has agreed to purchase
thereunder; or (v) the establishment of and any offers and sales of Stock made
under or in connection with the Directed Share Program (other than, in the case
of clause (v) above, losses, claims, damages or liabilities (or expenses
relating thereto) that are finally judicially determined to have resulted from
the bad faith or gross negligence of the Underwriters), PROVIDED, HOWEVER, that
(1) the indemnity agreements of the Company contained in clauses (i) and (ii) of
this subparagraph (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 clauses (i) and (ii) of this subparagraph (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 subparagraph (c) of Section 6 hereof. The indemnity agreements
of the Company contained in this subparagraph (a) and the
15
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 subparagraph (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 subparagraphs
(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
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
16
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, (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, (iii) if the indemnified parties under this
Section 7 consist of the Underwriters or any of their officers, employees or
controlling persons, then any such counsel chosen for such indemnified parties
shall be designated in writing by Chase Securities Inc., and (iv) if the
indemnified parties under this Section 7 consist of the Company or any of its
officers, employees or controlling persons, then any such counsel chosen for
such indemnified parties shall be designated in writing by the Company. 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 subparagraphs (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 (provided, however, that the indemnifying party shall not
be liable for more than one separate firm for all such indemnified parties) 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
subparagraph (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 subparagraph (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.
17
The parties agree that it would not be just and equitable if
contributions pursuant to this subparagraph (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
subparagraph (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 subparagraph (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 subparagraph (d). Notwithstanding
the provisions of this subparagraph (d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Stock purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subparagraph
(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 subparagraph (c) of this Section 7).
(e) The Company will not, without the prior written consent of
each Underwriter, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such Underwriter
or any person who controls such Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of such Underwriter and each such controlling
person from all liability arising out of such claim, action, suit or proceeding.
8. TERMINATION. This Agreement may be terminated by you at any
time prior to the Closing Date by giving written notice to the Company if after
the date of this Agreement trading in the Common Stock shall have been
suspended, or if there shall have occurred (i) the engagement in hostilities or
an escalation of major hostilities by the United States or the declaration of
war or a national emergency by the United States on or after the date hereof,
(ii) any outbreak of hostilities or other national or international calamity or
crisis or change in economic or political conditions if the effect of such
outbreak, calamity, crisis or change in economic or political conditions in the
financial markets of the United States would, in the Underwriters' reasonable
judgment, make the offering or delivery of the Stock impracticable, (iii)
suspension of trading in securities generally or a material adverse decline in
value of securities generally on the New York Stock Exchange, the American Stock
Exchange, The Nasdaq Stock Market, or limitations on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such exchange or system, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of, or
commencement of any proceeding or investigation by, any court, legislative body,
agency or other governmental authority which in the Underwriters' reasonable
opinion materially and adversely affects or will materially or adversely affect
the business or operations of the Company, (v) declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in the Underwriters' reasonable opinion has a
material adverse effect on the securities markets in the United States. If this
Agreement shall
18
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 (x) indemnity
and contribution agreements contained in Section 7 hereof shall survive such
termination and (y) 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 subparagraphs (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 Milbank,
Tweed, Xxxxxx & XxXxxx LLP, counsel for the Underwriters.
(c) You shall have received from Xxxxx Xxxx LLP, counsel
for the Company, and from Xxxxxxx X. Xxxxxx, Esq., Vice President of
Intellectual Property 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
19
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 subparagraph (d) of this Section 9 are true and
correct.
(f) You shall have received from Deloitte & Touche 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
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 Deloitte & Touche 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 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 subparagraph (f) of Section 6 hereof.
20
(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 the beneficial owners of the
outstanding Common Stock identified on ANNEX C hereto, 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, sell, offer, contract to
sell, transfer the economic risk of ownership in, make any short sale,
pledge or otherwise dispose of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for or any
rights to purchase or acquire Common Stock.
(k) The Company shall have acquired from Nebraska State
Bank, on terms reasonably satisfactory to you, the promissory notes of
SD Acquisition Inc. ("SD") in an aggregate principal amount of $4.635
million (the "SD Notes") evidencing loans made by Nebraska State Bank
to SD under loan agreements between the parties, dated as of May 15,
2000, the proceeds of which were used by SD to purchase the assets of
the Company associated with its non-life science product line. The
acquisition of the SD Notes will be made simultaneously with the
closing of the sale of the Stock to you hereunder and will be financed
with a portion of the net offering proceeds. The Company authorizes you
to pay a portion of the net proceeds of the offering sufficient to
purchase the SD Notes directly to Nebraska State Bank (or such other
parties as it shall direct) at the Closing.
In addition, you shall have received on the Closing Date and on any
later date on which Option Stock is purchased, such additional documents
(including, without limitation, opinions of counsel, letters, certificates and
agreements) as you may reasonably request.
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 Milbank, Tweed, Xxxxxx & XxXxxx LLP, counsel for the
Underwriters, shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; PROVIDED,
HOWEVER, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement,
including all costs and expenses referred to in subparagraphs (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:
21
(a) the Registration Statement shall have become effective and no
stop order suspending the effectiveness thereof shall be in effect and no
proceedings therefor shall be pending or threatened by the Commission; and
(b) you shall have made payment for all the Stock to be sold on
the Closing Date (or, in the case of the Option Stock, on any later date on
which Option Stock is purchased) against delivery of the certificates evidencing
such Stock, as provided in Section 5 hereof.
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 termination due to the non-fulfillment of the
condition set forth in subparagraph (a) of this Section 10, 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 subparagraphs (i) and
(j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. With respect to its
obligations under Section 7 of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis any indemnified person identified in Section 7 of
this Agreement 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 subparagraph (a) of
Section 7 of this Agreement, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 11 and the possibility that such payments might later be held to be
improper; PROVIDED, HOWEVER, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of the Company and the several Underwriters and, with
respect to the provisions of Section 7 hereof, the several parties (in addition
to the Company and the several Underwriters) indemnified under the provisions of
said Section 7, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to Chase Securities
Inc., Xxx Xxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000, with a copy to Milbank, Tweed,
Xxxxxx & XxXxxx LLP, One Chase Xxxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx X. Xxxxxxxx, Esq.; and if to the Company, shall be
mailed, telegraphed or delivered to it at its office, 0000 Xxxxx 00xx Xxxxxx,
Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X'Xxxxx, with a copy to Xxxxx Xxxx LLP,
0000 Xxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxx, Esq. All
notices given by telegraph shall be promptly confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any investigation made by or on behalf of any Underwriter or
controlling person thereof, or by or on behalf of the
22
Company or their respective directors or officers, and (b) delivery and payment
for the Stock under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
23
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,
TRANSGENOMIC, INC.
By: /s/ Xxxxxx X. X'Xxxxx
------------------------------------
Name: Xxxxxx X. X'Xxxxx
Title: Chief Executive Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
CHASE SECURITIES INC.
Bear, Xxxxxxx & Co. Inc.
Xxxx Xxxxxxxx Incorporated
by Chase Securities Inc.
By /s/ Xxxxxxx Xxxxxxx
--------------------------
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
24
SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES
TO BE
UNDERWRITERS PURCHASED
Chase Securities Inc...................................... 2,240,000
Bear, Xxxxxxx & Co. Inc................................... 1,344,000
Xxxx Xxxxxxxx Incorporated ............................... 896,000
---------
Total ........................................ 4,480,000
