EXHIBIT 1.1
1,825,000 Shares
VENTRO CORPORATION
Common Stock, $.0002 Par Value
FORM OF
UNDERWRITING AGREEMENT
___________, 2000
____________, 2000
Xxxxxx Xxxxxxx & Co. Incorporated
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities Inc.
Deutsche Bank Securities Inc.
Prudential Securities Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Ventro Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to the several Underwriters named in Schedule II hereto (the
"Underwriters"), and certain stockholders of the Company named in Schedule I
hereto (the "Selling Stockholders") propose to sell to the several Underwriters,
an aggregate of 1,825,000 shares of the Company's Common Stock, $.0002 par value
(the "Firm Shares"), of which 1,370,000 shares are to be issued and sold by the
Company and 455,000 shares are to be sold by the Selling Stockholders, each
Selling Stockholder selling the amount set forth opposite such Selling
Stockholder's name in Schedule I hereto.
Certain Selling Stockholders also propose to issue and sell to the several
Underwriters not more than an additional 273,750 shares of its Common Stock,
$.0002 par value (the "Additional Shares"), each such Selling Stockholder
selling the amount set forth opposite such Selling Stockholder's name in
Schedule I hereto, 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 4
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "Shares." The shares of Common Stock, $.0002 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 and the
Selling Stockholders are hereinafter sometimes collectively referred to as the
"Sellers."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "Prospectus."
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 Underwriters acknowledge that concurrently with the offering of the
Shares, the Company is offering an aggregate of $300,000,000 principal amount of
its ___% Convertible Subordinated Notes due 2007 pursuant to an underwriting
agreement dated the date hereof between the Company and the Underwriters named
therein, plus up to an additional $45,000,000 aggregate principal amount of its
___% Convertible Subordinated Notes due 2007 to be offered upon exercise of an
option granted to such underwriters, pursuant to such underwriting agreement, to
cover over-allotments, if any (the "Note Offering"). The consummation of the
Offering of the Common Stock is not contingent upon the consummation of the Note
Offering or vice versa.
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) 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, (ii) 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 (iii) 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 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 State of Delaware, 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 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
and its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its
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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 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 and its subsidiaries, taken as a whole; all of the
issued shares of capital stock of each wholly-owned subsidiary of the
Company and the issued shares of capital stock of each other subsidiary of
the Company that are held by the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(e) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries, in each
case except as described in the Prospectus.
(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 (including the Shares to be sold by the
Selling Stockholders) outstanding prior to the issuance of the Shares have
been duly authorized and are validly issued, fully paid and non-assessable.
Except as set forth in the Prospectus, the Company does not have
outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares
of its capital stock or any such options, rights, convertible securities or
obligations. All outstanding shares of capital stock of the Company, and
options and other rights to acquire capital stock of the Company, have been
issued in compliance with the registration and prospectus delivery
requirements and qualification provisions of all applicable securities
laws, and were not issued in violation of any preemptive rights, rights of
first refusal or other similar rights.
(h) The Shares 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 rights, rights of first refusal or other
similar rights.
(i) This Agreement has been duly authorized, executed and delivered by
the Company.
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(j) 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 law or the certificate of incorporation or
bylaws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any 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.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(l) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company and
its subsidiaries have not incurred any material liability or obligations,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (ii) the Company has not purchased any of its
outstanding capital stock, other than the repurchase of shares of its
capital stock in connection with employee terminations, nor declared, paid
or otherwise made any dividend or distribution of any kind on its capital
stock other than ordinary and customary dividends; and (iii) there has not
been any material change in the capital stock, short-term debt or long-term
debt of the Company and its subsidiaries, except in each case as described
in the Prospectus.
(m) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries 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.
(n) 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.
(o) 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.
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(p) There is no owner of any securities of the Company who has any
rights, not effectively satisfied or waived, to require registration of any
shares of capital stock of the Company in connection with the filing of the
Registration Statement or the sale of any shares of capital stock of the
Company thereunder.
(q) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any of its subsidiaries has been
refused any insurance coverage sought or applied for; and neither the
Company nor any of its subsidiaries 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 as may
be necessary to continue its business at a cost that would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, except as described in the Prospectus.
(r) The Company and its subsidiaries (i) are 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) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are 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 and its
subsidiaries, taken as a whole.
(s) 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 could, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(t) The Company and its subsidiaries own or possess adequate licenses
or other rights to use all 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, trade names, and technology
necessary to conduct their business in the manner described in the
Prospectus; neither the Company nor any of its subsidiaries is obligated to
pay any material royalty, grant a material license, or provide other
material consideration to any third party in connection with its patents,
copyrights, trademarks, service marks, trade names, or technology other
than as disclosed in the Prospectus; and, except as disclosed in the
Prospectus, neither the Company nor any of its subsidiaries has received
any notice of infringement or conflict with (and neither the Company nor
any of its subsidiaries knows of any infringement or conflict with)
asserted rights of others with respect to any
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patents, copyrights, trademarks, service marks, trade names, technology or
know-how which could result in any material adverse effect upon the Company
and its subsidiaries, taken as a whole; and, except as disclosed in the
Prospectus, the discoveries, inventions, products or processes of the
Company and its subsidiaries referred to in the Prospectus do not, to the
best knowledge of the Company and its subsidiaries, infringe or conflict
with any right or valid and enforceable patent of any third party, or any
discovery, invention, product or process which is the subject of a patent
application filed by any third party, known to the Company or any of its
subsidiaries which could have a material adverse effect on the Company and
its subsidiaries, taken as a whole. Except as described in the Prospectus,
no third party, including any academic or governmental organization,
possesses rights to the Company's or any of its subsidiaries' patents,
copyrights, trademarks, service marks, trade names, or technology which, if
exercised, could enable such third party to develop products which compete
with those of the Company and its subsidiaries in a manner which could have
a material adverse effect on the Company and its subsidiaries, taken as a
whole, or a material adverse effect on the ability of the Company and its
subsidiaries to conduct their business in the manner described in the
Prospectus.
(u) The Company and its subsidiaries possess all consents, approvals,
orders, certificates, authorizations and permits issued by, and has made
all declarations and filings with, all appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses and to own, lease, license and use their properties in the
manner described in the Prospectus; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such consent, approval, order,
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, or failure to
obtain or file, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Prospectus.
(v) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) No material labor dispute with the employees of the Company or any
of its subsidiaries exists, except as described in the Prospectus, or, to
the knowledge of the Company, is imminent; and the Company is not aware of
any existing, threatened or imminent labor disturbance by the employees of
any its principal suppliers, manufacturers or contractors that could have a
material adverse affect on the Company and its subsidiaries, taken as a
whole.
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(x) Except as provided in writing and agreed to by Xxxxxx Xxxxxxx &
Co. Incorporated, each of the Company's executive officers and directors,
each of the Selling Stockholders and certain other stockholders holding in
the aggregate approximately __% of the outstanding shares of Common Stock,
and all shares of Common Stock, par value $.0002 per share, of the Company
issuable to such executive officers, directors, Selling Stockholders and
certain other stockholders upon the conversion, exercise or exchange of
outstanding securities convertible into or exercisable or exchangeable for
shares of Common Stock, including, without limitation, outstanding options
issued under the Company's 1998 Stock Plan or 1999 Directors' Stock Plan,
are subject to valid, binding and enforceable agreements (collectively, the
"Lock-up Agreements") that restrict the holders thereof from selling,
making any short sale of, granting any option for the purchase of, or
otherwise transferring or disposing of, any of such shares of Common Stock,
or any such securities convertible into or exercisable or exchangeable for
Common Stock, for a period of 90 days after the date of the Prospectus,
without the prior written consent of the Company or Xxxxxx Xxxxxxx & Co.
Incorporated.
(y) The Common Stock has been approved for listing on the Nasdaq
National Market.
(z) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or
with any person or affiliate located in Cuba.
(aa) The Company has reviewed its operations, the operations of its
subsidiaries and the operations of any third parties with whom the Company
has a material relationship to evaluate the extent to which the business or
operations of the Company or any of its subsidiaries will be affected by
the Year 2000 Problem (that is, any significant risk that computer hardware
or software applications used by the Company and its subsidiaries will not,
in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or time periods
occurring prior to January 1, 2000); as a result of such review, (i) the
Company has no reason to believe, and does not believe, that (A) there are
any issues related to the Company's preparedness to address the Year 2000
Problem that are of a character required to be described or referred to in
the Registration Statement or Prospectus which have not been accurately
described in the Registration Statement or Prospectus and (B) the Year 2000
Problem will have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business or operations of the Company and
its subsidiaries, taken as a whole, or result in any material loss or
interference with the business or operations of the Company and its
subsidiaries, taken as a whole; and (ii) the Company reasonably believes,
after due inquiry, that the suppliers, vendors, customers or other material
third parties used or served by the Company and such subsidiaries are
addressing or will address the Year 2000 Problem in a timely manner, except
to the extent that a failure to address the Year 2000 Problem by any
supplier, vendor, customer or material third party would not have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, business or operations of the Company and its subsidiaries, taken
as a whole.
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(bb) Ernst & Young LLP are independent public accountants with respect
to the Company and its subsidiaries, including Promedix, Inc., a Delaware
corporation that is a wholly-owned subsidiary of the Company ("Promedix"),
and XxxxxxxxxxXX.xxx, Inc. a Delaware corporation that is a wholly-owned
subsidiary of the Company ("SpecialtyMD"), as required by the Securities
Act.
(cc) The financial statements of the Company included in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), together with related schedules and notes, present fairly the
financial position, results of operations and changes in financial position
of the Company on the basis stated therein at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; the supporting schedules, if any,
included in the Registration Statement present fairly in accordance with
generally accepted accounting principles the information required to be
stated therein; and the other financial and statistical information and
data set forth in the Registration Statement and Prospectus (and any
amendment or supplement thereto) 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.
(dd) The financial statements of each of Promedix and SpecialtyMD
included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), together with related schedules and
notes, present fairly the respective financial position, results of
operations and changes in financial position of each of Promedix and
SpecialtyMD on the basis stated therein at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; the supporting schedules, if any,
included in the Registration Statement present fairly in accordance with
generally accepted accounting principles the information required to be
stated therein; and the other financial and statistical information and
data set forth in the Registration Statement and Prospectus (and any
amendment or supplement thereto) regarding each of Promedix and
SpecialtyMD, respectively, are, in all material respects, accurately
presented and prepared on a basis consistent with such financial statements
and the books and records of Promedix and SpecialtyMD, as the case may be.
(ee) The unaudited pro forma combined condensed financial information,
included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), together with related schedules and notes
complies as to form in all material respects to the accounting requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder, and management of the Company believes that the
assumptions underlying the pro forma adjustments are reasonable. All
necessary pro forma adjustments have been properly applied to the
historical amounts in the compilation of the information and such
information presents fairly with respect to the respective combined
entities presented therein the financial position, results of operations
and other information purported to be shown therein at the respective dates
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and for the respective periods specified on a basis consistent with the
audited financial statements included in the Registration Statement and the
Prospectus. No other financial statements or schedules are required by Form
S-1 or otherwise to be included in the Registration Statement or the
Prospectus.
2. Representations and Warranties of the Selling Stockholders. Each
of the Selling Stockholders, including the Insiders (defined below), severally
and not jointly, represents, warrants and covenants to and agrees with each of
the Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Stockholder.
(b) The execution and delivery by such Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, this
Agreement, the Irrevocable Election to Sell signed by such Selling
Stockholder (the "Irrevocable Election"), the Transmittal Letter and
Custodian Agreement signed by such Selling Stockholder and EquiServe LP as
Custodian, relating to the deposit of the Shares to be sold by such Selling
Stockholder (the "Custody Agreement") and the Irrevocable Power of Attorney
signed by such Selling Stockholder appointing certain individuals as such
Selling Stockholder's attorneys-in-fact to the extent set forth therein,
relating to the transactions contemplated hereby and by the Registration
Statement (the "Power of Attorney") will not contravene any provision of
applicable law and will not result in a breach of any of the terms and
provisions or constitute a default under the certificate of incorporation
or bylaws of such Selling Stockholder (if such Selling Stockholder is a
corporation), or any agreement or other instrument to which such Selling
Stockholder is a party (or by which any property or assets of such Selling
Stockholder is bound or to which any property or assets of such Selling
Stockholder is subject) or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such Selling
Stockholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by such Selling Stockholder of its obligations under this
Agreement, the Irrevocable Election, the Custody Agreement or Power of
Attorney of such Selling Stockholder, 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.
(c) Such Selling Stockholder has, and on the Closing Date or the
Option Closing Date, as the case may be, will have, good and marketable
title to the Shares to be sold by such Selling Stockholder and the full
legal right and power (including, if such Selling Stockholder is a
corporation or similar entity, corporate power), and all authorization and
approval required by law, to enter into this Agreement, the Irrevocable
Election, the Custody Agreement and the Power of Attorney and to sell,
transfer and deliver the Shares to be sold by such Selling Stockholder.
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(e) Each of the Irrevocable Election, the Custody Agreement and the
Power of Attorney has been duly authorized, executed and delivered by such
Selling Stockholder and is a valid and binding agreement of such Selling
Stockholder.
(f) Upon the delivery of and payment for the Shares to be sold by such
Selling Stockholder pursuant to this Agreement, the Underwriters will
obtain good and marketable title thereto, free and clear of any security
interests, claims, liens, equities and other encumbrances.
(g) All information furnished in writing by or on behalf of such
Selling Stockholder for use in the Registration Statement is, and on the
Closing Date will be, true, correct, and complete, and does not, and on the
Closing Date will not, contain any untrue statement of a material fact or
omit to state any material fact necessary to make such information not
misleading, and all information furnished in writing by or on behalf of
such Selling Stockholder for use in the Prospectus is, and on the Closing
Date will be, true, correct, and complete, and does not, and on the Closing
Date will not, contain any untrue statement of a material fact or omit to
state any material fact necessary to make such information not misleading
in the light of the circumstances under which they were made.
(h) The section of the Registration Statement entitled "Principal and
Selling Stockholders," 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 with respect to such Selling Stockholder.
(i) There are no shares of Common Stock that are beneficially owned
(within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) by such Selling Stockholder or by an
affiliate (within the meaning of Rule 12b-2 of the Exchange Act) of such
Selling Stockholder that are not subject to an agreement restricting the
transfer of such shares during the period of 90 days after the date of the
Prospectus.
3. Additional Representations and Warranties of the Insider Selling
Stockholders. Each of the Selling Stockholders that is an Insider (as defined
below) further represents and warrants to and agrees with each of the
Underwriters that such Selling Stockholder has reviewed the Company's
representations and warranties contained in Section 1 of this Agreement and,
based on such review (but without further investigation), such Selling
Stockholder does not have knowledge that, and nothing has come to such Selling
Stockholder's attention that would give such Selling Stockholder reason to
believe: (A) the representations and warranties of the Company contained in
Section 1 hereof are not true and correct; (B) the
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Registration Statement, when it became effective, contained and, as amended or
supplemented, if applicable, will contain any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; or (C) the Prospectus, as of the date of
the Prospectus, contains and, as amended or supplemented, if applicable, will
contain any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
"Insider" shall mean any Selling Stockholder that is (i) an executive officer or
director of the Company or (ii) a corporation or other entity of which any
person who is a director, executive officer, general partner, principal or
member of such entity is an executive officer or director of the Company.
4. Agreements to Sell and Purchase. Each Seller 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 such
Seller the respective numbers of Firm Shares set forth in Schedule II hereto
opposite its name at $___ a share (the "Purchase Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, certain Selling Stockholders
hereby agree to sell to the Underwriters the Additional Shares (in such number
as described below) and the Underwriters shall have a one-time right to
purchase, severally and not jointly, up to 273,750 Additional Shares at the
Purchase Price. The number of Additional Shares to be sold by each such Selling
Stockholder shall equal (A) in the case that the Underwriters elect to purchase
all such Additional Shares, the number set forth opposite such Selling
Stockholder's name in Schedule I hereto or (B) in the case that the Underwriters
elect to purchase less than all such Additional Shares, the number that bears
the same proportion that the total number of Additional Shares to be sold by
such Selling Stockholder as set forth opposite the name of such Selling
Stockholder in Schedule I hereto bears to the total the total number of
Additional Shares offered hereunder. If you, on behalf of the Underwriters,
elect to exercise such option, you shall so notify the Company in writing not
later than 30 days after the date of this Agreement, which 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. Such date may be the same as the
Closing Date (as defined below) but not earlier than the Closing Date nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 6 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, 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 as the
number of Firm Shares set forth in Schedule II 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, (A) offer, pledge,
sell, contract to sell, sell any option or
11
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 (B) 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 (A) or (B) 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 (i) the Shares to be sold hereunder and the
securities to be sold in the Note Offering; (ii) 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 as described in the
Prospectus or of which the Underwriters have been advised in writing; (iii) the
grant of any options or other rights to purchase or acquire any shares of Common
Stock pursuant to the 1998 Stock Plan or the 1999 Directors' Stock Plan; (iv)
the issuance by the Company of shares of Common Stock pursuant to the 1999
Employee Stock Purchase Plan; (v) the issuance of any shares of Common Stock or
grant of other right to acquire shares of capital stock of the Company pursuant
to equipment or lease financing activities entered into in the ordinary course
of the Company's business; or (vi) the issuance by the Company of shares of
Common Stock or securities convertible into or exchangeable for Common Stock in
connection with mergers or the acquisition of securities, businesses, property
or other assets. In addition, each Selling Stockholder 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, initiate any demand for the registration of any shares of Common
Stock or any security convertible into or exchangeable for Common Stock.
5. Terms of Public Offering. The Sellers are 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 Sellers are further
advised by you that the Shares are to be offered to the public initially at $___
a share (the "Public Offering Price") and to certain dealers selected by you at
a price that represents a concession not in excess of $___ a share under the
Public Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of $___ a share, to any Underwriter or to
certain other dealers
6. Payment and Delivery. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller 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 9:00 a.m., New York City
time, on ___, 2000, or at such other time on the same or such other date, not
later than ___, 2000, 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 such Seller 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
9:00 a.m., New York City time, on the date specified in the notice described in
Section 4 or at such other time on the same or on such other date, in any event
not later than ___, 2000, as shall be designated in writing by you. The time and
date of such payment are hereinafter referred to as the "Option Closing Date."
12
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and 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 Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the 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.
7. Conditions to the Underwriters' Obligations. The obligations of the
Sellers 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 5:30 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:
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
and its subsidiaries, taken as a whole, 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 the chief executive
officer and chief financial officer of the Company, to the effect set forth
in Section 7(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 officers signing and delivering such certificate may rely upon the
best of his or her respective knowledge as to proceedings threatened.
13
(c) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx Xxxx & Xxxxxxxx, 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 State of
Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus;
(ii) each subsidiary of 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;
(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(iv) (A) 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 (B) the issuance of such Shares will not be
subject to any preemptive rights, rights of first refusal or other
similar rights;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under this Agreement,
the Indenture and the Securities will not contravene any provision of
any applicable law or the certificate of incorporation or bylaws of
the Company or, to the best of such counsel's knowledge, (A) any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries,
taken as a whole, or, to the best of such counsel's knowledge, (B) any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or performance by the
Company of its obligations under this Agreement, the Indenture and the
Securities, 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 Securities.
(vii) the statements (A) in the Prospectus under the captions
"Business--Our Strategic Relationships," "Board of Directors," "Board
Committees," "Employee Stock Plans," "Limitation of Liability and
Indemnification Matters," "Related Party Transactions," "Description
of Capital Stock," "Shares Eligible for Future Sale" and
"Underwriters" and (B) in the Registration Statement in Items 14 and
15, in each case insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein, do
not contain any misstatements with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to
therein;
14
(viii) after due inquiry, such counsel does not know of any legal,
regulatory or governmental proceedings pending or threatened to which
the Company or any of its subsidiaries is a party or to which any of
the properties of the Company or any of its subsidiaries 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 Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;
(ix) 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;
(x) to the knowledge of such counsel, there is no legal or
beneficial owner of any securities of the Company who has any rights,
not effectively satisfied or waived, to require registration of any
shares of capital stock of the Company in connection with the filing
of the Registration Statement or the sale of any shares of capital
stock of the Company thereunder;
(xi) to the knowledge of such counsel: (A) the Registration
Statement has become effective under the Securities Act, no stop order
proceedings with respect thereto have been instituted or are pending
or threatened under the Securities Act, and nothing has come to such
counsel's attention to lead it to believe that such proceedings are
contemplated, and (B) any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the Securities Act
has been made in the manner and within the time period required by
such Rule 424(b); and
(xii) such counsel shall also state that (A) such counsel believes
that the Registration Statement and Prospectus (except for financial
statements and schedules and other financial and statistical data
included therein as to which such counsel need not express any
opinion) comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder, (B) such counsel has no reason to believe that
(except for financial statements and schedules and other financial and
statistical data included therein as to which such counsel need not
express any belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (C) such counsel has no
reason to believe that (except for financial statements and schedules
and other financial and statistical data included therein as to which
such counsel need not express any belief) the Prospectus contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading
15
(e) The Underwriters shall have received on the Closing Date an
opinion of Venture Law Group, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company is duly qualified to transact business in
California and Utah and to such counsel's knowledge, neither the
conduct of its business nor its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(ii) each subsidiary 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 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 and its sub subsidiaries, taken as a whole;
(iii) the shares of Common Stock (including the Shares to be sold
by the Selling Stockholders) outstanding on the date hereof have been
duly authorized and are validly issued, fully paid and non-assessable;
and
(iv) all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly by the Company or
through a subsidiary, free and clear of all liens, encumbrances,
equities or claims.
(v) the execution and delivery by the Company of, and the
performance by the Company of its obligations under this Agreement,
the Indenture and the Securities will not contravene any provision of
any applicable law or the certificate of incorporation or bylaws of
the Company or, to the best of such counsel's knowledge, any agreement
or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries,
taken as a whole, or, to the best of such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or performance by the
Company of its obligations under this Agreement, the Indenture and the
Securities, 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 Securities.
(f) The Underwriters shall have received an opinion of counsel for
Alza Corporation, Biotechnology Industry Organization, Warburg, Xxxxxx &
Co. and Xxxxx Partners, dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders;
16
(ii) the execution and delivery by or on behalf of each Selling
Stockholder of, and the performance by such Selling Stockholder of its
obligations under, this Agreement, the Irrevocable Election, the
Custody Agreement and the Power of Attorney of such Selling
Stockholder will not contravene any provision of applicable law, or
result in a breach of any of the terms and provisions of, or
constitute a default under the certificate of incorporation or bylaws
of such Selling Stockholder (if such Selling Stockholder is a
corporation), or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon such Selling Stockholder
or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over such Selling Stockholder, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Stockholder of its
obligations under this Agreement or the Custody Agreement or Power of
Attorney of such Selling Stockholder, except such as may be required
by the securities or Blue Sky laws of the various states in connection
with offer and sale of the Shares;
(iii) each of the Selling Stockholders has valid title to the
Shares to be sold by such Selling Stockholder and the legal right and
power (including if such Selling Stockholder is a corporation or
similar entity, corporate power), and all authorization and approval
required by law, to enter into this Agreement, the Irrevocable
Election, the Custody Agreement and the Power of Attorney of such
Selling Stockholder and to sell, transfer and deliver the Shares to be
sold by such Selling Stockholder;
(iv) each of the Irrevocable Election, the Custody Agreement and
the Power of Attorney of each Selling Stockholder has been duly
authorized, executed and delivered by such Selling Stockholder and is
a valid and binding agreement of such Selling Stockholder; and
(v) upon the delivery of and against payment for such Shares to
be sold by each Selling Stockholder pursuant to this Agreement, the
Underwriters will obtain good and marketable title thereto, free and
clear of any security interests, claims, liens, equities and other
encumbrances.
(g) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxx Xxxxxx White & XxXxxxxxx, a Partnership of Professional
Corporations, special regulatory counsel to the Company, dated the Closing
Date, to the effect that:
(i) in connection with this offering, such counsel represents the
Company with respect to regulatory matters;
(ii) such counsel has read the portions of the Registration
Statement and the Prospectus entitled "Risk Factors--We are subject to
government regulation that exposes us to potential liability and
negative publicity" and "Business--Government Regulation" (such
portions being herein collectively referred to as
17
the "Regulatory Portions"), and in such counsel's opinion, the
descriptions of the laws, rules and regulations set forth in the
Regulatory Portions are fair and accurate summaries of such laws,
rules and regulations; and
(iii) nothing has come to such counsel's attention that leads it
to believe that the statements contained in the Regulatory Portions of
the Registration Statement or the Prospectus at the time it became
effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, at the Closing
Date, the information contained in the Regulatory Portions of the
Prospectus or any amendment or supplement to the Regulatory Portions
of the Prospectus contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(h) The Underwriters shall have received on the Closing Date an
opinion of Fenwick & West LLP, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 7(d)(iv),
7(d)(v), 7(d)(vi) (but only as to the statements in the Prospectus under
"Description of Capital Stock" and "Underwriters") and 7(d)(xi) above.
With respect to Section 7(d)(xii) above, Xxxxx Xxxx & Xxxxxxxx and
Fenwick & West LLP may state that their opinion and belief are based upon
their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified.
With respect to Sections 7(d)(vi)(B), 7(d)(viii), 7(d)(ix) and
[7(d)(x)], Xxxxx Xxxx & Xxxxxxxx may state that their opinion is based upon
a company certificate with respect to factual matters.
The opinions of Xxxxx Xxxx & Xxxxxxxx, Venture Law Group, a
Professional Corporation, and Xxxxxx Xxxxxx White & XxXxxxxxx, a
Partnership of Professional Corporations, described in Sections 7(d), 7(e),
7(f) and 7(g) above, respectively, shall each be rendered to the
Underwriters at the request of the Company and shall so state therein.
18
and shall be in form and substance satisfactory to your counsel and ___
shall state in their opinion that they are justified in relying on each
such other opinion.
(i) 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 auditors, 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 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.
(j) The Lock-Up Agreements, each substantially in the form of Exhibit
A hereto, between you and certain stockholders, 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.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed in compliance with the provisions
hereof only if counsel for the Underwriters shall be satisfied that they comply
in form and scope.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the 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 and other matters related to the issuance of the Additional Shares and an
opinion or opinions of Xxxxx Xxxx & Xxxxxxxx, Venture Law Group, a Professional
Corporation, and Xxxxxx Xxxxxx White & XxXxxxxxx, a Partnership of Professional
Corporations, in form and substance satisfactory to Fenwick & West LLP, counsel
for the Underwriters.
8. 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, four signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 8(c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement 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 and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b)
19
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 and to pay all expenses (including fees and disbursements of
counsel) in connection with such qualification and in connection with any
review of the offering of the Shares by the National Association of
Securities Dealers, Inc.
(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 June 30, 2001 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports to its stockholders and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or
any national securities exchange.
(g) The Company will apply the proceeds from the sale of the Shares in
the manner set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will use its best efforts to obtain and maintain in
effect the quotation of the Shares on the Nasdaq National Market and will
take all necessary steps to cause the Shares to be included on the Nasdaq
National Market as promptly as practicable and to maintain such inclusion
for a period of three years after the date hereof or until such earlier
date as the Shares shall be listed for regular trading privileges on
another national securities exchange approved by you.
(i) The Company will comply with all registration, filing and
reporting requirements of the Exchange Act which may from time to time be
applicable to the
20
Company.
(j) The Company will comply with all provisions of all undertakings
contained in the Registration Statement.
(k) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company agrees to pay or
cause to be paid all costs and expenses incident to the performance of the
obligations of the Company under this Agreement, including, but not limited
to, all expenses incident to: (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 8(d) hereof, including filing fees and the
reasonable fees 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 costs 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, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(ix) all other costs and expenses incident to the performance of the
obligations of the Sellers hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided in
this Section, Section 9 entitled "Indemnity and Contribution", and the last
paragraph of Section 11 below, the Underwriters will pay all of their costs
and expenses, including fees and disbursements of
21
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.
(l) the Company agrees: (i) to enforce the terms of each Lock-up
Agreement and (ii) issue stop-transfer instructions to the transfer agent
for the Common Stock with respect to any transaction or contemplated
transaction that would constitute a breach of or default under the
applicable Lock-up Agreement. In addition, without the prior written
consent of Xxxxxx Xxxxxxx & Co. Incorporated, the Company agrees: (i) not
to amend or terminate, or waive any right under, any Lock-up Agreement, or
take any other action that would directly or indirectly have the same
effect as an amendment or termination, or waiver of any right under, any
Lock-up Agreement, that would permit any holder of shares of Common Stock,
or securities convertible into or exercisable or exchangeable for Common
Stock, to (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
other than the exercise of options granted under the 1998 Stock Plan or
1999 Directors' Stock Plan or the purchase of shares of Common Stock under
the 1999 Employee Stock Purchase Plan 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 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, or
(ii) not to consent to any of the foregoing. Notwithstanding the foregoing,
the Company may issue a total of up to _______ shares of its Common Stock
during the 90 days after the date of the Prospectus (the "Lock-up Period")
in connection with acquisitions, strategic alliances, technology licensing
transactions, joint ventures or similar transactions ("Excepted
Transactions"); provided, however, that: (i) the Company shall give Xxxxxx
Xxxxxxx & Co. Incorporated reasonable prior written notice of any such
issuance describing the Excepted Transaction in reasonable detail and
stating the number of shares of Common Stock proposed to be issued in the
Excepted Transaction, (ii) all shares of Common Stock issued in connection
with the Excepted Transaction shall remain subject to the lock-up
restrictions of this paragraph 8(m) for the remainder of the Lock-up
Period, (iii) prior to any such issuance of Common Stock, each person that
is to acquire any such shares of Common Stock shall execute and deliver an
agreement substantially in the form of Exhibit A covering all such shares
for the remainder of the Lock-up Period and (iv) no such issuance shall be
made unless and until the requirements and conditions in the foregoing
clauses (i), (ii) and (iii) have been complied with and satisfied.
(m) the Company agrees to place a restrictive legend on any shares of
Common Stock acquired by a stockholder who has signed a Lock-Up Agreement
pursuant to the exercise, after the date hereof and prior to the expiration
of the 90-day period after the date of the Prospectus, of any option
granted under the Company's 1998 Stock Plan or 1999 Directors' Stock Plan,
which legend shall restrict the transfer of such shares prior to the
expiration of such 90-day period. In addition, the Company agrees that,
without the prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated, it
will not release any stockholder or option holder from the market standoff
provision imposed by
22
the Company pursuant to its 1998 Stock Plan or 1999 Directors' Stock Plan
earlier than 90 days after the date of the public offering of the Shares.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and 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, 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, 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 such Underwriter through you
expressly for use therein.
(b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter and 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, or is under common
control with or is controlled by any Underwriter, 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
Selling Stockholder furnished in writing by or on behalf of such Selling
Stockholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto; provided however that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of
any Underwriter, or any person controlling such Underwriter, from whom
the person asserting any losses, claims, damages or liabilities purchased
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 set 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 loss, claim, damage or liability, unless such failure
is the result of noncompliance by the Company with Section 8(a) hereof.
The aggregate liability of each Selling Stockholder under the indemnity
agreement contained in this paragraph and the contribution agreement
contained in Sections 9(e) and (f) below shall be limited to an amount
equal to the gross proceeds received by such Selling Stockholder from the
offering of the Shares sold by such Selling Stockholder under this
Agreement.
23
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Stockholders, the directors of
the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company or any Selling
Stockholder within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company and the Selling Stockholders to such
Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
(d) 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 9(a), 9(b) or 9(c), 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 the fees and expenses of more than
one separate firm (in addition to any local counsel) for all such
indemnified parties 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 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. In the case of any such separate firm for the Selling
Stockholders and such control persons of the Selling Stockholders, such
firm shall be designated in writing by the Selling Stockholders
representing a majority of the Shares sold by all Selling Stockholders. 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.
24
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.
(e) To the extent the indemnification provided for in Section 9(a),
9(b) or 9(c) 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 (i) 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 9(e)(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
9(e)(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 Sellers 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 proceeds from the offering of the Shares (before
deducting expenses) received by each Seller 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 Sellers 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 Sellers 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 9 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint. The aggregate
liability of each Selling Stockholder under the contribution agreement
contained in this Section and Section 9(f) and under the indemnification
agreement contained in Sections 9(a) and 9(b) above shall be limited to an
amount equal to the gross proceeds received by such Selling Stockholder
from the offering of the Shares sold by such Selling Stockholder.
(f) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation
25
(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 9(e). The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages and liabilities referred 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 9, 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 9 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.
(g) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Stockholders 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 or any person controlling any Underwriter, any Selling
Stockholder or any person controlling any Selling Stockholder or by or on
behalf of the Company, its officers or directors or any person controlling
the Company and (iii) acceptance of and payment for any of the Shares.
10. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) 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 National Association
of Securities Dealers, Inc., 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 general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) 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 (b) in the case of any of
the events specified in clauses 10(a)(i) through 10(a)(iv), such event, singly
or together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the 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
26
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 II 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 11 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, the Company and the Selling Stockholders for
the purchase of such Firm Shares are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholder. 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 the 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, the non-defaulting Underwriters shall have the option to
(i) terminate their obligation hereunder to purchase Additional Shares 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 any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, 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.
12. 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.
13. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have been
27
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
[The remainder of this page is intentionally left blank.]
28
Very truly yours,
VENTRO CORPORATION
By:_________________________
Name:
Title:
The Selling Stockholders named in
Schedule I hereto, acting severally
By:_________________________
Name:
Title:
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities Inc.
Deutsche Bank Securities Inc.
Prudential Securities Inc.
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:_____________________________________
Name:
Title:
[Signature Page to Underwriting Agreement]
29
SCHEDULE I
Number of Firm
Selling Stockholder Shares To Be Sold
------------------- -----------------
---------
Total.......................................... =========
SCHEDULE II
Number of Number of
Underwriter Firm Shares Additional Shares
To Be Purchased To Be Purchased
Xxxxxx Xxxxxxx & Co. Incorporated....
FleetBoston Xxxxxxxxx Xxxxxxxx Inc...
Chase Securities Inc.................
Deutsche Bank Securities Inc.........
Prudential Securities Inc............ -------- --------
Total....................... ======== ========
EXHIBIT A
[FORM OF LOCK-UP LETTER]
March __, 2000
Xxxxxx Xxxxxxx & Co. Incorporated
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx Securities Inc.
Deutsche Bank Securities Inc.
Prudential Securities 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 Ventro Corporation, a Delaware corporation (the "Company"),
providing for the public offering (the "Public Offering") by the several
Underwriters, including Xxxxxx Xxxxxxx (the "Underwriters"), of shares (the
"Shares") of the Common Stock, par value $0.0002 per share, 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 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 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. 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, 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.
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.
This Agreement shall terminate and be of no further effect if the
registration statement for the Public Offering is not declared effective by the
Securities and Exchange Commission by July 31, 2000.
Very truly yours,
--------------------------------------
(Signature)
--------------------------------------
(Print name)
--------------------------------------
--------------------------------------
(Address)
