Exhibit 1.1
CYGNUS, INC.
Common Stock
UNDERWRITING AGREEMENT
[DATE]
The Representatives of the
several Underwriters listed on
Schedule I hereto
Ladies and Gentlemen:
Cygnus, Inc., a Delaware corporation (the "Company"),
proposes to sell an aggregate of _______ shares (the "Firm Shares") of the
Company's Common Stock, $____ par value per share (the "Common Stock"), to
you and to the other underwriters named in Schedule I (collectively, the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"). The Company has also agreed to grant to you and the
other Underwriters an option (the "Option") to purchase up to an additional
______ shares of Common Stock (the "Option Shares") on the terms and for the
purposes set forth in Section 1(b). The Firm Shares and the Option Shares
are hereinafter collectively referred to as the "Shares."
The initial public offering price per share for the Shares
and the purchase price per share for the Shares to be paid by the several
Underwriters shall be agreed upon by the Company and the Representatives,
acting on behalf of the several Underwriters, and such agreement shall be set
forth in a separate written instrument substantially in the form of Exhibit A
hereto (the "Price Determination Agreement"). The Price Determination
Agreement may take the form of an exchange of any standard form of written
telecommunication among the Company and the Representatives and shall specify
such applicable information as is indicated in Exhibit A hereto. The
offering of the Shares will be governed by this Agreement, as supplemented by
the Price Determination Agreement. From and after the date of the execution
and delivery of the Price Determination Agreement, this Agreement shall be
deemed to incorporate, and, unless the context otherwise indicates, all
references contained herein to "this Agreement" and to the phrase "herein"
shall be deemed to include the Price Determination Agreement.
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The Company confirms as follows its agreements with the
Representatives and the several other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations,
warranties and agreements of the Company herein contained and subject to all
the terms and conditions of this Agreement, the Company agrees to sell to
each Underwriter named below, and each Underwriter, severally and not
jointly, agrees to purchase from the Company at the purchase price per share
for the Firm Shares to be agreed upon by the Representatives and the Company
in accordance with Section 1(c) or 1(d) hereof and set forth in the Price
Determination Agreement, the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I, plus such additional number of Firm
Shares which such Underwriter may become obligated to purchase pursuant to
Section 8 hereof. Schedule I may be attached to the Price Determination
Agreement.
(b) Subject to all the terms and conditions of
this Agreement, the Company grants the Option to the several Underwriters to
purchase, severally and not jointly, up to ___ Option Shares from the Company
at the same price per share as the Underwriters shall pay for the Firm
Shares. The Option may be exercised only to cover over-allotments in the sale
of the Firm Shares by the Underwriters and may be exercised in whole or in
part at any time (but not more than once) on or before the 45th day after the
date of this Agreement (or, if the Company has elected to rely on Rule 430A,
on or before the 45th day after the date of the Price Determination
Agreement), upon written or telegraphic notice (the "Option Shares Notice")
by the Representatives to the Company no later than 12:00 noon, New York City
time, at least two and no more than five business days before the date
specified for closing in the Option Shares Notice (the "Option Closing Date")
setting forth the aggregate number of Option Shares to be purchased and the
time and date for such purchase. On the Option Closing Date, the Company
will issue and sell to the Underwriters the number of Option Shares set forth
in the Option Shares Notice, and each Underwriter will purchase such
percentage of the Option Shares as is equal to the percentage of Firm Shares
that such Underwriter is purchasing, as adjusted by the Representatives in
such manner as they deem advisable to avoid fractional shares.
(c) The initial public offering price per share
for the Firm Shares and the purchase price per share for the Firm Shares to
be paid by the several Underwriters shall be agreed upon and set forth in the
Price Determination Agreement, if the Company has elected to rely on Rule
430A. In the event such price has not been agreed upon and the Price
Determination Agreement has not been executed by the close of business on the
fourteenth business day following the date on which the Registration
Statement (as hereinafter defined) becomes effective, this Agreement shall
terminate forthwith, without liability of any party to any other party except
that Section 6 shall remain in effect.
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(d) If the Company has elected not to rely on
Rule 430A, the initial public offering price per share for the Firm Shares
and the purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be agreed upon and set forth in the Price
Determination Agreement, which shall be dated the date hereof, and an
amendment to the Registration Statement containing such per share price
information shall be filed before the Registration Statement becomes
effective.
2. Delivery and Payment. Delivery of the Firm Shares
shall be made to the Representatives for the accounts of the Underwriters at
the office of ______________________, against payment of the purchase price
by {Federal Reserve Funds check payable in immediately available funds to the
order of the Company} {by wire transfer of Federal Funds or similar same day
funds to an account designated in writing by the Company to ___________ at
least one business day prior to the Closing Date (as hereinafter defined)}.
Such payment shall be made at 10:00 a.m., New York City time, on the third
business day (or fourth business day, if the Price Determination Agreement is
executed after 4:30 p.m.) after the date on which the first bona fide
offering of the Shares to the public is made by the Underwriters or at such
time on such other date, not later than ten business days after such date, as
may be agreed upon by the Company and the Representatives (such date is
hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the
Option Shares against payment by the Underwriters (in the manner specified
above) will take place at the offices specified above for the Closing Date at
the time and date (which may be the Closing Date) specified in the Option
Shares Notice.
{Certificates evidencing the Shares shall be in definitive
form and shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.}
The cost of original issue tax stamps, if any, in connection
with the issuance and delivery of the Firm Shares and Option Shares by the
Company to the respective Underwriters shall be borne by the Company. The
Company will pay and save each Underwriter and any subsequent holder of the
Shares harmless from any and all liabilities with respect to or resulting
from any failure or delay in paying Federal and state stamp and other
transfer taxes, if any, which may be payable or determined to be payable in
connection with the original issuance or sale to such Underwriter of the Firm
Shares and Option Shares.
3. Representations and Warranties of the Company. The
Company represents, warrants and covenants to each Underwriter that:
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(a) The Company meets the requirements for use
of Form S-3 and registration statement (Registration No. ) on Form S-3
relating to the Shares, including a preliminary prospectus and such
amendments to such registration statement as may have been required to the
date of this Agreement, has been prepared by the Company under the provisions
of the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (collectively referred to as the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder for the
offering of the Shares from time to time in accordance with Rule 415 of the
Rules and Regulations, and has been filed with the Commission. The term
"preliminary prospectus" as used herein means a preliminary prospectus as
contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules and
Regulations included at any time as part of the registration statement.
Copies of such registration statement and amendments and of each related
preliminary prospectus have been delivered to the Representatives. The term
"Registration Statement" means the registration statement as amended at the
time it becomes or became effective (the "Effective Date"), including
financial statements and all exhibits and any information deemed to be
included by Rule 430A or Rule 434 of the Rules and Regulations. If the
Company files a registration statement to register a portion of the Shares
and relies on Rule 462(b) of the Rules and Regulations for such registration
statement to become effective upon filing with the Commission (the "Rule 462
Registration Statement"), then any reference to the "Registration Statement"
shall be deemed to include the Rule 462 Registration Statement, as amended
from time to time. A prospectus supplement relating to the Shares, the terms
of the offering thereof and the other matters set forth therein has been
prepared and will be filed pursuant to Rule 424 of the Rules and Regulations.
Such prospectus supplement, in the form first filed after the date hereof
pursuant to Rule 424, is herein referred to as the "Prospectus Supplement".
The term "Prospectus" means the form of final prospectus included in the
Registration Statement at the Effective Date as supplemented by the
Prospectus Supplement; provided that if the Prospectus is amended or
supplemented on or after the date hereof by prior to the date on which the
Prospectus Supplement is first filed pursuant to Rule 424, the term
"Prospectus" shall refer to the Prospectus as so amended or supplemented and
as supplemented by the Prospectus Supplement. Any reference herein to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), on or before the
Effective Date or the date of such preliminary prospectus or the Prospectus,
as the case may be. Any reference herein to the terms "amend," "amendment"
or "supplement" with respect to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to refer to and include the
filing of any document under the Exchange Act after the Effective Date, or
the date of any preliminary prospectus or the Prospectus, as the case may be,
and deemed to be incorporated therein by reference.
(b) On the Effective Date, the date the
Prospectus is first filed with the Commission pursuant to Rule 424(b), at all
times subsequent to and including the Closing Date and, if later, the Option
Closing Date and when any post-effective amendment to the
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Registration Statement becomes effective or any amendment or supplement to
the Prospectus is filed with the Commission, the Registration Statement and
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment or supplement thereto), including the
financial statements included or incorporated by reference in the Prospectus,
did or will comply with all applicable provisions of the Act, the Exchange
Act, the rules and regulations thereunder (the "Exchange Act Rules and
Regulations") and the Rules and Regulations and will contain all statements
required to be stated therein in accordance with the Act, the Exchange Act,
the Exchange Act Rules and Regulations and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement or any
such amendment did or will contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. At the Effective Date,
the date the Prospectus or any amendment or supplement to the Prospectus is
filed with the Commission and at the Closing Date and, if later, the Option
Closing Date, the Prospectus did not or will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The foregoing
representations and warranties in this Section 3(b) do not apply to any
statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company
by the Representatives specifically for inclusion in the Registration
Statement or Prospectus or any amendment or supplement thereto. For all
purposes of this Agreement, the amounts of the selling concession and
reallowance set forth in the Prospectus constitute the only information
relating to any Underwriter furnished in writing to the Company by the
Representatives specifically for inclusion in the Registration Statement, the
preliminary prospectus or the Prospectus. The Company has not distributed
any offering material in connection with the offering or sale of the Shares
other than the Registration Statement, the preliminary prospectus, the
Prospectus or any other materials, if any, permitted by the Act.
(c) The documents which are incorporated by
reference in the preliminary prospectus and the Prospectus or from which
information is so incorporated by reference, when they become effective or
were filed with the Commission, as the case may be, complied in all material
respects with the requirements of the Act or the Exchange Act, as applicable,
the Exchange Act Rules and Regulations and the Rules and Regulations; and any
documents so filed and incorporated by reference subsequent to the Effective
Date shall, when they are filed with the Commission, conform in all material
respects with the requirements of the Act and the Exchange Act, as
applicable, the Exchange Act Rules and Regulations and the Rules and
Regulations.
(d) The only subsidiaries (as defined in the
Rules and Regulations) of the Company are the subsidiaries listed on Exhibit
21 to the Registration Statement (the "Subsidiaries"). The Company and each
of its Subsidiaries is, and at the Closing Date will be, a corporation duly
organized, validly existing and in good standing under the laws of its
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jurisdiction of incorporation. The Company and each of its Subsidiaries has,
and at the Closing Date will have, full power and authority to conduct all
the activities conducted by it, to own or lease all the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. The Company and each of its Subsidiaries is,
and at the Closing Date will be, duly licensed or qualified to do business
and in good standing as a foreign corporation in all jurisdictions in which
the nature of the activities conducted by it or the character of the assets
owned or leased by it makes such licensing or qualification necessary. All
of the outstanding shares of capital stock of the Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable and are
owned by the Company free and clear of all liens, encumbrances and claims
whatsoever. Except for the stock of the Subsidiaries and as disclosed in the
Registration Statement, the Company does not own, and at the Closing Date
will not own, directly or indirectly, any shares of stock or any other equity
or long-term debt securities of any corporation or have any equity interest
in any firm, partnership, joint venture, association or other entity.
Complete and correct copies of the certificate of incorporation and of the
by-laws of the Company and each of its Subsidiaries and all amendments
thereto have been delivered to the Representatives, and no changes therein
will be made subsequent to the date hereof and prior to the Closing Date or,
if later, the Option Closing Date.
(e) The outstanding shares of Common Stock have
been, and the Shares to be issued and sold by the Company upon such issuance
will be, duly authorized, validly issued, fully paid and nonassessable and
will not be subject to any preemptive or similar right. The description of
the Common Stock in the Registration Statement and the Prospectus is, and at
the Closing Date will be, complete and accurate in all respects. Except as
set forth in the Prospectus, the Company does not have outstanding, and at
the Closing Date will not have outstanding, any options to purchase, or any
rights or warrants to subscribe for, or any securities or obligations
convertible into, or any contracts or commitments to issue or sell, any
shares of Common Stock, any shares of capital stock of any Subsidiary or any
such warrants, convertible securities or obligations.
(f) The financial statements and schedules
included or incorporated by reference in the Registration Statement or the
Prospectus present fairly the consolidated financial condition of the Company
as of the respective dates thereof and the consolidated results of operations
and cash flows of the Company for the respective periods covered thereby, all
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. The pro forma financial statements and other
pro forma financial information included in the Registration Statement or the
Prospectus (i) present fairly in all material respects the information shown
therein, (ii) have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and (iii) have
been properly computed on the bases described therein. The assumptions used
in the preparation of the pro forma financial statements and other pro forma
financial information included in the Registration Statement or the
Prospectus are reasonable and the adjustments
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used therein are appropriate to give effect to the transactions or
circumstances referred to therein. No other financial statements or
schedules of the Company are required by the Act, the Exchange Act or the
Rules and Regulations to be included in the Registration Statement or the
Prospectus. Ernst & Young, LLP (the "Accountants"), who have reported on
such financial statements and schedules, are independent accountants with
respect to the Company as required by the Act and the Rules and Regulations.
The statements included in the Registration Statement with respect to the
Accountants pursuant to Rule 509 of Regulation S-K of the Rules and
Regulations are true and correct in all material respects.
(g) The Company maintains a system of internal
accountings control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(h) Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus
and prior to the Closing Date, except as set forth in or contemplated by the
Registration Statement and the Prospectus, (i) there has not been and will
not have been any change in the capitalization of the Company, or in the
business, properties, business prospects, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries, arising for any
reason whatsoever, (ii) neither the Company nor any of its Subsidiaries has
incurred nor will it incur any material liabilities or obligations, direct or
contingent, nor has it entered into nor will it enter into any material
transactions other than pursuant to this Agreement and the transactions
referred to herein and (iii) the Company has not and will not have paid or
declared any dividends or other distributions of any kind on any class of its
capital stock.
(i) The Company is not an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for,
an "investment company," as such terms are defined in the Investment Company
Act of 1940, as amended.
(j) Except as set forth in the Registration
Statement and the Prospectus, there are no actions, suits or proceedings
pending or threatened against or affecting the Company or any of its
Subsidiaries or any of their respective officers in their capacity as such,
before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign,
wherein an unfavorable ruling, decision or finding might materially and
adversely affect the Company or any of its Subsidiaries or its business,
properties, business prospects, condition (financial or otherwise) or results
of operations.
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(k) The Company and each of its Subsidiaries
has, and at the Closing Date will have, (i) all governmental licenses,
permits, consents, orders, approvals and other authorizations necessary to
carry on its business as contemplated in the Prospectus, (ii) complied in all
respects with all laws, regulations and orders applicable to it or its
business and (iii) performed all its obligations required to be performed by
it, and is not, and at the Closing Date will not be, in default, under any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement, lease, contract or other agreement or
instrument (collectively, a "contract or other agreement") to which it is a
party or by which its property is bound or affected. To the best knowledge
of the Company and each of its Subsidiaries, no other party under any
contract or other agreement to which it is a party is in default in any
respect thereunder. Neither the Company nor any of its Subsidiaries is, nor
at the Closing Date will any of them be, in violation of any provision of its
certificate of incorporation or by-laws.
(l) No consent, approval, authorization or
order of, or any filing or declaration with, any court or governmental agency
or body is required in connection with the authorization, issuance, transfer,
sale or delivery of the Shares by the Company, in connection with the
execution, delivery and performance of this Agreement by the Company or in
connection with the taking by the Company of any action contemplated hereby,
except such as have been obtained under the Act or the Rules and Regulations
and such as may be required under state securities or Blue Sky laws or the
by-laws and rules of the National Association of Securities Dealers, Inc.
(the "NASD") in connection with the purchase and distribution by the
Underwriters of the Shares.
(m) The Company has full corporate power and
authority to enter into this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company in
accordance with the terms hereof. The performance of this Agreement and the
consummation of the transactions contemplated hereby and the application of
the net proceeds from the offering and sale of the Shares in the manner set
forth in the Prospectus under "Use of Proceeds" will not result in the
creation or imposition of any lien, charge or encumbrance upon any of the
assets of the Company or any of its Subsidiaries pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give any other party a right
to terminate any of its obligations under, or result in the acceleration of
any obligation under, the certificate of incorporation or by-laws of the
Company or any of its Subsidiaries, any contract or other agreement to which
the Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or any of its properties is bound or affected, or
violate or conflict with any judgment, ruling, decree, order, statute, rule
or regulation of any court or other governmental agency or body applicable to
the business or properties of the Company or any of its Subsidiaries.
(n) The Company and each of its Subsidiaries
has good and
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marketable title to all properties and assets described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not
material to the business of the Company or its Subsidiaries. The Company and
each of its Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such exceptions
as are not material and do not materially interfere with the use made and
proposed to be made of such properties by the Company and such Subsidiaries.
(o) There is no document or contract of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement which
is not described or filed as required. All such contracts to which the
Company or any Subsidiary is a party have been duly authorized, executed and
delivered by the Company or such Subsidiary, constitute valid and binding
agreements of the Company or such Subsidiary and are enforceable against the
Company or such Subsidiary in accordance with the terms thereof.
(p) No statement, representation, warranty or
covenant made by the Company in this Agreement or made in any certificate or
document required by this Agreement to be delivered to the Representatives
was or will be, when made, inaccurate, untrue or incorrect.
(q) Neither the Company nor any of its
directors, officers or controlling persons has taken, directly or indirectly,
any action intended, or which might reasonably be expected, to cause or
result, under the Act or otherwise, in, or which has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(r) No holder of securities of the Company has
rights to the registration of any securities of the Company because of the
filing of the Registration Statement.
(s) Prior to the Closing Date, the Shares will
be approved for quotation on the Nasdaq National Market.
(t) The Company and its Subsidiaries are in
compliance with all federal, state and local employment and labor laws,
including, but not limited to, laws relating to non-discrimination in hiring,
promotion and pay of employees; no labor dispute with the employees of the
Company or any Subsidiary exists or, to the knowledge of the Company, is
imminent or threatened; and the Company is not aware of any existing,
imminent or threatened labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that could result in a
material adverse effect on the condition (financial or otherwise) or on the
earnings, business, properties, business prospects or operations of the
Company and its Subsidiaries, taken as a whole.
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(u) The Company and its Subsidiaries own, or
are licensed or otherwise have the full exclusive right to use, the material
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, services marks
and trade names (collectively, "patent and proprietary rights") presently
employed by them or which are necessary in connection with the conduct of the
business now operated by them, and neither the Company nor any of its
Subsidiaries has received any written notice or otherwise has actual
knowledge of any infringement of or conflict with asserted rights of others
or any other claims with respect to any patent or proprietary rights, or of
any basis for rendering any patent and proprietary rights invalid or
inadequate to protect the interest of the Company or any of its Subsidiaries.
(v) Neither the Company nor any of its
Subsidiaries nor, to the Company's knowledge, any employee or agent of the
Company or any Subsidiary has made any payment of funds of the Company or any
Subsidiary or received or retained any funds in violation of any law, rule or
regulation or of a character required to be disclosed in the Prospectus.
(w) 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 imposing liability or standards of conduct concerning any
Hazardous Material (as hereinafter defined) ("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, individually or in the aggregate result in a material
adverse effect on the condition (financial or otherwise) or on the earnings,
business, properties, business prospects or operations of the Company and its
Subsidiaries, taken as a whole. The term "Hazardous Material" means (A) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (B) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act, as amended, (C) any
petroleum or petroleum product, (D) any polychlorinated biphenyl and (E) any
pollutant or contaminant or hazardous, dangerous, or toxic chemical,
material, waste or substance regulated under or within the meaning of any
other Environmental Law.
(x) In the ordinary course of its business, the
Company conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and its Subsidiaries, in
the course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating
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activities and any potential liabilities to third parties). Except as set
forth in the Registration Statement and the Prospectus there are no costs and
liabilities associated with or arising in connection with Environmental Laws
as currently in effect (including, without limitation, costs of compliance
therewith) which would, singly or in the aggregate have a material adverse
effect on the condition (financial or otherwise) or on the earnings,
business, properties, business prospects or operations of the Company and its
Subsidiaries, taken as a whole.
(y) The Company maintains insurance with
respect to its properties and business of the types and in amounts generally
deemed adequate for its business and consistent with insurance coverage
maintained by similar companies and businesses, all of which insurance is in
full force and effect.
(z) The Company has filed all material federal,
state and foreign income and franchise tax returns and has paid all taxes
shown as due thereon, other than taxes which are being contested in good
faith and for which adequate reserves have been established in accordance
with generally accepted accounting principles ("GAAP"); and the Company has
no knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company. There are no tax returns of the Company or
any of its Subsidiaries that are currently being audited by state, local or
federal taxing authorities or agencies (and with respect to which the Company
or any Subsidiary has received notice), where the findings of such audit, if
adversely determined, would result in a material adverse effect on the
condition (financial or otherwise) or on the earnings, business, properties,
business prospects or operations of the Company and its Subsidiaries, taken
as a whole.
(aa) With respect to each employee benefit plan,
program and arrangement (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) maintained or contributed to by the
Company, or with respect to which the Company could incur any liability under
ERISA (collectively, the "Benefit Plans"), no event has occurred and, to the
best knowledge of the Company, there exists no condition or set of
circumstances, in connection with which the Company could be subject to any
liability under the terms of such Benefit Plan, applicable law (including,
without limitation, ERISA and the Internal Revenue Code of 1986, as amended)
or any applicable agreement that could materially adversely affect the
business, properties, business prospects, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries, taken as a
whole.
4. Agreements of the Company. The Company agrees with
the several Underwriters as follows:
(a) The Company will not, either prior to the
Effective Date or thereafter during such period as the Prospectus is required
by law to be delivered in connection with sales of the Shares by an
Underwriter or dealer, file any amendment or
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supplement to the Registration Statement or the Prospectus, unless a copy
thereof shall first have been submitted to the Representatives within a
reasonable period of time prior to the filing thereof and the Representatives
shall not have objected thereto in good faith.
(b) The Company will use its best efforts to
cause the Registration Statement to become effective, and will notify the
Representatives promptly, and will confirm such advice in writing, (1) when
the Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (2) of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (3) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, (4) of
the happening of any event during the period mentioned in the second sentence
of Section 4(e) that in the judgment of the Company makes any statement made
in the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in
order to make the statements therein, in light of the circumstances in which
they are made, not misleading and (5) of receipt by the Company or any
representative or attorney of the Company of any other communication from the
Commission relating to the Company, the Registration Statement, any
preliminary prospectus or the Prospectus. If at any time the Commission
shall issue any order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible moment. The Company will
use its best efforts to comply with the provisions of and make all requisite
filings with the Commission pursuant to Rule 430A and to notify the
Representatives promptly of all such filings.
(c) The Company will furnish to the
Representatives, without charge, two signed copies of the Registration
Statement and of any post-effective amendment thereto, including financial
statements and schedules, and all exhibits thereto (including any document
filed under the Exchange Act and deemed to be incorporated by reference into
the Prospectus), and will furnish to the Representatives, without charge, for
transmittal to each of the other Underwriters, a copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) The Company will comply with all the
provisions of any undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from
time to time, the Company will deliver to each of the Underwriters, without
charge, as many copies of the Prospectus or any amendment or supplement
thereto as the Representatives may reasonably request. The Company consents
to the use of the Prospectus or any amendment or supplement thereto by the
several Underwriters and by all dealers to whom the Shares may be sold, both
in connection with the offering or sale of the Shares and for any period of
time thereafter during which the Prospectus is required by law to be
delivered in connection
13
therewith. If during such period of time any event shall occur which in the
judgment of the Company or counsel to the Underwriters should be set forth in
the Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement
or amendment thereto, and will deliver to each of the Underwriters, without
charge, such number of copies thereof as the Representatives may reasonably
request. The Company shall not file any document under the Exchange Act
before the termination of the offering of the Shares by the Underwriters if
such document would be deemed to be incorporated by reference into the
Prospectus which is not approved by the Representatives after reasonable
notice thereof.
(f) Prior to any public offering of the Shares
by the Underwriters, the Company will cooperate with the Representatives and
counsel to the Underwriters in connection with the registration or
qualification of the Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions as the Representatives may request; provided,
that in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any action which
would subject it to general service of process in any jurisdiction where it
is not now so subject.
(g) The Company will make generally available
to holders of its securities as soon as may be practicable but in no event
later than the last day of the fifteenth full calendar month following the
calendar quarter in which the Effective Date falls, an earnings statement
(which need not be audited but shall be in reasonable detail) for a period of
12 months ended commencing after the Effective Date, and satisfying the
provisions of Section 11(a) of the Act (including Rule 158 of the Rules and
Regulations).
(h) Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is
terminated, the Company will pay, or reimburse if paid by the
Representatives, all costs and expenses incident to the performance of the
obligations of the Company under this Agreement, including but not limited to
costs and expenses of or relating to (1) the preparation, printing and filing
of the Registration Statement and exhibits to it, each preliminary
prospectus, the Prospectus and any amendment or supplement to the
Registration Statement or the Prospectus, (2) the preparation and delivery of
certificates representing the Shares, (3) the word processing, printing and
reproduction of this Agreement, the Agreement Among Underwriters, any Dealer
Agreements and any Underwriters' Questionnaire, (4) furnishing (including
costs of shipping, mailing and courier) such copies of the Registration
Statement, the Prospectus and any preliminary prospectus, and all amendments
and supplements thereto, as may be requested for use in connection with the
offering and sale of the Shares by the Underwriters or by dealers to whom
Shares may be sold, (5) the approval of the Shares for quotation on the
Nasdaq National Market, (6) any filings required to be made by the
Underwriters with the NASD, and the fees, disbursements and other charges of
counsel for the Underwriters in connection therewith, (7) the registration
14
or qualification of the Shares for offer and sale under the securities or
Blue Sky laws of such jurisdictions designated pursuant to Section 4(f),
including the fees, disbursements and other charges of counsel to the
Underwriters in connection therewith, and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda, (8) counsel to the
Company, (9) the transfer agent for the Shares and (10) the Accountants.
(i) If this Agreement shall be terminated by
the Company pursuant to any of the provisions hereof (otherwise than pursuant
to Section 8) or if for any reason the Company shall be unable to perform its
obligations hereunder, the Company will reimburse the several Underwriters
for all out-of-pocket expenses (including the fees, disbursements and other
charges of counsel to the Underwriters) reasonably incurred by them in
connection herewith.
(j) The Company will not at any time, directly
or indirectly, take any action intended, or which might reasonably be
expected, to cause or result in, or which will constitute, stabilization of
the price of the shares of Common Stock to facilitate the sale or resale of
any of the Shares.
(k) The Company will apply the net proceeds
from the offering and sale of the Shares to be sold by the Company in the
manner set forth in the Prospectus under "Use of Proceeds".
(l) During the period of [180] days commencing
at the Closing Date, the Company will not, without the prior written consent
of PaineWebber Incorporated, directly or indirectly, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of, any Common Stock
or securities convertible into Common Stock, other than to the Underwriters
pursuant to this Agreement and other than pursuant to employee benefit plans,
provided, that the Company will not grant options to purchase shares of
Common Stock pursuant to such employee benefit plans at a price less than the
initial public offering price.]
(m) The Company will not, and will cause each
of its executive officers, directors and each beneficial owner of more than
5% of the outstanding shares of Common Stock to enter into agreements with
the Representatives in the form set forth in Exhibit B to the effect that
they will not, for a period of [90] days after the commencement of the public
offering of the Shares, without the prior written consent of __________,
directly or indirectly sell, contract to sell, grant an option for the sale
of or otherwise dispose of any shares of Common Stock or Securities
convertible into Common Stock (other than to the Underwriting pursuant to
this Agreement and pursuant to employee benefit plans provided that the
Company will not grant option to purchase shares of Common Stock pursuant to
such Employee Benefit Plans at a price less than the initial public offering
price).
5. Conditions of the Obligations of the Underwriters.
In addition to the execution and delivery of the Price Determination
Agreement, the obligations of each
15
Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration
Statement has become effective shall be received by the Representatives not
later than 5:00 p.m., New York City time, on the date of this Agreement or at
such later date and time as shall be consented to in writing by the
Representatives and all filings required by Rule 424 of the Rules and
Regulations and Rule 430A shall have been made.
(b) (i) No stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall be pending or threatened by the
Commission, (ii) no order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending before or threatened or
contemplated by the Commission or the authorities of any such jurisdiction,
(iii) any request for additional information on the part of the staff of the
Commission or any such authorities shall have been complied with to the
satisfaction of the staff of the Commission or such authorities and (iv)
after the date hereof no amendment or supplement to the Registration
Statement or the Prospectus shall have been filed unless a copy thereof was
first submitted to the Representatives and the Representatives did not object
thereto in good faith, and the Representatives shall have received
certificates, dated the Closing Date and the Option Closing Date and signed
by the Chief Executive Officer or the Chairman of the Board of Directors of
the Company and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief),
to the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i)
there shall not have been, and no development shall have occurred which could
reasonably be expected to result in, a material adverse change in the general
affairs, business, business prospects, properties, management, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus and (ii)
neither the Company nor any of its Subsidiaries shall have sustained any
material loss or interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration Statement
and the Prospectus, if in the judgment of the Representatives any such
development makes it impracticable or inadvisable to consummate the sale and
delivery of the Shares by the Underwriters at the initial public offering
price.
(d) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
shall have been no litigation or other proceeding instituted against the
Company or any of its Subsidiaries or any of their respective
16
officers or directors in their capacities as such, before or by any Federal,
state or local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole.
(e) Each of the representations and warranties
of the Company contained herein shall be true and correct in all material
respects at the Closing Date and, with respect to the Option Shares, at the
Option Closing Date, as if made at the Closing Date and, with respect to the
Option Shares, at the Option Closing Date, and all covenants and agreements
herein contained to be performed on the part of the Company and all
conditions herein contained to be fulfilled or complied with by the Company
at or prior to the Closing Date and, with respect to the Option Shares, at or
prior to the Option Closing Date, shall have been duly performed, fulfilled
or complied with.
(f) The Representatives shall have received an
opinion, dated the Closing Date and, with respect to the Option Shares, the
Option Closing Date, and satisfactory in form and substance to counsel for
the Underwriters, from (i) ____________________, counsel to the Company, to
the effect set forth in Exhibit C and (ii) __________, patent and regulatory
counsel for the Company, to the effect set forth in Exhibit D.
(g) The Representatives shall have received an
opinion, dated the Closing Date and the Option Closing Date, from
_____________________, counsel to the Underwriters, with respect to the
Registration Statement, the Prospectus and this Agreement, which opinion
shall be satisfactory in all respects to the Representatives.
(h) On the date of the Prospectus, the
Accountants shall have furnished to the Representatives a letter, dated the
date of its delivery, addressed to the Representatives and in form and
substance satisfactory to the Representatives, confirming that they are
independent accountants with respect to the Company as required by the Act
and the Rules and Regulations and with respect to the financial and other
statistical and numerical information contained in the Registration Statement
or incorporated by reference therein. At the Closing Date and, as to the
Option Shares, the Option Closing Date, the Accountants shall have furnished
to the Representatives a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set forth
in the letter from the Accountants, that nothing has come to their attention
during the period from the date of the letter referred to in the prior
sentence to a date (specified in the letter) not more than five days prior to
the Closing Date and the Option Closing Date which would require any change
in their letter dated the date of the Prospectus, if it were required to be
dated and delivered at the Closing Date and the Option Closing Date.
17
(i) At the Closing Date and, as to the Option
Shares, the Option Closing Date, there shall be furnished to the
Representatives an accurate certificate, dated the date of its delivery,
signed by each of the Chief Executive Officer and the Chief Financial Officer
of the Company, in form and substance satisfactory to the Representatives, to
the effect that:
(i) Each signer of such certificate has
carefully examined the Registration Statement and the Prospectus
(including any documents filed under the Exchange Act and deemed to
be incorporated by reference into the Prospectus) and (A) as of the
date of such certificate, such documents are true and correct in all
material respects and do not omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not untrue or misleading and (B) since the Effective Date,
no event has occurred as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein
not untrue or misleading in any material respect and there has been no
document required to be filed under the Exchange Act and the Exchange
Act Rules and Regulations that upon such filing would be deemed to be
incorporated by reference into the Prospectus that has not been so
filed;
(ii) Each of the representations and
warranties of the Company contained in this Agreement were, when
originally made, and are, at the time such certificate is delivered,
true and correct in all material respects;
(iii) Each of the covenants required
herein to be performed by the Company on or prior to the delivery of
such certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company on or
prior to the date of such certificate has been duly, timely and fully
complied with; and
(iv) Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, (A) there has not been, and no development has occurred
which could reasonably be expected to result in, a material adverse
change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results
of operations of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, in each case other than as set forth in or contemplated by
the Registration Statement and the Prospectus and (B) neither the
Company nor any of its Subsidiaries has sustained any material loss
or interference with its business or properties from fire, explosion,
flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration
Statement and the Prospectus,
18
and such other matter as the Representatives may reasonably request.
(j) On or prior to the Closing Date, the
Representatives shall have received the executed agreements referred to in
Section 4(n).
(k) The Shares shall be qualified for sale in
such states as the Representatives may reasonably request, each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date and the Option Closing Date.
(l) Prior to the Closing Date, the Shares shall
have been approved for quotation on the Nasdaq National Market.
(m) The National Association of Securities
Dealers, Inc. shall have approved the underwriting terms and arrangements and
such approval shall not have been withdrawn or limited.
(n) The Company shall have furnished to the
Representatives such certificates, in addition to those specifically
mentioned herein, as the Representatives may have reasonably requested as to
the accuracy and completeness at the Closing Date and the Option Closing Date
of any statement in the Registration Statement or the Prospectus or any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus, as to the accuracy at the Closing Date and the
Option Closing Date of the representations and warranties of the Company
herein, as to the performance by the Company of its obligations hereunder, or
as to the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of the Representatives.
6. Indemnification.
(a) The Company will indemnify and hold
harmless each Underwriter, the directors, officers, employees and agents of
each Underwriter and each person, if any, who controls each Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, liabilities, expenses and
damages (including, but not limited to, any and all investigative, legal and
other expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding between any of
the indemnified parties and any indemnifying parties or between any
indemnified party and any third party, or otherwise, or any claim asserted),
as and when incurred, to which any Underwriter, or any such person, may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
(i) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment or supplement to the Registration Statement or
the Prospectus
19
or in any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Shares under the Securities Laws thereof
or filed with the Commission, (ii) the omission or alleged omission to state
in such document a material fact required to be stated in it or necessary to
make the statements in it not misleading or (iii) any act or failure to act
or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Shares or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim,
liability, expense or damage arising out of or based upon matters covered by
clause (i) or (ii) above (provided that the Company shall not be liable under
this clause (iii) to the extent it is finally judicially determined by a
court of competent jurisdiction that such loss, claim, liability, expense or
damage resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such underwriter through its gross negligence or
willful misconduct); provided that the Company will not be liable to the
extent that such loss, claim, liability, expense or damage arises from the
sale of the Shares in the public offering to any person by an Underwriter and
is based on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to
any Underwriter furnished in writing to the Company by the Representatives on
behalf of any Underwriter expressly for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus. This indemnity
agreement will be in addition to any liability that the Company might
otherwise have.
(b) Each Underwriter will indemnify and hold
harmless the Company, each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, each
director of the Company and each officer of the Company who signs the
Registration Statement to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only insofar as losses, claims, liabilities,
expenses or damages arise out of or are based on any untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to any Underwriter furnished in writing
to the Company by the Representatives on behalf of such Underwriter expressly
for use in the Registration Statement, the Preliminary Prospectus or the
Prospectus. This indemnity will be in addition to any liability that each
Underwriter might otherwise have; provided, however, that in no case shall
any Underwriter be liable or responsible for any amount in excess of the
underwriting discounts and commissions received by such Underwriter.
(b) Any party that proposes to assert the right
to be indemnified under this Section 6 will, promptly after receipt of notice
of commencement of any action against such party in respect of which a claim
is to be made against an indemnifying party or parties under this Section 6,
notify each such indemnifying party of the commencement of such action,
enclosing a copy of all papers served, but the omission so to notify such
indemnifying party will not relieve it from any liability that it may have to
any indemnified
20
party under the foregoing provisions of this Section 6 unless, and only to
the extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and,
to the extent that it elects by delivering written notice to the indemnified
party promptly after receiving notice of the commencement of the action from
the indemnified party, jointly with any other indemnifying party similarly
notified, to assume the defense of the action, with counsel satisfactory to
the indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying
party will not be liable to the indemnified party for any legal or other
expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection
with the defense. The indemnified party will have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such indemnified party unless (1) the
employment of counsel by the indemnified party has been authorized in writing
by the indemnifying party, (2) the indemnified party has reasonably concluded
(based on advice of counsel) that there may be legal defenses available to it
or other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf
of the indemnified party) or (4) the indemnifying party has not in fact
employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of
which cases the reasonable fees, disbursements and other charges of counsel
will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time
for all such indemnified party or parties. All such fees, disbursements and
other charges will be reimbursed by the indemnifying party promptly as they
are incurred. An indemnifying party will not be liable for any settlement of
any action or claim effected without its written consent (which consent will
not be unreasonably withheld). No indemnifying party shall, without the
prior written consent of each indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action or proceeding relating to the matters contemplated by this Section 6
(whether or not any indemnified party is a party thereto), unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising or that may arise out of such
claim, action or proceeding. Notwithstanding any other provision of this
Section 6 [(b)], if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such
21
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(c) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
the foregoing paragraphs of this Section 6 is applicable in accordance with
its terms but for any reason is held to be unavailable from the Company or
the Underwriters, the Company and the Underwriters will contribute to the
total losses, claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Act, officers of the Company who signed
the Registration Statement and directors of the Company, who also may be
liable for contribution) to which the Company and any one or more of the
Underwriters may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in
the table on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one
hand, and the Underwriters, on the other, with respect to the statements or
omissions which resulted in such loss, claim, liability, expense or damage,
or action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or the Representatives on
behalf of the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 6(c) were
to be determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of
the loss, claim, liability, expense or damage, or action in respect thereof,
referred to above in this Section 6(c) shall be deemed to include, for
purpose of this Section 6(c), 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 6(c),
no Underwriter shall be required to contribute any amount in excess of the
underwriting
22
discounts and commissions received by it and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 6(c) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 6(c),
any person who controls a party to this Agreement within the meaning of the
Act will have the same rights to contribution as that party, and each officer
of the Company who signed the Registration Statement will have the same
rights to contribution as the Company, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of notice
of commencement of any action against such party in respect of which a claim
for contribution may be made under this Section 6(c), will notify any such
party or parties from whom contribution may be sought, but the omission so to
notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 6
(d). Except for a settlement entered into pursuant to the last sentence of
Section 6 (c) hereof, no party will be liable for contribution with respect
to any action or claim settled without its written consent (which consent
will not be unreasonably withheld).
(d) The indemnity and contribution agreements
contained in this Section 6 and the representations and warranties of the
Company contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of the Shares and payment therefore or (iii)
any termination of this Agreement.
7. Termination. The obligations of the several
Underwriters under this Agreement may be terminated at any time on or prior
to the Closing Date (or, with respect to the Option Shares, on or prior to
the Option Closing Date), by notice to the Company from the Representatives,
without liability on the part of any Underwriter to the Company, if, prior to
delivery and payment for the Shares (or the Option Shares, as the case may
be), in the sole judgment of the Representatives, (i) there has been, since
the respective dates as of which information is given in the Registration
Statement, any material adverse change in the Company's business, properties,
business prospects, condition (financial or otherwise) or results of
operations, (ii) trading in any of the equity securities of the Company shall
have been suspended by the Commission, the NASD, by an exchange that lists
the Shares or by the Nasdaq Stock Market, (iii) trading in securities
generally on the New York Stock Exchange or the Nasdaq Stock Market shall
have been suspended or limited or minimum or maximum prices shall have been
generally established on such exchange or over the counter market, or
additional material governmental restrictions, not in force on the date of
this Agreement, shall have been imposed upon trading in securities generally
by such exchange or by order of the Commission or the NASD or any court or
other governmental authority, (iv) a general banking moratorium shall have
been declared by either Federal or New York State authorities or (v) any
material adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United States
or any outbreak or
23
material escalation of hostilities or declaration by the United States of a
national emergency or war or other calamity or crisis shall have occurred the
effect of any of which is such as to make it, in the sole judgment of the
Representatives, impracticable or inadvisable to market the Shares on the
terms and in the manner contemplated by the Prospectus.
8. Substitution of Underwriters. If any one or more
of the Underwriters shall fail or refuse to purchase any of the Firm Shares
which it or they have agreed to purchase hereunder, and the aggregate number
of Firm 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 Firm Shares, the other Underwriters shall be obligated, severally,
to purchase the Firm Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase, in the proportions which the number
of Firm Shares which they have respectively agreed to purchase pursuant to
Section 1 bears to the aggregate number of Firm Shares which all such
non-defaulting Underwriters have so agreed to purchase, or in such other
proportions as the Representatives may specify; provided that in no event
shall the maximum number of Firm Shares which any Underwriter has become
obligated to purchase pursuant to Section 1 be increased pursuant to this
Section 8 by more than one-ninth of the number of Firm Shares agreed to be
purchased by such Underwriter without the prior written consent of such
Underwriter. If any Underwriter or Underwriters shall fail or refuse to
purchase any Firm Shares and the aggregate number of Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-tenth of the aggregate number of the Firm Shares and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Firm Shares are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company for the purchase or sale of any
Shares under this Agreement. In any such case either the Representatives 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. Any action taken pursuant to this Section 8
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
9. Miscellaneous. (a) Notice given pursuant to any of
the provisions of this Agreement shall be in writing and, unless otherwise
specified, shall be mailed or delivered (a) if to the Company, at the office
of the Company, 000 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxx, XX 00000, Attention:
Xxxxxxx X. Xxxxxxx, Ph.D., President and Chief Executive Officer, or (b) if
to the Underwriters, to the Representatives at the offices of
______________________, Attention: ________________. Any notice under
Section 7 or 8 may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.
(b) This Agreement has been and is made solely for the
benefit of the several Underwriters and the Company and of the controlling
persons, directors and officers
24
referred to in Section 6, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall
not include a purchaser, as such purchaser, of Shares from any of the several
Underwriters.
(c) All representations, warranties and agreements of
the Company contained herein or in certificates or other instruments
delivered pursuant hereto, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any
Underwriter or any of its controlling persons and shall survive delivery of
and payment for the Shares hereunder.
(d) Any action required or permitted to be taken by the
Representatives under this Agreement may be taken by them jointly or by
____________.
(e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
(f) This Agreement may be signed in two or more
counterparts with the same effect as if the signatures thereto and hereto
were upon the same instrument.
(g) In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
(h) THE COMPANY AND THE UNDERWRITERS EACH HEREBY
IRREVOCABLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(i) This Agreement may not be amended or otherwise
modified or any provision hereof waived except by an instrument in writing
signed by the Representatives and the Company.
25
Please confirm that the foregoing correctly sets forth the
agreement among the Company and the several Underwriters.
Very truly yours,
CYGNUS, INC.
By: _____________________
Title:
Confirmed as of the date first
above mentioned:
[Representatives]
Acting on behalf of
themselves and as the
Representatives of the
other several Underwriters
named in Schedule I hereof.
By: ____________________________
By: ____________________________
Title:
SCHEDULE I
UNDERWRITERS
Number of
Name of Firm Shares
Underwriters to be Purchased
------------ ---------------
Total . . . . . . . --------------------
--------------------
EXHIBIT A
CYGNUS, INC.
_____________________
PRICE DETERMINATION AGREEMENT
[Date]
[Representatives]
As Representatives of the several Underwriters
Dear Sirs:
Reference is made to the Underwriting Agreement, dated
______, 199___ (the "Underwriting Agreement"), among __________________, a
__________ corporation (the "Company") and the several Underwriters named in
Schedule I thereto or hereto (the "Underwriters"), for whom __________,
__________ [and __________________] is [are] acting as representatives (the
"U.S. Representatives"). The Underwriting Agreement provides for the
purchase by the Underwriters from the Company, subject to the terms and
conditions set forth therein, of an aggregate of ________ shares (the "Firm
Shares") of the Company's common stock, par value $____ per share. This
Agreement is the Price Determination Agreement referred to in the
Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the
undersigned agree with the Representatives as follows:
The initial public offering price per share for the Firm
Shares shall be $_______.
The purchase price per share for the Firm Shares to be paid
by the several Underwriters shall be $_______ representing an amount equal to
the initial public offering price set forth above, less $______ per share.
The Company represents and warrants to each of the
Underwriters that the representations and warranties of the Company set forth
in Section 3 of the Underwriting Agreement are accurate as though expressly
made at and as of the date hereof.
As contemplated by the Underwriting Agreement, attached as
Schedule I is a completed list of the several Underwriters, which shall be a
part of this Agreement and the Underwriting Agreement.
This Agreement shall be governed by the law of the State of
New York without regard to the conflict of laws principles of such State.
If the foregoing is in accordance with your understanding of
the agreement among the Underwriters and the Company, please sign and return
to the Company a counterpart hereof, whereupon this instrument along with all
counterparts and together with the Underwriting Agreement shall be a binding
agreement among the Underwriters and the Company in accordance with its terms
and the terms of the Underwriting Agreement.
A-2
Very truly yours,
CYGNUS, INC.
By:_________________________
Title:
Confirmed as of the date
first above mentioned:
[Representatives]
Acting on behalf of themselves
and as the Representatives
of the other several Underwriters
named in Schedule I hereof.
By: ________________________
By: ________________________
Title:
A-3
EXHIBIT B
[DATE]
[Representatives]
As Representatives of the
several Underwriters
Dear Sirs:
In consideration of the agreement of the several
Underwriters, for which ___________, ________[and ______________] (the
"Representatives") intend to act as Representatives to underwrite a proposed
public offering (the "Offering") of ____ shares of Common Stock, par value
$_____ per share (the "Common Stock") of ______, a ______________
corporation, as contemplated by a registration statement with respect to such
shares filed with the Securities and Exchange Commission on Form S-3
(Registration No. _________), the undersigned hereby agrees that the
undersigned will not, for a period of [90] days after the commencement of the
public offering of such shares, without the prior written consent of
________________, offer to sell, sell, contract to sell, grant any option to
sell, or otherwise dispose of, or require the Company to file with the
Securities and Exchange Commission a registration statement under the
Securities Act of 1933 to register any shares of Common Stock or securities
convertible into or exchangeable for Common Stock or warrants or other rights
to acquire shares of Common Stock of which the undersigned is now, or may in
the future become, the beneficial owner within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934)
[(other than pursuant to employee stock option plans or in connection with other
employee incentive compensation arrangements)].
Very truly yours,
By:________________________
Print Name:________________________
--------------------------
* Insert if this agreement will be signed by an employee of the Company.
EXHIBIT C
Form of Opinion of
Counsel to the Company
1. The Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has full corporate power
and authority to conduct all the activities conducted by it, to own or lease
all the assets owned or leased by it and to conduct its business as described
in the Registration Statement and the Prospectus. The Company is the sole
record owner and, to our knowledge, the sole beneficial owner of all of the
capital stock of each of its Subsidiaries.
2. All of the outstanding shares of Common Stock have
been, and the Shares, when paid for by the Underwriters in accordance with
the terms of the Agreement, will be, duly authorized, validly issued, fully
paid and nonassessable and will not be subject to any preemptive or similar
right under (i) the statutes, judicial and administrative decisions, and the
rules and regulations of the governmental agencies of the State of Delaware,
(ii) the Company's certificate of incorporation or by-laws or (iii) any
instrument, document, contract or other agreement referred to in the
Registration Statement or any instrument, document, contract or agreement
filed as an exhibit to, or incorporated as an exhibit by reference in, the
Registration Statement. Except as described in the Registration Statement or
the Prospectus, to the best of our knowledge, there is no commitment or
arrangement to issue, and there are no outstanding options, warrants or other
rights calling for the issuance of, any share of capital stock of the Company
or any Subsidiary to any person or any security or other instrument that by
its terms is convertible into, exercisable for or exchangeable for capital
stock of the Company.
3. No consent, approval, authorization or order of, or
any filing or declaration with, any court or governmental agency or body is
required in connection with the authorization, issuance, transfer, sale or
delivery of the Shares by the Company, in connection with the execution,
delivery and performance of the Agreement by the Company or in connection
with the taking by the Company of any action contemplated thereby or, if so
required, all such consents, approvals, authorizations and orders specifying
the same have been obtained and are in full force and effect, except such as
have been obtained under the Act and the Rules and Regulations and such as
may be required under state securities or "Blue Sky" laws or by the by-laws
and rules of the NASD in connection with the purchase and distribution by the
Underwriters of the Shares to be sold by the Company. All references
in this opinion to the Agreement shall include the Price Determination
Agreement.
4. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization." The description of the Common
Stock contained in the Prospectus is complete and accurate in all material
respects. The form of certificate used to evidence the Common Stock is in
due and proper form and complies with all applicable statutory requirements.
5. The Registration Statement and the Prospectus
(including any documents incorporated by reference into the Prospectus, at
the time they were filed) comply or complied in all material respects as to
form with the requirements of the Act, the Exchange Act, the Exchange Act
Rules and Regulations and the Rules and Regulations (except that we express
no opinion as to financial statements, schedules and other financial data
contained in the Registration Statement or the Prospectus or incorporated by
reference therein).
6. To the best of our knowledge, any instrument,
document, lease, license, contract or other agreement (collectively,
"Documents") required to be described or referred to in the Registration
Statement or the Prospectus has been properly described or referred to
therein and any Document required to be filed as an exhibit to the
Registration Statement has been filed as an exhibit thereto or has been
incorporated as an exhibit by reference in the Registration Statement; and no
default exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any Document filed
or required to be filed as an exhibit to the Registration Statement.
7. To the best of our knowledge, except as disclosed
in the Registration Statement or the Prospectus, no person or entity has the
right to require the registration under the Act of shares of Common Stock or
other securities of the Company by reason of the filing or effectiveness of
the Registration Statement.
8. To the best of our knowledge, the Company is not in
violation of, or in default with respect to, any law, rule, regulation,
order, judgment or decree, except as may be described in the Prospectus or
such as in the aggregate do not now have and will not in the future have a
material adverse effect upon the operations, business or assets of the
Company and the Subsidiaries, taken as a whole.
9. All descriptions in the Prospectus of statutes,
regulations or legal or governmental proceedings are accurate and fairly
present the information required to be shown.
10. The Company has full corporate power and authority
to enter into the Agreement, and the Agreement has been duly authorized,
executed and delivered by the Company, is a valid and binding agreement of
the Company and, except for the
C-2
indemnification and contribution provisions thereof, as to which we express
no opinion, is enforceable against the Company in accordance with the terms
thereof.
11. The execution and delivery by the Company of, and
the performance by the Company of its agreements in, the Agreement do not and
will not (i) violate the certificate of incorporation or by-laws of the
Company, (ii) breach or result in a default under, cause the time for
performance of any obligation to be accelerated under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
assets of the Company or any of its Subsidiaries pursuant to the terms of,
(x) any indenture, mortgage, deed of trust, loan agreement, bond, debenture,
note agreement, capital lease or other evidence of indebtedness of which we
have knowledge, (y) any voting trust arrangement or any contract or other
agreement to which the Company is a party that restricts the ability of the
Company to issue securities and of which we have knowledge or (z) any
Document filed as an exhibit to, or incorporated as an exhibit by reference
in, the Registration Statement, (iii) breach or otherwise violate any
existing obligation of the Company under any court or administrative order,
judgment or decree of which we have knowledge or (iv) violate applicable
provisions of any statute or regulation in the States of Delaware or
Califronia or of the United States.
12. Delivery of certificates for the Shares will
transfer valid and marketable title thereto to each Underwriter that has
purchased such Shares in good faith and without notice of any adverse claim
with respect thereto.
13. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
14. The Shares have been approved for quotation on the
Nasdaq National Market.
We hereby confirm to you that we have been advised by the
Commission that the Registration Statement has become effective under the Act
and that no order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose has been instituted or is
pending, threatened or contemplated.
We hereby further confirm to you that there are no actions,
suits, proceedings or investigations pending or, to our knowledge, overtly
threatened in writing against the Company or any of its Subsidiaries, or any
of their respective officers or directors in their capacities as such, before
or by any court, governmental agency or arbitrator which (i) seek to
challenge the legality or enforceability of the Agreement, (ii) seek to
challenge the legality or enforceability of any of the Documents filed, or
required to be filed, as exhibits to the Registration Statement, (iii) seek
damages or other remedies with respect to any of the Documents filed, or
required to be filed, as exhibits to the Registration Statement, (iv) except
C-3
as set forth in or contemplated by the Registration Statement and the
Prospectus, seek money damages in excess of $_______ or seek to impose
criminal penalties upon the Company, any of its Subsidiaries or any of their
respective officers or directors in their capacities as such and of which we
have knowledge or (v) seek to enjoin any of the business activities of the
Company or any of its Subsidiaries or the transactions described in the
Prospectus and of which we have knowledge.
15. We have participated in the preparation of the
Registration Statement and the Prospectus and, without assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus or in any amendment
or supplement thereto or in any document incorporated by reference into the
Prospectus, nothing has come to our attention that causes us to believe that,
both as of the Effective Date and as of the Closing Date and the Option
Closing Date, the Registration Statement or any amendment thereto contained
or contains any untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that any Prospectus or any amendment or
supplement thereto including any documents incorporated by reference into the
Prospectus, at the time such Prospectus was issued, at the time any such
amended or supplemented Prospectus was issued, at the Closing Date and the
Option Closing Date, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances in which they were
made, not misleading (except that we express no opinion as to financial
statements, schedules and other financial data contained in the Registration
Statement or the Prospectus or incorporated by reference therein).
The foregoing opinion is subject to the qualification that
the enforceability of the Agreement may be: (i) subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally; and (ii) subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding at
law or in equity) including principles of commercial reasonableness or
conscionability and an implied covenant of good faith and fair dealing.
This letter is furnished by us solely for your benefit in
connection with the transactions referred to in the Agreement and may not be
circulated to, or relied upon by, any other person, except that this letter
may be relied upon by your counsel in connection with the opinion letter to
be delivered to you pursuant to Section 5(g) of the Agreement.
In rendering the foregoing opinion, counsel may rely, to the
extent they deem such reliance proper, on the opinions (in form and substance
reasonably satisfactory to Underwriters' counsel) of other counsel reasonably
acceptable to Underwriters' counsel as to matters governed by the laws of
jurisdictions other than the United States and the States of California and
Delaware, and as to matters of fact, upon certificates of officers of the
Company, the Selling Shareholders and of government officials; provided that
such counsel
C-4
shall state that the opinion of any other counsel is in form satisfactory to
such counsel. Copies of all such opinions and certificates shall be furnished
to counsel to the Underwriters on the Closing Date.
C-5
EXHIBIT D
Form of opinion of
Patent and Regulatory Counsel
1. I have studied and agree with the statements in the
Prospectus under the captions [insert sections of Prospectus relating to
intellectual property and government regulation of the Company].
2. I do not know of any pending or threatened legal or
governmental proceeding relating to patents or proprietary know-how owned or
used by the Company or any of its Subsidiaries, 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, except as disclosed in the
Registration Statement, which, if adversely decided, would have a material
adverse effect on the business, financial condition or results of operations
of the Company or any of its Subsidiaries.
3. I have no knowledge of any infringement or alleged
infringement by the Company or any of its Subsidiaries of issued patent
rights of others, except as disclosed in the Registration Statement, which
would have a material adverse effect on the business, financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole.
4. To the best of my knowledge, each of the Company
and each of its Subsidiaries possesses all governmental licenses, permits,
consents, orders, approvals and other authorizations necessary to carry on
their respective businesses as now conducted and as described in the
Prospectus, except for those the absence of which will not have a material
adverse effect on the business, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole.
