Ribozyme Pharmaceuticals, Inc.
3,150,000 Shares of Common Stock*
(par value $.01 per share)
UNDERWRITING AGREEMENT
New York, New York
February __, 2000
ING Barings LLC
Chase Securities Inc.
As Representatives of the
several Underwriters
c/o ING Barings LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Ribozyme Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the several underwriters named in Schedule I hereto (the "Underwriters") for
whom ING Barings LLC and Chase Securities Inc. are acting as representatives
(the "Representatives") an aggregate of 3,150,000 shares (the "Firm Shares") of
its common stock, par value $0.01 per share (the "Common Stock"). The
stockholders listed in Schedule II hereto (the "Selling Stockholders") propose
to issue and sell to the several Underwriters an aggregate of not more than
472,500 additional shares of Common Stock (the "Additional Shares"), if
requested by the Underwriters in accordance with Section 3(c) hereof. The Firm
Shares and the Additional Shares are collectively referred to herein as the
"Shares". The words "you" and "your" refer to the Representatives of the
Underwriters. References herein to any document or other information
incorporated by reference in the Registration Statement shall include documents
or other information incorporated by reference in the Prospectus (or, if the
Prospectus is not in existence, in the most recent preliminary prospectus).
Reference made herein to any preliminary prospectus or the Prospectus shall be
deemed to include all documents and information incorporated by reference
therein and shall be deemed to refer to and include any documents and
information filed after the date of such preliminary prospectus or Prospectus,
as the case may be, and so incorporated by reference, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
1. Representations and Warranties of the Company. The Company represents
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and warrants to and agrees with each of the Underwriters that:
_________________________
* Plus an option to purchase from the Company up to an additional 472,500
shares of Common Stock to cover over-allotments.
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3 (No.
333-_______), for the registration of the Shares under the Securities Act of
1933, as amended (the "Act"). Such registration statement, including the
prospectus, financial statements and schedules, exhibits and all other documents
filed as a part thereof, as amended through the time of effectiveness of the
registration statement, including any information deemed to be a part thereof as
of the time of effectiveness pursuant to Rule 430A or Rule 434 of the Rules and
Regulations of the Commission under the Act (the "Regulations"), is herein
called the "Registration Statement." Any registration statement filed by the
Company pursuant to Rule 462(b) under the Act is herein called the "Rule 462(b)
Registration Statement", and from and after the date and time of filing of the
Rule 462(b) Registration Statement the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The prospectus, in the form
first filed with the Commission pursuant to Rule 424(b) of the Regulations or
filed as part of the Registration Statement at the time of effectiveness if no
Rule 424(b) or Rule 434 filing is required, is herein called the "Prospectus".
The term "preliminary prospectus" as used herein means a preliminary prospectus
included in the Registration Statement at the time it is declared effective as
described in Rule 430A of the Regulations; provided, however, if the Company
has, with the consent of the Representatives, elected to rely upon Rule 434
under the Act, the term "Prospectus" shall mean the Company's prospectus subject
to completion dated ________ __, 2000 (such preliminary prospectus is herein
called the "Rule 434 preliminary prospectus"), together with the applicable term
sheet (the "Term Sheet") prepared and filed by the Company with the Commission
under Rules 434 and 424(b) under the Act and all references in this Agreement to
the date of the Prospectus shall mean the date of the Term Sheet. All references
in this Agreement to the Registration Statement, the Rule 462(b) Registration
Statement, a preliminary prospectus, the Prospectus or the Term Sheet, or any
amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX").
(b) Each preliminary prospectus and the Prospectus, if filed by
electronic transmission pursuant to XXXXX (except as may be permitted by
Regulation S-T under the Securities Act), was identical to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale of
the Shares. At the time of the effectiveness of the Registration Statement or
the effectiveness of any Rule 462(b) Registration Statement and any post-
effective amendment thereto, when the Prospectus is first filed with the
Commission pursuant to Rule 424(b) or Rule 434 of the Regulations, when any
supplement to or amendment of the Prospectus is filed with the Commission and at
the Closing Date and the Additional Closing Date, if any (as defined in Section
3), the Registration Statement and the Prospectus and any amendments thereof and
supplements thereto complied (and, in the event of any of the aforementioned
filings that may occur in the future will, at the time of such filing(s),
comply) in all material respects with the applicable provisions of the Act and
the Regulations, did not and will not contain an untrue statement of a material
fact and did not and will not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. When any related preliminary prospectus was first filed with the
Commission
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(whether filed as part of the Registration Statement for the registration of the
Shares or any amendment thereto or pursuant to Rule 424(a) of the Regulations)
and when any amendment thereof or supplement thereto was first filed with the
Commission, such preliminary prospectus and any amendments thereof and
supplements thereto complied in all material respects with the applicable
provisions of the Act and the Regulations and did not contain an untrue
statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. No representation and warranty is made in this
subsection (b), however, with respect to the statements set forth in the [first
(including the table), third, seventh and eighth] paragraphs under the caption
"Underwriting" in, and the last paragraph on the cover page of, the Prospectus.
If Rule 434 is used, the Company will comply with the requirements of Rule 434.
The documents which are incorporated by reference in any preliminary prospectus
or the Prospectus or from which information is so incorporated by reference,
when they became effective or were filed with the Commission, as the case may
be, complied in all material respects with the requirements of the Act and the
Rules and Regulations or the Exchange Act and the rules and regulations
thereunder, as applicable, and did not, when such documents were so filed,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and any documents so filed and incorporated by reference subsequent
to the effective date of the Registration Statement shall, when they are filed
with the Commission, conform in all material respects with the requirements of
the Act and the Rules and Regulations and the Exchange Act and the rules and
regulations thereunder, as applicable. The Commission has not issued any stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of the Prospectus or any preliminary prospectus
or, to the knowledge of the Company, instituted proceedings for that purpose.
(c) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and
engage in the business in which it is engaged or in which it proposes to engage
as described in the Registration Statement, the preliminary prospectus and the
Prospectus. The Company is duly registered and qualified to do business as a
foreign corporation in good standing in each jurisdiction where the character,
location, ownership or leasing of its properties (owned, leased or licensed) or
the nature or conduct of its business requires such registration or
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, result in a material adverse effect on or
affecting the business, operations, assets, properties, condition (financial or
other), stockholders' equity, prospects or results of operations of the Company
and its subsidiaries taken as a whole (a "Material Adverse Effect").
(d) The Company has no subsidiaries (as defined in the Regulations),
other than Medizyme Pharmaceuticals Ltd., a Bermuda exempted limited liability
company (the "Subsidiary"). The Company does not own or control, 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
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any firm, partnership, joint venture, association, or other entity other than
the Subsidiary except for the Company's equity interests in Atugen AG
("Atugen"). All the outstanding shares of capital stock of the Subsidiary owned
by the Company have been duly and validly authorized and issued and are fully
paid and nonassessable and, except as described in the Registration Statement,
the preliminary prospectus and the Prospectus, are free and clear of any
security interest, pledge, claim (legal or equitable), lien, charge, equity,
mortgage, encumbrance or other restriction (each a "Lien"), stockholders'
agreements, voting trusts or defects of title. The Subsidiary has been duly
organized and is validly existing as a limited liability company in good
standing under the laws of its jurisdiction of organization, with full power and
authority to own, lease and operate its properties and conduct the business in
which it is engaged or in which it proposes to engage. The Subsidiary is duly
registered and qualified as a foreign corporation in good standing in each
jurisdiction where the character, location, ownership or leasing of its
properties or the nature or conduct of its business requires such registration
or qualification, except where the failure to be so qualified would not have a
Material Adverse Effect. Except as described in the Registration Statement, the
preliminary prospectus and the Prospectus, the Subsidiary is not currently
prohibited, directly or indirectly, from paying any dividends to the Company,
from making any other distribution on its capital stock, from repaying to the
Company any loans or advances to it from the Company or from transferring any of
its property or assets to the Company or any other subsidiary of the Company.
All the outstanding shares of capital stock of Atugen owned by the Company have
been duly and validly authorized and issued and are fully paid and nonassessable
and, except as described in the Registration Statement, the preliminary
prospectus and the Prospectus, are free and clear of any Liens, stockholders'
agreements, voting trusts or defects of title. Atugen has been duly organized
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of organization, with full power and authority to own, lease and
operate its properties and conduct the business in which it is engaged or in
which it proposes to engage. Atugen is duly registered and qualified as a
foreign corporation in good standing in each jurisdiction where the character,
location, ownership or leasing of its properties or the nature or conduct of its
business requires such registration or qualification, except where the failure
to be so qualified would not have a Material Adverse Effect. Except as described
in the Registration Statement, the preliminary prospectus and the Prospectus,
Atugen is not currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on its capital
stock, from repaying to the Company any loans or advances to it from the Company
or from transferring any of its property or assets to the Company or any other
subsidiary of the Company.
(e) Ernst & Young LLP, the accountants who have expressed their
opinion with respect to the financial statements (including the related notes
and supporting schedules) of the Company filed with the Commission as a part of
the Registration Statement, the preliminary prospectus and the Prospectus, are,
with respect to the Company and the Subsidiary, independent public accountants
as required by the Act and the Exchange Act.
(f) As of the date hereof, the Company has an authorized
capitalization as set forth in the Registration Statement, the preliminary
prospectus and the Prospectus and there has
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been no material change in its capitalization since that date. All outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws and were not issued in violation of any
preemptive right, resale right, right of first refusal or similar right. The
authorized and outstanding capital stock of the Company conforms to the
description thereof contained in the Registration Statement, the preliminary
prospectus and the Prospectus (and such description correctly states, in all
material respects, the substance of the provisions of the instruments defining
the capital stock of the Company). Except as described in the Registration
Statement, the preliminary prospectus and the Prospectus, there are no
authorized or outstanding rights (including, without limitation, preemptive
rights, co-sale rights, resale rights, rights of first refusal or similar
rights), warrants or options to acquire, or instruments convertible into or
exercisable or exchangeable for, any share of capital stock or other equity
interest or ownership interest in the Company, the Subsidiary or Atugen or any
contract, commitment, agreement, understanding or arrangement of any kind
relating to the issuance of any capital stock or other equity interest or
ownership interest in the Company, the Subsidiary or Atugen or any such
convertible or exercisable or exchangeable securities or instruments or any such
rights, warrants or options, except for any such rights that have been
effectively waived in writing so as not to be exercisable in connection with the
registration, offer or sale of the Shares. The Shares to be issued pursuant to
this Agreement will not be issued in violation of any preemptive right, co-sale
right, resale right, right of first refusal or similar right. The description of
the Company's stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, set forth in the
Registration Statement, the preliminary prospectus and the Prospectus accurately
and fairly presents, in all material respects, the information required to be
shown with respect to such plans, arrangements, options and rights. The Shares
have been duly authorized for issuance and, when issued and delivered to and
paid for by the Underwriters pursuant to this Agreement, will be validly issued,
fully paid and nonassessable, good title to the Shares will be transferred to
the Underwriters free and clear of any Liens and the certificates representing
the Shares will be in valid and sufficient form.
(g) Other than the stockholder litigation described under the caption
"Business-Legal proceedings" in the Registration Statement, there is (i) no
action, suit or proceeding or, to the knowledge of the Company, no
investigation, before or by any court, arbitrator or governmental agency, body
or official, domestic or foreign, pending or, to the knowledge of the Company,
threatened or contemplated, as to which the Company, the Subsidiary or Atugen is
(or, to the extent threatened or contemplated, will be) a party or as to which
the business, assets or property of the Company, the Subsidiary or Atugen (or,
to the extent threatened or contemplated, will be) subject, (ii) no statute,
rule, regulation or order that has been enacted, adopted or issued by any
governmental agency, body or official, and (iii) no injunction, restraining
order or order of any nature that has been issued by a federal or state court or
foreign court of competent jurisdiction to which the Company, the Subsidiary or
Atugen is or will be subject or affecting the business, assets or property of
the Company, the Subsidiary or Atugen, that could reasonably be expected to (in
the case of clauses (i), (ii) and (iii)), individually or in the aggregate,
whether or not arising from transactions in the ordinary course
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of business, have a Material Adverse Effect, be required to be disclosed in the
Registration Statement, the preliminary prospectus or the Prospectus or
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement. There are no legal or administrative
proceedings, Contracts (as defined below) or documents concerning the Company or
the Subsidiary of a character that would be required to be described in or filed
as an exhibit to a registration statement on Form S-3 under the Act that are not
described or filed, as required, in the Registration Statement, the preliminary
prospectus and the Prospectus.
(h) The financial statements of the Company, together with the related
notes thereto, which are a part of the Registration Statement, the preliminary
prospectus and the Prospectus, present fairly the financial position and the
results of operations, changes in stockholders' equity and changes in cash flows
of the Company as of the respective dates and for the respective periods
specified therein. All of such financial statements and related notes have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved and comply as to form in all
material respects with the applicable accounting requirements included in
Regulation S-X under the Act. The supporting schedules, the "Summary Financial
Data", the "Selected Financial Data" and the tables included in the Registration
Statement, the preliminary prospectus and the Prospectus fairly present the
information purported to be shown thereby at the respective dates thereof and
for the respective periods covered thereby and have been presented on a basis
consistent with that of the audited financial statements therein. No other
financial statements or supporting schedules are required by the Act or
Regulation S-X to be included therein.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement, the preliminary prospectus and the
Prospectus, there has not been (i) any loss or adverse change, or any
development which could reasonably be expected to result in a loss or adverse
change, in or affecting the business, properties, management, assets, prospects,
stockholders' equity, operations, condition (financial or other), or results of
operations of the Company and its subsidiaries taken as a whole, (ii) any
transaction entered into by the Company, Atugen or the Subsidiary, except
transactions in the ordinary course of business; (iii) any obligation, direct or
contingent, incurred by the Company or the Subsidiary which is material to the
Company and the Subsidiary taken as a whole, except for liabilities or
obligations which are reflected in the Registration Statement, the preliminary
prospectus and the Prospectus, (iv) any change in the capital stock or
outstanding indebtedness of the Company, or (v) any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company, which in
any case described in clauses (i), (ii), (iii), (iv) or (v) above, could
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole or
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement.
(j) The Company and the Subsidiary have good and marketable title to
all properties and assets described in the Registration Statement, the
preliminary prospectus and the Prospectus as being owned by them, free and clear
of all Liens except Liens for taxes not yet due
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and payable. The Company and the Subsidiary have valid and enforceable leases
for the properties leased by them, the Company and the Subsidiary enjoy peaceful
and undisturbed possession under all such leases with such exceptions as do not
materially interfere with the use thereof made by the Company and the
Subsidiary, and such leases conform in all material respects to the descriptions
thereof, if any, set forth in the Registration Statement, the preliminary
prospectus and the Prospectus. The Company and the Subsidiary own, lease or
otherwise have rights to use all properties and assets as are important to their
respective operations as now conducted and as proposed to be conducted.
(k) The Company and the Subsidiary have all requisite corporate power
and authority, and all licenses, certificates, approvals, consents, concessions,
qualifications, orders, registrations, authorizations and permits from all
federal, state, foreign and other governmental and regulatory agencies, bodies
and authorities ("Permits") that are material to and necessary for the conduct
of the business of the Company and the Subsidiary as such business is currently
conducted. The Company reasonably believes that it will be able to obtain
Permits that are material to and necessary for the conduct of the business of
the Company and the Subsidiary as such business is proposed to be conducted as
described in the Registration Statement, the preliminary prospectus and the
Prospectus. All such Permits are valid and in full force and effect and there is
no proceeding pending or, to the best knowledge of the Company, threatened,
which could reasonably be expected to cause any such Permit to be withdrawn,
canceled, suspended or not renewed. The Company and the Subsidiary are not in
violation of, or in default under, and have fulfilled and performed all their
obligations with respect to, such Permits, except as would not have a Material
Adverse Effect. No event has occurred which allows or would allow revocation or
termination of any such Permit or result in any material impairment of the
rights of the holder of any such Permit. The Contracts to which the Company or
the Subsidiary is a party are valid and binding agreements, enforceable against
the Company and the Subsidiary in accordance with their terms and, to the best
of the Company's knowledge, the other contracting party or parties thereto are
not in breach or default under any of such Contracts, except in each case as
would not have a Material Adverse Effect.
(l) The Company and the Subsidiary are not (i) in violation of their
respective certificates of incorporation, as amended, or articles of
organization, as amended, as the case may be, or bylaws, as amended or (ii) in
breach of or default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, franchise, joint venture, deed of trust, bond, note, lease,
Permit or other agreement or instrument to which the Company or the Subsidiary
is a party or by which the Company or the Subsidiary may be bound or to which
any of the property or assets of the Company or the Subsidiary is subject (each
a "Contract"), or in violation of any law, order, rule, regulation, writ,
injunction or decree of any court or governmental agency, body or authority,
except in the case of this clause (ii) for such breaches, defaults or violations
that could not reasonably be expected to, individually or in the aggregate, have
a Material Adverse Effect on the Company and its subsidiaries taken as a whole
or materially and adversely affect the ability of the Company to perform its
obligations under this Agreement.
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(m) The Company and the Subsidiary own, possess, license or have
rights to use all patents, patent applications, trademarks, trademark
applications, service marks, service xxxx applications, tradenames, inventions,
discoveries, concepts, ideas, techniques, methods, source codes, object codes,
copyrights, manufacturing processes, formulae, computer software, databases,
works of authorship, technology, trade secrets, know-how, and other unpatented
and/or unpatentable proprietary or confidential information, collaborative
research agreements, systems or procedures and material intangible property and
assets (collectively, "Intellectual Property") necessary to the conduct of their
business as currently conducted and as proposed to be conducted. The Company
reasonably believes that the Company and the Subsidiary will be able to own or
possess adequate licenses or other rights to use all Intellectual Property
necessary to the conduct of their business as proposed to be conducted as
described in the Registration Statement. The Company has no knowledge that it
lacks or will be unable to obtain any rights or licenses to use any of such
Intellectual Property. The Registration Statement, the preliminary prospectus
and the Prospectus fairly and accurately describe the Company's rights with
respect to Intellectual Property. Neither the Company nor the Subsidiary have
received any notice of, and otherwise have no knowledge of, any infringement of
or conflict with asserted rights or claims of others with respect to any
Intellectual Property and the Company is unaware of any fact which could form a
reasonable basis for any such claim.
(n) Rights that any other party may have in the Company's patent
rights will not have a Material Adverse Effect on the Company and the Subsidiary
taken as a whole or materially and adversely affect the ability of the Company
to perform its obligations under this Agreement. There are no outstanding
licenses or other agreements that relate to or restrict the Company's use of its
patent rights in a manner that could reasonably be expected to have a Material
Adverse Effect. None of the Company's patents has been or is now involved in any
interference, reissue, reexamination or opposition proceeding in the United
States Patent and Trademark Office. To the knowledge of the Company, there is no
patent or patent application of any person that conflicts in any material
respect with any patent of the Company or invalidates any claim the Company has
in any patent or patent application. With regard to its patent rights, the
Company has no knowledge of unpaid maintenance fees, patents that have lapsed,
or abandonment of applications, and knows of no reason why any patent
applications should not be allowed. Except as disclosed in the Prospectus, there
are no claims, actions, or proceedings, pending or to the Company's best
knowledge, threatened, challenging the validity of any of its claims in any of
the Intellectual Property. To the knowledge of the Company, there is no prior
art that may render any of its patent rights invalid or patent applications
unpatentable.
(o) The Software owned or purported to be owned by the Company or the
Subsidiary, was either (i) developed by employees of the Company or the
Subsidiary within the scope of their employment; (ii) developed by independent
contractors who have assigned their rights to the Company or the Subsidiary
pursuant to written agreements; or (iii) otherwise acquired by the Company or
the Subsidiary from a third party. The Software does not contain any programming
code, documentation or other materials or development environments that
8
embody Intellectual Property rights of any person other than the Company
except for such materials or development environments obtained by the Company or
the Subsidiary from other persons who make such materials or development
environments generally available on non-discriminatory commercial terms.
"Software" means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, schematics, flow-charts and other work product used to design,
plan, organize and develop any of the foregoing, and (iv) all documentation,
including user manuals and training materials, relating to any of the foregoing.
(p) The Company and the Subsidiary have filed on a timely basis with
the appropriate taxing authorities (or have received an extension for filing
with respect to) all necessary federal, state and foreign income and franchise
tax returns, reports and other information required to be filed by them. Each
such tax return, report or other information was, when filed, accurate and
complete in all material respects. The Company and the Subsidiary have duly
paid, or have made adequate charges, accruals and reserves in the financial
statements for, all such taxes required to be paid by them and any other
assessment, fine or penalty levied against them, for all periods as to which the
tax liability of the Company or the Subsidiary has not been finally determined.
No tax deficiency has been or, to the best of the Company's knowledge, might be
asserted or contemplated against the Company or the Subsidiary.
(q) The Company and the Subsidiary are insured by recognized,
financially sound and reputable institutions with policies in such amounts and
with such deductibles and covering such risks as are generally deemed adequate
and customary for their business including, but not limited to, policies
covering real and personal property owned or leased by the Company and the
Subsidiary against theft, damage, destruction, acts of vandalism and
earthquakes, general liability and directors and officers liability, all of
which insurance is in full force and effect. The Company has no reason to
believe that it or the Subsidiary will not be able to (i) renew its existing
insurance coverage as and when such policies expire or (ii) obtain comparable
coverage from similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at a cost that would not result in a Material
Adverse Effect on the Company and its subsidiaries taken as a whole or
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement. Neither of the Company nor the Subsidiary has
been denied any insurance coverage which it has sought or for which it has
applied.
(r) Neither the Company nor the Subsidiary is involved in any labor
dispute, disturbance, lockout, slowdown or stoppage of employees, and, to the
best knowledge of the Company, no such dispute or disturbance is threatened or
imminent. The Company is not aware of any existing or imminent labor disturbance
by the employees of any of its principal suppliers or its collaborators that
could reasonably be expected to result in a Material Adverse Effect on the
Company and its subsidiaries taken as a whole or materially and adversely affect
the ability of the Company to perform its obligations under this Agreement.
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(s) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws (as defined below) on the business,
operations and properties of the Company and the Subsidiary, 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, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that the Company and the Subsidiary (i) are in compliance in all
material respects with all applicable foreign, United States federal, state and
local environmental laws, rules, regulations, treaties, statutes and codes
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all Permits required of them under
applicable Environmental Laws to conduct their business as currently conducted,
(iii) are in compliance in all material respects with all terms and conditions
of any such Permit and (iv) have not received notice of any actual or potential
liability for the investigation or remediation of any disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants. No action,
proceeding, revocation proceeding, writ, injunction or claim is pending or, to
the knowledge of the Company, threatened, relating to the Environmental Laws or
to the Company's or the Subsidiary's activities involving Hazardous Materials.
"Hazardous Materials" means any material or substance (i) that is prohibited or
regulated by any Environmental Law or (ii) that has been designated or regulated
by any governmental body or authority as radioactive, toxic, hazardous or
otherwise a danger to health, reproduction or the environment. Neither the
Company nor the Subsidiary has been named as a "potentially responsible party"
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended.
(t) Neither the Company nor the Subsidiary has engaged in the
generation, use, manufacture, transportation or storage of any Hazardous
Materials on any of the Company's or the Subsidiary's properties or former
properties, except in compliance in all material respects with all applicable
Environmental Laws. No Hazardous Materials have been treated or disposed of on
any of the Company's or the Subsidiary's properties or on properties formerly
owned or leased by the Company or the Subsidiary during the time of such
ownership or lease, except in compliance in all material respects with
Environmental Laws.
(u) No payments or inducements have been made or given, directly or
indirectly, to any federal or local official or candidate for, any federal or
state office in the United States or foreign offices by the Company or the
Subsidiary, by any of their officers, directors, employees or agents or, to the
best knowledge of the Company, by any other person in connection with any
opportunity, Contract, Permit, certificate, consent, order, approval, waiver or
other authorization relating to the business of the Company or the Subsidiary,
except for such payments or inducements as were lawful under applicable written
laws, rules and regulations. Neither the Company nor the Subsidiary, nor any
director, officer, agent, employee or, to the knowledge of the Company, other
person associated with or acting on behalf of the Company or
10
the Subsidiary, (i) has used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
unlawful rebate, payoff, influence payment, kickback or other unlawful payment
in connection with the business of the Company or the Subsidiary.
(v) Neither the Company nor the Subsidiary has any liability for any
prohibited transaction (within the meaning of Section 4975(c) of the Internal
Revenue Code of 1986, as amended (the "Code") or Part 4 of Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) (or an
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA) or any complete or partial withdrawal liability (within
the meaning of Section 4201 of ERISA), with respect to any pension, profit
sharing or other plan which is subject to ERISA, to which the Company and the
Subsidiary make or ever have made a contribution and in which any employee of
the Company and Subsidiary is or has ever been a participant. With respect to
such plans, the Company and the Subsidiary are in compliance in all material
respects with all applicable provisions of ERISA.
(w) The Company and the Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are appropriately recorded 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, (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences and (v) assets are properly accounted for and
safeguarded against loss from unauthorized use. The Company has not received
from its independent public accountants a letter describing or been informed by
them of, a substantial or material deficiency in the Company's internal
accounting controls in connection with their audit of the Company's financial
statements incorporated by reference in the Registration Statement, the
preliminary prospectus and the Prospectus.
(x) There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company or the Subsidiary to or for the benefit of any of
the officers or directors or stockholders of the Company or the Subsidiary or
any of the members of the families of any of them, except as disclosed in the
Registration Statement, the preliminary prospectus and the Prospectus.
(y) No consent, approval, registration, authorization, filing,
qualification, Permit or order of or with any court or supervisory, regulatory,
administrative or governmental agency, body or authority, arbitrator or others
(including securityholders) is required in connection with the execution and
delivery of this Agreement, the issuance, sale or delivery of the Shares to be
issued, sold and delivered by the Company hereunder, or the consummation of
11
any other of the transactions contemplated herein or the fulfillment of the
terms hereof, except the registration under the Act of the Shares and such
consents, approvals, registrations, authorizations, filings, qualifications,
Permits or orders, as may be required under the state securities or "blue sky"
laws or the bylaws and rules of the National Association of Securities Dealers,
Inc. (the "NASD") or as have been obtained and which are in full force and
effect in connection with the offer, purchase and distribution by the
Underwriters of the Shares.
(z) The execution, delivery and performance by the Company of this
Agreement and the issuance and sale of the Shares and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate action. Neither the issuance, offer, sale or delivery of the Shares,
the execution, delivery and performance by the Company of this Agreement nor the
compliance by the Company with all the provisions hereof nor the consummation of
the transactions contemplated hereby (i) conflicts with or will conflict with,
or constitutes or will constitute a breach or violation of or a default under
(or an event that, with notice or lapse of time or both, would constitute such a
breach, violation or default), or results in or will result in the imposition of
a Lien upon any property or assets of the Company or the Subsidiary, under, any
of the terms or provisions of the certificate of incorporation or by-laws or
other organizational or constitutive documents of the Company or the Subsidiary,
nor (ii) conflicts with or will conflict with or constitutes or will constitute
a breach or violation of, or a default under (or an event that with notice or
the lapse of time or both would constitute a default) or the loss of any
material benefit under, or the termination of, or results in or will result in
the creation or imposition of any Lien upon any property or assets of the
Company or the Subsidiary pursuant to, any Contract, nor (iii) violates or
conflicts with or will violate or conflict with any law, statute, rule or
regulation applicable to the Company or the Subsidiary or any judgment, decree
or order applicable to the Company or the Subsidiary of any court or
supervisory, regulatory, administrative or governmental agency, body or
authority, or arbitrator having jurisdiction over the Company or the Subsidiary
or any of their respective properties or assets.
(aa) The Company has full corporate power and authority to enter into
this Agreement and to perform the transactions contemplated hereby. This
Agreement and the transactions contemplated herein have been duly and validly
authorized, executed and delivered by the Company and this Agreement constitutes
the legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforceability thereof may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium
or other laws now or hereafter in effect relating to or affecting creditors'
rights generally and (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law) and except
to the extent that the provisions of Section 7 hereof may be limited by
applicable federal or state securities laws or unenforceable as against public
policy.
12
(bb) The Company has duly and validly authorized the issuance and sale
of the Shares. The description of the Shares in the Registration Statement, the
preliminary prospectus and the Prospectus is accurate in all material respects.
(cc) The Company is not now, and as a result of the offer and sale of
the Shares in the manner contemplated in this Agreement, the Registration
Statement, the preliminary prospectus and the Prospectus and the application of
the net proceeds of such sale as described in the section entitled "Use of
Proceeds" of the Registration Statement, the preliminary prospectus and the
Prospectus, will not be, an "investment company" or an "affiliated person" of,
or "promoter" or "principal underwriter" for, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), without taking account of any exemption arising out of the number
or type of holders of the Company's securities.
(dd) The Company has not incurred any liability for a fee, commission,
or other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement other than the
discount contemplated hereby.
(ee) Neither the Company nor the Subsidiary nor, to the Company's best
knowledge, any of its or their officers, directors or affiliates (as defined in
Rule 501(b) of Regulation D ("Regulation D") under the Act) has taken or will
take, directly or indirectly, any action designed to cause or to result in or
that has constituted, or might reasonably be expected to cause or result in or
constitute, under the Exchange Act, or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
(ff) The Company has not distributed and will not distribute prior to
the later of (A) the Additional Closing Date and (B) the completion of the
distribution of the Shares by the Underwriters and dealers, any offering
material (including, without limitation, content on its Website, if any, that
may be deemed to be offering material) in connection with the offering and sale
of the Shares other than the preliminary prospectus and the Prospectus.
(gg) There are no holders of securities of the Company which by reason
of the filing of the Registration Statement or otherwise in connection with the
sale of the Shares contemplated hereby, have the right to request or demand that
the Company register under the Act any of their securities in connection with
the Registration Statement, except for any such rights that have been
effectively waived in writing so as not to be exercisable in connection with the
registration, offer or sale of the Shares.
(hh) There is no tax, duty, levy, impost, deduction, charge or
withholding imposed by any political subdivision or taxing authority by virtue
of the execution, delivery, performance or enforcement, or to ensure the
legality, validity or admissibility into evidence, of this Agreement, and
neither is it necessary that the Shares be submitted to, or filed or recorded
13
with, any court or other authority to ensure such legality, validity,
enforceability or admissibility into evidence. There are no transfer taxes or
other similar fees or charges under federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance and sale by the Company
of the Shares.
(ii) All necessary actions, authorizations, conditions and things
reasonably required to be taken, given, fulfilled and done by the Company and
the Subsidiary on or prior to the date of this Agreement, have been, or on the
Closing Date or the Additional Closing Date, if any, will have been taken,
given, fulfilled and done in connection with (i) the issue of the Prospectus,
(ii) the execution and delivery of this Agreement, (iii) the execution, delivery
and issuance of the Shares, (iv) the compliance with all provisions of this
Agreement to be performed or complied with by such date, and (v) the right of
any holders of securities of the Company to request or demand that the Company
register under the Act any of their securities in connection with the
Registration Statement.
(jj) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is quoted on the Nasdaq National Market, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq National Market, nor has the Company received any
notification that the Commission or the Nasdaq National Market is contemplating
terminating such registration or listing.
(kk) The Company has timely and properly filed with the Commission all
reports and other documents required to have been filed by it with the
Commission pursuant to the Act, the Regulations, the Exchange Act and the rules
and regulations. True and complete copies of all such reports and other
documents have been delivered to you or your counsel.
(ll) Except as described in the Registration Statement, the
preliminary prospectus and the Prospectus, and except in connection with
exercises of outstanding options and warrants, the Company has not sold or
issued any shares of capital stock within the six month period preceding the
date of the Prospectus, all of which sales and issuances were made in compliance
with the Act and the Regulations.
(mm) Each officer and director of the Company named under the heading
"Management" in the Prospectus, [and each of the following stockholders of the
Company:] [(such stockholders of the Company,] together with each officer and
director of the Company named under the heading "Management" in the Prospectus,
to be referred to collectively as the "Locked-Up Parties"), has agreed to sign
an agreement substantially in the form attached hereto as Exhibit A (the "Lock-
---------
up Agreements"). The Company also has provided to counsel for the Underwriters
true, accurate and complete copies of all of the lock-up agreements presently in
effect or effected hereby. The Company has given "no transfer" instructions to
its transfer agent and registrar with respect to such securities.
14
(nn) Since its inception, the Company has not incurred any material
liability arising under or as a result of the application of the provisions of
the Act.
(oo) The Company meets the requirements for use of Form S-3 under the
Regulations.
Any certificate signed by an officer of the Company and delivered to
the Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
2. Representations and Warranties of the Selling Stockholders.
----------------------------------------------------------
(a) Each Selling Stockholder, severally and not jointly, represents
and warrants to each Underwriter that:
(i) Such Selling Stockholder is the lawful owner of the Shares
to be sold by such Selling Stockholder pursuant to this Agreement and has,
and on the Closing Date, will have, good and clear title to such Shares,
free of all restrictions on transfer, liens, encumbrances, security
interests, equities and claims whatsoever. Upon delivery of and payment for
the Shares to be sold by such Selling Stockholder pursuant to this
Agreement on the Closing Date, good and clear title to such Shares will
pass to the Underwriters, free of all restrictions on transfer, liens,
encumbrances, security interests and claims whatsoever.
(ii) Such Selling Stockholder has, and on the Closing Date will
have, full legal right, power and authority to enter into this Agreement,
the Power of Attorney in the form heretofore furnished to you (the "Power
of Attorney") and the Custody Agreement in the form heretofore furnished to
you (the "Custody Agreement"), and to sell, assign, transfer and deliver
the Shares in the manner provided herein. Each of this Agreement, the Power
of Attorney and the Custody Agreement has been duly executed and delivered
by such Selling Stockholder, and is a valid and binding agreement of such
Selling Stockholder, enforceable in accordance with its terms, except as
rights to indemnification thereunder may be limited by applicable law and
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(iii) None of the execution, delivery and performance of this
Agreement, the Power of Attorney and the Custody Agreement by such Selling
Stockholder, the compliance by such Selling Stockholder with all the
provisions hereof and the consummation of the transactions contemplated
hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any
15
court or governmental body or agency (except such as may be required under
the securities or Blue Sky laws of the various states), (ii) conflict with
or constitute a breach of any of the terms or provisions of, or a default
under, any indenture, loan agreement, mortgage, lease or other material
agreement or instrument to which such Selling Stockholder is a party or by
which such Selling Stockholder or any property of such Selling Stockholder
is bound or (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body
or agency having jurisdiction over such Selling Stockholder or any property
of such Selling Stockholder.
(iv) Neither such Selling Stockholder, nor any person acting on
behalf of such Selling Stockholder, has taken, directly or indirectly, any
action designed to stabilize or manipulate the price of any security of the
Company, or which has constituted or which might in the future reasonably
be expected to cause or result in stabilization or manipulation of the
price of any security of the Company, to facilitate the sale or resale of
the Shares or otherwise.
(v) Each certificate signed by or on behalf of such Selling
Stockholder and delivered to the Underwriters or counsel for the
Underwriters shall be deemed to be a representation and warranty by such
Selling Stockholder to the Underwriters as to the matters covered thereby.
(vi) At the time of the effectiveness of the Registration
Statement or the effectiveness of any Rule 462(b) Registration Statement
and any post-effective amendment thereto, when the Prospectus is first
filed with the Commission pursuant to Rule 424(b) or Rule 434 of the
Regulations, when any supplement to or amendment of the Prospectus is filed
with the Commission and at the Closing Date, the Registration Statement and
the Prospectus and any amendments thereof and supplements thereto did not
and will not omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. When
any related preliminary prospectus was first filed with the Commission
(whether filed as part of the Registration Statement for the registration
of the Shares or any amendment thereto or pursuant to Rule 424(a) of the
Regulations) and when any amendment thereof or supplement thereto was first
filed with the Commission, such preliminary prospectus and any amendments
thereof and supplements thereto did not contain an untrue statement of a
material fact and did not omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. No representation and warranty is made in this subsection
(vi), however, with respect to the statements set forth in the [first
(including the table), third, seventh and eighth] paragraphs under the
caption "Underwriting" in, and the last paragraph on the cover page of, the
Prospectus.
16
(vii) Nothing has come to the attention of such Selling
Stockholder to cause the Selling Stockholder to believe that the Company's
representations and warranties contained in this Agreement are not
accurate.
(viii) There is not pending or threatened against such Selling
Stockholder any action, suit or proceeding which (A) questions the validity
of this Agreement or of any action taken or to be taken by such Selling
Stockholder pursuant to or in connection with this Agreement or (B) is
required to be disclosed in the Registration Statement which is not so
disclosed, and such actions, suits or proceedings as are summarized in the
Registration Statement, if any, are accurately summarized.
3. Purchase, Sale and Delivery of the Shares.
-----------------------------------------
(a) The Company agrees to issue and sell to the several Underwriters
the Firm Shares upon the terms herein set forth. On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to sell
to each Underwriter and each Underwriter, severally and not jointly, agrees to
purchase from the Company, at a purchase price of $ _____ per Share, the number
of Firm Shares set forth opposite the respective names of the Underwriters in
Schedule I hereto plus an additional number of Firm Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Payment of the purchase price for, and delivery of, the Firm
Shares and the Additional Shares (if the option provided for in Section 3(c)
below shall have been exercised on or before the third full business day prior
to the Closing Date) shall be made at the offices of ING Barings LLC, Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as shall be agreed upon
by ING Barings LLC and the Company, at 10:00 A.M. on the third full business day
(as permitted under Rule 15c6-1 under the Exchange Act) (unless postponed in
accordance with the provisions of Section 10 hereof) following the date of the
effectiveness of the Registration Statement (or, if the Company has elected to
rely upon Rule 430A of the Regulations, the third or fourth full business day
(as permitted under Rule 15c6-1 under the Exchange Act) after the determination
of the public offering price of the Firm Shares), or such other time not later
than five business days after such date as shall be agreed upon by you and the
Company (such time and date of payment and delivery being herein called the
"Closing Date"); provided, however, that if the Company has not made available
to the Underwriters copies of the Prospectus in such quantities and at such
places requested by the Underwriters, no later than noon on the business day
following the execution of this Agreement, ING Barings LLC may, in its sole
discretion, postpone the Closing Date until no later than two full business days
following the delivery of such copies of the Prospectus. Payment for the Firm
Shares shall be made to the Company by wire transfer in immediately available
funds to the order of the Company, against delivery to you for the respective
accounts of the Underwriters of the Firm Shares to be purchased by them.
Certificates for the Firm Shares shall be registered in such name or names and
in such authorized denominations as you may request on or before noon on the
business day
17
prior to the Closing Date. The Company will permit you to examine and package
such certificates at or before noon on the business day prior to the Closing
Date. "Business day" shall mean any day other than a Saturday, Sunday or a legal
holiday or a day on which banking institutions or trust companies are authorized
or obligated by law to close in New York City.
(c) In addition, the Selling Stockholders hereby grant to the
Underwriters the option to purchase, severally and not jointly, up to 472,500
Additional Shares (each Selling Stockholder granting such option with respect to
the number of shares of Common Stock which appears opposite the name of such
Selling Stockholder on Schedule II hereto), each at the same purchase price per
share to be paid by the Underwriters to the Company for the Firm Shares as set
forth in this Section 3, for the sole purpose of covering over-allotments in the
sale of Firm Shares by the Underwriters. This option may be exercised from time
to time and at any time, in whole or in part, on or before the thirtieth day
following the date of the Prospectus, by notice from ING Barings LLC to the
Company and the Selling Stockholders. Such notice shall set forth the aggregate
number of Additional Shares as to which the option is being exercised and the
date and time, as reasonably determined by ING Barings LLC, when the Additional
Shares are to be delivered (such date and time being herein sometimes referred
to as the "Additional Closing Date"); provided, however, that the Additional
Closing Date shall not be earlier than the Closing Date or earlier than the
second full business day after the date on which the option shall have been
exercised nor later than the fifth full business day after the date on which the
option shall have been exercised (unless such time and date are postponed in
accordance with the provisions of Section 10 hereof). Certificates in negotiable
form (endorsed in blank or accompanied by stock powers in blank, with signatures
appropriately guaranteed, and any funds necessary for the purchase of stock
transfer stamps) representing all of the Additional Shares to be sold by the
Selling Stockholders have been placed in custody under a Custody Agreement and
each Selling Stockholder has duly executed and delivered a Power of Attorney
appointing [Xxxxx X. Xxxxxxxxxxxxxx] and [Xxxxxxxx X. Xxxxxxx] and each of them
as such Selling Stockholder's attorney-in-fact (the "Attorney-in-Fact") with
authority to execute this Agreement and to deliver this Agreement on behalf of
such Selling Stockholder, to authorize the delivery of the Additional Shares to
be sold by such Selling Stockholder hereunder and otherwise to act on behalf of
such Selling Stockholder in connection with the transactions contemplated by
this Agreement and the Custody Agreement. Each Selling Stockholder agrees that
the shares represented by the certificates held in custody for such Selling
Stockholder under the Custody Agreement are subject to the interests of the
Underwriters hereunder and the arrangements made by such Selling Stockholder for
such custody, as well as the appointment by such Selling Stockholder of the
Attorney-in-Fact, are, to that extent, irrevocable. Each Selling Stockholder
specifically agrees that the obligations of such Selling Stockholder hereunder
shall not be terminated, except as otherwise provided herein, by any act of such
Selling Stockholder, operation of law or otherwise, whether by the death or
incapacity of such Selling Stockholder, if an individual, or by the occurrence
of any other event. If any Selling Stockholder, if an individual, should die or
become incapacitated, or if any other such event should occur, before the
delivery of the Additional Shares hereunder, certificates representing the
shares held in custody for such Selling Stockholder shall be delivered pursuant
to the terms and conditions of this Agreement and the Custody Agreement, and the
actions taken by the Attorney-in-Fact pursuant to the Power of
18
Attorney shall be as valid as if such death, incapacity or other event had not
occurred, whether or not the Custodian or the Attorneys-in-Fact shall have
received notice of such death, incapacity or other event. Payment for the
Additional Shares shall be made to the Custodian by wire transfer in immediately
available funds to the order of the Custodian, against delivery to you for the
respective accounts of the Underwriters of the Additional Shares to be purchased
by them. Certificates for the Additional Shares shall be registered in such name
or names and in such authorized denominations as you may request on or before
noon on the business day prior to the Closing Date. The Company will permit you
to examine and package such certificates at or before noon on the business day
prior to the Closing Date.
The number of Additional Shares to be sold to each Underwriter shall
be the number which bears the same ratio to the aggregate number of Additional
Shares being purchased as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto (or such number increased as set forth
in Section 10 hereof) bears to the total number of Firm Shares being purchased
from the Company, subject, however, to such adjustments to eliminate any
fractional shares as ING Barings LLC in its sole discretion shall make.
(d) Time shall be of the essence and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriters.
4. Offering. It is understood that the several Underwriters propose to
--------
offer the Shares for sale to the public upon the terms set forth in the
Prospectus.
5. Covenants of the Company; Covenants of the Selling Stockholders.
---------------------------------------------------------------
(a) The Company covenants and agrees with each Underwriter that:
(i) If the Registration Statement has not been declared effective
at the time of the execution of this Agreement, the Company will use its
best efforts to cause the Registration Statement and any amendments thereto
to become effective as promptly as possible. If Rule 430A is used or the
filing of the Prospectus is otherwise required under Rule 424(b) or Rule
434, the Company will file the Prospectus (properly completed if Rule 430A
has been used) pursuant to Rule 424(b) or Rule 434 within the prescribed
time period and will provide evidence satisfactory to you of such timely
filing. If the Company elects to rely on Rule 434, the Company will prepare
and file a term sheet that complies with the requirements of Rule 434. If
the Company elects to rely on Rule 462(b) under the Act, the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) under the Act prior to the time confirmations are sent or
given, as specified by Rule 462(b)(2) under the Act, and shall pay the
applicable fees in accordance with Rule 111 under the Act.
The Company will notify you immediately (and, if requested by
you, will confirm such notice in writing) (i) when the Registration
Statement and any amendments
19
thereto become effective, (ii) of any request by the Commission for any
amendment of or supplement to the Registration Statement, any preliminary
prospectus or the Prospectus or for additional information, (iii) of the
mailing or the delivery to the Commission for filing of any amendment of or
supplement to the Registration Statement or the Prospectus, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto or of
the initiation, or the threatening, of any proceedings therefor, (v) of the
receipt of any comments from the Commission, and (vi) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for that purpose. If a stop order or
suspension of qualification is proposed at any time, the Company will use
its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain the lifting thereof as soon as possible. The Company will
not file any amendment to the Registration Statement or any amendment of or
supplement to, any preliminary prospectus or the Prospectus (including the
prospectus required to be filed pursuant to Rule 424(b) or Rule 434) that
differs from the prospectus on file at the time of the effectiveness of the
Registration Statement before or after the effective date of the
Registration Statement to which you shall reasonably object in writing
after being timely furnished in advance a copy thereof.
(ii) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act by an Underwriter or dealer any
event shall have occurred as a result of which the Prospectus as then
amended or supplemented would, in the reasonable judgment of ING Barings
LLC, counsel to the Underwriters or the Company, include an untrue
statement of a material fact or omit to state any material fact required to
be stated therein, or necessary to make the statements therein, not
misleading, or if it shall be necessary at any time to amend or supplement
the Registration Statement, the preliminary prospectus or the Prospectus to
comply with any law, the Company promptly will notify ING Barings LLC and
prepare and file with the Commission and furnish at its own expense to the
Underwriters and dealers, an appropriate amendment or supplement (in form
and substance reasonably satisfactory to ING Barings LLC) which will
correct such untrue statement or omission or so that the Registration
Statement, any preliminary prospectus and the Prospectus will comply with
the law and will use its best efforts to have any amendment to the
Registration Statement declared effective as soon as possible.
(iii) As soon as practicable, but not later than 45 days after
the end of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, the Company will make
generally available (within the meaning of Section 11(a) of the Act) to its
securityholders and to you an earnings statement or statements of the
Company which will satisfy the provisions of Section 11(a) of the Act and
Rule 158 of the Regulations, covering a period of at least twelve
consecutive months beginning after the effective date of the Registration
Statement; and will, during the period of five years from the date of the
Prospectus, make generally
20
available (within the meaning of Section 11(a) of the Act) to its
securityholders as soon as practicable after the end of each fiscal year,
an annual report (including a balance sheet and statements of financial
condition, operations, cash flows and changes in stockholders' equity of
the Company, certified by the Company's independent public accountants)
and, as soon as practicable after the end of each of the first three
quarters of each fiscal year (beginning with the fiscal quarter ending
after the effective date of the Registration Statement), consolidated
summary financial information of the Company for such quarter in reasonable
detail.
(iv) The Company will furnish without charge to you and counsel
to the Underwriters three complete signed copies of the Registration
Statement (including exhibits thereto), and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and, so long
as, in the reasonable opinion of counsel to the Underwriters, delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of each preliminary prospectus and the Prospectus and any amendment
or supplement thereto as you may request.
(v) The Company will arrange for the qualification of the Shares
for sale under the laws of such jurisdictions (both national and foreign)
as ING Barings LLC may designate and will make such applications, file such
documents and furnish such information as may be required for that purpose
and will maintain such qualifications in effect for so long as required for
the distribution of the Shares; provided, however, that in no event shall
the Company be required to qualify to do business in any such jurisdiction
in which it is not already qualified or to file a general consent to
service of process in any jurisdiction in which it is not now so required,
other than in respect of suits arising out of the offering or sale of the
Shares. The Company will, from time to time, prepare and file such
statements, reports and other documents, as are or may be required to
continue such qualifications in effect for so long a period as ING Barings
LLC may request for the distribution of the Shares. The Company will
cooperate with ING Barings LLC and counsel to the Underwriters in
connection with the filings required to be made by ING Barings LLC with the
NASD and will pay the fee of the NASD in connection with its review of the
offering of the Shares and will use its best efforts to maintain quotation
of its shares on the Nasdaq National Market System.
(vi) During the period of five years from the effective date of
the Registration Statement, the Company will furnish to you and, upon
request, to each of the several Underwriters, without charge, copies of, in
such quantities as you or the Underwriters may request from time to time,
(i) as soon as available, all reports or other communications (financial or
other) furnished generally by the Company to its securityholders, (ii) as
soon as practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of the
close of such fiscal year and statements of income, stockholders' equity
and cash flows for the year then ended and the opinion thereon of the
Company's independent public or
21
certified public accountants; and (iii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report
filed by the Company with the Commission, the NASD, any other supervisory,
regulatory, administrative or governmental agency, body or authority
whether pursuant to the Exchange Act or otherwise or any national
securities exchange or system on which any class of securities of the
Company is listed or quoted.
(vii) For a period of 90 days from the date of the Prospectus
(the "Lock-Up Period"), without the prior written consent of ING Barings
LLC, neither the Company nor any Locked-Up Party shall, directly or
indirectly: (1) issue, offer for sale, contract to sell, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement
or otherwise) by any person at any time in the future of) any shares of
Common Stock or securities convertible into, exercisable or exchangeable
for, or represent the right to receive, Common Stock or sell or grant
options, rights or warrants with respect to any shares of Common Stock or
any of the foregoing or announce the offering of or register for sale any
of the foregoing or any outstanding shares of Common Stock; provided
however, that the Company may grant options and issue and sell Common Stock
pursuant to any directors' and employees' stock plan (including any
employees' stock purchase plan), stock ownership plan, dividend
reinvestment plan or warrants of the Company in effect at the effective
date of the Registration Statement and which are described in the
Prospectus so long as none of those shares that may be issued to any
Locked-Up Party may be transferred during the Lock-Up Period and the
Company shall enter stop transfer instructions with its transfer agent and
registrar against any such transfer; or (2) enter into any swap, repurchase
agreement, pledge, transfer or other transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of
such shares of Common Stock or other securities, whether any such
transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise. In
addition, during such period, the Company and the Subsidiary also agree not
to file any registration statement (other than a Form S-8 registration
statement filed in connection with shares of Common Stock received under a
Company directors' and employees' stock plan, stock ownership plan,
employment agreement or dividend reinvestment plan) with respect to, and
each of the executive officers, directors and certain securityholders of
the Company has agreed not to make any demand for, or exercise any right
with respect to, the registration of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
without the prior written consent of ING Barings LLC.
(viii) During the period when, in the opinion of counsel to the
Underwriters, the delivery of a Prospectus by an Underwriter or dealer may
be required by the Act, the Company will comply, at its own expense, with
all requirements imposed
22
upon it by the Commission, the Act, the Regulations, the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, so far
as necessary to permit the continuance of sales of or dealing in the Shares
during such period in accordance with the provisions hereof and the
Prospectus. In addition, during such period the Company shall file, on a
timely basis, with the Commission and the Nasdaq National Market all
reports and documents required to be filed under the Exchange Act.
(ix) Each of the Company and the Subsidiary will conduct its
business in compliance in all material respects with all applicable laws,
rules, regulations, decisions, directives and orders. The Company will do
and perform all things required or necessary to be done and performed under
this Agreement by the Company on or prior to the Closing Date and to comply
or cause to be satisfied, to the extent such are within its control, the
conditions precedent to the several obligations of the Underwriters
specified in Section 9 hereof.
(x) Neither the Company nor any of its affiliates (as defined
in Regulation D under the Act), will take, directly or indirectly, any
action designed to cause or result in, or which constitutes or which might
reasonably be expected to cause, result in, or constitute, under the
Exchange Act, or otherwise, stabilization or manipulation of the price of
the shares of Common Stock of the Company to facilitate the offering and
distribution of the Shares or any other action prohibited by Regulation M
under the Exchange Act.
(xi) The Company will apply the net proceeds to the Company
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."
(xii) The Company shall engage and maintain, at its expense, a
registrar and transfer agent for the Shares.
(xiii) The Company will use its best efforts to maintain listing
of its shares of Common Stock on the Nasdaq National Market.
(xiv) The Company is familiar with the Investment Company Act of
1940, as amended, and the rules and regulations thereunder, and has in the
past conducted its affairs, and will in the future conduct its affairs, in
such a manner so as to ensure that the Company was not and will not be an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(xv) The Company shall cause to be prepared and delivered, at
its expense, within one business day from the date hereof, to the
Underwriters an "electronic Prospectus" to be used by the Underwriters in
connection with the offering and sale of the Shares. As used herein, the
term "electronic Prospectus" means a form of Prospectus,
23
and any amendment or supplement thereto, that meets each of the following
conditions: (i) it shall be encoded in an electronic format, satisfactory
to you, that may be transmitted electronically by the Underwriters to
offerees and purchasers of the Shares for at least during the period when,
in the opinion of counsel to the Underwriters, the Prospectus is required
to be delivered under the Act or the Exchange Act; (ii) it shall disclose
the same information as the paper Prospectus and Prospectus filed pursuant
to XXXXX, except to the extent that graphic and image material cannot be
disseminated electronically, in which case such graphic and image material
shall be replaced in the electronic Prospectus with a fair and accurate
narrative description or tabular representation of such material, as
appropriate; and (iii) it shall be in or convertible into a paper format or
an electronic format, satisfactory to you, that will allow investors to
store and have continuously ready access to the Prospectus at any future
time, without charge to investors (other than any fee charged for
subscription to the system as a whole and for on-line time).
(b) Each Selling Stockholder covenants and agrees with each
Underwriter that:
(i) Each Selling Stockholder will not, directly or indirectly,
without the prior written consent of ING Barings LLC, offer, sell, grant
any option to purchase or otherwise dispose (or announce any offer, sale,
grant of any option to purchase or other disposition) of any shares of
Common Stock or any securities convertible into, or exchangeable or
exercisable for, shares of Common Stock for a period of 90 days after the
date hereof, except pursuant to this Agreement, and will not take, directly
or indirectly, any action designed to, or which might in the foreseeable
future reasonably be expected to cause or result in, stabilization of
manipulation of the price of any securities of the Company.
(ii) The Selling Stockholder consents to the use of the
Prospectus and any amendment or supplement thereto by the Underwriters and
all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and for such period of time thereafter as
the Prospectus is required by law to be delivered in connection therewith.
6. Payment of Expenses.
-------------------
(a) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay, or reimburse
ING Barings LLC, if paid by the Underwriters, all costs, fees and expenses
incident to the performance of the obligations of the Company and the Selling
Stockholders under this Agreement, including but not limited to costs, fees and
expenses of or relating to (i) the preparation by the Company, 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 (including, without limitation, the fees and
expenses of the Company's counsel,
24
accountants and other advisors), (ii) the preparation and delivery of
certificates representing the Shares, (iii) the printing of this Agreement and
Underwriter's Questionnaires, Underwriter's Powers of Attorney, Blue Sky
Memoranda, Master Agreements Among Underwriters and Master Selling Agreements,
Custody Agreement and Selling Stockholders' Power of Attorney and all other
documents relating to the public offering of the Shares (including those
documents supplied to the Underwriters in quantities as hereinabove stated) and
furnishing (including costs of shipping and mailing) such copies of the
Registration Statement, the Prospectus and any preliminary prospectus, and all
exhibits, schedules, consents, certificates of experts, 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, (iv) the quotation of the Shares on the Nasdaq National Market, (v) any
filings required to be made with, and the review by, the NASD and the fees,
disbursements and other charges of the Underwriters' counsel in connection
therewith, (vi) the registration or qualification (or obtaining exemptions from
such registration or qualification) of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions designated pursuant to Section
5(e), including the fees, disbursements and other charges of the Underwriters'
counsel in connection therewith, and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda, (vii) the issuance,
transfer and delivery of the Shares to the Underwriters and the Selling
Stockholders, including any issue, transfer, stamp or other taxes payable
thereon, (viii) the transfer agent or registrar for the Shares, (ix) the costs
and expenses of the Underwriters incident to the preparation and undertaking of
"road show" preparations to be made to prospective investors, and (x) all other
fees, costs and expenses referred to in Part II of the Registration Statement.
Except as otherwise provided herein, the Underwriters shall pay their own
expenses, including the fees and disbursement of their counsel.
(b) If this Agreement shall be terminated by the Company otherwise
than as explicitly permitted by this Agreement, or if any condition to the
obligations of the Underwriters set forth in Section 9 hereof is not satisfied,
or if this Agreement shall be terminated by ING Barings LLC as permitted
hereunder pursuant to Section 9, Section 10 or Section 12, or if the sale to the
Underwriters of the Shares on the Closing Date is not consummated because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse ING Barings LLC and the other Underwriters (or such Underwriters as
have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been incurred by ING
Barings LLC and the Underwriters in connection with the proposed purchase and
the offering and sale of the Shares, including but not limited to fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges.
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter, its directors, officers, employees, and agents and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act,
25
against any and all losses, liabilities, claims, damages, actions and expenses
whatsoever, as incurred (including but not limited to attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing, compromising
or defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise, insofar as such losses, liabilities,
claims, damages or expenses (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement for the registration of the Shares,
as originally filed or any amendment thereof, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission to state therein a material fact
necessary in order to make statements therein, not misleading; or (iii) in whole
or in part upon any inaccuracy in the representations and warranties of the
Company contained herein; or (iv) in whole or in part upon any failure of the
Company to perform its obligations hereunder or under law; or (v) any act or
failure to act or any alleged act or failure to act by an 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, damage, liability or action arising out of or based upon any matter
covered by clause (i), (ii), (iii) or (iv) above, provided that the Company will
not be liable under this clause (v) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its bad faith
or willful misconduct; and provided, however, that the Company will not be
liable in any such case covered by clauses (i), (ii), (iii), (iv) or (v) above
to the extent but only to the extent that any such loss, liability, claim,
damage, action or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information relating to
an Underwriter furnished to the Company by or on behalf of any Underwriter
through you expressly for use therein; and provided, further, that with respect
to any preliminary prospectus, the foregoing indemnity in this clause 7(a) shall
not inure to the benefit of any Underwriter from whom the person asserting any
loss, claim, damage, liability or expense purchased Shares, or any of its
directors, officers or employees or any person controlling such Underwriter, if
copies of the Prospectus were timely delivered to the Underwriter and a copy of
the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Shares to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage, liability, action or
expense. The Company acknowledges that the statements set forth in the [first
(including the table), third, seventh and eighth] paragraphs under the captain
"Underwriting" in, and in the last paragraph on the cover page of, the
Prospectus constitute the only information furnished in writing relating to an
Underwriter by or on behalf of
26
any Underwriter expressly for use in the Registration Statement relating to the
Shares as originally filed or in any amendment thereof, any related preliminary
prospectus or the Prospectus or in any amendment thereof or supplement thereto,
as the case may be. This indemnity agreement will be in addition to any
liability which the Company may otherwise have, including under this Agreement.
(b) Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold harmless each Underwriter, its directors, officers,
employees, and agents and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against any and all losses, liabilities, claims, damages, actions and
expenses whatsoever, as incurred (including but not limited to attorneys' fees
and any and all expenses whatsoever incurred in investigating, preparing,
compromising or defending against any litigation, commenced or threatened, or
any claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise, insofar as such losses, liabilities,
claims, damages or expenses (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement for the registration of the Shares,
as originally filed or any amendment thereof, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission to state therein a material fact
necessary in order to make statements therein, not misleading; or (iii) in whole
or in part upon any inaccuracy in the representations and warranties of the
Company or such Selling Stockholder contained herein; or (iv) in whole or in
part upon any failure of the Company or such Selling Stockholder to perform its
obligations hereunder or under law; or (v) any act or failure to act or any
alleged act or failure to act by an 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, damage, liability or
action arising out of or based upon any matter covered by clause (i), (ii),
(iii) or (iv) above, provided that no Selling Stockholder will be liable under
this clause (v) to the extent that a court of competent jurisdiction shall have
determined by a final judgment that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its bad faith or willful
misconduct; and provided, however, that no Selling Stockholder will be liable in
any such case covered by clauses (i), (ii), (iii), (iv) or (v) above to the
extent but only to the extent that any such loss, liability, claim, damage,
action or expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information relating to an
Underwriter furnished to the Company by or on behalf of any Underwriter through
you expressly for use therein; and provided, further, that with respect to any
preliminary prospectus, the foregoing indemnity in this clause 7(b) shall not
inure to the benefit of any Underwriter from whom the person asserting any loss,
claim, damage, liability or expense purchased Shares, or any
27
of its directors, officers or employees or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability, action or expense. Each Selling Stockholder acknowledges that
the statements set forth in the [first (including the table), third, seventh and
eighth] paragraphs under the captain "Underwriting" in, and in the last
paragraph on the cover page of, the Prospectus constitute the only information
furnished in writing relating to an Underwriter by or on behalf of any
Underwriter expressly for use in the Registration Statement relating to the
Shares as originally filed or in any amendment thereof, any related preliminary
prospectus or the Prospectus or in any amendment thereof or supplement thereto,
as the case may be. Notwithstanding the foregoing, (y) the aggregate liability
of any Selling Stockholder pursuant to this paragraph (b) and for any breach of
any representation or warranty contained in this Agreement by such Selling
Stockholder shall be limited to an amount equal to the proceeds (after deducting
underwriting discounts and commissions) received by such Selling Stockholder
from the Underwriters for the sale of the Shares sold by such Selling
Stockholder hereunder, and (z) to the extent the Company is also liable for
indemnification under Section 7(a) above, no Selling Stockholder shall be liable
for indemnification under this Section 7(b) until, and then only to the extent
that, the indemnified party has made demand for indemnification pursuant to
Sections 7(a) and 7(d) from the Company and the Company shall have rejected such
demand or shall not have made payment to satisfy in full such indemnification
claim within thirty days of the date of such original demand. This indemnity
agreement will be in addition to any liability which the Company and the Selling
Stockholders may otherwise have, including under this Agreement.
(c) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each Selling Stockholder, each of the directors
of the Company, each of the officers of the Company who shall have signed the
Registration Statement, and each other person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against any losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to
28
the extent, that any such loss, liability, claim, damage or expense arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information relating to an Underwriter furnished to the Company by
or on behalf of any Underwriter through you expressly for use therein; provided,
however, that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discounts and commissions applicable to the
Shares purchased by such Underwriter hereunder. This indemnity will be in
addition to any liability which any Underwriter may otherwise have, including
under this Agreement. The Company and each Selling Stockholder acknowledge that
the statements set forth in the [first (including the table), third, seventh and
eighth] paragraphs under the captain "Underwriting" in, and in the last
paragraph on the cover page of, the Prospectus constitute the only information
furnished in writing relating to an Underwriter by or on behalf of any
Underwriter expressly for use in the Registration Statement relating to the
Shares as originally filed or in any amendment thereof, any related preliminary
prospectus or the Prospectus or in any amendment thereof or supplement thereto,
as the case may be.
(d) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability or
obligation which it may have under this Section 7 or otherwise (i) unless the
failure to notify shall result in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not in any event relieve the
indemnifying party from any obligations other than the indemnification
obligation provided in paragraph (a) or (b) above). In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified parties promptly after receiving the aforesaid notice from an
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified parties. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that a conflict may
arise between the positions of the indemnifying party or parties in conducting
the defense of any such action or that there may be one or more legal defenses
available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses shall be borne by the indemnifying parties, it
being understood, however, that the indemnifying party
29
or parties shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (plus separate local
counsel, if retained by the indemnified party or parties) at any time for all
such indemnified parties. An indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withheld.
Notwithstanding the foregoing, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated in this Section 7, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent is for money damages only and includes (i) an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
Any losses, claims, damages, liabilities, expenses or actions for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 or under Section 8 below shall be paid by the indemnifying party
to the indemnified party as such losses, claims, damages, liabilities or
expenses are incurred, but in all cases, no later than thirty (30) days of
invoice to the indemnifying party.
The indemnity and contribution agreements contained in this Section 7
and in Section 8 below and the representation and warranties of the Company and
the Selling Stockholders set forth in this Agreement shall remain operative and
in full force and effect, regardless of (i) any investigation made by or on
behalf of any Underwriter or any director, officer or employee of or person
controlling any Underwriter, the Company, its directors or officers or any
persons controlling the Company, or any Selling Stockholder, (ii) acceptance of
any Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter, or to the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7 and Section 8 below.
The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7 and Section 8 below and are fully informed
regarding said provisions. They further acknowledge that the
30
provisions of this Section 7 and Section 8 below fairly allocate the risks in
light of the ability of the parties to investigate the Company and its business
in order to assure that adequate disclosure is made in the Registration
Statement, the preliminary prospectus and Prospectus as required by the Act and
the Exchange Act.
8. Contribution. In order to provide for contribution in circumstances
------------
in which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, each indemnifying party shall severally
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company, one or more of the Selling Stockholders and one
or more of the Underwriters may be subject, in such proportions as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders (relative as to each other), on the one hand, and the
Underwriters, severally, on the other hand, from the offering of the Shares or,
if such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company and the Selling Stockholders (relative as to each other), on the one
hand, and the Underwriters, severally, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Stockholders, on
the one hand, and the Underwriters, severally, on the other and the Company and
the Selling Stockholders relative to each other, shall be deemed to be in the
same proportion as the total proceeds from the offering of the Shares (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the Selling Stockholders bears to the underwriting discounts
and commissions received by the Underwriters, respectively. The relative fault
of the Company and the Selling Stockholders, on the one hand, and of the
Underwriters, severally, on the other and the Company and the Selling
Stockholders relative to each other, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Underwriters and the Selling Stockholders agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations
31
referred to above. Notwithstanding the provisions of this Section 8, (i) in no
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Further notwithstanding the provisions of this Section 8 and
the preceding sentence, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. For purposes of this Section 8, each director, officer,
employee and agent of an Underwriter and each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each person, if any, who controls the Company or a Selling Stockholder within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 8. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent,
provided that such consent was not unreasonably withheld.
The Underwriters' obligations in this Section 8 to contribute are several
in proportion to their respective underwriting obligations and not joint. The
remedies provided for in this Section 8 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified party
at law or in equity.
9. Conditions to the Obligations of the Underwriters. The several
-------------------------------------------------
obligations of the Underwriters to purchase and pay for the Firm Shares and the
Additional Shares, as provided herein, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders contained herein as of the date hereof, the Closing Date and any
Additional Closing Date, to the absence from any certificates, opinions, written
statements or letters furnished to you or to Underwriters' counsel pursuant to
this Section 9 of any misstatement or omission, to the timely performance by the
Company and the Selling Stockholders of its covenants and other obligations
hereunder and to each of the following additional conditions:
(a) The Registration Statement shall have become effective not later
than, if pricing pursuant to Rule 430A, 5:30 P.M., New York time on the date of
this Agreement, and if
32
pricing pursuant to a pricing amendment, 12:00 P.M., New York time on the date
an amendment to the Registration Statement containing the public offering price
has been filed with the Commission, or at such later time and date as shall have
been consented to in writing by ING Barings LLC; if the Company shall have
elected to rely upon Rule 430A or Rule 434 of the Regulations, the Prospectus
shall have been filed with the Commission in a timely fashion in accordance with
Section 5(a) hereof; and, at or prior to the Closing Date no stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereof shall have been issued and no proceedings for such purpose
shall have been initiated or threatened by the Commission; no order suspending
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 authorities of any
such jurisdiction; 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 to the
satisfaction of counsel to the Underwriters; 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 you and you did not
reasonably object thereto; and the NASD, upon review of the terms of the public
offering of the Shares, shall not have raised any objection to the fairness or
reasonableness of the underwriting terms and arrangements.
(b) The Company shall have furnished to you the opinion of
Rothgerber, Xxxxxxx & Xxxxx, counsel for the Company, dated the Closing Date and
the Additional Closing Date, if applicable, addressed to the Underwriters and in
form and substance reasonably satisfactory to Stroock & Stroock & Xxxxx LLP,
Underwriters' counsel, to the effect that:
(i) The Company has been duly organized and is validly existing
and in good standing under the laws of Delaware, with the corporate power
and authority to own, lease and operate its properties and engage in the
business in which it is engaged or proposes to engage as described in the
Registration Statement and the Prospectus. To such counsel's knowledge, the
Company is duly registered and qualified to do business as a foreign
corporation in good standing in each jurisdiction where the character or
location of its properties (owned, leased or licensed) or the nature or
conduct of its business requires such registration or qualification, except
where the failure to so register or qualify, individually or in the
aggregate, would not have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole. To such counsel's knowledge, except as
described in the Registration Statement, the preliminary prospectus and the
Prospectus, the Company does not own or control, directly or indirectly,
any shares of stock or any other equity or long-term debt securities of any
corporation or have an equity interest in any firm, partnership,
association, joint venture or other entity.
(ii) The Company's authorized equity capitalization is as set
forth in the Registration Statement and the Prospectus; the Common Stock,
the Firm Shares, the Additional Shares and all others shares of capital
stock of the Company conform to the
33
description thereof contained in the Registration Statement. The
outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. The
Shares to be issued and sold to the Underwriters pursuant to the
Underwriting Agreement have been duly authorized, and when issued and
delivered to and paid for by the Underwriters pursuant to the Underwriting
Agreement, will be validly issued and fully paid and nonassessable, and to
such counsel's knowledge will be transferred to the Underwriters free and
clear of any Liens and will not have been issued in violation of or subject
to any statutory or, to such counsel's best knowledge, other preemptive
rights, resale rights, co-sale rights, rights of first refusal, or similar
rights. The certificates for the Shares are in valid and sufficient form.
The holders of outstanding shares of capital stock of the Company are not
entitled to statutory or, to such counsel's best knowledge, other
preemptive rights, co-sale rights, rights of first refusal, resale rights
or similar rights in respect of the Shares. Except as described in the
Registration Statement and the Prospectus, to such counsel's best
knowledge, there are no authorized or outstanding rights, warrants or
options to acquire, or instruments convertible into or exercisable or
exchangeable for, any share of capital stock or other equity interest or
ownership interest in the Company or the Subsidiary or any contract,
commitment, agreement, understanding or arrangement of any kind relating to
the issuance of any capital stock or other equity interest or ownership
interest in the Company or the Subsidiary or any such convertible or
exercisable or exchangeable securities or instruments or any such rights,
warrants or options. To such counsel's knowledge, all holders of securities
of the Company which have any rights to the registration of securities of
the Company because of the filing of the Registration Statement or
otherwise in connection with the sale of the Shares contemplated by the
Underwriting Agreement have waived such rights as of the date thereof.
(iii) To the best knowledge of such counsel, there are no legal
or governmental actions, suits, proceedings or investigations pending or
threatened against the Company or the Subsidiary, or as to which the
business, assets or property of the Company or the Subsidiary would be
subject or bound, that are of a character required to be disclosed in the
Registration Statement or the Prospectus which have not been disclosed
therein. The statements in the Registration Statement and the Prospectus
under the caption "Business--Legal proceedings", insofar as such statements
constitute a summary of matters of law, relating to pending litigation
fairly summarize, in all material respects, the matters referred to
therein.
(iv) The Registration Statement has become effective under the
Act; all filings required by Rule 424(b) of the Regulations have been made
in the manner and within the time period required by Rule 424(b). To the
best knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened. The Registration Statement and
the Prospectus (other than the financial statements and supporting
schedules, financial data and statistical data, as to which such counsel
need not express
34
any opinion) and each amendment or supplement thereto comply as to form in
all material respects with the applicable requirements of the Act and the
Regulations.
(v) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company, and is the valid and binding
agreement of the Company. The Company has the corporate power and authority
to enter into the Underwriting Agreement and to issue, sell and deliver to
the Underwriters the Shares to be issued and sold by it thereunder.
(vi) To the best knowledge of such counsel, the Company is not
in violation of its certificate of incorporation, as amended.
(vii) Neither the issuance, offer, sale or delivery of the
Shares, the execution, delivery and performance by the Company of the
Underwriting Agreement nor the compliance by the Company with all the
provisions thereof nor the consummation of the transactions contemplated
thereby (other than performance of the Company's indemnification and
contribution obligations thereunder, concerning which no opinion is
expressed), (A) constitutes or will constitute a breach or violation of or
a default (or an event that with notice or the lapse of time or both would
constitute such a breach, violation or default) under, any of the terms or
provisions of the certificate of incorporation or by-laws of the Company or
the organizational documents of the Subsidiary, (B) constitutes or will
constitute a breach or violation of, or a default (or an event that with
notice or the lapse of time or both would constitute such a breach,
violation or default), or the termination of any Contract filed as an
exhibit to any of the Company's filings with the Commission pursuant to the
1934 Act, nor (C) violates or will violate any law, statute, rule or
regulation applicable to the Company or the Subsidiary (other than state
securities or blue sky laws concerning which no opinion need be expressed)
or any judgment, decree or order known to such counsel and applicable to
the Company or the Subsidiary of any court or governmental agency, body or
authority, having jurisdiction over the Company or the Subsidiary or any of
their property or assets, the default under or the breach or violation of
which, in the case of clauses (B) and (C) above, individually or in the
aggregate, could have a Material Adverse Effect on the Company and the
Subsidiary taken as a whole.
(viii) The Company is not now, and as a result of the offer and
sale of the Shares in the manner contemplated in the Underwriting
Agreement, the Registration Statement, the preliminary prospectus and the
Prospectus and the application of the net proceeds of such sale as
described in the Registration Statement, the preliminary prospectus and the
Prospectus, will not be, an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company"
within the meaning of the Investment Company Act, without taking account of
any exemption arising out of the number or type of holders of the Company's
securities.
35
(ix) No consent, approval, authorization, filing,
qualification, Permit or order of any court or governmental agency, body or
authority, or, to the knowledge of such counsel, from the Company's
securityholders is required for the Company's execution, delivery and
performance of the Underwriting Agreement, the issuance, sale or delivery
of the Shares thereunder or the consummation of any other of the
transactions contemplated in the Underwriting Agreement or the fulfillment
of the terms thereof, except such as have been obtained under the Act and
the Exchange Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Shares
by the Underwriters and such other approvals (specified in such opinion) as
have been obtained and which are in full force and effect.
(x) The Common Stock is registered pursuant to Section 12(g)
of the Exchange Act and is quoted on the Nasdaq National Market, and to the
best of such counsel's knowledge, the Company has not received any
notification that the Commission or the Nasdaq National Market is
contemplating the termination of such registration or listing.
(xi) To such counsel's knowledge, each Selling Stockholder is
the lawful owner of the Shares to be sold by such Selling Stockholder
pursuant to the Underwriting Agreement and has good and clear title to such
Shares, free of all restrictions on transfer, liens, encumbrances, security
interests, equities and claims whatsoever, and upon delivery of and payment
for the Shares sold by each Selling Stockholder pursuant to the
Underwriting Agreement on the Closing Date, good and clear title to such
Shares will pass to the Underwriters, free of all restrictions on transfer,
liens, encumbrances, security interests and claims whatsoever.
(xii) Each Selling Stockholder had, at the time of entering into
the Underwriting Agreement, and on the Closing Date, has full legal right,
power and authority to enter into this Agreement and to sell, assign,
transfer and deliver the Shares in the manner provided herein. This
Agreement has been duly executed and delivered by each Selling Stockholder,
and is a valid and binding agreement of each Selling Stockholder,
enforceable in accordance with its terms, except as rights to
indemnification thereunder may be limited by applicable law and except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(xiii) To such counsel's knowledge, none of the execution,
delivery and performance of the Underwriting Agreement, the Custodian
Agreement and the Power of Attorney by each Selling Stockholder, the
compliance by each Selling Stockholder with all the provisions thereof and
the consummation of the transactions contemplated thereby do not (i)
require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of the various
states), (ii) conflict with or constitute a
36
breach of any of the terms or provisions of, or a default under, any
indenture, loan agreement, mortgage, lease or other material agreement or
instrument to which any Selling Stockholder is a party or by which any
Selling Stockholder or any property of any Selling Stockholder is bound or
(iii) violate or conflict with any applicable law or any rule, regulation,
judgment, order or decree of any court or any governmental body or agency
having jurisdiction over any Selling Stockholder or any property of any
Selling Stockholder.
(xiv) A Power of Attorney and the Custody Agreement have been
duly executed and delivered by each Selling Stockholder and, assuming the
due authorization, execution and delivery of the Custody Agreement by the
other parties thereto, each constitutes the valid and binding agreement of
each Selling Stockholder enforceable in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally or by general principles of equity relating to
the availability of remedies and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the
public policy underlying such laws.
In addition, such opinion shall also contain a statement that such counsel
has participated in conferences with officers and representatives of the
Company, representatives of the independent public accountants for the Company
and the Underwriters at which the contents of the Prospectus and related matters
were discussed and no facts have come to the attention of such counsel which
cause such counsel to believe that the Registration Statement (other than
financial statements and supporting schedules, other financial data and
statistical data, as to which such counsel need not express any opinion) at the
time it became effective (including all information deemed to be part of the
Registration Statement (other than financial statements and supporting
schedules, other financial data and statistical data, as to which such counsel
need not express any opinion) at the time of effectiveness pursuant to Rule
430A, Rule 462 or Rule 434, if applicable) contained an untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus (other than financial statements and supporting schedules, other
financial data and statistical data, as to which such counsel need not express
any opinion) as of its date and as of the Closing Date contained or contains an
untrue statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel (A) need not opine as to laws of
any jurisdiction other than the States of Colorado and Delaware (only as to the
Delaware General Corporation Law), and the federal laws of the United States, or
as to whether the laws of any particular jurisdiction apply, and (B) may rely as
to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and certificates or other written statements
of officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company and the
Subsidiary and on certificates from
37
the Selling Stockholders, provided that copies of any such statements or
certificates shall be delivered to Underwriters' counsel upon request. Moreover,
except to the extent set forth in the immediately preceding paragraph, such
counsel need not render any opinion as to compliance with any antifraud
provisions of any law, rule or regulation relating to (i) securities or (ii) the
sale or issuance thereof.
(c) The Company shall have furnished to you the opinion of
[__________], special Bermuda counsel for the Company, dated the Closing Date
and the Additional Closing Date, if applicable, addressed to the Underwriters
and in form and substance reasonably satisfactory to Stroock & Stroock & Xxxxx
LLP, Underwriters' counsel, to the effect that:
(i) The Subsidiary has been duly organized and is validly
existing and in good standing under the laws of Bermuda, with the corporate
power and authority to own, lease and operate its properties and engage in
the business in which it is engaged or proposes to engage as described in
the Registration Statement and the Prospectus. To such counsel's knowledge,
the Subsidiary is duly registered and qualified to do business as a foreign
corporation in good standing in each jurisdiction where the character or
location of its properties (owned, leased or licensed) or the nature or
conduct of its business requires such registration or qualification, except
where the failure to so register or qualify, individually or in the
aggregate, would not have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole.
(ii) All the outstanding shares of capital stock of the
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, are owned by the Company, free and clear of any Liens,
stockholders' agreements, voting trusts or defects of title, and were not
issued in violation of statutory or, to such counsel's best knowledge,
other preemptive rights, co-sale rights, resale rights, rights of first
refusal, or similar rights.
(iii) Except as described in the Registration Statement and the
Prospectus, to such counsel's best knowledge, there are no authorized or
outstanding rights, warrants or options to acquire, or instruments
convertible into or exercisable or exchangeable for, any share of capital
stock or other equity interest or ownership interest in the Subsidiary or
any contract, commitment, agreement, understanding or arrangement of any
kind relating to the issuance of any capital stock or other equity interest
or ownership interest in the Subsidiary or any such convertible or
exercisable or exchangeable securities or instruments or any such rights,
warrants or options.
(iv) To the best knowledge of such counsel, there are no legal
or governmental actions, suits, proceedings or investigations pending or
threatened against the Subsidiary, or as to which the business, assets or
property of the Subsidiary would be subject or bound that are of a
character required to be disclosed in the Registration Statement or the
Prospectus which have not been disclosed therein.
38
(v) To the best knowledge of such counsel, the Subsidiary is
not in violation of its organizational documents, as each may be amended.
(d) The Company shall have furnished to you the opinion of Xxxxxxx,
Phleger & Xxxxxxxx LLP, intellectual property counsel ("IP Counsel") for the
Company, dated the Closing Date and the Additional Closing Date, if applicable,
addressed to the Underwriters and in form and substance reasonably satisfactory
to Stroock & Stroock & Xxxxx LLP, Underwriters' counsel, to the effect that:
(i) IP Counsel represents the Company in certain matters
relating to patents and is familiar with the worldwide patent portfolio of
the Company;
(ii) IP Counsel is familiar with the technology used by the
Company in its business and the manner of its use and has read the portions
of the Registration Statement and the Prospectus entitled "Risk Factors -
We experience a substantial degree of uncertainty relating to patents that
could cause us to incur substantial costs and delays as a result of
proceedings and litigation regarding patents and other proprietary rights,
possibly resulting in additional expenses and the loss of some patent
protection" and "Business - Our patents and proprietary technology"
(collectively, the "Intellectual Property Portion");
For the purposes of this IP Counsel opinion, to the "best
of such IP Counsel's knowledge" means the knowledge of Xxxxxxx Xxxxxxx,
Xxxxxx Xxxxxx and Xxxxxx Xxxx who have reviewed the contents of the
Registration Statement and Prospectus with the Company and who have been
involved with the prosecution of the Company's patent and patent
applications and who have reviewed the prosecution files identified on
schedule __ attached hereto (the "Schedule __ Patents").
(iii) with respect to the Schedule __ Patents, the Intellectual
Property Portion does not contain any inaccurate or misleading statements
and contains accurate descriptions of the Company's patent applications,
issued and allowed patents, and patents licensed to the Company and fairly
summarizes the legal matters, documents and proceedings relating thereto;
with respect to intellectual property matters other than the Schedule __
Patents, to the best of such IP Counsel's knowledge, the Intellectual
Property Portion does not contain any inaccurate or misleading statements
and contains accurate descriptions of the Company's patent applications,
issued and allowed patents, and patents licensed to the Company and fairly
summarizes the legal matters, documents and proceedings relating thereto;
(iv) to the best of such IP Counsel's knowledge, based upon a
review of the third party rights made known to IP Counsel and discussions
between IP Counsel and Company scientific and other personnel, there is no
United States or foreign patent that is or would be infringed by the
activities of the Company in the manufacture, use or sale of any presently
proposed product, the technologies employed by the Company or the method of
their use in any presently proposed product, each as described in the
Prospectus; in stating this opinion, IP Counsel is relying on the non-
infringement opinion of Lyon & Lyon with respect to eleven (11) third-party
patents listed on Schedule __, attached hereto (the "Lyon Patents") and the
following three (3) company products: (1) ANGIOZYME, (2) an anti-HCV
ribozyme and (3) HERZYME (the "Products").
(v) IP Counsel has reviewed and is familiar with the record in
the following proceedings: [1 Europe opposition, 1 Japan opposition];
(vi) IP Counsel has reviewed the Company's patent applications
filed in the United States and outside the United States as identified in
Schedule __ (the "Applications") and which Applications are described in
the Intellectual Property Portion and in the opinion of IP Counsel the
Applications identified in Schedule __ have been properly prepared and
filed on behalf of the Company, and are being diligently pursued by the
Company; the inventions described in
39
the Applications are assigned or licensed to the Company; no other entity
or individual has any right or claim in any of the inventions,
Applications, or any patent to be issued therefrom, and in IP Counsel's
opinion each of the Applications discloses patentable subject matter; with
respect to intellectual property matters other than the Schedule _ Patents,
IP Counsel has reviewed the Company's patent applications filed in the
United States and outside the United States (the "Non-Schedule
Applications") and which Non-Schedule Applications are described in the
Intellectual Property Portion and to the the best of such IP Counsel's
knowledge, the Non-Schedule Applications have been properly prepared and
filed on behalf of the Company, and those of interest to the Company are
being diligently pursued by the Company; the inventions described in the
Non-Schedule Applications are assigned or licensed to the Company; no other
entity or individual has any right or claim in any of the inventions, Non-
Schedule Applications, or any patent to be issued therefrom, and to the
best of such IP Counsel's knowledge, each of the Non-Schedule Applications
discloses patentable subject matter; for purposes of this opinion point,
disclosures of "patentable subject matter" shall exclude comment on the
scope of claims which may issue, which such IP Counsel is not providing in
this IP Counsel opinion.
(vii) other than ordinary ex parte prosecution activities, there
-- -----
are no pending or to the best of such IP Counsel's knowledge, threatened
judicial or governmental proceedings relating to patents to which the
Company is a party and there is no pending or to the best of such IP
Counsel's knowledge, threatened action, suit or claim by others that the
Company is infringing or otherwise violating any patent rights of others
that are material and have not been disclosed in
---
the Prospectus;
(viii) there are no rights of third parties to any of the
Company's intellectual property, including that described in the
Applications, issued, approved or licensed patents which could reasonably
be expected to materially affect the ability of the Company to conduct its
business as described in the Registration Statement and Prospectus,
including the commercialization of the Products currently under
development; and
(ix) with respect to the Schedule _ Patents, the information
contained in the Intellectual Property Portion of the Registration
Statement or the Prospectus at the time it became effective contained no
untrue statement of a material fact nor did it omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading and that, at the Closing Date, the information
contained in the Intellectual Property Portion of the Prospectus or any
amendment or supplement to the Intellectual Property Portion of the
Prospectus contains no untrue statement of a material fact nor does it omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; with respect to intellectual property matters other than the
Schedule _ Patents, to the best of such IP Counsel's knowledge, the
information contained in the Intellectual Property Portion of the
Registration Statement or the Prospectus at the time is became effective
contained no untrue statement of a material fact nor did it omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and that, at the Closing Date, the
information contained in the Intellectual Property Portion of the
Prospectus or any amendment or supplement to the Intellectual Property
Portion of the Prospectus contains no untrue statement of a material fact
nor does it omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(x) the patents to which the Company has ownership or license
rights are identified on an attached "Comprehensive Schedule of Patents".
Such schedule indicates the areas of the Company's technology to which the
patent or patent application pertains, the status of the patent or
application (abandoned, pending, in force, ...) and the Company's ownership
interest in such patent or application;
40
(xi) IP Counsel has made independent investigation of the
ownership interest and legal status, including the maintenance fee or
annuity status of each application or patent identified on the Schedule of
Patents and has confirmed that assignments to the Company have been
recorded with the U.S. Patent and Trademark Office for each patent or
application owned by the Company and that assignments to each licensor have
been recorded with the U.S. Patent and Trademark Office for each patent
licensed to the Company.
(xii) IP Counsel is not aware of any noticed, actual or
threatened termination of any license referred to in the Prospectus or
Registration Statement.
(e) All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement, preliminary prospectus
or Prospectus, and the registration, authorization, issue, sale and delivery of
the Shares as herein contemplated shall be satisfactory in form and substance to
you and to Underwriters' counsel in your and your counsel's reasonable
discretion. The Underwriters shall have received from Stroock & Stroock & Xxxxx
LLP, Underwriters' counsel, a favorable opinion, dated the Closing Date (and the
Additional Closing Date, if applicable), with respect to the issuance and sale
of the Shares, the Registration Statement, the Prospectus and other related
matters as you may reasonably require, and the Company, the Subsidiary and the
Selling Stockholders shall have furnished to Underwriters' counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon the matters referred to in this Section.
(f) At the Closing Date (and the Additional Closing Date, if
applicable) you shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of the Company, dated the Closing Date (and the
Additional Closing Date, if applicable), to the effect that (i) the condition
set forth in subsection (a) of this Section 9 has been satisfied, (ii) as of the
date hereof and as of the Closing Date (and the Additional Closing Date, if
applicable) all the representations and warranties of the Company set forth in
this Agreement are accurate with the same force and effect as if made on each of
such dates, (iii) as of the Closing Date (and the Additional Closing Date, if
applicable) the agreements and obligations of the Company to be performed
hereunder on or prior thereto have been duly performed, (iv) when the
Registration Statement became effective and at all times subsequent thereto up
to the delivery of such certificate, the Registration Statement and the
Prospectus, and any amendments or supplements thereto, contained the information
required to be included therein by the Act and the applicable rules and
regulations of the Commission thereunder, and conformed to the requirements of
the Act and the applicable rules and regulations of the Commission thereunder;
the Registration Statement and the Prospectus, and any amendments or supplements
thereto, did not and do not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and since the effective date of the
Registration Statement, there has occurred no event required to be set forth in
an amended or supplemented Prospectus which has not been so set forth; and (v)
subsequent to the
41
respective dates as of which information is given in the Registration Statement
and the Prospectus, the Company and the Subsidiary have not sustained any
material loss or interference with their respective business or properties from
fire, flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental proceeding,
and there has not been any material adverse change, or any development involving
a prospective material adverse change, in the business, management, properties,
operations, prospects, condition (financial or otherwise), or results of
operations of the Company and the Subsidiary taken as a whole, or any
transaction that is material to the Company and its subsidiaries taken as a
whole, except transactions entered into in the ordinary course of business, or
any obligation, direct or contingent, that is material to the Company and its
subsidiaries, taken as a whole, incurred by the Company or its subsidiaries,
except obligations incurred in the ordinary course of business, or any change in
the capital stock or outstanding indebtedness of the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as a
whole, or any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company or any of its subsidiaries.
(g) All the representations and warranties of each Selling Stockholder
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on the Closing Date, and you shall have
received on the Closing Date a certificate dated the Closing Date from each
Selling Stockholder to such effect and to the effect that such Selling
Stockholder has complied with all of the agreements and satisfied all of the
conditions herein contained and required to be complied with or satisfied by
such Selling Stockholder on or prior to the Closing Date.
(h) At the time this Agreement is executed and at the Closing Date and
the Additional Closing Date, if applicable, Ernst & Young, LLP shall have
furnished to you a letter or letters, dated respectively as of the time this
Agreement is executed and as of the Closing Date (and the Additional Closing
Date, if applicable), addressed to you and based upon the procedures described
in such letter, but carried out to a date not more than five (5) days prior to
the Closing Date or the Additional Closing Date, as the case may be, and
otherwise in form and substance satisfactory to you, confirming that they are
independent public accountants with respect to the Company within the meaning of
the Act and Regulation S-X, stating that the answer to item 10 of the
Registration Statement is correct as it relates to them and that:
(i) in their opinion the audited financial statements, the
related financial statement schedules and the audited financial statements
of the Company included in the Registration Statement and the Prospectus
and reported on by them comply in form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and the Subsidiary; carrying out
certain specified procedures (but not an examination in accordance with
generally accepted
42
auditing standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such letter; a
reading of the minutes of the meetings of the stockholders and the board of
directors of the Company and the Subsidiary; and inquiries of certain
officials of the Company and the Subsidiary who have responsibility for
financial and accounting matters of the Company and the Subsidiary as to
transactions and events subsequent to December 31, 1999, nothing came to
their attention which caused them to believe that:
(1) any unaudited financial statements included in the
Registration Statement and the Prospectus do not comply as to form in
all material respects with the applicable accounting requirements of
the Act and with the published rules and regulations of the Commission
with respect to registration statements on Form S-3; and said
unaudited financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement and the Prospectus;
(2) at December 31, 1999 there was any change in the capital
stock, stockholders' equity, long-term debt and working capital of the
Company or any decreases in current assets or net assets as compared
with amounts shown in the December 31, 1998 financial statements,
except in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by ING Barings LLC;
(3) the information included in the Registration Statement
and Prospectus in response to Regulation S-K, Item 301 (Selected
Financial Data), Item 302 (Supplementary Financial Information) and
Item 402 (Executive Compensation) and Item 503(d) (Ratio of Earnings
to Fixed Charges) is not in conformity with the applicable disclosure
requirements of Regulation S-K; or
(4) there was any change at [___________], 2000 in the
capital stock, stockholders' equity, long-term debt and working
capital of the Company or any decreases in current assets, net assets
or working capital as compared with the amounts shown in the December
31, 1999 financial statements or, for the period from January 1, 2000
to a date within five days of the date of such letter, there were any
decreases as compared with the corresponding period in the preceding
year in net sales or total or per share amounts of net income, except
for changes or decreases that the registration statement discloses
have occurred or as set forth in such letter;
(iii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of Interim
financial information as
43
described in Statement of Auditing Standards No. 71 ("SAS 71"), Interim
Financial Information, on the unaudited financial statements included in
the Registration Statement and the Prospectus;
(iv) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and the Subsidiary) set forth in the Registration Statement and
the Prospectus, which have been specified by you prior to the date of such
letter, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation; and
(v) with respect to the fiscal years ended December 31, 1998 and
December 31, 1999, they have performed an SSAE 8 examination of the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained in the Registration Statement and the Prospectus and
have determined that:
(1) the presentation includes, in all material respects, the
required elements of the applicable rules and regulations under the
Act;
(2) the historical financial amounts have been accurately
derived in all material respects from the Company's audited financial
statements; and
(3) the underlying information, determinations, estimates
and assumptions of the Company provide a reasonable basis for the
disclosures contained therein.
In addition, ING Barings LLC shall have received from Ernst & Young LLP a
letter addressed to the Company and made available to you for the use of the
Underwriters stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's consolidated financial statements as
of December 31, 1999, did not disclose any weaknesses in internal controls that
they considered to be substantial or material weaknesses.
In the event that the letters to be delivered referred to above set forth
note any changes, decreases or increases in the financial information included
in the Registration Statement and the Prospectus, it shall be a further
condition to the obligations of the Underwriters hereunder that ING Barings LLC
shall have determined in its sole judgment, that such changes, decreases or
increases as are set forth in such letters do not reflect a material adverse
change in the stockholders' equity or long-term debt of the Company as compared
with the amounts shown in the latest balance sheet of the Company included in
the Prospectus, or a material adverse change
44
in total net revenues or net income of the Company, in each case as compared
with the corresponding period of the prior year.
(i) Subsequent to the date this Agreement is executed or, if earlier,
the dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraph (f) of this Section
9 or (ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or other), earnings, business or properties
of the Company and the Subsidiary, whether or not arising in the ordinary course
of business, the effect of which, in any case referred to in clause (i) or (ii)
above, is, in ING Barings LLC's sole judgment, material and adverse and that
makes it impracticable or inadvisable to proceed with the offering or delivery
of the Shares as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto).
(j) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change, or any development involving a prospective material
adverse change, in the general affairs, business, prospects, properties,
management, key personnel, condition (financial or other) or results of
operations of the Company and the Subsidiary, whether or not arising from
transactions in the ordinary course of business, in each case other than as set
forth in the Registration Statement and the Prospectus (or, in the case of a
prospective change, other than as contemplated by the Registration Statement and
the Prospectus), and (ii) the Company shall not have sustained any material loss
or interference with its business or properties from fire, explosion, flood,
hurricane or other casualty or calamity, 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 your reasonable judgment any such development makes it
impracticable or inadvisable to consummate the sale and delivery of the Shares
at the public offering price.
(k) 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 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 could reasonably be expected to have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole.
(l) At the time of execution of this Agreement, except as may have
otherwise been consented to in writing by ING Barings LLC, the Company shall
have furnished to you a letter addressed to you from each Locked-Up Party, in
which each such person agrees not to (1) offer for sale, contract to sell, sell,
pledge or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any person at
45
any time in the future of) any shares of Common Stock or securities convertible
into, exercisable or exchangeable for, or represent the right to receive, Common
Stock or sell or grant options, rights or warrants with respect to any shares of
Common Stock or register for sale any outstanding shares of Common Stock; or (2)
enter into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of such
shares of Common Stock or securities, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise for a period of 90 days following the time of
execution of this Agreement without your prior written consent, other than
shares of Common Stock disposed of as gifts or transfers to immediate family
members or trusts or partnerships, the beneficiaries and sole partners of which
are immediate family members, provided that the donee or transferee agrees in
writing to be bound in the same manner.
(m) The Shares shall be qualified for sale in such jurisdictions as
you shall have requested subject to the terms hereof, each such qualification
shall be in effect and not subject to any stop order or other proceeding on the
Closing Date and the Additional Closing Date, if applicable.
(n) The Company shall have timely filed with the Nasdaq National
Market a notification form for the listing of additional shares on the Nasdaq
National Market with respect to the Firm Shares and the Additional Shares, if
any. Such Firm Shares and such Additional Shares, if any, shall have been
approved for designation upon notice of issuance on the Nasdaq National Market
prior to the Effective Date.
(o) The Company and the Selling Stockholders shall have furnished to
you such certificates, in addition to those specifically mentioned herein, as
you may have reasonably requested (i) as to the accuracy and completeness (to
the extent required under applicable law) at the Closing Date and the Additional
Closing Date, if applicable, of any statement in the Registration Statement, the
preliminary prospectus or the Prospectus, (ii) as to the accuracy at the Closing
Date and the Additional Closing Date, if applicable, of the representations,
warranties and covenants of the Company and the Selling Stockholders herein,
(iii) as to the performance by the Company and the Selling Stockholders of its
obligations hereunder, or (iv) as to the fulfillment of the conditions
concurrent and precedent to your obligations hereunder.
(p) Prior to the Closing Date and the Additional Closing Date, if
applicable, the Company and the Selling Stockholders shall have furnished to the
Underwriters such further information and documents as you may reasonably
request.
If any of the conditions specified in this Section shall not have been
fulfilled in all respects when and as required to be satisfied, or if any of the
opinions and certificates mentioned above or elsewhere in this Agreement shall
not be reasonably satisfactory in form and substance to you and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be terminated at, or at any time on or prior to, the Closing Date (and
Additional
46
Closing Date, if applicable) by ING Barings LLC. Notice of such termination
shall be given to the Company promptly in writing or by telephone confirmed in
writing.
10. Default by an Underwriter.
-------------------------
(a) If any Underwriter or Underwriters shall default in its or their
obligations to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, the Shares to which the default relates shall be purchased
by the non-defaulting Underwriters in proportion to the respective proportions
which the numbers of Firm Shares set forth opposite their respective names in
Schedule I hereto bear to the aggregate number of Firm Shares set forth opposite
the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, you may in your discretion
arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within 5 calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 10, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Section 6, 7(a) and 8 hereof) or the Underwriters, but nothing in
this Agreement shall relieve a defaulting Underwriter or Underwriters of its or
their liability, if any, to the other Underwriters and the Company for damages
occasioned by its or their default hereunder. Notwithstanding the foregoing, if
any default occurs with respect to the Additional Closing, this Agreement will
not terminate with respect to the Firm Shares purchased prior to such time.
(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Additional Closing Date, as
the case may be, for a period not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of Underwriters' counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 9 with like
effect as if it had originally been a party to this Agreement with respect to
such Firm Shares and Additional Shares.
47
11. Survival of Representations and Agreements. All representations and
------------------------------------------
warranties, covenants and agreements of the Underwriters, the Company and the
Selling Stockholders contained in this Agreement, including the agreements
contained in Section 5 and Section 6, the indemnity agreements contained in
Section 7 and the contribution agreements contained in Section 8, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof or by or on
behalf of the Company, any of its officers and directors or any controlling
person thereof or by or on behalf of any Selling Stockholder or any controlling
person of any Selling Stockholder, and shall survive delivery of and payment for
the Shares to and by the Underwriters. The representations contained in Sections
1 and 2 and the agreements contained in Sections 6, 7, 8 and 12(d) hereof also
shall survive the termination of this Agreement, including termination pursuant
to Section 10 or 12 hereof.
12. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective upon the later of when (i)
you and the Company shall have received notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. If either the
public offering price or the purchase price per Share has not been agreed upon
prior to 5:00 P.M., New York time, on the fifth full business day after the
Registration Statement shall have become effective, this Agreement shall
thereupon terminate without liability to the Company or the Underwriters except
as herein expressly provided. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Company and the Selling Stockholders by
notifying you or by you notifying the Company. Notwithstanding the foregoing,
the provisions of this Section 12 and of Sections 1, 2, 6, 7 and 8 hereof shall
at all times be in full force and effect.
(b) ING Barings LLC shall have the right to terminate this Agreement
at any time on or prior to the Closing Date, or the obligations of the
Underwriters to purchase the Additional Shares at any time on or prior to the
Additional Closing Date, as the case may be (but in any event prior to delivery
of and payment for the Shares), if (A) any domestic or international event or
act or occurrence has materially disrupted, or in your opinion will in the
immediate future materially disrupt, the market for the Company's securities or
securities in general; or (B) if trading on the New York or American Stock
Exchanges or Nasdaq National Market shall have been suspended, or limited,
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the New York Stock
Exchange or the Nasdaq National Market by the New York Stock Exchange or the
Nasdaq National Market or by order of the Commission or any other governmental
authority having jurisdiction; or (C) if a banking moratorium has been declared
by a state or federal authority or if any new restriction materially adversely
affecting the distribution of the Firm Shares or the Additional Shares, as the
case may be, shall have become effective; or (D)(i) there shall have occurred
any outbreak or escalation of hostilities or there is an outbreak or escalation
of national or international hostilities or there is a declaration by the United
States of a national emergency or war or (ii) if there has been any crisis or
calamity or any change or development in United
48
States' or international political, financial or economic conditions, if the
effect of any such event in (D)(i) or (D)(ii), in the sole judgment of ING
Barings LLC makes it impracticable or inadvisable to proceed with the offering,
sale and delivery of the Firm Shares or the Additional Shares, as the case may
be, on the terms contemplated by the Prospectus (exclusive of any supplement
thereto) or to enforce contracts for the sale of securities; or (E) in the sole
judgment of ING Barings LLC there shall have occurred any Material Adverse
Effect on the Company and its subsidiaries taken as a whole or (F) the Company
shall have sustained a loss by strike, fire, flood, earthquake, accident or
other calamity of such character as in the sole judgment of ING Barings LLC may
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured. Any
termination pursuant to this Section shall be without liability on the part of
(a) the Company to any Underwriter, except that the Company shall be obligated
to reimburse the expenses of ING Barings LLC and the underwriters to the extent
required pursuant to Sections 6, 7 and 8 hereof, (b) any Underwriter to the
Company or (c) of any party hereto to any other party except that the provisions
of Sections 6, 7 and 8 shall at all times be effective and shall survive such
termination.
(c) Any notice of termination pursuant to this Section 12 shall be by
telephone or facsimile and confirmed in writing by letter.
13. Agreements of the Selling Stockholders. Each Selling Stockholder
--------------------------------------
agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes payable in
connection with the transfer of the Shares to be sold by such Selling
Stockholder to the Underwriters.
(b) To do and perform all things to be done and performed by such
Selling Stockholder under this Agreement prior to the Closing Date and to
satisfy all conditions precedent to the delivery of the Shares to be sold by
such Selling Stockholder pursuant to this Agreement.
14. Notices. Any notice or notification in any form to be given hereunder
-------
shall be in writing and shall be delivered in person or sent by telephone or
facsimile transmission (but in the case of a notification by telephone, with
subsequent confirmation by letter or facsimile transmission).
Any notice or notification to you shall be addressed to:
ING Barings LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: H. Xxxx Xxxxxxx
With a copy to:
00
Xxxxxxx & Xxxxxxx & Xxxxx XXX
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
50
Any notice or notification to the Company shall be addressed to the
Company at:
Ribozyme Pharmaceuticals, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to:
Rothgerber, Xxxxxxx & Xxxxx
One Xxxxx Center
Suite 3000
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx III, Esq.
Any notice or notification to any Selling Stockholder shall be
addressed to such Selling Stockholder, care of the Company at:
Ribozyme Pharmaceuticals, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to:
Rothgerber, Xxxxxxx & Xxxxx
One Xxxxx Center
Suite 3000
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx III, Esq.
Any notice or notification shall (subject to confirmation when
required) take effect at the time of receipt.
15. Parties. This Agreement shall inure solely to the benefit of, and
-------
shall be binding upon, the Underwriters, the Company, the Selling Stockholders
and the controlling persons, directors, officers, employees and agents referred
to in Section 7 and 8, and their respective successors and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
herein contained. The term "successors and assigns" shall not include a
purchaser, in its capacity as such, of Shares from any of the Underwriters.
Notwithstanding the foregoing, this
51
Agreement and the terms and provisions hereof are, unless otherwise specified
herein, for the sole benefit of only those persons, except that (a) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of each Purchaser
Indemnified Party and (b) the indemnity agreement of the Underwriters contained
in Section 7 hereof shall be deemed to be for the benefit of each Company
Indemnified Party.
16. Consent to Jurisdiction. Any legal suit, action or proceeding arising
-----------------------
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of New York or the courts of
the State of New York in each case located in the City and County of New York
(collectively, the "Specified Courts"), and each party irrevocably submits to
the exclusive jurisdiction (except for proceedings instituted in regard to the
enforcement of a judgment of any such court (a "Related Judgment"), as to which
such jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum. Each party not located in the United States
irrevocably appoints CT Corporation System, which currently maintains an office
at New York, New York, United States of America, as its agent to receive service
of process or other legal summons for purposes of any such suit, action or
proceeding that may be instituted in any state or federal court in the City and
County of New York.
With respect to any Related Proceeding, each party irrevocably waives, to
the fullest extent permitted by applicable law, all immunity (whether on the
basis of sovereignty or otherwise) from jurisdiction, service of process,
attachment (both before and after judgment) and execution to which it might
otherwise be entitled in the Specified Courts or any other court of competent
jurisdiction, and will not raise or claim or cause to be pleaded any such
immunity at or in respect of any such Related Proceeding or Related Judgment,
including, without limitation, any immunity pursuant to the United States
Foreign Sovereign Immunities Act of 1976, as amended.
17. Miscellaneous. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of New York applicable to
contracts made and to be performed within the State of New York. This Agreement
may be executed in one or more counterparts, and if executed in more than one
counterpart, the executed counterparts shall together constitute a single
instrument. The descriptive headings in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
Time shall be of the essence of this Agreement.
52
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof.
If any provision or portion of any provision of the Agreement, or the
application of any such provision or any portion thereof to any party or
circumstances, shall be held invalid or unenforceable, the remaining portion of
such provision and the remaining portion of such provision and the remaining
provisions of this agreement, and the application of such provision or portion
of such provision as is held invalid or unenforceable to any parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and such remaining portion of such provision and
the remaining provisions of this Agreement shall continue to be valid and in
full force and effect.
If the foregoing is in accordance with the Underwriters' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the
Underwriters in accordance with its terms.
53
This Agreement may be signed in counterparts which together shall
constitute one and the same instrument.
Very truly yours,
RIBOZYME PHARMACEUTICALS, INC.
By: _____________________________________
Name:
Title:
[Selling Stockholders]
By: _____________________________________
Name:________________________________
Attorney-in-Fact
By: _____________________________________
Name:________________________________
Attorney-in-Fact
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
ING BARINGS LLC
By: ING Barings LLC
Acting on its own behalf and as
one of the Representatives
of the several Underwriters
referred to in the foregoing Agreement
By: ___________________________
Title: ________________________
54
CHASE SECURITIES INC.
By: Chase Securities Inc.
Acting on its own behalf and as one of the
Representatives of the several Underwriters
referred to in the foregoing Agreement
By: ___________________________
Title: ________________________
55
SCHEDULES
I - Underwriters
II - Selling Stockholders
Exhibits
A - Form of Lock-Up Agreement
SCHEDULE I
UNDERWRITERS
Underwriting Agreement dated ________, 2000
Number of Firm
Shares to be
Purchased from
the Company
--------------
Name
----
ING Barings LLC.................. ------------
Chase Securities Inc............. ------------
Total............................ ------------
============
SCHEDULE II
SELLING STOCKHOLDERS
Name and Address of
Selling Stockholder Additional Shares to be Sold
------------------- ----------------------------
Total..............
=========== ===========
2
Exhibit A
Form of Lock-Up Agreement
ING Barings LLC
Chase Securities Inc.
c/o ING Barings LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Ribozyme Pharmaceuticals, Inc.
Dear Sirs:
The undersigned is the record owner of shares of common stock, par value
$.01 per share, and/or warrants or options to purchase shares of common stock
and/or shares of preferred stock, par value $.01 per share (such shares of
common stock, warrants and options herein referred to as the "Securities"), of
Ribozyme Pharmaceuticals, Inc., a Delaware corporation (the "Company"). The
undersigned understands that the Company currently intends to file with the
Securities and Exchange Commission a Registration Statement on Form S-3 (the
"Registration Statement"), for the registration of the Company's common stock,
which will be underwritten by a group of underwriters for whom ING Barings LLC
and Chase Securities Inc. will act as representatives.
The undersigned agrees that the undersigned will not, without the prior
consent of ING Barings LLC, directly or indirectly for a period of 90 days from
the date the Registration Statement has been declared effective: (1) offer for
sale, contract to sell, sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to, result in
the disposition by any person at any time in the future of) any Securities or
securities convertible into, exercisable or exchangeable for, or represent the
right to receive, Securities or sell or grant options, rights or warrants with
respect to any Securities or register for sale any outstanding Securities; or
(2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such Securities or securities, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Securities or other
securities, in cash or otherwise.
Notwithstanding the foregoing, (i) gifts or (ii) transfers to (A) the
undersigned's immediate family or (B) a trust or partnership the beneficiaries
and sole partners of which are members of the undersigned's immediate family
and/or the undersigned, shall not be prohibited by this agreement if the donee
or transferee agrees in writing to be bound by the foregoing in the same manner
as it applies to the undersigned. "Immediate family" shall mean spouse, lineal
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descendants, father, mother, brother or sister to the transferor. This agreement
shall not prohibit the exercise of any stock options, except that the Securities
obtained upon any such exercise shall be subject to the limitations on
disposition herein.
Very truly yours,
_______________________________________ By: _____________________________
Legal name of Stockholder as it appears Name:
on the Corporate Records Title:
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