EXHIBIT 1.1
6,250,000
ANADYS PHARMACEUTICALS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
March ___, 2004
XX XXXXX SECURITIES CORPORATION
XXXXX XXXXXXX & CO.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
XXXXXXX & COMPANY, INC.
As Representatives of the several Underwriters
c/o XX Xxxxx Securities Corporation
1221 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
1. Introductory. Anadys Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), proposes to sell, pursuant to the terms of this Agreement, to the
several underwriters named in Schedule A hereto (the "Underwriters," or, each,
an "Underwriter"), an aggregate of 6,250,000 shares of common stock, $0.01 par
value (the "Common Stock") of the Company. The aggregate of 6,250,000 shares so
proposed to be sold is hereinafter referred to as the "Firm Stock." The Company
also proposes to sell to the Underwriters, upon the terms and conditions set
forth in Section 4 hereof, up to an additional 937,500 shares of Common Stock
(the "Optional Stock"). The Firm Stock and the Optional Stock are hereinafter
collectively referred to as the "Stock." XX Xxxxx Securities Corporation ("XX
Xxxxx") and U.S. Bancorp Xxxxx Xxxxxxx Inc., Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated and Xxxxxxx & Company, Inc. are acting as representatives of the
several Underwriters and in such capacity are hereinafter referred to as the
"Representatives." As part of the offering contemplated by this Agreement,
Xxxxxx Brothers Inc. (the "Designated Underwriter") has agreed to reserve out of
the Firm Stock purchased by it under this Agreement, up to 280,000 shares, for
sale to the Company's customers and business partners and friends of the
Company's officers, directors and employees (collectively, "Participants"), as
set forth in the Prospectus (as defined herein) under the heading "Underwriting"
(the "Directed Share Program"). The Firm Stock to be sold by the Designated
Underwriter pursuant to the Directed Share Program (the "Directed Shares") will
be sold by the Designated Underwriter pursuant to this Agreement at the public
offering price. Any Directed Shares not subscribed for by the end of the
business day on which this Agreement is executed will be offered to the public
by the Underwriters as set forth in the Prospectus.
2. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-110528) (including
any pre-effective amendments thereto, the "Initial Registration
Statement") in respect of the Stock has been filed with the Securities and
Exchange Commission (the "Commission"); the Initial Registration
Statement, including each pre-effective amendment and any post-effective
amendment thereto, each in the form heretofore delivered to you, and,
excluding exhibits thereto, to you for each of the other Underwriters,
have been declared effective by the Commission in such form; other than
2
a registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under
the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations (the "Rules and Regulations") of the Commission
thereunder, which became effective upon filing, no other document with
respect to the Initial Registration Statement has heretofore been filed
with the Commission; and no stop order suspending the effectiveness of the
Initial Registration Statement, any post-effective amendment thereto or
the Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the Rules and Regulations, is hereinafter called a "Preliminary
Prospectus"); the various parts of the Initial Registration Statement and
the Rule 462(b) Registration Statement, if any, including all exhibits
thereto and including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act and deemed by virtue of Rule 430A under the Securities Act
to be part of the Initial Registration Statement at the time it was
declared effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statements"; and such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Securities Act, is hereinafter called the "Prospectus." No document
has been or will be prepared or distributed in reliance on Rule 434 under
the Securities Act. No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission.
(b) The Registration Statements conform (and the Rule 462(b) Registration
Statement, if any, the Prospectus and any amendments or supplements to
either of the Registration Statements or the Prospectus, when they become
effective or are filed with the Commission, as the case may be, will
conform) in all material respects to the requirements of the Securities
Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statements and any
amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain any 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; provided, however, that the foregoing representations and
warranties shall not apply to information contained in or omitted from the
Registration Statements or the Prospectus or any such amendment or
supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company through the Representatives by or on
behalf of any Underwriter specifically for inclusion therein, which
information the parties hereto agree is limited to the Underwriter's
Information (as defined in Section 17).
(c) The Company and each of its subsidiaries (as defined in Section 15)
have been duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good standing
as foreign corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have all power and authority
necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to so
qualify or have such power or authority would not have, singularly or in
the aggregate, a material adverse effect on the condition (financial or
otherwise), results of operations, business or prospects of the Company
and its subsidiaries taken as a whole (a "Material Adverse Effect"). The
Company owns or controls, directly or indirectly, only the following
corporations, partnerships, limited liability partnerships, limited
liability companies, associations or other entities: Anadys
Pharmaceuticals Europe GmbH (the "Subsidiary").
3
(d) This Agreement has been duly authorized, executed and delivered by the
Company.
(e) The Stock to be issued and sold by the Company to the Underwriters
hereunder has been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and nonassessable and free of any preemptive or
similar rights and will conform to the description thereof contained in
the Prospectus.
(f) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable, have been issued in compliance with federal and state
securities laws, and conform to the description thereof contained in the
Prospectus. None of the outstanding shares of Common Stock was issued in
violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or equity or
debt securities convertible into or exchangeable or exercisable for, any
capital stock of the Company or any of its subsidiaries other than those
accurately described in the Prospectus. The description of the Company's
stock option, stock bonus and other stock plans or arrangements, and the
options or other rights granted thereunder, as described in the Prospectus
accurately and fairly present the information required to be shown with
respect to such plans, arrangements, options and rights.
(g) All the outstanding shares of capital stock of the Subsidiary have
been duly authorized and validly issued, are fully paid and nonassessable
and, except to the extent set forth in the Prospectus, are owned by the
Company directly or indirectly through one or more wholly-owned
subsidiaries, free and clear of any claim, lien, encumbrance, security
interest, restriction upon voting or transfer or any other claim of any
third party.
(h) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
(ii) result in any violation of the provisions of the charter or by-laws
of the Company or any of its subsidiaries or any statute or any order,
rule or (iii) result in any violation of any regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets.
(i) Except for the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or qualifications
as may be required under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and applicable state securities laws, the National
Association of Securities Dealers, Inc. (the "NASD") and the Nasdaq
National Market in connection with the purchase and distribution of the
Stock by the Underwriters, no consent, approval, authorization or order
of, or filing or registration with, any such court or governmental agency
or body is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby.
(j) Ernst & Young LLP, who have expressed their opinions on the audited
financial statements included in the Registration Statements and the
Prospectus are independent public accountants as required by the
Securities Act and the Rules and Regulations.
4
(k) The financial statements, together with the related notes, included in
the Prospectus and in each Registration Statement fairly present the
financial position and the results of operations and changes in financial
position of the Company and its consolidated subsidiaries at the
respective dates or for the respective periods therein specified. Such
statements and related notes have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
except as may be set forth in the Prospectus. The financial statements,
together with the related notes, included in the Prospectus comply in all
material respects with the Securities Act and the Rules and Regulations
thereunder. No other financial statements or supporting schedules or
exhibits are required by the Securities Act or the Rules and Regulations
thereunder to be included in the Prospectus or the Registration
Statements.
(l) Neither the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus;
and, since such date, there has not been any change in the capital stock
(other than issuances of options in the ordinary course of business and
pursuant to equity incentive plans disclosed in the Prospectus or the
issuance of Common Stock upon the exercise of outstanding options and
warrants as described in the Prospectus) or long-term debt of the Company
or any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the business, general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated
in the Prospectus.
(m) Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company
or any of its subsidiaries is the subject which is required to be
described in the Registration Statement or the Prospectus and is not
described therein, or which, singularly or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, might have a Material
Adverse Effect or would prevent or adversely affect the ability of the
Company to perform its obligations under this Agreement; and to the best
of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(n) Neither the Company nor any of its subsidiaries (i) is in violation of
its charter or by-laws, (ii) is in default in any respect, and no event
has occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or
(iii) is in violation in any respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets may
be subject except any violations or defaults which, singularly or in the
aggregate, would not have a Material Adverse Effect.
(o) The Company and each of its subsidiaries possess all licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate state, federal or foreign
regulatory agencies or bodies which are necessary or desirable for the
ownership of their respective properties or the conduct of their
respective businesses as described in the Prospectus except where any
failures to possess or make the same, singularly or in the aggregate,
would not have a Material Adverse Effect, and the Company has not received
notification of any revocation or modification of any such license,
certificate, authorization or
5
permit and has no reason to believe that any such license, certificate,
authorization or permit will not be renewed.
(p) Neither the Company nor any of its subsidiaries is or, after giving
effect to the offering of the Stock and the application of the proceeds
thereof as described in the Prospectus will become an "investment company"
within the meaning of the Investment Company Act of 1940, as amended and
the rules and regulations of the Commission thereunder.
(q) Neither the Company nor any of its officers, directors or affiliates
has taken or will take, directly or indirectly, any action designed or
intended to stabilize or manipulate the price of any security of the
Company, or which caused or resulted in, 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.
(r) The Company and its subsidiaries own or possess the right to use all
patents, trademarks, trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets and rights described in the Prospectus as being owned by them for
the conduct of their respective businesses as now conducted and as
currently proposed to be conducted, and the Company is not aware of any
claim to the contrary or any challenge by any other person to the rights
of the Company and its subsidiaries with respect to the foregoing. The
Company's business as now conducted and as proposed to be conducted does
not and will not infringe or conflict with any patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses or other
intellectual property or franchise right of any person. Except as
described in the Prospectus, no claim has been made against the Company
alleging the infringement by the Company of any patent, trademark, service
xxxx, trade name, copyright, trade secret, license in or other
intellectual property right or franchise right of any person.
(s) The Company and each of its subsidiaries have good and marketable
title in fee simple to, or have valid rights to lease or otherwise use,
all items of real or personal property which are material to the business
of the Company and its subsidiaries taken as a whole, in each case free
and clear of all liens, encumbrances, claims and defects that may result
in a Material Adverse Effect.
(t) No labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the best of the Company's knowledge, is
imminent which might be expected to have a Material Adverse Effect. The
Company is not aware that any key employee or significant group of
employees of the Company or any subsidiary plans to terminate employment
with the Company or any such subsidiary.
(u) No "prohibited transaction" (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan which could have a Material Adverse Effect; each
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; the Company has not incurred
and does not expect to incur liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any "pension plan"; and
each "pension plan" (as defined in ERISA) for which the Company would have
any liability that is intended to be qualified under Section 401(a) of the
Code is so qualified
6
in all material respects and nothing has occurred, whether by action or by
failure to act, which could cause the loss of such qualification.
(v) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any kind of
toxic or other wastes or other hazardous substances by, due to, or caused
by the Company or any of its subsidiaries (or, to the best of the
Company's knowledge, any other entity for whose acts or omissions the
Company or any of its subsidiaries is or may be liable) upon any of the
property now or previously owned or leased by the Company or any of its
subsidiaries, or upon any other property, in violation of any statute or
any ordinance, rule, regulation, order, judgment, decree or permit or
which would, under any statute or any ordinance, rule (including rule of
common law), regulation, order, judgment, decree or permit, give rise to
any liability, except for any violation or liability which would not have,
singularly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; there has been no disposal, discharge, emission
or other release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other hazardous
substances with respect to which the Company or any of its subsidiaries
have knowledge, except for any such disposal, discharge, emission, or
other release of any kind which would not have, singularly or in the
aggregate with all such discharges and other releases, a Material Adverse
Effect.
(w) The Company and its subsidiaries each (i) has filed all necessary
federal, state and foreign income and franchise tax returns, (ii) has paid
all federal state, local and foreign taxes due and payable for which it is
liable, and (iii) does not have any tax deficiency or claims outstanding
or assessed or, to the best of the Company's knowledge, proposed against
it which could reasonably be expected to have a Material Adverse Effect.
(x) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses
in similar industries.
(y) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded accounts for
assets are compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(z) The minute books of the Company and each of its subsidiaries have been
made available to the Underwriters and counsel for the Underwriters, and
such books (i) contain a complete summary of all meetings and actions of
the board of directors (including each board committee) and shareholders
of the Company and each of its subsidiaries since the time of its
respective incorporation through the date of the latest meeting and
action, and (ii) accurately in all material respects reflect all
transactions referred to in such minutes or written consents.
(aa) There is no franchise, lease, contract, agreement or document
required by the Securities Act or by the Rules and Regulations to be
described in the Prospectus or to be filed as an exhibit to the
Registration Statements which is not described or filed therein as
required; and all descriptions of any such franchises, leases, contracts,
agreements or documents contained in the Registration Statements are
accurate and complete descriptions of such documents in all material
7
respects. Other than as described in the Prospectus, no such franchise,
lease, contract, agreement or document has been suspended or terminated
for convenience or default by the Company or any of the other parties
thereto, and the Company has not received notice or any other knowledge of
any such pending or threatened suspension or termination, except for such
pending or threatened suspensions or terminations that would not
reasonably be expected to, singularly or in the aggregate, have a Material
Adverse Effect.
(bb) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required
to be described in the Prospectus and which is not so described.
(cc) No person or entity has the right to require registration of shares
of Common Stock or other securities of the Company or any of its
subsidiaries because of the filing or effectiveness of the Registration
Statements or otherwise, except for persons and entities who have
expressly waived such right or who have been given timely and proper
notice and have failed to exercise such right within the time or times
required under the terms and conditions of such right.
(dd) Neither the Company nor any of its subsidiaries own any "margin
securities" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Stock will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Stock to be considered a
"purpose credit" within the meanings of Regulation T, U or X of the
Federal Reserve Board.
(ee) Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Company or the Underwriters for a brokerage
commission, finder's fee or like payment in connection with the offering
and sale of the Stock.
(ff) No forward-looking statement (within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act) contained in the
Prospectus has been made or reaffirmed without a reasonable basis or has
been disclosed other than in good faith.
(gg) The Stock has been approved for listing subject to notice of issuance
on the NASDAQ Stock Market's National Market.
(hh) The Company has taken all necessary actions to ensure that, upon and
at all times after the effectiveness of the Registration Statements, it
will be in compliance with all applicable provisions of the Xxxxxxxx-Xxxxx
Act of 2002 and all rules and regulations promulgated thereunder or
implementing the provisions thereof (the "Xxxxxxxx-Xxxxx Act") that are
then in effect and is actively taking steps to ensure that it will be in
compliance with other applicable provisions of the Xxxxxxxx-Xxxxx Act not
currently in effect upon and at all times after the effectiveness of such
provisions.
(ii) The Company has taken all necessary actions to ensure that, upon and
at all times after the Nasdaq National Market ("Nasdaq") shall have
approved the Stock for inclusion, it will be in compliance with all
applicable corporate governance requirements set forth in the Nasdaq
Marketplace Rules that are then in effect and is actively taking steps to
ensure that it will be in compliance with other applicable corporate
governance requirements set forth in the Nasdaq Marketplace Rules not
currently in effect upon and all times after the effectiveness of such
requirements.
8
(jj) Neither the Company nor any of its subsidiaries nor, to the best of
the Company's knowledge, any employee or agent of the Company or any
subsidiary, has made any contribution or other payment to any official of,
or candidate for, any federal, state or foreign office in violation of any
law or of the character required to be disclosed in the Prospectus.
(kk) There are no transactions, arrangements or other relationships
between and/or among the Company, any of its affiliates (as such term is
defined in Rule 405 of the Securities Act) and any unconsolidated entity,
including, but not limited to, any structured finance, special purpose or
limited purpose entity, that could reasonably be expected to materially
affect the Company's liquidity or the availability of or requirements for
its capital resources, which transaction, arrangement or other
relationship is required to be described in the Prospectus and which has
not been described as required.
(ll) There are no outstanding loans, advances (except normal advances for
business expense in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers
or directors of the Company, except as disclosed in the Prospectus.
(mm) The Registration Statements, the Prospectus and the Preliminary
Prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions
in which they are distributed in connection with the Directed Share
Program. No authorization, approval, consent, license, order, registration
or qualification of or with any government, governmental instrumentality
or court, other than such as have been obtained, is necessary under the
securities laws or regulations of any foreign jurisdiction in which the
Directed Shares are offered outside the United States.
(nn) The Company has not offered, or caused the Underwriters to offer, any
Stock to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or business partner
of the Company to alter the customer's or business partner's level or type
of business with the Company or (ii) a journalist or publication to write
or publish favorable information about the Company or its products.
3. Qualified Independent Underwriter.
(a) The Company hereby confirms its engagement of the services of Xxxx
Xxxxx Xxxx Xxxxxx, Incorporated (the "Independent Underwriter") without
compensation as, and the Independent Underwriter hereby confirms its
agreement with the Company to render services as, a "qualified independent
underwriter" within the meaning of Rule 2720(b)(15) of the NASD with
respect to the offering and sale of the Stock.
(b) The Independent Underwriter has participated in the preparation of the
Registration Statement and the Prospectus, has complied in all material
respects with all of the requirements of NASD Conduct Rule 2720 applicable
to it in connection with the offering and sale of the Stock, and
recommends, as of the date of the execution and delivery of this
Agreement, that the Purchase Price (as defined below) for each share be
not more than $______.
4. Purchase Sale and Delivery of The Stock.
(a) On the basis of the representations, warranties 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 agrees,
severally and not jointly, to purchase from the Company that number of
shares of Firm Stock (rounded up or down, as determined by XX Xxxxx in its
discretion, in order to avoid fractions) obtained by multiplying
__________ shares of Firm Stock by a fraction the
9
numerator of which is the number of shares of Firm Stock set forth
opposite the name of such Underwriter in Schedule A hereto and the
denominator of which is the total number of shares of Firm Stock.
(b) The purchase price per share to be paid by the Underwriters to the
Company for the Stock will be $_____ per share (the "Purchase Price").
(c) The Company will deliver the Firm Stock to the Representatives for the
respective accounts of the several Underwriters (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given at or
prior to 12:00 Noon, New York time, on the second full business day
preceding the First Closing Date (as defined below) against payment of the
aggregate Purchase Price therefor by wire transfer to an account at a bank
acceptable to XX Xxxxx, payable to the order of the Company, all at the
offices of Xxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligations of each Underwriter hereunder. The time and date of the
delivery and closing shall be at 10:00 A.M., New York time, on
___________, 2004, in accordance with Rule 15c6-1 of the Exchange Act. The
time and date of such payment and delivery are herein referred to as the
"First Closing Date". The First Closing Date and the location of delivery
of, and the form of payment for, the Firm Stock may be varied by agreement
between the Company and XX Xxxxx. The Company shall make the certificates
for the Firm Stock available to the Representatives for examination on
behalf of the Underwriters in New York, New York at least 24 hours prior
to the First Closing Date.
(d) For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus,
the Underwriters may purchase all or less than all of the Optional Stock.
The price per share to be paid for the Optional Stock shall be the
Purchase Price. The Company agrees to sell to the Underwriters the number
of shares of Optional Stock specified in the written notice by XX Xxxxx
described below and the Underwriters agree, severally and not jointly, to
purchase such shares of Optional Stock. Such shares of Optional Stock
shall be purchased from the Company for the account of each Underwriter in
the same proportion as the number of shares of Firm Stock set forth
opposite such Underwriter's name on Schedule A hereto bears to the total
number of shares of Firm Stock (subject to adjustment by XX Xxxxx to
eliminate fractions). The option granted hereby may be exercised as to all
or any part of the Optional Stock at any time, and from time to time, not
more than 30 days subsequent to the date of this Agreement. No Optional
Stock shall be sold and delivered unless the Firm Stock previously has
been, or simultaneously is, sold and delivered. The right to purchase the
Optional Stock or any portion thereof may be surrendered and terminated at
any time upon notice by XX Xxxxx to the Company.
(e) The option granted hereby may be exercised by written notice being
given to the Company by XX Xxxxx setting forth the number of shares of the
Optional Stock to be purchased by the Underwriters and the date and time
for delivery of and payment for the Optional Stock. Each date and time for
delivery of and payment for the Optional Stock (which may be the First
Closing Date, but not earlier) is herein called the "Option Closing Date"
and shall in no event be earlier than two business days nor later than
five business days after written notice is given. (The Option Closing Date
and the First Closing Date are herein called the "Closing Dates".)
(f) The Company will deliver the Optional Stock to the Underwriters (in
the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to
the Company given at or prior to 12:00 Noon, New York time, on the second
full business day preceding the Option Closing Date against payment of the
aggregate Purchase
10
Price therefor by wire transfer to an account at a bank acceptable to XX
Xxxxx payable to the order of the Company, all at the offices of Xxxxxxxx
& Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligations of
each Underwriter hereunder. The Company shall make the certificates for
the Optional Stock available to the Representatives for examination on
behalf of the Underwriters in New York, New York not later than 10:00
A.M., New York Time, on the business day preceding the Option Closing
Date. The Option Closing Date and the location of delivery of, and the
form of payment for, the Optional Stock may be varied by agreement between
the Company and XX Xxxxx.
(g) The several Underwriters propose to offer the Stock for sale upon the
terms and conditions set forth in the Prospectus.
5. Further Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) The Company will prepare the Rule 462(b) Registration Statement, if
necessary, in a form approved by the Representatives and file such Rule
462(b) Registration Statement with the Commission on the date hereof;
prepare the Prospectus in a form approved by the Representatives and file
such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the second business day following the execution and delivery of this
Agreement; make no further amendment to the Registration Statements or any
supplement to the Prospectus to which the Representatives shall reasonably
object by notice to the Company after a reasonable period to review;
advise the Representatives, promptly after it receives notice thereof, of
the time when any amendment to either Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish the Representatives with
copies thereof; advise the Representatives, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statements or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, use promptly its best efforts to obtain its withdrawal.
(b) If at any time prior to the expiration of nine months after the
effective date of the Initial Registration Statement when a prospectus
relating to the Stock is required to be delivered any event occurs as a
result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend or supplement the Prospectus to comply with
the Securities Act, the Company will promptly notify the Representatives
thereof and upon their request will promptly prepare an amended or
supplemented Prospectus which will correct such statement or omission or
effect such compliance. The Company will furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of such amended
or supplemented Prospectus; and in case any Underwriter is required to
deliver a prospectus relating to the Stock nine months or more after the
effective date of the Initial Registration Statement, the Company upon the
request of the Representatives and at the expense of such Underwriter will
prepare promptly an amended or supplemented Prospectus as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the
Securities Act.
11
(c) To furnish promptly to each of the Representatives and to counsel for
the Underwriters a signed copy of each of the Registration Statements as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith.
(d) To deliver promptly to the Representatives in New York City such
number of the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statements as originally
filed with the Commission and each amendment thereto (in each case
excluding exhibits), (ii) each Preliminary Prospectus, (iii) the
Prospectus (not later than 10:00 A.M., New York time, of the business day
following the execution and delivery of this Agreement) and (iv) any
amended or supplemented Prospectus (not later than 10:00 A.M., New York
time, on the business day following the date of such amendment or
supplement).
(e) To make generally available to its stockholders as soon as
practicable, but in any event not later than 18 months after the effective
date of the Registration Statement, an earnings statement (as defined in
Rule 158(c) under the Securities Act) of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities
Act and the Rules and Regulations (including, at the option of the
Company, Rule 158).
(f) The Company will promptly take from time to time such actions as the
Representatives may reasonably request to qualify the Stock for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Representatives may designate and to continue such qualifications in
effect for so long as required for the distribution of the Stock; provided
that the Company and its subsidiaries shall not be obligated to qualify as
foreign corporations in any jurisdiction in which they are not so
qualified or to file a general consent to service of process in any
jurisdiction.
(g) During the period of five years from the date hereof, the Company will
deliver to the Representatives and, upon request, to each of the other
Underwriters, (i) as soon as they are available, copies of all reports or
other communications furnished to stockholders and (ii) as soon as they
are available, copies of any reports and financial statements furnished or
filed with the Commission pursuant to the Exchange Act or any national
securities exchange or automatic quotation system on which the Stock is
listed or quoted.
(h) The Company will not directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock for a period of 180 days from the date of the Prospectus
without the prior written consent of XX Xxxxx other than the Company's
sale of the Stock hereunder and the issuance of shares pursuant to (i)
employee benefit plans, equity incentive plans or other employee
compensation plans as in existence on the date hereof and as described in
the Prospectus or (ii) currently outstanding options, warrants or rights.
The Company will cause each officer, director and stockholder listed in
Schedule B to furnish to the Representatives, prior to the First Closing
Date, a letter, substantially in the form of Exhibit A hereto; the Company
acknowledges, on behalf of such officers, directors and stockholders, that
Xxxxxx Brothers Inc. has assigned all its rights under any such letters
addressed to it to XX Xxxxx for the benefit of the several Underwriters.
(i) The Company will supply the Representatives or their counsel with
copies of all correspondence to and from, and all documents issued to and
by, the Commission in connection with the registration of the Stock under
the Securities Act.
12
(j) Prior to each of the Closing Dates the Company will furnish to the
Representatives, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for any
periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(k) Prior to each of the Closing Dates, the Company will not issue any
press release or other communication directly or indirectly or hold any
press conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of business
and consistent with the past practices of the Company and of which the
Representatives are notified in advance), without the prior written
consent of the Representatives, unless in the judgment of the Company and
its counsel, and after notification to the Representatives, such press
release or communication is required by law.
(l) In connection with the offering of the Stock, until XX Xxxxx shall
have notified the Company of the completion of the resale of the Stock,
the Company will not, and will cause its affiliated purchasers (as defined
in Regulation M under the Exchange Act) not to, either alone or with one
or more other persons, bid for or purchase, for any account in which it or
any of its affiliated purchasers has a beneficial interest, any Common
Stock, or attempt to induce any person to purchase any Common Stock; and
not to, and to cause its affiliated purchasers not to, make bids or
purchase for the purpose of creating actual, or apparent, active trading
in or of raising the price of the Common Stock.
(m) The Company will not take any action prior to the Closing Date which
would require the Prospectus to be amended or supplemented pursuant to
Section 5(b).
(n) The Company shall at all times comply with all applicable provisions
of the Xxxxxxxx-Xxxxx Act in effect from time to time.
(o) The Company will apply the net proceeds from the sale of the Stock as
set forth in the Prospectus under the heading "Use of Proceeds".
(p) In connection with the Directed Share Program, the Company will ensure
that the Directed Shares will be restricted to the extent required by the
NASD or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three (3) months following the date of the
effectiveness of the Registration Statement. The Designated Underwriter
will notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer agent to place stop
transfer restrictions upon such securities for such period of time.
(q) The Company will pay all fees and disbursements of counsel incurred by
the Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
(r) The Company will comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in
which the Directed Shares are offered in connection with the Directed
Share Program.
6. Payment of Expenses. The Company agrees with the Underwriters to pay (a) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Stock and any taxes payable in that connection, (b) the costs incident to
the registration of the Stock under the Securities Act, (c) the costs incident
to the preparation, printing and distribution of the Registration Statements,
Preliminary
13
Prospectus, Prospectus, any amendments, supplements and exhibits thereto, the
costs of printing, reproducing and distributing the "Agreement Among
Underwriters" between the Representatives and the Underwriters, the Master
Selected Dealers' Agreement, the Underwriters' Questionnaire and this Agreement
by mail, telex or other means of communications, (d) the fees and expenses
(including related fees and expenses of counsel for the Underwriters) incurred
in connection with filings made with the NASD, (e) any applicable listing or
other fees, (f) the fees and expenses of qualifying the Stock under the
securities laws of the several jurisdictions as provided in Section 5(f) and of
preparing, printing and distributing blue sky memoranda and legal investment
surveys (including related fees and expenses of counsel to the Underwriters),
(g) all fees and expenses of the registrar and transfer agent of the Common
Stock, and (h) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement (including, without limitation,
the fees and expenses of the Company's counsel and the Company's independent
accountants); provided that, except as otherwise provided in this Section 6 and
in Section 10, the Underwriters shall pay their own costs and expenses,
including the fees and expenses of their counsel, any transfer taxes on the
Stock which they may sell and the expenses of advertising any offering of the
Stock made by the Underwriters.
7. Conditions of Underwriters' Obligations. The respective obligations of the
several Underwriters hereunder are subject to the accuracy, when made and on
each of the Closing Dates, of the representations and warranties of the Company
contained herein, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) No stop order suspending the effectiveness of the Registration
Statements shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the Commission, and any request
for additional information on the part of the Commission (to be included
in the Registration Statements or the Prospectus or otherwise) shall have
been complied with to the reasonable satisfaction of the Representatives.
The Rule 462(b) Registration Statement, if any, and the Prospectus shall
have been timely filed with the Commission in accordance with Section
5(a).
(b) None of the Underwriters shall have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement or
the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Underwriters,
is material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary
to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Stock, the
Registration Statements and the Prospectus and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
(d) Xxxxxx Godward LLP shall have furnished to the Representatives such
counsel's written opinion, as counsel to the Company, addressed to the
Underwriters and dated the Closing Date, in substantially the form
attached as Exhibit B:
(e) Xxxxxxxx Xxxx Lodge & Hutz LLP shall have furnished to the
Representatives such counsel's written opinion, as intellectual property
counsel to the Company, addressed to the Underwriters and dated the
Closing Date, substantially in the form attached hereto as Exhibit C.
14
(f) Xxxxx X. Xxxxxxx & Associates, APC shall have furnished to the
Representatives its written opinion, as intellectual property counsel to
the Company, addressed to the Underwriters and dated as of the Closing
Date, substantially in the form attached hereto as Exhibit D.
(g) The Representatives shall have received from Xxxxxxxx & Xxxxxxxx LLP,
counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to such matters as the Underwriters may reasonably
require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for enabling them to pass upon
such matters.
(h) At the time of the execution of this Agreement, the Representatives
shall have received from Ernst & Young LLP a letter, addressed to the
Underwriters and dated such date, in form and substance satisfactory to
the Representatives (i) confirming that they are independent certified
public accountants with respect to the Company and the Subsidiary within
the meaning of the Securities Act and the Rules and Regulations and (ii)
stating the conclusions and findings of such firm with respect to the
financial statements and certain financial information contained in the
Prospectus.
(i) On the Closing Date, the Representatives shall have received a letter
(the "bring-down letter") from Ernst & Young LLP addressed to the
Underwriters and dated the Closing Date confirming, as of the date of the
bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus as of a date not more than three
business days prior to the date of the bring-down letter), the conclusions
and findings of such firm with respect to the financial information and
other matters covered by its letter delivered to the Representatives
concurrently with the execution of this Agreement pursuant to Section
7(h).
(j) The Company shall have furnished to the Representatives a certificate,
dated the Closing Date, of its Chairman of the Board, its President or a
Vice President and its chief financial officer stating that (i) such
officers have carefully examined the Registration Statements and the
Prospectus and, in their opinion, the Registration Statements as of their
respective effective dates and the Prospectus, as of each such effective
date, did not include any untrue statement of a material fact and did not
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) since the effective
date of the Initial Registration Statement no event has occurred which
should have been set forth in a supplement or amendment to the
Registration Statements or the Prospectus, (iii) to the best of their
knowledge after reasonable investigation, as of the Closing Date, the
representations and warranties of the Company in this Agreement are true
and correct and the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date, and (iv) subsequent to the date of the most
recent financial statements in the Prospectus, there has been no material
adverse change in the financial position or results of operation of the
Company and its subsidiaries, or any change, or any development including
a prospective change, in or affecting the condition (financial or
otherwise), results of operations, business or prospects of the Company
and its subsidiaries taken as a whole, except as set forth in the
Prospectus.
(k) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and (ii) since such date there shall not have been any change
in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the business,
15
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise than
as set forth or contemplated in the Prospectus, the effect of which, in
any such case described in clause (i) or (ii), is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Stock on the terms
and in the manner contemplated in the Prospectus.
(l) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Stock or materially and adversely affect the business or
operations of the Company; and no injunction, restraining order or order
of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Stock or materially and adversely
affect or potentially materially and adversely affect the business or
operations of the Company.
(m) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the Company's corporate credit rating
or the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization," as that term is defined by
the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations
and (ii) no such organization shall have publicly announced that it has
under surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of any of the Company's
debt securities.
(n) Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum or maximum prices or maximum range for prices shall
have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities or a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States, (iii) the United States shall
have become engaged in hostilities, or the subject of an act of terrorism,
or there shall have been an escalation in hostilities involving the United
States, or there shall have been a declaration of a national emergency or
war by the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions (or
the effect of international conditions on the financial markets in the
United States shall be such) as to make it in the judgment of the
Representatives, impracticable or inadvisable to proceed with the sale or
delivery of the Stock on the terms and in the manner contemplated in the
Prospectus.
(o) The National Market System shall have approved the Stock for listing,
subject only to official notice of issuance and evidence of satisfactory
distribution.
(p) XX Xxxxx shall have received the written agreements, substantially in
the form of Exhibit A hereto, of the officers, directors and shareholders
of the Company listed in Schedule B to this Agreement.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
16
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers, employees, representatives and agents and each person, if any,
who controls any Underwriter within the meaning of the Securities Act
(collectively, the "Underwriter Indemnified Parties" and each an
"Underwriter Indemnified Party") against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which
that Underwriter Indemnified Party may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, either of the Registration Statements or the
Prospectus or in any amendment or supplement thereto, (ii) the omission or
alleged omission to state in any Preliminary Prospectus, either of the
Registration Statements or the Prospectus or in any amendment or
supplement thereto a material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act
or failure to act, or any alleged act or failure to act, by any
Underwriter in connection with, or relating in any manner to, the Stock 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 matters covered by clause (i) or (ii) above, (provided that
the Company shall not be liable in the case of any matter covered by this
clause (iii) to the extent that it is determined in a final judgement by a
court of competent jurisdiction that such loss, claim, damage, liability
or action resulted directly from any such act or failure to act undertaken
or omitted to be taken by such Underwriter through its gross negligence or
willful misconduct), and shall reimburse each Underwriter Indemnified
Party promptly upon demand for any legal or other expenses reasonably
incurred by that Underwriter Indemnified Party in connection with
investigating or preparing to defend or defending against or appearing as
a third party witness in connection with any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based
upon (i) an untrue statement or alleged untrue statement in or omission or
alleged omission from the Preliminary Prospectus, either of the
Registration Statements or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of
any Underwriter specifically for use therein, which information the
parties hereto agree is limited to the Underwriter's Information (as
defined in Section 17); provided further, however, that the foregoing
indemnification agreement with respect to the Preliminary Prospectus shall
not insure to the benefit of any Underwriter from which the person
asserting any such loss, claim, damage or liability purchased Stock, or
any officers, employees, representatives, agent or controlling persons of
such Underwriter, if (i) a copy of the Prospectus (as then amended or
supplemented) was required by law to be delivered to such person at or
prior to the written confirmation of the sale of Stock to such person,
(ii) a copy of the Prospectus (as then amended or supplemented) was not
sent or given to such person by or on behalf of such Underwriter and such
failure was not due to non-compliance by the Company with Section 5(d),
and (iii) the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage or liability.
The Company shall indemnify and hold harmless the Designated
Underwriter and its officers, employees, representatives and agents and
each person, if any, who controls any Underwriter within the meaning of
the Securities Act (collectively the "Designated Underwriter Indemnified
Parties," and each a "Designated Underwriter Indemnified Party") against
any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which that Designated Underwriter Indemnified Party
may become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in any material
17
prepared by or with the consent of the Company for distribution to
Participants in connection with the Directed Share Program, (ii) the
omission or alleged omission to state in any material prepared by or with
the consent of the Company for distribution to Participants in connection
with the Directed Share Program of a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (iii) the
failure of any Participant to pay for and accept delivery of Directed
Shares that the Participant agreed to purchase; or (iv) any other loss,
claim, damage or liability, or any action in respect of, related to,
arising out of, or in connection with the Directed Share Program, other
than such losses, claims, damages or liabilities (or expenses relating
thereto) that are finally judicially determined to have resulted from the
willful misconduct or gross negligence of the Designated Underwriter.
This indemnity agreement is not exclusive and will be in addition to
any liability which the Company might otherwise have and shall not limit
any rights or remedies which may otherwise be available at law or in
equity to each Underwriter Indemnified Party.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company its officers, employees, representatives and agents,
each of its directors and each person, if any, who controls the Company
within the meaning of the Securities Act (collectively the "Company
Indemnified Parties" and each a "Company Indemnified Party") against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company Indemnified Parties may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained
in the Preliminary Prospectus, either of the Registration Statements or
the Prospectus or in any amendment or supplement thereto or (ii) 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, but in each case only to the extent that the untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of that Underwriter
specifically for use therein, and shall reimburse the Company Indemnified
Parties for any legal or other expenses reasonably incurred by such
parties in connection with investigating or preparing to defend or
defending against or appearing as third party witness in connection with
any such loss, claim, damage, liability or action as such expenses are
incurred; provided that the parties hereto hereby agree that such written
information provided by the Underwriters consists solely of the
Underwriter's Information. This indemnity agreement is not exclusive and
will be in addition to any liability which the Underwriters might
otherwise have and shall not limit any rights or remedies which may
otherwise be available at law or in equity to the Company Indemnified
Parties.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 8
except to the extent it has been materially prejudiced by such failure;
and, provided, further, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 8. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or
18
action, the indemnifying party shall not be liable to the indemnified
party under this Section 8 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof
other than reasonable costs of investigation; provided, however, that any
indemnified party shall have the right to employ 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
unless (i) the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the indemnifying party and in the reasonable judgment of such counsel
it is advisable for such indemnified party to employ separate counsel or
(iii) the indemnifying party has failed to assume the defense of such
action and employ counsel reasonably satisfactory to the indemnified
party, in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense
of the indemnifying party, the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party 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 reasonable fees
and expenses of more than one separate firm of attorneys at any time for
all such indemnified parties, which firm shall be designated in writing by
XX Xxxxx, if the indemnified parties under this Section 8 consist of any
Underwriter Indemnified Party, or by the Company if the indemnified
parties under this Section 8 consist of any Company Indemnified Parties.
Each indemnified party, as a condition of the indemnity agreements
contained in Sections 8(a) and 8(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. Subject to the provisions of Section 8(d) below, no indemnifying
party shall be liable for any settlement of any such action effected
without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to the penultimate paragraph in Section
8(a) hereof in respect of such action or proceeding, then in addition to
such separate firm for the indemnified parties, the indemnifying party
shall be liable for the reasonable fees and expenses of not more than one
separate firm (in addition to any local counsel) for the Designated
Underwriter for the defense of any losses, claims, damages and liabilities
arising out of the Directed Share Program, and all persons, if any, who
control the Designated Underwriter within the meaning of either Section 15
of the Act of Section 20 of the Exchange Act.
(d) If at any time an indemnified party shall have requested that an
indemnifying party reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by this Section 8 effected without
its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the request for
reimbursement, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) If the indemnification provided for in this Section 8 is unavailable
or insufficient to hold harmless an indemnified party under Section 8(a)
or 8(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof,
19
(i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on
the other from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
on the one hand and the Underwriters on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters with
respect to the Stock purchased under this Agreement, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied
by the Company on the one hand or the Underwriters on the other, the
intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission;
provided that the parties hereto agree that the written information
furnished to the Company through the Representatives by or on behalf of
the Underwriters for use in any Preliminary Prospectus, either of the
Registration Statements or the Prospectus consists solely of the
Underwriter's Information. The Company and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section
8(e) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(e) shall be
deemed to include, for purposes of this Section 8(e), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(e), (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Stock underwritten by it and distributed to the public were
offered to the public less the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations to contribute as provided in this Section
8(e) are several in proportion to their respective underwriting obligations and
not joint.
9. Termination. The obligations of the Underwriters hereunder may be terminated
by XX Xxxxx, in its absolute discretion by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 7(k), 7(m) or 7(n) have occurred
or if the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
10. Reimbursement of Underwriters' Expenses. If (a) this Agreement shall have
been terminated pursuant to Section 9 or 11, (b) the Company shall fail to
tender the Stock for delivery to the Underwriters for any reason not permitted
under this Agreement, or (c) the Underwriters shall decline to purchase the
Stock for any reason permitted under this Agreement, the Company shall reimburse
the Underwriters for the fees and expenses of their counsel and for such other
out-of-pocket expenses as shall have been reasonably incurred by them in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company shall pay the full amount thereof to XX Xxxxx. If this
Agreement is
20
terminated pursuant to Section 11 by reason of the default of one or more
Underwriters, the Company shall not be obligated to reimburse any defaulting
Underwriter on account of those expenses.
11. Substitution of Underwriters. If any Underwriter or Underwriters shall
default in its or their obligations to purchase shares of Stock hereunder and
the aggregate number of shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of shares underwritten, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the shares which such defaulting Underwriter or Underwriters agreed but failed
to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 11, (i) the Company
shall have the right to postpone the Closing Dates for a period of not more than
five full business days in order that the Company may effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or arrangements, and the Company agrees promptly to
file any amendments to the Registration Statement or supplements to the
Prospectus which may thereby be made necessary, and (ii) the respective numbers
of shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 11 shall be without liability on the part of
any non-defaulting Underwriter or the Company, except expenses to be paid or
reimbursed pursuant to Sections 6 and 10 and except the provisions of Section 8
shall not terminate and shall remain in effect.
12. Successors; Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the several Underwriters, the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the Underwriter Indemnified Parties and the
Independent Underwriter, and the indemnities of the several Underwriters shall
also be for the benefit of the Company Indemnified Parties. It is understood
that each Underwriter's responsibility to the Company is solely contractual in
nature and the Underwriters do not owe the Company, or any other party, any
fiduciary duty as a result of this Agreement.
13. Survival of Indemnities, Representations, Warranties, etc. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the several Underwriters, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Company or any person controlling any of them and shall
survive delivery of and payment for the Stock.
21
14. Notices. All statements, requests, notices and agreements hereunder shall
be in writing, and:
(a) if to the Underwriters or the Independent Underwriter, shall be
delivered or sent by mail, telex or facsimile transmission to XX Xxxxx
Securities Corporation, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx,
00000, Attention: Head of Equity Capital Markets (fax: 000.000.0000), with
a copy to the Legal Department (fax: 000.000.0000); provided, however,
that any notice to the Independent Underwriter or an Underwriter pursuant
to Section 8 hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its
acceptance telex to the Representatives, which address will be supplied to
any other party hereto by XX Xxxxx upon request; or
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxxxxxxx X. Xxxxxxxxxxxx, Ph.D., Chief
Executive Officer and President (fax: 000.000.0000).
15. Definition of Certain Terms. For purposes of this Agreement, (a) "business
day" means any day on which the New York Stock Exchange, Inc. is open for
trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
17. Underwriters' Information. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the Underwriters' Information consists
solely of the following information in the Prospectus: (i) the last paragraph on
the front cover page concerning the terms of the offering by the Underwriters;
and (ii) the statements concerning the Underwriters contained in the third
paragraph under the heading "Underwriting" (which paragraph begins "The
underwriters propose to offer the shares . . .") and (iii) the statements
concerning the Underwriters contained in the last paragraph under the heading
"Underwriting."
18. Authority of the Representatives. In connection with this Agreement, you
will act for and on behalf of the several Underwriters, and any action taken
under this Agreement by the Representatives will be binding on all the
Underwriters.
19. Partial Unenforceability. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or
enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
20. General. 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. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and the Representatives.
21. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
22
If the foregoing is in accordance with your understanding of the agreement
between the Company, and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
ANADYS PHARMACEUTICALS, INC.
By:____________________________
Name:
Title:
Accepted as of
the date first above written:
XX XXXXX SECURITIES CORPORATION
XXXXX XXXXXXX & CO.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
XXXXXXX & COMPANY, INC.
Acting on their own behalf
and as Representatives of several
Underwriters referred to in the
foregoing Agreement
By: XX XXXXX SECURITIES CORPORATION
By:______________________________
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Head of Equity Capital Markets
23
SCHEDULE A
Number Number of
of Firm Optional
Shares Shares
to be to be
Name Purchased Purchased
---- --------- ---------
XX Xxxxx Securities Corporation
Xxxxx Xxxxxxx & Co.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
Xxxxxxx & Company, Inc.
--------- ---------
Xxxxxx Brothers Inc.
Total
========= =========
24
SCHEDULE B
[list of stockholders subject to Section 5(h)]
25
EXHIBIT A
Form of Lock-Up Agreement
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $0.01 per share (the "Common Stock"), of
Anadys Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and that
the Underwriters propose to reoffer the Shares to the public (the "Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of XX Xxxxx
Securities Corporation, on behalf of the Underwriters, the undersigned will not,
directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose
of (or enter into any transaction or device that is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock (including, without limitation, shares of Common
Stock that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock that may be issued upon exercise of any
option or warrant) or securities convertible into or exchangeable for Common
Stock owned by the undersigned on the date of execution of this Lock-Up Letter
Agreement or on the date of the completion of the Offering, 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, 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 commencing on the date hereof and ending 180 days after
the date of the final Prospectus relating to the Offering.
Notwithstanding the foregoing, the undersigned may transfer the
undersigned's shares of Common Stock (i) as a bona fide gift or gifts, (ii) to
any trust for the direct or indirect benefit of the undersigned or the immediate
family of the undersigned, (iii) if the undersigned is a corporation, to any
wholly-owned subsidiary of such corporation, (iv) if the undersigned is a
limited liability company, to a member or affiliated limited liability company
or (v) if the undersigned is a partnership, to a partner or affiliated
partnership; provided that in any such case, (A) it shall be a condition to the
transfer that the donee or transferee execute an agreement stating that the
donee or transferee is receiving and holding such capital stock subject to the
provisions of this Lock-Up Letter Agreement and there shall be no further
transfer of such capital stock except in accordance with this agreement, (B) any
such transfer shall not involve a disposition for value, (C) no filing by any
party (donor, donee, transferor or transferee) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), shall be required or shall be
voluntarily made in connection with such transfer or distribution (other than a
filing on a Form 5, Schedule 13D or Schedule 13G made after the expiration of
the 180-day period referred to above) and (D) each party (donor, donee,
transferor or transferee) shall not be required by law (including without
limitation the disclosure requirements of the Securities Act of 1933, as
amended, and the Exchange Act) to make, and shall agree to not voluntarily make,
any public announcement of the transfer or disposition. In addition,
notwithstanding the lock-up restriction described in this paragraph, the
undersigned may at any time enter into a written plan meeting the requirements
of Rule 10b5-1 under the Exchange Act relating to the sale of shares of Common
Stock, if then permitted by the Company, provided that the shares subject to
such plan shall be subject to the restrictions set forth in paragraph 2 of this
Lock-Up Letter Agreement. For purposes of this Lock-Up Letter Agreement,
"immediate family" shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin.
26
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
In addition, the undersigned hereby waives any rights the undersigned may
have, if any, to require registration of Common Stock in connection with the
filing of a registration statement relating to the Offering.
It is understood that, if the Company notifies you that it does not intend
to proceed with the Offering, if the Underwriting Agreement is not executed
prior to May 15, 2004, or if the Underwriting Agreement (other than the
provisions thereof which survive termination) shall terminate or be terminated
prior to payment for and delivery of the Shares, the undersigned will be
released from the undersigned's obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
The undersigned acknowledges that Lock-Up Letter Agreements in form and
substance similar to this Lock-Up Letter Agreement have been or will be
delivered to you by other parties in connection with the proposed Offering, and
that XX Xxxxx Securities Corporation, on behalf of the Underwriters, may consent
to any sale, transfer, disposition or other action otherwise prohibited under
any such other Lock-Up Letter Agreement without any obligation or liability to
the undersigned.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
27
EXHIBIT B
Form of Opinion of Xxxxxx Godward LLP
Counsel to the Company
28
EXHIBIT C
Form of Opinion of Xxxxxxxx Xxxx Lodge & Hutz LLP
Intellectual Property Counsel to the Company
29
EXHIBIT D
Form of Opinion of Xxxxx X. Xxxxxxx & Associates, APC
Intellectual Property Counsel to the Company
