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ARQULE, INC.
2,000,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
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March __, 0000
XXXXXXXXX & XXXXX LLC
XXXXXXXXXXX & CO., INC.
VECTOR SECURITIES INTERNATIONAL, INC.
x/x Xxxxxxxxx & Xxxxx LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
ArQule, Inc., a Delaware corporation (herein called the Company),
proposes to issue and sell 1,632,500 shares of its authorized but unissued
Common Stock, $.01 par value (herein called the Common Stock), and the
stockholders of the Company named in SCHEDULE II hereto (herein collectively
called the Selling Securityholders) propose to sell an aggregate of 367,500
shares of Common Stock of the Company (said shares of Common Stock being herein
called the Underwritten Stock). The Company proposes to grant to the
Underwriters (as hereinafter defined) an option to purchase up to 300,000
additional shares of Common Stock (herein called the Option Stock and with the
Underwritten Stock herein collectively called the Stock). The Common Stock is
more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.
The Company and the Selling Securityholders severally hereby confirm
the agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in SCHEDULE I hereto (herein
collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent and
warrant that you have been authorized by each of the other Underwriters to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
1. REGISTRATION STATEMENT. The Company has filed with the Securities
and Exchange Commission (herein called the Commission) a registration statement
on Form S-1 (No. 333-________), including the related preliminary prospectus,
for the registration under the Securities Act of 1933, as amended (herein called
the Securities Act) of the Stock. Copies of such registration statement and of
each amendment thereto, if any, including the related preliminary prospectus
(meeting the requirements of Rule 430A of the rules and regulations of
---------------------------
(1) Plus an option to purchase from the Company up to 300,000 additional shares
to cover over-allotments.
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the Commission) heretofore filed by the Company with the Commission have been
delivered to you and are identical to the electronically transmitted copies
thereof filed with the Commission pursuant to the Commission's Electronic Data
Gathering, Analysis and Retrieval System (herein called XXXXX), except to the
extent permitted by Regulation S-T.
The term Registration Statement as used in this Agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended (including any Rule 462(b) registration
statement). The term Prospectus as used in this Agreement shall mean the
prospectus relating to the Stock first filed with the Commission pursuant to
Rule 424(b) and Rule 430A (or if no such filing is required, as included in the
Registration Statement) and, in the event of any supplement or amendment to such
prospectus after the Effective Date, shall also mean (from and after the filing
with the Commission of such supplement or the effectiveness of such amendment)
such prospectus as so supplemented or amended. The term Preliminary Prospectus
as used in this Agreement shall mean each preliminary prospectus included in
such registration statement prior to the time it becomes effective. For the
purposes of this Agreement, all references to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the Commission
pursuant to XXXXX.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SECURITYHOLDERS.
(a) The Company hereby represents and warrants as follows:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has full corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement and the Prospectus and as being conducted, and is duly qualified
as a foreign corporation and in good standing in all jurisdictions in which
the character of the property owned or leased or the nature of the business
transacted by it makes qualification necessary (except where the failure to
be so qualified would not have a material adverse effect on the business,
properties, financial condition or results of operations of the Company).
(ii) Since the respective dates as of which information is given in
the Registration
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Statement and the Prospectus, there has not been any material adverse
change, or any development for which the Company has a reasonable basis to
believe may result in a prospective material adverse change, in the
business, properties, financial condition or results of operations of the
Company, whether or not arising from transactions in the ordinary course of
business, other than as set forth in the Registration Statement and the
Prospectus, and since such dates, except in the ordinary course of
business, the Company has not entered into any material transaction not
referred to in the Registration Statement and the Prospectus.
(iii) The Registration Statement and the Prospectus comply, and on the
Closing Date (as hereinafter defined) and any later date on which Option
Stock is to be purchased, the Prospectus will comply as to form, in all
material respects, with the provisions of the Securities Act and the rules
and regulations of the Commission thereunder. On the Effective Date, the
Registration Statement did not contain any untrue statement of a material
fact and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; on the Effective Date, the Prospectus did not and, on the
Closing Date and any later date on which Option Stock is to be purchased,
will not, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and
each of the Prospectus and any amendments or supplements thereto delivered
to you for use in connection with the offering of the Stock is identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T;
provided, however, that none of the representations and warranties in this
subparagraph (c) shall apply to statements in, or omissions from, the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information herein or otherwise furnished in writing to the
Company by or on behalf of the Underwriters expressly for use in the
Registration Statement or the Prospectus.
(iv) The Stock is duly and validly authorized, will be, when issued
and sold to the Underwriters as provided herein, duly and validly issued,
fully paid and nonassessable and conforms to the description thereof in the
Prospectus. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the issuance and
sale of the Stock as contemplated herein.
(v) The Stock to be sold by the Selling Securityholders is listed
and duly admitted to trading on the Nasdaq National Market. The Stock to be
sold by the Selling Securityholders is listed and duly admitted to trading
on the Nasdaq National Market.
(vi) Except as set forth in the Prospectus, to the best of the
Company's knowledge, the Company now holds, and on the Closing Date and any
later date on which Option Stock is to be purchased will hold, all material
licenses, certificates and permits from state, federal and other regulatory
authorities which are necessary for the conduct of the business of the
Company as currently conducted; the Company is not in violation of its
corporate charter or by-laws, or in default in the performance or
observance of any provision of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
joint venture or other agreement or instrument which is an exhibit to the
Registration Statement and to which it is a party or by which it or any of
its properties is bound
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or, to the best of the Company's knowledge, in violation of any law, order,
rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or over the properties of the Company,
which violation or default would have a Material Adverse Effect.
(vii) The Company owns, or possesses adequate rights to use and
sublicense, all patents, patent rights, inventions, trade secrets,
licenses, know-how, proprietary techniques, including processes,
trademarks, service marks, trade names, copyrights and other intellectual
property described or referred to in the Registration Statement and the
Prospectus as owned or used by it or, except as set forth in the
Prospectus, which are necessary for the conduct of its business as now
conducted and as described in the Registration Statement and the
Prospectus. All such patents, patent rights, licenses, trademarks, service
marks and copyrights are (i) valid and enforceable and (ii) not being
infringed by any third parties which infringement could, whether singly or
in the aggregate, materially and adversely affect the business, properties,
operations, condition (financial or otherwise), results of operations,
income or business prospects of the Company, as presently being conducted
or as proposed to be conducted in the Prospectus. Except as set forth in
the Prospectus, the Company has no knowledge of, nor has it received any
notice of, infringement of or conflict with asserted rights of others with
respect to any patents, patent rights, inventions, trade secrets, licenses,
know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names, copyrights or other intellectual
property which, singly or in the aggregate, is, or is reasonably likely to
be, the subject of an unfavorable decision, ruling or finding that could
have a material adverse effect on the business, properties, financial
condition or results of operations of the Company.
(viii) The authorized and outstanding shares of capital stock of the
Company are as set forth in the Prospectus under the caption "Description
of Capital Stock" provided that the outstanding shares shall have increased
by the number of shares as have been issued after December 31, 1996 and
prior to the Closing Date pursuant to the exercise of options granted under
the Company's Amended and Restated 1994 Equity Incentive Plan (herein
called the Employee Options). The Company has no subsidiaries. On the
Closing Date the capital stock of the Company will conform to the
description thereof in the Registration Statement under the caption
"Description of Capital Stock". There are no outstanding options, warrants
or other rights granted to or by the Company to purchase shares of Common
Stock or other securities of the Company, or any subsidiary, other than as
described in the Prospectus. To the best knowledge of the Company, no such
option, warrant or other right has been granted to any person, the exercise
of which would cause such person to own more than five percent of the
Common Stock outstanding immediately after the offering other than as
described in the Prospectus. No person or entity holds a right to require
or participate in a registration under the Securities Act of shares of
Common Stock of the Company which right has not been waived by the holder
thereof as of the date hereof with respect to the registration of shares
pursuant to the Registration Statement. Except as set forth in the
Prospectus, no person holds a right to require registration under the
Securities Act of shares of Common Stock of the Company at any other time.
Except for rights terminating upon the consummation of the offering of the
Stock, no person or entity has a right of first refusal or participation
with respect to the sale of shares of the Stock by the Company.
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(ix) The financial statements of the Company, together with related
notes and schedules as set forth in the Registration Statement, present
fairly the financial position, results of operations and cash flows of the
Company at the indicated dates and for the indicated periods. Such
financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, and all adjustments necessary for a fair presentation of results
for such periods have been made. The summary financial and other data
included in the Registration Statement present fairly the information shown
therein and have been compiled on a basis consistent with the financial
statements presented therein.
(x) Price Waterhouse LLP, which has certified certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Securities
Act and the Rules and Regulations thereunder.
(xi) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of laws of Florida, Chapter
92-198, An Act Relating to Disclosure of Doing Business with Cuba, and the
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after
the date the Registration Statement becomes or has become effective with
the Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported or
incorporated by reference in the Prospectus, if any, concerning the
Company's business with Cuba or with any person or affiliate located in
Cuba changes in any material way, the Company will provide the Department
notice of such business or change, as appropriate, in a form acceptable to
the Department.
(xii) The Company is familiar with the Investment Company Act of
1940, as amended, and has in the past conducted its affairs in such a
manner to ensure that the Company was not and is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, and the rules
and regulations thereunder.
(xiii) Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or to
which any property or assets of the Company is the subject which, if
determined adversely to the Company, might have a material adverse effect
on the business, properties, financial conditions or results of operations
of the Company; and to the best of the Company's knowledge, except as set
forth in the Prospectus, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others.
(b) Each of the Selling Securityholders hereby represents and
warrants as follows:
(i) Such Selling Securityholder has good and marketable title to
all of the shares of Stock to be sold by such Selling Securityholder
hereunder, free and clear of all liens, encumbrances, restrictions on
transfer, equities, security interests and claims whatsoever, with full
right and authority to deliver the same hereunder, subject in the case of
each Selling
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Securityholder, to the rights of the Company, as Custodian (herein called
the Custodian), and that upon the delivery of and payment for such shares
of the Stock hereunder, the several Underwriters will receive good and
marketable title thereto, free and clear of all liens, encumbrances,
restrictions on transfer, equities, security interests and claims
whatsoever.
(ii) Certificates in negotiable form for the shares of the Stock
to be sold by such Selling Securityholder have been placed in custody under
a Custody Agreement and Power of Attorney (hereinafter called the Custody
Agreement) for delivery under this Agreement with the Custodian; such
Selling Securityholder specifically agrees that the shares of the Stock
represented by the certificates so held in custody for such Selling
Securityholder are subject to the interests of the several Underwriters and
the Company, that the arrangements made by such Selling Securityholder for
such custody, including the Power of Attorney provided for in such Custody
Agreement, are to that extent irrevocable, and that the obligations of such
Selling Securityholder shall not be terminated by any act of such Selling
Securityholder or by operation of law, whether by the death or incapacity
of such Selling Securityholder (or, in the case of a Selling Securityholder
that is not an individual, the dissolution or liquidation of such Selling
Securityholder) or the occurrence of any other event; if any such death,
incapacity, dissolution, liquidation or other such event should occur
before the delivery of such shares of the Stock hereunder, certificates for
such shares of the Stock shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such death,
incapacity, dissolution, liquidation or other event had not occurred,
regardless of whether the Custodian shall have received notice of such
death, incapacity, dissolution, liquidation or other event.
(c) Each of the Selling Securityholders, severally and not jointly,
represents and warrants that the representations and warranties of the
Company set forth in subparagraph (iii) of paragraph 2(a) above are true
and correct and that, to their knowledge, the representations and
warranties of the Company set forth in subparagraphs (i) and (ii) and
(iv)-(xii) of paragraph 2(a) above are true and correct.
3. PURCHASE OF THE STOCK BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject
to the terms and conditions herein set forth, the Company agrees to issue and
sell 1,632,500 shares of the Underwritten Stock to the several Underwriters,
each Selling Securityholder agrees to sell to the several Underwriters the
number of shares of the Underwritten Stock set forth in SCHEDULE II opposite the
name of such Selling Securityholder, and each of the Underwriters agrees to
purchase from the Company and the Selling Securityholders the respective
aggregate number of shares of Underwritten Stock set forth opposite its name in
SCHEDULE I. The price at which such shares of Underwritten Stock shall be sold
by the Company and the Selling Securityholders and purchased by the several
Underwriters shall be $_____ per share. The obligation of each Underwriter to
each of the Company and the Selling Securityholders shall be to purchase from
each of the Company and the Selling Securityholders that number of shares of the
Underwritten Stock which represents the same proportion of the total number of
shares of the Underwritten Stock to be sold by each of the Company and the
Selling Securityholders pursuant to this Agreement as the number of shares of
the Underwritten Stock set forth opposite the name of such
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Underwriter in SCHEDULE I hereto represents of the total number of shares of the
Underwritten Stock to be purchased by all Underwriters pursuant to this
Agreement, as adjusted by you in such manner as you deem advisable to avoid
fractional shares. In making this Agreement, each Underwriter is contracting
severally and not jointly; except as provided in paragraphs (b) and (c) of this
Section 3, the agreement of each Underwriter is to purchase only the respective
number of shares of the Underwritten Stock specified in SCHEDULE I.
(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company or the Selling Securityholders shall
immediately give notice thereof to you, and the non-defaulting Underwriters
shall have the right within 24 hours after the receipt by you of such notice to
purchase, or procure one or more other Underwriters to purchase, in such
proportions as may be agreed upon between you and such purchasing Underwriter or
Underwriters and upon the terms herein set forth, all or any part of the shares
of the Stock which such defaulting Underwriter or Underwriters agreed to
purchase. If the non-defaulting Underwriters fail so to make such arrangements
with respect to all such shares and portion, the number of shares of the Stock
which each non-defaulting Underwriter is otherwise obligated to purchase under
this Agreement shall be automatically increased on a pro rata basis to absorb
the remaining shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase; provided, however, that the non-defaulting
Underwriters shall not be obligated to purchase the shares and portion which the
defaulting Underwriter or Underwriters agreed to purchase if the aggregate
number of such shares of the Stock exceeds 10% of the total number of shares of
the Stock which all Underwriters agreed to purchase hereunder. If the total
number of shares of the Stock which the defaulting Underwriter or Underwriters
agreed to purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company and the Selling Securityholders shall have the
right, within 24 hours next succeeding the 24-hour period above referred to, to
make arrangements with other underwriters or purchasers satisfactory to you for
purchase of such shares and portion on the terms herein set forth. In any such
case, either you or the Company and the Selling Securityholders shall have the
right to postpone the Closing Date determined as provided in Section 5 hereof
for not more than seven business days after the date originally fixed as the
Closing Date pursuant to said Section 5 in order that any necessary changes in
the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If neither the non-defaulting Underwriters nor the
Company and the Selling Securityholders shall make arrangements within the
24-hour periods stated above for the purchase of all the shares of the Stock
which the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company or the Selling Securityholders to any
non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company or the Selling Securityholders.
Nothing in this paragraph (b), and no action taken hereunder, shall relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the
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several Underwriters to purchase the Option Stock at the same price per share as
the Underwriters shall pay for the Underwritten Stock. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten Stock by
the Underwriters and may be exercised in whole or in part at any time (but not
more than once) on or before the thirtieth day after the date of this Agreement
upon written or telegraphic notice by you to the Company setting forth the
aggregate number of shares of the Option Stock as to which the several
Underwriters are exercising the option. Delivery of certificates for the shares
of Option Stock, and payment therefor, shall be made as provided in Section 5
hereof. The number of shares of the Option Stock to be purchased by each
Underwriter shall be the same percentage of the total number of shares of the
Option Stock to be purchased by the several Underwriters as such Underwriter is
purchasing of the Underwritten Stock, as adjusted by you in such manner as you
deem advisable to avoid fractional shares.
4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering by the Underwriters of
the Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front
cover page, the first two paragraphs on the inside front cover and under
"Underwriting" in the Registration Statement, any Preliminary Prospectus and the
Prospectus relating to the Stock filed by the Company (insofar as such
information relates to the Underwriters) constitutes the only information
furnished by the Underwriters to the Company for inclusion in the Registration
Statement, any Preliminary Prospectus, and the Prospectus, and you on behalf of
the respective Underwriters represent and warrant to the Company that the
statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten Stock
and the Option Stock (if the option granted by Section 3(c) hereof shall have
been exercised not later than 7:00 A.M., San Francisco time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of Xxxxxx & Dodge LLP, Xxx Xxxxxx Xxxxxx, Xxxxxx, XX 00000, at
7:00 a.m., San Francisco time, on the third business day after the date of this
Agreement, or at such time on such other day, not later than seven full business
days after such third business day, as shall be agreed upon in writing by the
Company, the Selling Securityholders and you. The date and hour of such delivery
and payment (which may be postponed as provided in Section 3(b) hereof) are
herein called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of Xxxxxx & Dodge LLP, Xxx Xxxxxx
Xxxxxx, Xxxxxx, XX 00000, at 7:00 a.m., San Francisco time, on the third
business day after the exercise of such option.
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(c) Payment for the Stock purchased from the Company shall be made to
the Company or its order, and payment for the Stock purchased from the Selling
Securityholders shall be made to the Custodian, for the account of the Selling
Securityholders, in each case by wire transfer or one or more certified or
official bank check or checks in same day funds. Such payment shall be made upon
delivery of certificates for the Stock to you for the respective accounts of the
several Underwriters against receipt therefor signed by you. Certificates for
the Stock to be delivered to you shall be registered in such name or names and
shall be in such denominations as you may request at least one business day
before the Closing Date, in the case of Underwritten Stock, and at least one
business day prior to the purchase thereof, in the case of the Option Stock.
Such certificates will be made available to the Underwriters for inspection,
checking and packaging at the offices of Lewco Securities Corporation, 0
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the business day prior to the Closing Date
or, in the case of the Option Stock, by 3:00 p.m., New York time, on the
business day preceding the date of purchase.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholders for shares to be purchased by any Underwriter
whose check shall not have been received by you on the Closing Date or any later
date on which Option Stock is purchased for the account of such Underwriter. Any
such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. Each of the Company and the Selling Securityholders
respectively covenants and agrees as follows:
(a) The Company will (i) to the extent necessary prepare and timely
file with the Commission under Rule 424(b) a Prospectus containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A and (ii) not file any amendment to the Registration
Statement or supplement to the Prospectus of which you shall not previously have
been advised and furnished with a copy or to which you shall have reasonably
objected in writing or which is not in compliance with the Securities Act or the
rules and regulations of the Commission.
(b) The Company will promptly notify each Underwriter in the event
of (i) the request by the Commission for amendment of the Registration Statement
or for supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company and
the Selling Securityholders will make every reasonable effort to prevent the
issuance of such a stop order and, if such an order shall at any time be issued,
to obtain the withdrawal thereof at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to
you a signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the
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time the Registration Statement becomes effective and, promptly upon the filing
thereof, a signed copy of each post-effective amendment, if any, to the
Registration Statement (together with, in each case, all exhibits thereto unless
previously furnished to you) and will also deliver to you, for distribution to
the Underwriters, a sufficient number of additional conformed copies of each of
the foregoing (but without exhibits) so that one copy of each may be distributed
to each Underwriter, (ii) as promptly as possible deliver to you and send to the
several Underwriters, at such office or offices as you may designate, as many
copies of the Prospectus as you may reasonably request, and (iii) thereafter
from time to time during the period in which a prospectus is required by law to
be delivered by an Underwriter or dealer, likewise send to the Underwriters as
many additional copies of the Prospectus and as many copies of any supplement to
the Prospectus and of any amended prospectus, filed by the Company with the
Commission, as you may reasonably request for the purposes contemplated by the
Securities Act. The Registration Statement, the Prospectus and any amendments or
supplements thereto furnished to you will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any event relating
to or affecting the Company, or of which the Company shall be advised in writing
by you, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of counsel for the Underwriters, to supplement or
amend the Prospectus in order to make the Prospectus not misleading in the light
of the circumstances existing at the time it is delivered to a purchaser of the
Stock, the Company will forthwith prepare and file with the Commission a
supplement to the Prospectus or an amended prospectus so that the Prospectus as
so supplemented or amended will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time such
Prospectus is delivered to such purchaser, not misleading. If, after the initial
public offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is required by law to be delivered by an Underwriter or dealer, in
keeping such qualifications in good standing under said securities or
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blue sky laws; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. The Company
will, from time to time, prepare and file such statements, reports, and other
documents as are or may be required to continue such qualifications in effect
for so long a period as you may reasonably request for distribution of the
Stock.
(g) During a period of five years commencing with the date hereof,
the Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports, documents or statements
furnished to stockholders of the Company or filed with the Commission. If
applicable, any such document furnished to you will be identical to the
electronically transmitted copy thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(h) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date, the
Company will make generally available to its stockholders an earnings statement
in accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.
(i) The Company agrees to pay all costs and expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all costs and expenses incident to (i) the
preparation, printing and filing with the Commission and the National
Association of Securities Dealers, Inc. ("NASD") of the Registration Statement,
any Preliminary Prospectus and the Prospectus, (ii) the furnishing to the
Underwriters of copies of any Preliminary Prospectus and of the several
documents required by paragraph (c) of this Section 6 to be so furnished, (iii)
the photocopying of this Agreement and related documents delivered to the
Underwriters, (iv) the preparation, printing and filing of all supplements and
amendments to the Prospectus referred to in paragraph (d) of this Section 6, (v)
the furnishing to you and the Underwriters of the reports and information
referred to in paragraph (g) of this Section 6 and (vi) the printing and
issuance of stock certificates, including the transfer agent's fees. Each of the
Selling Securityholders will pay any transfer taxes incident to the transfer to
the Underwriters of the shares of Stock being sold by such Selling
Securityholder.
(j) The Company agrees to reimburse you, for the account of the
several Underwriters, for fees and related disbursements (including counsel fees
and disbursements and cost of printing memoranda for the Underwriters) paid by
or for the account of the Underwriters or their counsel in qualifying the Stock
under state securities or blue sky laws and in the review of the offering by the
NASD.
(k) The provisions of paragraphs (i) and (j) of this Section are
intended to relieve the Underwriters from the payment of the expenses and costs
which the Company and the Selling Securityholders hereby agree to pay and shall
not affect any agreement which the Company and the Selling Securityholders may
make, or may have made, for the sharing of any such expenses and costs.
(l) The Company and each of the Selling Securityholders hereby agrees
that, without the prior written consent of Xxxxxxxxx & Xxxxx LLC on behalf of
the Underwriters, it will not,
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for a period of 90 days following the effective date of the Registration
Statement, (i) sell, offer, contract to sell, make any short sale, pledge,
transfer or otherwise dispose of, directly or indirectly, any shares of Common
Stock (including any stock appreciation right or similar right with an exercise
or conversion privilege at a price related to, or derived from the market price
of the Common Stock) or any securities convertible into or exchangeable or
exercisable for shares of Common Stock owned directly by the undersigned or with
respect to which the undersigned has the power of disposition (including,
without limitation, shares of Common Stock which the undersigned may be deemed
to beneficially own in accordance with the rules and regulations promulgated
under the Securities and Exchange Act of 1934, as amended), or (ii) engage in
any hedging transaction with respect to any shares of Common Stock that may have
an impact on the market price of the Common Stock, whether any such transaction
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (A) the sale of Stock to
be sold to the Underwriters pursuant to this Agreement, (B) the issuance of
shares of Common Stock issued by the Company upon the exercise of options
granted under the stock option plans of the Company (the "Option Plans"), and
(C) the grant of options to purchase Common Stock under the Option Plans.
(m) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your reasonable
opinion the market price for the Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
(n) The Company will in the future conduct its affairs in such a
manner to ensure that the Company will not be an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of this Section 7, the
Company and the Selling Securityholders jointly and severally agree to indemnify
and hold harmless each Underwriter and each person (including each partner or
officer thereof) who controls any Underwriter within the meaning of Section 15
of the Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Securities Exchange Act of
1934, as amended (herein called the Exchange Act), or the common law or
otherwise, and the Company and the Selling Securityholders jointly and severally
agree to reimburse each such Underwriter and controlling person for any legal or
other expenses (including, except as otherwise hereinafter provided, reasonable
fees and disbursements of a single counsel for all indemnified parties) incurred
by the respective indemnified parties in connection with defending against any
such losses, claims, damages or liabilities or in connection with any
investigation or inquiry of, or
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other proceeding which may be brought against, the respective indemnified
parties, in each case arising out of or based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (including the Prospectus as part thereof and any Rule 462(b)
registration statement) or any post-effective amendment thereto (including any
Rule 462(b) registration statement) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus or
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the omission
or alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that (1) the indemnity agreements of
the Company and the Selling Securityholders contained in this paragraph (a)
shall not apply to any such losses, claims, damages, liabilities or expenses if
such statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing to the
Company by or on behalf of any Underwriter for use in any Preliminary Prospectus
or the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto and (2) the indemnity agreement contained in this paragraph
(a) with respect to any Preliminary Prospectus shall not inure to the benefit of
any Underwriter from whom the person asserting any such losses, claims, damages,
liabilities or expenses purchased the Stock which is the subject thereof (or to
the benefit of any person controlling such Underwriter) if at or prior to the
written confirmation of the sale of such Stock a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
and the untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof. The indemnity agreements of
the Company and the Selling Securityholders contained in this paragraph (a) and
the representations and warranties of the Company and the Selling
Securityholders contained in Section 2 hereof shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its officers who signs the Registration Statement on his
own behalf or pursuant to a power of attorney, each of its directors, each of
the Selling Securityholders, each other Underwriter and each person (including
each partner or officer thereof) who controls the Company, any such other
Underwriter or any such Selling Securityholders, within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Exchange Act, or the common law
or otherwise and to reimburse each of them for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of a single counsel for all indemnified parties) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any Rule
462(b)
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registration statement) or any post-effective amendment thereto (including any
Rule 462(b) registration statement) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, if
such statement or omission was made in reliance upon and in conformity with
information furnished as herein stated or otherwise furnished in writing to the
Company by or on behalf of such indemnifying Underwriter for use in the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto. The indemnity agreement of each Underwriter contained in
this paragraph (b) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a)
and (b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party shall be entitled at its own
expense to participate in the defense of any action, suit or proceeding against,
or investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (herein called the Notice of Defense) to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after receipt of
the Notice, an indemnifying
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party gives a Notice of Defense and the counsel chosen by the indemnifying party
or parties is reasonably satisfactory to the indemnified party or parties(it
being agreed that Xxxxxx & Dodge LLP is satisfactory), the indemnifying party or
parties will not be liable under paragraphs (a) through (c) of this Section 7
for any legal or other expenses subsequently incurred by the indemnified party
or parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding, except that (A) the indemnifying party or parties shall
bear the, legal and other expenses incurred in connection with the conduct of
the defense as referred to in clause (i) of the proviso to the preceding
sentence and (B) the indemnifying party or parties shall bear such other
expenses as it or they have authorized to be incurred by the indemnified party
or parties. If, within a reasonable time after receipt of the Notice, no Notice
of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnifying party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Selling Securityholders on the one hand and the Underwriters on
the other shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Stock received by the Company and the
Selling Securityholders and the total underwriting discount received by the
Underwriters, as set forth in the table on the cover page of the Prospectus,
bear to the aggregate public offering price of the Stock. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by each indemnifying party and
the parties' relative intent knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Stock purchased by such
Underwriter. No person guilty of fraudulent
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misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this paragraph
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
(e) Neither the Company nor the Selling Securityholders will, without
the prior written consent of each Underwriter, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding) unless such settlement
compromise or consent includes an unconditional release of such Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding.
(f) Except for the liability of each Selling Securityholder under
such Selling Securityholder's representations and warranties contained in
subparagraphs (b)(i) and (b)(ii) of Section 2 hereof, which liability shall not
be limited, the liability of each Selling Securityholder under such Selling
Securityholder's representations and warranties contained in paragraph (c) of
Section 2 hereof, and under the indemnity and reimbursement agreements contained
in the provisions of this Section 7 and Section 11 hereof, shall be limited to
an amount equal to the public offering price upon the sale of the stock sold by
such Selling Securityholder to the Underwriters. The Company and the Selling
Securityholders may agree, as among themselves and without limiting the rights
of the Underwriters under this Agreement, as to the respective amounts of such
liability for which they each shall be responsible.
8. TERMINATION. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company if after the
date of this Agreement trading in the Common Stock shall have been suspended, or
if there shall have occurred (i) the engagement in hostilities or an escalation
of major hostilities by the United States or the declaration of war or a
national emergency by the United States on or after the date hereof, (ii) any
outbreak of hostilities or other national or international calamity or crisis or
change in economic or political conditions if the effect of such outbreak,
calamity, crisis or change in economic or political conditions in the financial
markets of the United States would, in the Underwriters' reasonable judgment,
make the offering or delivery of the Stock impracticable, (iii) suspension of
trading in securities generally or a material adverse decline in value of
securities generally on the New York Stock Exchange, the American Stock
Exchange, or The Nasdaq Stock Market or limitations on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such exchange or system, (iv) the enactment, publication, decree
17
-17-
or other promulgation of any federal or state statute, regulation, rule or order
of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company or the Selling
Securityholders to the Underwriters and no liability of the Underwriters to the
Company or the Selling Securityholders; provided, however, that in the event of
any such termination the Company and the Selling Securityholders agree to
indemnify and hold harmless the Underwriters from all actual, accountable,
out-of-pocket costs and expenses incident to the performance of the obligations
of the Company and the Selling Securityholders under this Agreement, including
all actual, accountable, out-of-pocket costs and expenses referred to in
paragraphs (i) and (j) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company and by the Selling Securityholders of all their
respective obligations to be performed hereunder at or prior to the Closing Date
or any later date on which Option Stock is to be purchased, as the case may be,
and to the following further conditions:
(a) The Registration Statement shall have become effective; and no
stop order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock hereunder
and the validity and form of the certificates representing the Stock, all
corporate proceedings and other legal matters incident to the foregoing, and the
form of the Registration Statement and of the Prospectus (except as to the
financial statements contained therein), shall have been approved at or prior to
the Closing Date by Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, counsel for the
Underwriters.
(c) You shall have received from Xxxxxx & Dodge LLP, counsel for the
Company and the Selling Securityholders, an opinion, addressed to the
Underwriters and dated the Closing Date, covering the matters set forth in Annex
A hereto, and if Option Stock is purchased at any date after the Closing Date,
additional opinions from each such counsel, addressed to the Underwriters and
dated such later date, confirming that the statements expressed as of the
Closing Date in such opinions remain valid as of such later date.
(d) You shall have received from Xxxxxx & Xxxxxxx, patent counsel for
the Company, an opinion, addressed to the Underwriters and dated the Closing
Date, to the effect that they serve a patent counsel to the Company with respect
to the issued patents, pending and contemplated patent applications, trade
secrets and the proprietary technology that the Company owns or has rights to,
and covering the matters set forth in Annex B hereto, and if Option Stock is
purchased at any date after the Closing Date, additional opinions from such
counsel, addressed
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to the Underwriters and dated such later date, confirming that the statements
expressed as of the Closing Date, in such opinion remain valid as of such later
date.
(e) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct in all material respects and neither the Registration Statement nor the
Prospectus omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, respectively, not misleading,
(ii) since the Effective Date, no event has occurred which should have been set
forth in a supplement or amendment to the Prospectus which has not been set
forth in such a supplement or amendment, (iii) since the respective dates as of
which information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the business, properties, financial
condition or results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, and, since such dates, except
in the ordinary course of business, the Company has not entered into any
material transaction not referred to in the Registration Statement in the form
in which it originally became effective and the Prospectus contained therein,
(iv) the Company has no material contingent obligations which are not disclosed
in the Registration Statement and the Prospectus, (v) there are no pending or
threatened legal proceedings to which the Company is a party or of which
property of the Company is the subject which are material and which are not
disclosed in the Registration Statement and the Prospectus, (vi) there are no
franchises, contracts, leases or other documents which are required to be filed
as exhibits to the Registration Statement which have not been filed as required,
(vii) the representations and warranties of the Company and the Selling
Securityholders herein are true and correct in all material respects as of the
Closing Date and the Company and each of the Selling Securityholders have
complied with each obligation which is required to be performed on his or its
part at or prior to the Closing Date or any later date on which Option Stock is
to be purchased, as the case may be, and (viii) there has not been any material
change in the market for securities in general or in political, financial or
economic conditions from those reasonably foreseeable that would render it
impracticable in your reasonable judgment to make a public offering of the
Stock, or a material adverse change in market levels for securities in general
(or those of companies such as the Company in particular) or financial or
economic conditions which render it inadvisable to proceed.
(f) You shall have received on the Closing Date and on any later date
on which Option Stock is purchased a certificate, dated the Closing Date or such
later date, as the case may be, and signed by the Chief Executive Officer,
President and the Chief Financial Officer of the Company, stating that the
respective signers of said certificate have carefully examined the Registration
Statement in the form in which it originally became effective and the Prospectus
contained therein and any supplements or amendments thereto, and that the
statements included in clauses (i) through (vii) of paragraph (e) of this
Section 9 are true and correct.
(g) You shall have received from Price Waterhouse LLP a letter or
letters, addressed to the Underwriters and dated the Closing Date and any later
date on which Option Stock is purchased, confirming that they are independent
public accountants with respect to the Company within the meaning of the
Securities Act and the applicable published rules and regulations
19
-19-
thereunder and based upon the procedures described in their letter delivered to
you concurrently with the execution of this Agreement (herein called the
Original Letter), but carried out to a date not more than five business days
prior to the Closing Date or such later date on which Option Stock is purchased
(i) confirming, to the extent true, that the statements and conclusions set
forth in the Original Letter are accurate as of the Closing Date or such later
date, as the case may be, and (ii) setting forth any revisions and additions to
the statements and conclusions set forth in the Original Letter which are
necessary to reflect any changes in the facts described in the Original Letter
since the date of the Original Letter or to reflect the availability of more
recent financial statements, data or information. The letters shall not disclose
any change, or any development involving a prospective change, in or affecting
the business or properties of the Company or any of its subsidiaries which, in
your sole judgment makes it impractical or inadvisable to proceed with the
public offering of the Stock or the purchase of the Option Stock as contemplated
by the Prospectus.
(h) You shall have received from Price Waterhouse LLP a letter
stating that their review of the Company's system of internal accounting
controls, to the extent they deemed necessary in establishing the scope of their
examination of the Company's financial statements as of December 31, 1996, did
not disclose any weakness in internal controls that they considered to be
material weaknesses.
(i) You shall have received on the Closing Date (and, with respect
to the Selling Securityholders listed in SCHEDULE II, any later date on which
Option Stock is purchased from such Selling Securityholders) a certificate from
or on behalf of each Selling Securityholder stating that:
(i) The representations and warranties made by such Selling
Securityholder herein are true or correct in all material respects on the
Closing Date; and
(ii) Such Selling Securityholder has complied with each
obligation which is required to be performed on his or its part at or prior to
the Closing Date.
(j) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(k) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been duly authorized for listing by the Nasdaq National
Market upon official notice of issuance.
(l) On or prior to the Closing Date, you shall have received from all
directors, officers, and beneficial holders of more than 1% of the outstanding
Common Stock, agreements, in form reasonably satisfactory to Xxxxxxxxx & Xxxxx
LLC, stating that without the prior written consent of Xxxxxxxxx & Xxxxx LLC on
behalf of the Underwriters, such person or entity will not, for a period of 90
days after the effective date of the Registration Statement, (i) sell, offer,
contract to sell, make any short sale, pledge, transfer or otherwise dispose of,
directly or indirectly, any shares of Common Stock (including any stock
appreciation right or similar right
20
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with an exercise or conversion privilege at a price related to, or derived from
the market price of the Common Stock) or any securities convertible into or
exchangeable or exercisable for shares of Common Stock owned directly by the
undersigned or with respect to which the undersigned has the power of
disposition (including, without limitation, shares of Common Stock which the
undersigned may be deemed to beneficially own in accordance with the rules and
regulations promulgated under the Securities and Exchange Act of 1934, as
amended), or (ii) engage in any hedging transaction with respect to any shares
of Common Stock that may have an impact on the market price of the Common Stock,
whether any such transaction is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise.
All the agreements, opinions, certificates and letters mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, counsel for the
Underwriters, shall be reasonably satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Selling Securityholders. Any such termination shall be
without liability of the Company or the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders; provided, however, that (i) in the event of such
termination, the Company agrees to indemnify and hold harmless the Underwriters
from all actual, accountable, out-of-pocket costs and expenses incident to the
performance of the obligations of the Company and the Selling Securityholders
under this Agreement, including all actual, accountable, out-of-pocket costs and
expenses referred to in paragraphs (i) and (j) of Section 6 hereof, and (ii) if
this Agreement is terminated by you because of any refusal, inability or failure
on the part of the Company or the Selling Securityholders to perform any
agreement herein, to fulfill any of the conditions herein, or to comply with any
provision hereof other than by reason of a default by any of the Underwriters,
the Company will reimburse the Underwriters severally upon demand for all
actual, accountable, out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the transactions contemplated hereby.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY AND THE SELLING
SECURITYHOLDERS. The obligation of the Company and the Selling Securityholders
to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall
not be fulfilled, this Agreement may be terminated by the Company and the
Selling Securityholders by giving notice to you. Any such termination shall be
without liability of the Company and the Selling Securityholders to the
Underwriters and without liability of the Underwriters to the Company or the
Selling Securityholders; provided, however, that in the event of any such
termination the Company and the Selling Securityholders jointly and severally
agree to indemnify and hold harmless the Underwriters from all actual,
accountable, out-of-pocket costs and expenses incident to the performance of the
obligations of the Company and the Selling Securityholders
21
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under this Agreement including all actual, accountable, out-of-pocket costs and
expenses referred to in paragraphs (i) and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement (and subject, in the case of a
Selling Securityholder, to the provisions of paragraph (f) of Section 7), the
Company and the Selling Securityholders hereby jointly and severally agree to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; PROVIDED, HOWEVER, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of the Company, the Selling Securityholders and the several
Underwriters and, with respect to the provisions of Section 7 hereof, the
several parties (in addition to the Company, the Selling Securityholders and the
several Underwriters) indemnified under the provisions of said Section 7, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such, of any of the
Stock from any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telecopied or delivered to Xxxxxxxxx & Xxxxx LLC, Xxx Xxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000; and if to the Company, shall be mailed,
telecopied or delivered to it at its office, 000 Xxxxxx Xxxxxx, Xxxxxxx, XX
00000, Attention: Chief Executive Officer; and if to the Selling
Securityholders, shall be mailed, telegraphed or delivered to the Selling
Securityholders in care of the Custodian at the address of the Company set forth
above. All notices given by telecopy shall be promptly confirmed by letter.
14. DEFAULT BY SELLING SECURITYHOLDERS. If on any Closing Date any
Selling Securityholder fails to sell the Stock which such Selling Securityholder
has agreed to sell on such date as set forth in SCHEDULE II hereto, the Company
agrees that it will sell or arrange for the sale of that number of shares of
Common Stock to the Underwriters which represents the shares of Stock which such
Selling Securityholder has failed to so sell, as set forth in Schedule II
hereto, or such fewer number of shares as may be requested by the Underwriters.
15. MISCELLANEOUS. The reimbursement indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any
22
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investigation made by or on behalf of any Underwriter or controlling person
thereof, or by or on behalf of the Company or the Selling Securityholders or
their respective directors or officers, and (c) delivery and payment for the
Stock under this Agreement; PROVIDED. HOWEVER, that if this Agreement is
terminated prior to the Closing Date, the provisions of paragraphs (l) and (m)
of Section 6 hereof shall be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California.
23
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Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement among the Company
and the several Underwriters in accordance with its terms.
Very Truly Yours,
ARQULE, INC.
By:
------------------------------------
Xxxx X. Xxxxxx
President and Chief Executive Officer
SELLING SECURITYHOLDERS LISTED ON
SCHEDULE II HERETO:
By:
-------------------------------------
Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
XXXXXXXXX & XXXXX LLC
XXXXXXXXXXX & CO., INC.
VECTOR SECURITIES INTERNATIONAL, INC.
By: Xxxxxxxxx & Xxxxx LLC
By:
---------------------------
Managing Director
Acting on behalf of the several
Underwriters, including themselves,
named in SCHEDULE I hereto.
24
SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES OF
UNDERWRITTEN STOCK
UNDERWRITERS TO BE PURCHASED
------------ ---------------
Xxxxxxxxx & Xxxxx LLC...............................................................
Xxxxxxxxxxx & Co., Inc..............................................................
Vector Securities International, Inc................................................
25
SCHEDULE II
SELLING SECURITYHOLDERS
NUMBER OF SHARES OF
UNDERWRITTEN STOCK
NAME OF SELLING SECURITYHOLDERS TO BE SOLD
------------------------------- ----------
26
ANNEX A
Matters to be Covered in the Opinion of
Counsel for the Company and the Selling Securityholders
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing as a foreign corporation in the
Commonwealth of Massachusetts. The Company has all corporate power and authority
necessary to own or hold its properties and conduct the business in which it is
presently engaged.
2. The Company's authorized capitalization consists of 30,000,000 shares
of Common Stock, $.01 par value per share, and 1,000,000 shares of Preferred
Stock, $0.01 par value per share. All of the issued and outstanding shares of
capital stock of the Company have been, and the shares of the Stock being
delivered on the date hereof, upon issuance and delivery and payment therefor in
the manner described in the Underwriting Agreement, will be, duly and validly
authorized and issued, fully paid and non-assessable with no personal liability
attaching to the ownership thereof. The statements made in the Prospectus under
the caption "Description of Capital Stock," insofar as they purport to
constitute summaries of the terms of the Company's capital stock (including the
Stock), constitute accurate summaries of the terms of such capital stock in all
material respects and fairly present in all material respects the information
called for with respect thereto by Item 202 of Regulation S-K promulgated by the
Commission.
3. There are no preemptive or other rights to subscribe for or to
purchase or rights of first refusal or participation with respect to any shares
of Common Stock pursuant to the Company's charter or by-laws or any agreement or
other instrument known to us. Except as described in the Prospectus and as
provided in the Company charter and by-laws, there are no restrictions upon the
voting or transfer of any shares of Common Stock pursuant to any agreement or
other instrument known to us.
4. To our knowledge, but without inquiry into the dockets of any court,
commission, regulatory body, administrative agency or other government body, and
except as set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a party
or to which any property or assets of the Company or any of its subsidiaries is
subject which, if determined adversely to the Company or any of its
subsidiaries, are reasonably likely to have a material adverse effect on the
business or prospects of the Company and its subsidiaries taken as a whole and,
to our knowledge, except as set forth in the Prospectus, no such proceedings are
threatened by governmental authorities or by others.
5. The Registration Statement has been declared effective under the
Securities Act and, to our knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceeding for that purpose
is pending or threatened by the Commission.
27
6. The Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company prior to the date hereof
(other than the financial statements, financial and statistical information, pro
forma financial information and related schedules and notes thereto, as to which
we express no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations. In passing
upon the form of such documents, we have not independently verified and are not
passing upon, and have assumed the correctness and completeness of, the
statements made therein.
7. To our knowledge, there are no contracts or other documents that are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
that have not been described or filed as exhibits to the Registration Statement.
8. The Company has full right, power, and authority to execute and
deliver the Underwriting Agreement and to perform its obligations thereunder;
and all corporate action required to be taken for the due and proper
authorization, issuance, sale and delivery of the Common Stock to be sold by the
Company under the Underwriting Agreement and the consummation of the
transactions contemplated thereby to be effected by the Company have been duly
and validly taken by the Company.
9. The Underwriting Agreement has been duly authorized, executed, and
delivered by the Company.
10. The Underwriting Agreement has been duly executed and delivered by or
on behalf of each of the Selling Securityholders and the Custody Agreement
between the Selling Securityholders and the Company, as Custodian, and the Power
of Attorney referred to in such Custody Agreement have been duly executed and
delivered by each of the Selling Securityholders.
11. To such counsel's knowledge each Selling Securityholder has full legal
right, power and authority, and any approval required by law (other than any
approval required by the applicable federal or state securities and Blue Sky
laws) to sell, assign, transfer and deliver the Stock to be sold by him in the
manner provided in the Underwriting Agreement and the Custody Agreement.
12. Upon delivery to the Underwriters of a certificate representing the
Stock that is being sold by each Selling Securityholder under the Underwriting
Agreement and payment for such Stock by the Underwriters, each Underwriter will
acquire all of the rights of such Selling Securityholder in such Stock, and each
Underwriter will also acquire such Stock free of any "adverse claim" (within the
meaning of Section 8-302(2) of the Uniform Commercial Code).
13. The issuance and sale of the shares of Stock being delivered on the
date hereof by the Company and the Selling Securityholders, the compliance by
the Company and each Selling Securityholder with all of the provisions of the
Underwriting Agreement and the consummation of the transactions contemplated
thereby will not conflict with or result in a breach or violation of
28
any of the terms or provisions of, or constitute a default, an event of default,
or an event which, with notice or lapse of time or both, would constitute a
default or event of default under, any indenture, mortgage, deed of trust, loan
agreement, or other agreement or instrument filed as an exhibit to the
Registration Statement, nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any material statute,
order, rule or regulation or, to our knowledge, any judgment, order or decree of
any court or governmental agency or body having jurisdiction over the Company or
any of its properties or assets, except for such conflicts, breaches, violations
and defaults as are not reasonably likely, individually or in the aggregate, to
have (a) a material adverse effect on the business or prospects of the Company;
or (b) any adverse effect on the consummation of the transactions contemplated
by the Underwriting Agreement. 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 Exchange Act and applicable state
or foreign securities laws in connection with the purchase and distribution of
the Stock by the underwriters thereof, no consent, approval, authorization or
order of, or filing or registration with, any such court or governmental agency
or body is required for the issuance and sale of the shares of Stock being
delivered on the date hereof by the Company and the Selling Securityholders, the
compliance by the Company and the Selling Securityholders with all of the
provisions of the Underwriting Agreement or the consummation of the transactions
contemplated thereby.
14. To our knowledge, except as described under the caption "Shares
Eligible for Future Sale -- Registration Rights" in the Preliminary Prospectus
there are no contracts, agreements or understandings in effect on the date
hereof between the Company and any person granting such person the right to
require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the Registration
Statement or in any other registration statement filed by the Company under the
Securities Act.
15. The Stock issued and sold by the Company will be accepted for listing
by The Nasdaq National Market upon official notice of issuance of the shares by
the Company to The Nasdaq National Market.
In connection with the preparation of the Registration Statement and the
Prospectus, we have participated in conferences with officers and
representatives of the Company and the independent accountants of the Company,
at which conferences we have made inquiries of such persons and others and
discussed the contents of the Registration Statement and the Prospectus. While
the limitations inherent in the independent verification of factual matters and
the character of determinations involved in the registration process are such
that we are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (except as specifically stated
elsewhere in this opinion), nothing has come to our attention that has caused us
to believe that the Registration Statement, as of its effective date, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading (except that we express no view or opinion with respect
to the financial statements and schedules or other financial and statistical
data included in the
29
Registration Statement), and nothing has come to our attention that has caused
us to believe that the Prospectus, as of its date and as of the Closing Date,
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (except that we
express no view or opinion with respect to the financial statements and
schedules or other financial and statistical data included in the Prospectus).
----------------------------
In rendering the foregoing opinion we may rely as to questions of law not
involving the laws of the United States, the Commonwealth of Massachusetts and
the State of Delaware upon opinions of local counsel satisfactory in form and
scope to counsel for the Underwriters. We are not, however, rendering any
opinion with respect to patents, trademarks or federal or state regulation of
healthcare products. Copies of any opinions so relied upon shall be delivered to
the Representatives and to counsel for the Underwriters and the foregoing
opinion shall also state that counsel knows of no reason the Underwriters are
not entitled to rely upon the opinions of such local counsel. In addition, we
may state that as to various questions of fact material to our opinion, we have
relied upon the representations made in or pursuant to the Underwriting
Agreement and upon certificates of officers of the Company.
30
ANNEX B
Matters to be Covered in the Opinion of
Patent Counsel for the Company
1. With respect to the U.S. patent and each of the U.S. patent
applications referred to in the Registration Statement which are listed in
Schedules ____, nothing has come to our attention which would cause us to
believe that the sections of the Registration Statement entitled "Risk Factors -
Dependence on Patents and Proprietary Rights"; and "Business - Patents and
Proprietary Rights", at the time the Registration Statement became effective,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
not misleading.
2. With respect to the US. patent and each of the U.S. patent
applications referred to in the Prospectus which are listed in Schedules ____,
nothing has come to our attention which would cause us to believe that the
sections of the Prospectus entitled "Risk Factors - Dependence on Patents and
Proprietary Rights"; and "Business - Patents and Proprietary Rights", as of its
date and as of the Closing Date, contain any untrue statement of material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
3. To the best of our knowledge, except as described in the Prospectus,
and with the exception of proceedings before the U.S. Patent and Trademark
Office, there are no pending, or threatened, legal or governmental proceedings
relating to the U.S. patent or any of the U.S. patent applications listed in
Schedules ____.
4. To the best of our knowledge, except as described in the Prospectus,
the Company owns [the U.S. patent and each of the U.S. patent applications
referred to in the Prospectus that are listed in Schedules ____].
5. To the best of our knowledge, the Company has not received any notice
challenging the validity or enforceability of the U.S. patent listed in Schedule
____.
6. While there can be no guarantee that any particular patent application
will issue as a patent, each of the U.S. patent applications referred to in the
Prospectus which is listed in Schedules ____ was properly filed, and is being
properly and diligently prosecuted, in the U.S. Patent and Trademark Office.
7. To the best of our knowledge, for each U.S. patent application listed
in Schedules ____, all information known to Xxxxxx & Xxxxxxx, to date, to be
"material to patentability", as defined in 37 C.F.R. ss. 1.56(b), has been
disclosed, or will be disclosed pursuant to 37 C.F.R. ss. 1.97, to the U.S.
Patent and Trademark Office.
8. To the best of our knowledge, no claim, action, suit or proceeding is
presently pending or threatened against the Company relating to the potential
infringement of, or conflict
31
with, any patents of others. We have no knowledge of any facts which would form
a basis for the belief that there is any infringement by others of the Company's
U.S. patent.
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