1
ATHEROGENICS, INC
6,000,000 SHARES (1)
COMMON STOCK
UNDERWRITING AGREEMENT
AUGUST , 2000
--
CHASE SECURITIES INC.
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx, Xxxxxxxx & Xxxx, Inc.
X.X. Xxxxxxx & Sons, Inc.
c/o Chase Securities Inc.
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
AtheroGenics, Inc., a Georgia corporation (herein called the Company),
proposes to issue and sell 6,000,000 shares of its authorized but unissued
Common Stock, no par value (herein called the Common Stock) (said 6,000,000
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 900,000 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 hereby confirms 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. 333-31140), 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
--------------------
(1) Plus an option to purchase from the Company up to 900,000 additional
shares to cover over-allotments.
1
2
preliminary prospectus (meeting the requirements of Rule 430A of the rules and
regulations of the Commission) heretofore filed by the Company with the
Commission have been delivered to you.
The term Registration Statement as used in this agreement shall mean
such registration statement, including all documents incorporated by reference
therein, 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.
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. The Company
hereby represents and warrants as follows:
(a) 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, taken as a
whole) (herein called a Material Adverse Effect).
(b) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has been
no materially 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
2
3
the ordinary course of business, the Company has not entered into any
material transaction not referred to in the Registration Statement and
the Prospectus.
(c) 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, 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; and, 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; 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 for use in the Registration
Statement or the Prospectus.
(d) The Stock, when issued and sold to the Underwriters
as provided herein, will be duly and validly issued, fully paid and
nonassessable and conforms to the description thereof in the
Prospectus. No preemptive right, registration right, right of first
refusal or other similar rights of shareholders exists with respect to
any Stock or the issue or sale thereof, except as set forth in the
Prospectus. No further approval or authority of the shareholders or the
Board of Directors of the Company will be required for the issuance and
sale of the Stock as contemplated herein. Except as described in the
Prospectus, neither the filing of the Registration Statement nor the
offering or sale of the Stock as contemplated by this Agreement gives
rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any shares of capital
stock. Except as described in the Prospectus, there are no contracts,
agreements, or understandings 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 securities
registered pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement filed by
the Company under the Securities Act. Except as described in the
Prospectus, there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sales or liens
related to or entitling any person to purchase or otherwise acquire any
shares of the capital stock of, or the ownership interest in the
Company.
(e) Prior to the Closing Date the Stock to be issued and
sold by the Company will be authorized for listing by the Nasdaq
National Market upon official notice of issuance.
3
4
(f) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus relating
to the proposed offering of Stock, nor, to the knowledge of the
Company, instituted proceedings for that purpose.
(g) Each Preliminary Prospectus or Prospectus filed as
part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, complied when so filed in all material respects with
the Securities Act, and the Prospectus did not contain an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, provided,
however, that none of the representations and warranties contained in
this subparagraph (g) shall apply to the statements in, or omissions
from, any Preliminary Prospectus 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 for use
in such Preliminary Prospectus or the Prospectus.
(h) The authorized and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization". The form of certificates for the Stock conforms to
the legal requirements of the state of Georgia, the Company's charter
and bylaws and the rules of the Nasdaq National Market.
(i) The financial statements of the Company, together
with related notes and schedules as set forth in the Registration
Statement, present fairly in all material respects the consolidated
financial position and the results of operations and cash flows of the
Company at the indicated dates and for the indicated periods. Such
financial statements and related schedules 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
except as set forth in the Prospectus. The summary and selected
financial data included in the Registration Statement set forth in the
Prospectus under the captions "Capitalization," "Summary Financial
Data" and "Selected Financial Data" present fairly in all material
respects the information shown therein and such data has been compiled
on a basis consistent with the financial statements presented therein
and the books and records of the Company. The other financial and
statistical information and data set forth in the Registration
Statement are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the
books and records of the Company.
(j) Ernst & Young LLP, who have 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.
(k) Except as disclosed in the Registration Statement and
subject to Sections 2(x) and 2(y), there is no legal or governmental
proceeding pending, or to the knowledge of the Company, threatened
against the Company or any of its properties, before any court or
administrative agency or otherwise, which if determined adversely to
the
4
5
Company would have a Material Adverse Effect or prevent the
consummation of the transactions contemplated hereby.
(l) There are no agreements, contracts, leases or
documents of the Company of a character required to be described or
referred to in the Registration Statement or Prospectus or to be filed
as an exhibit to the Registration Statement by the Securities Act or
the Rules and Regulations summaries of which have not been fairly
described in all material respects or referred to in the Registration
Statement or Prospectus or filed as exhibits to the Registration
Statement. The agreements, contracts, leases or documents so described
in the Prospectus are in full force and effect on the date hereof
(unless otherwise indicated in the Registration Statement or the
Prospectus), and neither the Company nor, to the Company's knowledge,
any other party, is in breach of or default under, and no event has
occurred which with the giving of Notice or with the lapse of time
would constitute a breach of or default under, any of such agreements,
contracts, leases or documents where such breach or default would have
a Material Adverse Effect. Neither the Company, nor to its knowledge,
any other party has repudiated any provision of such agreements,
contracts, leases or documents which would have a Material Adverse
Effect.
(m) The Company has good and marketable title to all its
properties and assets as described in the Registration Statement or as
reflected in the financial statements filed with the Commission as part
of the Registration Statement, free and clear of any lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in
such financial statements or as described in the Registration Statement
or such as would not have a Material Adverse Effect. All leases to
which the Company is a party are valid and binding obligations of the
Company and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally or by general equitable
principles, no default by the Company has occurred or is continuing
thereunder which would have a Material Adverse Effect, and the Company
enjoys peaceful and undisturbed possession under all such leases to
which it is a party as lessee.
(n) The Company has timely filed all federal, state and
local income tax returns which have been required to be filed and have
paid all taxes indicated by said returns and all assessments received
by it to the extent that such taxes have become due and are not being
contested in good faith except where the failure to file such returns
and pay such taxes would not have a Material Adverse Effect. All tax
liabilities (including those being contested in good faith) for the
periods covered by the financial statements of the Company that are
included in the Registration Statement have been adequately provided
for in such financial statements. No tax deficiency has been, or to the
Company's knowledge, might be, asserted or contemplated against the
Company that would have a Material Adverse Effect.
(o) The Company has full legal right, power and authority
to enter into this Agreement and to perform its obligations
contemplated hereby. This Agreement has been duly authorized, executed
and delivered by the Company and (assuming due authorization and
delivery by the Underwriters) is a valid and binding agreement of the
5
6
Company, enforceable in accordance with its terms except insofar as
indemnification and contribution provisions may be limited by Federal
or state securities laws, principles of public policy or equitable
principles and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally or by general equitable
principles.
(p) The Company is not in violation of its charter or
bylaws or in default in the performance or observance of any agreement,
lease, contract, indenture or other instrument or obligation to which
it is a party or by which it, or any of its properties, is bound and
which default would have a Material Adverse Effect. The execution and
delivery of this Agreement by the Company and the consummation of the
transactions herein contemplated will not as of the Closing Date and
any later date on which Option Stock is to be purchased, conflict with
or result in a breach or constitute a default under, any indenture,
mortgage, deed of trust or other material agreement or instrument to
which the Company is a party, or result in the violation of its charter
or bylaws or any order, rule or regulation applicable to the Company of
any court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Company, which conflict,
breach or default would have a Material Adverse Effect.
(q) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with
the execution and delivery by the Company of this Agreement and the
consummation of the transactions herein contemplated, including,
without limitation, any such approval, consent, order, authorization,
designation, declaration or filing which may be required in connection
with the offering Stock reserved for sale to the Company's directors,
officers, employees, business associates and related persons (herein
called the Directed Shares) pursuant to a program established for such
purpose by the Company (herein called the Directed Share Program)
except as may be required in connection with the registration of the
Stock under the Securities Act and the Exchange Act and such additional
steps as may be required by the National Association of Securities
Dealers, Inc. (herein called the NASD) or such additional steps as may
be necessary to qualify the Stock for public offering by the
Underwriters under state securities or blue sky laws and any foreign
securities laws has been obtained or made and is in full force and
effect.
(r) Subject to Sections 2(x) and 2(y), the Company now
holds and at the Closing Date and any later date on which the Option
Stock is purchased, as the case may be, will hold, all licenses,
consents, certificates, orders, approvals and permits from all state,
United States, foreign and other governmental or regulatory
authorities, that are required for the conduct of the business of the
Company as such business is currently conducted and as proposed to be
conducted as described in the Prospectus, except for such licenses,
certificates approvals and permits the failure of which to maintain
would not have a Material Adverse Effect, all of which are valid and in
full force and effect (and there is no proceeding pending or, to the
knowledge of the Company, threatened which may cause any such license,
consent, certificate, order, approval or permit to be withdrawn,
cancelled, suspended or not renewed). The Company is not in violation
or breach of any of its obligations under, or of the terms of, any such
license, consent,
6
7
certificate, order, approval or permit, except for such breach, default
or failure as would not reasonably be expected to result in a Material
Adverse Effect.
(s) The Company is in compliance with all of the laws,
rules, regulations, orders, directives or judgments issued or
administered by any governmental agency or body or any court, foreign
or domestic having jurisdiction over the Company or any of their
respective properties or assets, except where any such failure to be in
compliance would not have a Material Adverse Effect.
(t) The Company (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
(including, without limitation, all laws and regulations relating to
biohazardous substances) (herein called Environmental Laws), (ii) has
received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its respective business as
presently conducted and (iii) is in compliance with all terms and
conditions of any such permit, license or approvals, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly, or in the aggregate, have a Material Adverse Effect.
(u) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a Material Adverse Effect.
(v) To the Company's knowledge, no labor disturbance by
the employees of the Company exists or is imminent which, and the
Company has not been provided written notice of any existing or
imminent labor disturbance by the employees of any of its principal
suppliers, authorized dealers or distributors that, would result in a
Material Adverse Effect. No collective bargaining agreement exists with
any of the Company's employees and, to the Company's knowledge, no such
agreement is imminent.
(w) The Company is in compliance in all material respects
with all currently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder (herein called ERISA); no
"reportable event" (as defined in ERISA) has occurred with respect to
any "pension plan" (as defined in ERISA) for which the Company would
have any liability; the Company has not incurred and does not currently
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections
412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretation thereunder (herein called
the Code); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material
7
8
respects and nothing has occurred, whether by action or by failure to
act, that would cause the loss of such qualification.
(x) Except as disclosed in the Registration Statement and
Prospectus, the Company owns or possesses adequate licenses or other
rights to the patents and patent applications, copyrights, trademarks,
service marks, trade names, technology and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary rights)
(herein collectively called Intellectual Property) which are necessary
to conduct, or currently employed by them in connection with the
conduct, of their businesses as described in the Registration Statement
and the Prospectus. The Company is not obligated to pay a material
royalty, grant a material license or provide other material
consideration to any third party in connection with the Intellectual
Property, except as described in the Registration Statement and in the
Prospectus. Except as set forth in the Registration Statement and the
Prospectus, the Company has not received any notice of, or has any
knowledge of, any infringement of or conflict with any rights of the
Company by others or any infringement of or conflict with any rights of
others, in each case with respect to any Intellectual Property which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect. Except as
disclosed in the Registration Statement and the Prospectus, and other
than with respect to patents and patent applications and trademark and
service xxxx applications filed with appropriate patent and trademark
offices, there are no legal or governmental proceedings pending or
threatened relating to Intellectual Property, which, singly or in the
aggregate, if determined adversely against the Company, would have a
Material Adverse Effect. To the Company's knowledge, none of the
Intellectual Property licensed to or by the Company is unenforceable or
invalid; and the Company is not aware of the granting of any patent
rights to third parties or the filing of any patent applications by
third parties or of any other rights of third parties to, or
conflicting with, any Intellectual Property owned by the Company,
except as disclosed in the Registration Statement and the Prospectus.
Except as set forth in the Registration Statement and the Prospectus,
to the knowledge of the Company, no third party, including any academic
or governmental organization, possesses rights to the Intellectual
Property which, if exercised, could reasonably be expected to result in
a Material Adverse Effect.
(y) To the Company's knowledge, in connection with the
filing of all patent applications filed or caused to be filed by the
Company with the United States Patent and Trademark Office (herein
called the PTO), the Company has complied with the PTO's duty of candor
and disclosure and has made no material misrepresentation in any such
application or in any application filed with any applicable non-U.S.
and international patent authorities with regard to the products and
proposed products as described in or contemplated by the Registration
Statement and Prospectus. The Company is unaware of any facts material
to a determination of patentability regarding the Company's patent
applications with regard to the products and proposed products as
described in or contemplated by the Registration Statement and
Prospectus not called to the attention of the PTO and is unaware of any
facts not called to the attention of the PTO which would have precluded
the grant of a patent in respect of each such application in respect of
which a patent has been allowed by the PTO without material restriction
of the claims set forth in such application at the time of such
allowance or any post-allowance amendment
8
9
filed with the PTO. The Company has no knowledge of any facts which
would materially conflict with the Company's ownership rights to the
Company's patent applications with regard to the products and proposed
products as described in or contemplated by the Registration Statement
and Prospectus.
(z) The Company is not, and after giving effect to the
offer and sale of the Stock and the application of the proceeds thereof
as described in the Prospectus, will not be, an "investment company" or
a company "controlled" by an "investment company" within the meaning of
such terms under the Investment Company Act of 1940, as amended (herein
called the Investment Company Act), and the rules and regulations
thereunder.
(aa) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(bb) The Company carries, or is covered by, insurance with
insurers of recognized reputability among the insurers that provide
insurance to companies engaged in similar industries in such amounts
and covering such risks as it believes is commercially reasonable in
light of customary insurance practices for companies engaged in similar
industries for protection from material liabilities, all of which
insurance is in full force and effect, and the Company has no reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers at a cost, that would not, single or in
the aggregate, have a Material Adverse Effect, and there are no claims
by the Company of any material amount under any such policy as to which
any insurer is denying liability or defending under a reservation of
rights claim and the Company has not received notice from any insurer
or agent of such insurer that substantial capital improvements or other
material expenditures will have to be made in order to continue such
insurance.
(cc) The Company has not and will not distribute prior to
the later of (i) the Closing Date, or any date on which Option Stock is
to be purchased, as the case may be, and (ii) completion of the
distribution of the Stock, any offering material (including, without
limitation, content on its website, if any, that may be deemed to be
offering material) in connection with the offering and sale of the
Stock other than any Preliminary Prospectuses, the Prospectus, the
Registration Statement and other materials, if any, permitted by the
Securities Act, except for that certain letter from the Company to
prospective purchasers of Directed Shares previously sent to such
purchasers by X.X. Xxxxxxx & Sons, Inc. in connection with the Directed
Share Program and as previously filed with the SEC.
9
10
(dd) The Company has not incurred any liability for any
finder's fees or similar payments in connection with the transactions
contemplated hereby other than to the Underwriters.
(ee) The Company has not offered, or caused any
Underwriter to offer, Stock to any person pursuant to the Directed
Share Program with the specific intent to unlawfully influence (i) a
customer or supplier of the Company to alter the customer's or
supplier's level or type of business with the Company or (ii) a trade
journalist or publication to write or publish favorable information
about the Company or its products.
(ff) All sales of the Company's securities prior to the
date hereof were at all relevant times duly registered under the
Securities Act and applicable foreign securities laws and state
securities or Blue Sky laws or were exempt from the registration
requirements of the Securities Act and applicable foreign and state
securities laws, or if such securities were not registered or exempt in
compliance with the Securities Act and applicable foreign and state
securities laws, any private rights of action for recission or damages
arising from the failure to register any such securities are time
barred by applicable statutes of limitations or equitable principles,
including laches.
(gg) The Company has obtained the agreement of (A) each of
its directors and officers, (B) the holders of at least [__]% of the
outstanding Common Stock; and (C) the holders of other securities
convertible into or exercisable or exchangeable for Common Stock or
warrants or other rights to purchase Common Stock (such that the
aggregate of such securities that are not subject to such agreement
does not represent more than [__]% of the outstanding Common Stock),
not to sell, contract to sell, transfer the economic risk of ownership
in, make any short sale, pledge or otherwise dispose of, directly or
indirectly, any shares of Common Stock beneficially owned by them at
the Closing Date or securities convertible into or exercisable or
exchangeable for Common Stock or warrants or other rights to purchase
Common Stock for a period of 180 days after the date of the Prospectus,
subject to any and all limitations set forth in the lock-up agreements
with such persons evidencing transfer restrictions so described.
(hh) Each certificate signed by an officer of the Company
and delivered to the Underwriters or counsel for the Underwriters in
connection with the issuance and sale of the Common Stock shall be
deemed to be a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
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 6,000,000 shares of the Underwritten Stock to
the several Underwriters and each of the Underwriters agrees to
purchase from the Company 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 purchased by the several Underwriters shall be $___ per share. In
making this Agreement, each Underwriter is contracting severally and
not jointly; except as provided in paragraphs (b) and (c) of this
10
11
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) It is understood that approximately ________ shares
of the Underwritten Stock ("Directed Shares") will be initially
reserved by the underwriters for offer and sale to employees and
persons having business relationships with the Company ("Directed Share
Participants") upon the terms and conditions set forth in the
Prospectus and in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc ("Directed Share
Program"). Under no circumstances will Chase Securities Inc. or any
Underwriter be liable to the Company or to any Directed Share
Participant for any action taken or omitted to be taken in good faith,
without gross negligence or willful misconduct, in connection with such
Directed Share Program. To the extent that any Directed Shares are not
affirmatively reconfirmed for purchase by any Directed Share
Participant on or by the end of the first business date after the date
of this Agreement, such Directed Shares may be offered to the public as
part of the initial public offering contemplated hereby.
(c) 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
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 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
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 shall
make arrangements within the 24-hour periods stated above for the
purchase of all
11
12
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 to any non-defaulting Underwriter and without any
liability on the part of any non-defaulting Underwriter to the Company.
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.
(d) On the basis of the representations, warranties and
covenants herein contained, and subject to the terms and conditions
herein set forth, the Company grants an option to the several
Underwriters to purchase, severally and not jointly, up to 900,000
shares in the aggregate of the Option Stock from the Company 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 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 Long
Xxxxxxxx & Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxx, at 10:00 am, New York
12
13
time, on the fourth 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 fourth business day, as shall be agreed upon in writing by
the Company 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(d) 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 Long Xxxxxxxx & Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx, at 10:00 am, New York time, on the third business day
after the exercise of such option.
(c) Payment for the Stock purchased from the Company
shall be made to the Company or its order by wire transfer of Federal
or other funds immediately available in Atlanta, Georgia. 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
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. The Company covenants and
agrees as follows:
(a) The Company will (i) 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,
13
14
(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 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 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.
(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
14
15
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 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 three 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 furnished to shareholders of the Company and of all
information, documents and reports filed with the Commission (including
the Report on Form SR required by Rule 463 of the Commission under the
Securities Act).
(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
security holders 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 its obligations 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. 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 printing 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. Except as specifically provided in
this Section 6, the Underwriters will pay their own cost and expenses,
including fees of their counsel, any stock transfer taxes due upon any
resale of Stock by them, any advertising costs incurred by them.
15
16
(j) The Company agrees to reimburse you, for the account
of the several Underwriters, for blue sky fees and related
disbursements (including reasonable 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 Company hereby agrees that, without the prior
written consent of Chase Securities Inc. on behalf of the Underwriters,
the Company will not, for a period of 180 days following the
commencement of the public offering of the Stock by the Underwriters,
directly or indirectly, (i) sell, offer, contract to sell, make any
short sale, pledge, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any shares of Common Stock
or any securities convertible into or exchangeable or exercisable for
or any rights to purchase or acquire Common Stock or (ii) enter into
any swap or other agreement that transfers, in whole or in part, any of
the economic consequences or ownership of Common Stock, whether any
such transaction described in clause (i) or (ii) above is to be settled
by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Stock to
be sold to the Underwriters pursuant to this Agreement, (B) 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") or
upon the exercise of warrants outstanding as of the date hereof, all as
described in the table under the caption "Capitalization" in the
Preliminary Prospectus, and (C) options to purchase Common Stock
granted under the Option Plans, (D) the conversion of all outstanding
preferred stock of the Company for Common Stock s described in the
Prospectus.
(l) The Company agrees to use its best efforts to cause
all directors, officers, and beneficial holders of substantially all of
the Company's Common Stock to agree that, without the prior written
consent of Chase Securities Inc. on behalf of the Underwriters, and
except as otherwise set forth in the Prospectus, such person or entity
will not, for a period of 180 days following the commencement of the
public offering of the Stock by the Underwriters, directly or
indirectly, (i) sell, offer, contract to sell, make any short sale,
pledge, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any shares of Common Stock
beneficially owned at the date of this Agreement or any securities
convertible into or exchangeable or exercisable for or any rights to
purchase or acquire Common Stock or (ii) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic
consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise.
(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 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
16
17
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 is familiar with the Investment Company
Act of 1940, as amended, and has in the past conducted its affairs, and
will in the future conduct its affairs, in such a manner to ensure that
the Company was not and 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) The Company agrees 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 agrees 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 not more than one legal counsel)
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) 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 contained in
this paragraph (a) shall not apply to any such losses, claims, damages,
liabilities or expenses if such
17
18
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 contained in this paragraph (a)
and the representations and warranties of the Company 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 and directors who signs
the Registration Statement on his own behalf or pursuant to a power of
attorney, each other Underwriter and each person (including each
partner or officer thereof) who controls the Company or any such other
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 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 counsel) 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) 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
18
19
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 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, 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 reasonable legal and other expenses of
not more than one legal counsel of the indemnifying party or parties
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
19
20
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 Underwriters 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 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
reasonable legal or other expenses reasonably incurred by such
indemnified party (but not more than one legal counsel for the
Underwriters) in connection with investigation, 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 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
20
21
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) The Company will not, 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.
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, 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 or other
promulgation of any federal or state statute, regulation, rule or order of, or
21
22
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 to the Underwriters and no liability of the
Underwriters to the Company; provided, however, that in the event of any such
termination the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all 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 of all its 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 &
Wood LLP, counsel for the Underwriters.
(c) You shall have received from Long Xxxxxxxx & Xxxxxx
LLP, counsel for the Company, and from King & Spalding LLP, patent
counsel for the Company, opinions, addressed to the Underwriters and
dated the Closing Date, in form and substance reasonably satisfactory
to the Underwriters and their counsel, 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) (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, in the
light of the circumstances under which they were made as it relates to
the Prospectus, 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
22
23
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 does not have any material
contingent obligations which are not disclosed in the Registration
Statement and the Prospectus, (v) there are not any pending or known
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 not any 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, and (vii)
the representations and warranties of the Company herein are true and
correct as of 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 as to 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 in
particular) or financial or economic conditions which render it
inadvisable to proceed.
(e) 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 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 (d) of this Section 9 are true and correct.
(f) You shall have received from Ernst & Young 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 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 three 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
23
24
disclose any change, or any development involving a prospective change,
in or affecting the business or properties of the Company which, in
your sole reasonable 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.
(g) 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.
(h) 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.
(i) On or prior to the Closing Date, you shall have
received from all directors, officers, and beneficial holders of
substantially all of the outstanding Common Stock agreements, in form
reasonably satisfactory to Chase Securities Inc., stating that without
the prior written consent of Chase Securities Inc. on behalf of the
Underwriters, and except as otherwise set forth in the Prospectus, such
person or entity will not, for a period of 180 days following the
commencement of the public offering of the Stock by the Underwriters,
directly or indirectly, (i) sell, offer, contract to sell, make any
short sale, pledge, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any shares of Common Stock
or any securities convertible into or exchangeable or exercisable for
or any rights to purchase or acquire Common Stock or (ii) enter into
any swap or other agreement that transfers, in whole or in part, any of
the economic consequences or ownership of Common Stock, whether any
such transaction described in clause (i) or (ii) above 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 & Xxxx LLP , counsel for the Underwriters, shall
be 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. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement,
including all 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 to fulfill any of the
conditions herein other than by reason of a default by any of the Underwriters
or because of an event described in Section 8 of the Agreement, the Company will
reimburse the Underwriters severally upon demand for all 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.
24
25
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY. The obligation of
the Company to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and no stop order suspending
the effectiveness thereof shall be in effect and no proceedings therefor shall
be pending or threatened by the Commission; (b) you shall have made payment for
all the Stock to be sold on the Closing Date (or in the case of the Option
Stock, on any later date on which Option Stock is purchased) against delivery of
the certificates evidencing such Stock, as provided in Section 5 hereof.
In case either of the conditions specified in this Section 10 shall not
be fulfilled, this Agreement may be terminated by the Company by giving notice
to you. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that in the event of any such termination the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement,
including all costs and expenses referred to in paragraphs (i) and (j) of
Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to its other
obligations under Section 7 of this Agreement, the Company hereby agrees 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 with interest thereon at the then commercial prime rate 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 and the several Underwriters and, with
respect to the provisions of Section 7 hereof, the several parties (in addition
to the Company 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 purchaser, 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, telegraphed or delivered to Chase Securities
Inc., Xxx Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000; and if to the Company,
shall be mailed, telegraphed or delivered to it at its office, AtheroGenics,
Inc., 0000 Xxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxxxxx X.
Xxxxxxx, M.D., Ph.D. All notices given by telegraph shall be promptly confirmed
by letter.
25
26
14. 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 investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company 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 (k) and (l) 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.
26
27
Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
AtheroGenics, Inc.
By
---------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
CHASE SECURITIES INC.
FleetBoston Xxxxxxxxx Xxxxxxxx Inc.
Xxxxx, Xxxxxxxx & Xxxx, Inc.
X.X. Xxxxxxx & Sons, Inc.
By Chase Securities Inc.
By
------------------------------
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
27
28
SCHEDULE I
UNDERWRITERS
NUMBER OF SHARES
TO BE
UNDERWRITERS PURCHASED
------------ ---------
Chase Securities Inc...................................
FleetBoston Xxxxxxxx Xxxxxxxx Inc.
Xxxxx, Xxxxxxxx & Xxxx. Inc............................
X.X. Xxxxxxx & Sons, Inc...............................
----------
Total.........................................
========
28
