Exhibit 1.1
KERYX BIOPHARMACEUTICALS, INC.
5,030,000 Shares of Common Stock,
par value $0.001 per share
Underwriting Agreement
July 14, 2005
X.X. Xxxxxx Securities Inc.
As Representative of the
several Underwriters listed
in Schedule 1 hereto
c/o X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Keryx Biopharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters listed in Schedule 1
hereto (the "Underwriters"), for whom you are acting as representative (the
"Representative"), an aggregate of 5,030,000 shares of Common Stock, par value $
0.001 per share, of the Company (the "Underwritten Shares") and, at the option
of the Underwriters, up to an additional 750,000 shares of Common Stock, par
value $ 0.001 per share, of the Company (the "Option Shares"). The Underwritten
Shares and the Option Shares are herein referred to as the "Shares". The shares
of Common Stock, par value $0.001 per share, of the Company to be outstanding
after giving effect to the sale of the Shares are herein referred to as the
"Stock".
The Company hereby confirms its agreement with the several Underwriters
concerning the purchase and sale of the Shares, as follows:
1. Registration Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Securities Act"), a registration statement (File No.
333-119376) including a prospectus, relating to the Shares. Such registration
statement, as amended at the time it becomes effective, including the
information, if any, deemed pursuant to Rule 430A under the Securities Act to be
part of the registration statement at the time of its effectiveness ("Rule 430
Information"), is referred to herein as the "Registration Statement"; and as
used herein, the term "Preliminary Prospectus" means each preliminary prospectus
supplement (and any amendments thereto) specifically relating to the Shares as
filed with the Commission pursuant to Rule 424(a) under the Securities Act, and
the term "Prospectus" means the prospectus supplement together with the base
prospectus included in the Registration Statement at the time of its
effectiveness in the form first used to confirm sales of the Shares. If the
Company has filed an abbreviated registration statement pursuant to Rule
462(b) under the Securities Act (the "Rule 462 Registration Statement"), then
any reference herein to the term "Registration Statement" shall be deemed to
include such Rule 462 Registration Statement. Any reference in this Agreement to
the Registration Statement, any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act (but excluding
any information or statements therein that were incorporated by reference to the
extent such information or statements have been modified or superseded by any
statement in the Prospectus, or in any other document that was subsequently
filed with the Commission and incorporated by reference in the Prospectus or
Registration Statement), as of the effective date of the Registration Statement
or the date of such Preliminary Prospectus or the Prospectus, as the case may be
and any reference to "amend", "amendment" or "supplement" with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any documents filed after such date under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Exchange Act") that are deemed to
be incorporated by reference therein. Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Registration Statement
and the Prospectus.
2. Purchase of the Shares by the Underwriters. (a) The Company agrees
to issue and sell the Underwritten Shares to the several Underwriters as
provided in this Agreement, and each Underwriter, on the basis of the
representations, warranties and agreements set forth herein and subject to the
conditions set forth herein, agrees, severally and not jointly, to purchase from
the Company the respective number of Underwritten Shares set forth opposite such
Underwriter's name in Schedule 1 hereto at a price per share the "Purchase
Price" of $13.207.
In addition, the Company agrees to issue and sell the Option Shares to
the several Underwriters as provided in this Agreement, and the Underwriters, on
the basis of the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, shall have the option to purchase,
severally and not jointly, from the Company the Option Shares at the Purchase
Price.
If any Option Shares are to be purchased, the number of Option Shares
to be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased as
the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule 1 hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject, however, to
such adjustments to eliminate any fractional Shares as the Representative in its
sole discretion shall make.
The Underwriters may exercise the option to purchase the Option Shares
at any time in whole, or from time to time in part, on or before the thirtieth
day following the date of this Agreement, by written notice from the
Representative to the Company. Such notice shall set forth the aggregate number
of Option Shares as to which the option is being exercised and the date and time
when the Option Shares are to be delivered and paid for which may be the same
date and time as the Closing Date (as hereinafter defined) but shall not be
earlier than the Closing Date nor later than the tenth full business day after
the date of such notice (unless such time
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and date are postponed in accordance with the provisions of Section 9 hereof).
Any such notice shall be given at least two business days prior to the date and
time of delivery specified therein.
(b) The Company understands that the Underwriters intend to make a
public offering of the Shares as soon after the effectiveness of this Agreement
as in the judgment of the Representative is advisable, and initially to offer
the Shares on the terms set forth in the Prospectus. The Company acknowledges
and agrees that the Underwriters may offer and sell Shares to or through any
affiliate of an Underwriter and that any such affiliate may offer and sell
Shares purchased by it to or through any Underwriter.
(c) Payment for the Shares shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Representative in the case of the Underwritten Shares, at the offices of Xxxxxx
Xxxxxx & Xxxxxxx LLP at 10:00 A.M. New York City time on July 20, 2005, or at
such other time or place on the same or such other date, not later than the
fifth business day thereafter, as the Representative and the Company may agree
upon in writing or, in the case of the Option Shares, on the date and at the
time and place specified by the Representative in the written notice of the
Underwriters' election to purchase such Option Shares. The time and date of such
payment for the Underwritten Shares is referred to herein as the "Closing Date"
and the time and date for such payment for the Option Shares, if other than the
Closing Date, is herein referred to as the "Additional Closing Date".
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representative for the respective accounts of the several Underwriters of
the Shares to be purchased on such date in definitive form registered in such
names and in such denominations as the Representative shall request in writing
not later than two full business days prior to the Closing Date or the
Additional Closing Date, as the case may be, with any transfer taxes payable in
connection with the sale of the Shares duly paid by the Company. The
certificates for the Shares will be made available for inspection and packaging
by the Representative at the office of X.X. Xxxxxx Securities Inc. set forth
above not later than 1:00 P.M., New York City time, on the business day prior to
the Closing Date or the Additional Closing Date, as the case may be.
(d) The Company acknowledges and agrees that the Underwriters are
acting solely in the capacity of an arm's length contractual counterparty to the
Company with respect to the offering of Shares contemplated hereby (including in
connection with determining the terms of the offering) and not as a financial
advisor or a fiduciary to, or an agent of, the Company or any other person.
Additionally, neither the Representative nor any other Underwriter is advising
the Company or any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Company shall consult with its own
advisors concerning such matters and shall be responsible for making their own
independent investigation and appraisal of the transactions contemplated hereby,
and the Underwriters shall have no responsibility or liability to the Company
with respect thereto. Any review by the Underwriters of the Company, the
transactions contemplated hereby or other matters relating to such transactions
will be performed solely for the benefit of the Underwriters and shall not be on
behalf of the Company.
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3. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending
the use of any Preliminary Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of filing
thereof, complied in all material respects with the Securities Act and
did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the Company
makes no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representative expressly for use in any
Preliminary Prospectus.
(b) Registration Statement and Prospectus. The Registration
Statement has been declared effective by the Commission. No order
suspending the effectiveness of the Registration Statement has been
issued by the Commission and no proceeding for that purpose has been
initiated or, to the knowledge of the Company, threatened by the
Commission; as of the applicable effective date of the Registration
Statement and any amendment thereto, the Registration Statement
complied and will comply in all material respects with the Securities
Act, and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and as of the applicable filing date of the Prospectus and
any amendment or supplement thereto and as of the Closing Date and as
of the Additional Closing Date, as the case may be, the Prospectus will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that the Company makes
no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representative expressly for use in the
Registration Statement and the Prospectus and any amendment or
supplement thereto.
(c) Incorporated Documents. The documents incorporated by
reference in the Prospectus, when they became effective or were filed
with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and none of such documents 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, in the light of the circumstances under which they were made,
not misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents become effective or
are filed with the Commission, as the case may be, will conform in all
material respects to the requirements of the Act or the Exchange Act,
as applicable, and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary
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to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) Financial Statements. The financial statements and the
related notes thereto of the Company and its consolidated subsidiaries
included or incorporated by reference in the Registration Statement and
the Prospectus comply in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as applicable,
and present fairly in all material respects the financial position of
the Company and its consolidated subsidiaries as of the dates indicated
and the results of their operations and the changes in their cash flows
for the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods covered thereby
except that unaudited interim financial statements are subject to year
end adjustments not material in amount and do not contain footnotes
required under GAAP, and the supporting schedules included or
incorporated by reference in the Registration Statement present fairly
in all material respects the information required to be stated therein;
and the other financial information included or incorporated by
reference in the Registration Statement and the Prospectus has been
derived from the accounting records of the Company and its subsidiaries
and presents fairly in all material respects the information shown
thereby.
(e) No Material Adverse Change. Subsequent to the respective
dates as to which information is included or incorporated by reference
in the Registration Statement and the Prospectus, (i) there has not
been any material change in the capital stock or long-term debt of the
Company or any of its subsidiaries, or any dividend or distribution of
any kind declared, set aside for payment, paid or made by the Company
on any class of capital stock, or any material adverse change, or, to
the knowledge of the Company, any development involving a prospective
material adverse change, in or affecting the business, properties,
management, financial position, stockholders' equity, results of
operations or prospects of the Company and its subsidiaries taken as a
whole; (ii) neither the Company nor any of its subsidiaries has entered
into any transaction or agreement that is material to the Company and
its subsidiaries taken as a whole or incurred any liability or
obligation, direct or contingent, that is material to the Company and
its subsidiaries taken as a whole; and (iii) neither the Company nor
any of its subsidiaries has sustained any material loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor disturbance or
dispute or any action, order or decree of any court or arbitrator or
governmental or regulatory authority, except in each case in clauses
(i), (ii) and (iii) as otherwise disclosed in the Registration
Statement and the Prospectus.
(f) Organization and Good Standing. The Company and each of
its subsidiaries (i) have been duly organized and are validly existing
and in good standing under the laws of their respective jurisdictions
of organization, (ii) are duly qualified to do business and (iii) are
in good standing in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, except in the case of
clauses (ii) and
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(iii) where the failure to be so qualified or have such power or
authority would not, individually or in the aggregate, have a material
adverse effect on the business, properties, management, financial
position, stockholders' equity, results of operations or prospects of
the Company and its subsidiaries taken as a whole (a "Material Adverse
Effect"). The Company does not own or control, directly or indirectly,
any corporation, association or other entity other than the
subsidiaries listed in Exhibit 21.1 to the Company's annual report on
Form 10-K for the fiscal year ended December 31, 2004.
(g) Capitalization. The Company has an authorized
capitalization as set forth in the Prospectus under the heading
"Capitalization"; all the outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable and are not subject to any pre-emptive or
similar rights; except as described in or expressly contemplated by the
Prospectus, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital
stock or other equity interest in the Company or any of its
subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock
of the Company or any such subsidiary, any such convertible or
exchangeable securities or any such rights, warrants or options; the
capital stock of the Company conforms in all material respects to the
description thereof contained in the Registration Statement and the
Prospectus; and all the outstanding shares of capital stock or other
equity interests of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable
(except, in the case of any foreign subsidiary, for directors'
qualifying shares) and are owned directly or indirectly by the Company,
free and clear of any lien, charge, encumbrance, security interest,
restriction on voting or transfer or any other claim of any third
party.
(h) Due Authorization. The Company has full right, power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder; and all action required to be taken for the due
and proper authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby has been duly
and validly taken.
(i) Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(j) The Shares. The Shares have been duly authorized by the
Company and, when issued and delivered and paid for as provided herein,
will be duly and validly issued and will be fully paid and
nonassessable and will conform to the descriptions thereof in the
Prospectus; and the issuance of the Shares is not subject to any
preemptive or similar rights.
(k) Description of the Underwriting Agreement. This Agreement
conforms in all material respects to the description thereof in the
Registration Statement and the Prospectus.
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(l) No Violation or Default. Neither the Company nor any of
its subsidiaries is (i) in violation of its charter or by-laws or
similar organizational documents; (ii) in default, and no event has
occurred that, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject; or (iii)
in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory
authority applicable to the Company and its subsidiaries, except, in
the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(m) No Conflicts. The execution, delivery and performance by
the Company of this Agreement, the issuance and sale of the Shares and
the consummation of the transactions contemplated by this Agreement
will not (i) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant
to, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of its
subsidiaries is subject, (ii) result in any violation of the provisions
of the charter or by-laws or similar organizational documents of the
Company or any of its subsidiaries or (iii) result in the violation of
any law or statute or any judgment, order, rule or regulation of any
court or arbitrator or governmental or regulatory authority applicable
to the Company and its subsidiaries, except, in the case of clauses (i)
and (iii) above, for any such conflict, breach or violation that would
not, individually or in the aggregate, have a Material Adverse Effect.
(n) No Consents Required. No consent, approval, authorization,
order, registration or qualification of or with any court or arbitrator
or governmental or regulatory authority is required for the execution,
delivery and performance by the Company of this Agreement, the issuance
and sale of the Shares and the consummation of the transactions
contemplated hereby, except for the registration of the Shares under
the Securities Act and such consents, approvals, authorizations, orders
and registrations or qualifications as may be required under applicable
state securities laws in connection with the purchase and distribution
of the Shares by the Underwriters.
(o) Legal Proceedings. Except as described in the Prospectus,
there are no legal, governmental or regulatory investigations, actions,
suits or proceedings pending to which the Company or any of its
subsidiaries is or may be a party or to which any property of the
Company or any of its subsidiaries is or may be the subject that,
individually or in the aggregate, if determined adversely to the
Company or any of its subsidiaries, could reasonably be expected to
have a Material Adverse Effect or materially and adversely affect the
ability of the Company to perform its obligations under this Agreement;
to the knowledge of the Company, no such investigations, actions, suits
or proceedings
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are threatened or contemplated by any governmental or regulatory
authority or threatened by others; and (i) there are no current or
pending legal, governmental or regulatory actions, suits or proceedings
that are required under the Securities Act to be described in the
Prospectus that are not so described and (ii) there are no statutes,
regulations or contracts or other documents that are required under the
Securities Act to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus that are not
so filed or described.
(p) Independent Accountants. KPMG LLP, who have certified
certain financial statements of the Company and its subsidiaries are
independent public accountants with respect to the Company and its
subsidiaries as required by the Securities Act.
(q) Title to Real and Personal Property. The Company and its
subsidiaries have good and marketable title in fee simple to, or have
valid rights to lease or otherwise use, all items of real and personal
property that are material to the respective businesses of the Company
and its subsidiaries, in each case free and clear of all liens,
encumbrances, claims and defects and imperfections of title except
those that (i) do not materially interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries or (ii) could not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
(r) Title to Intellectual Property. The Company and its
subsidiaries own or possess adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights,
licenses and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective businesses as
currently operated; and the conduct of their respective businesses will
not conflict in any material respect with any such rights of others,
and the Company and its subsidiaries have not received any written, or
to the knowledge of the Company, other notice of any claim of
infringement or conflict with any such rights of others. The Company
has not received any written, or to the knowledge of the Company, other
notice of infringement of or conflict with, and the Company has no
knowledge of any infringement of or conflict with, asserted rights of
others with respect to its intellectual property rights which could
reasonably be expected to result in a Material Adverse Effect; the
discoveries, inventions, products or processes of the Company referred
to in the Registration Statement and the Prospectus do not infringe or
conflict with any right or patent of any third party, or any discovery,
invention, product or process which is the subject of a patent
application filed by any third party. Further, except as described in
the Prospectus, or which would not reasonably be expected to result in
a Material Adverse Effect, the Company is not obligated to pay a
royalty, grant a license or provide other consideration to any third
party in connection with its patents, patent rights, licenses,
inventions, trademarks, service marks, trade names, copyrights and
know-how; and no third party, including any academic or governmental
organization, possesses rights to the Company's intellectual property
rights which, if exercised, could enable such third party to develop
products competitive with those of the Company or its subsidiaries or
could reasonably be expected to have a Material Adverse Effect.
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(s) Clinical Trials. The clinical trials conducted by or on
behalf of the Company with respect to KRX-101 that are described in the
Prospectus as ongoing, or the results of which are referred to in the
Prospectus, are the only clinical trials currently being conducted by
or on behalf of the Company with respect to KRX-101. Nothing has come
to the attention of the Company that has caused the Company to believe
that the studies and tests described in the Prospectus were not and, to
the extent still pending, are not being conducted in all material
respects in accordance with experimental protocols, procedures and
controls pursuant to accepted professional scientific standards; the
descriptions of the results of such studies, tests and trials contained
in the Prospectus are consistent in all material respects with such
results. Except as described in the Prospectus, no results of any other
studies or tests have come to the attention of the Company that have
caused the Company to believe that such results are materially adverse
to the results described in the Prospectus of the clinical trials. The
Company has not received any notices or correspondence from the Food
and Drug Administration (the "FDA") or any other governmental agency
requiring the termination, suspension or modification of any clinical
trials currently conducted by, or on behalf of, the Company or in which
the Company has participated. Nothing has come to the attention of the
Company that has caused the Company to believe that the clinical trials
previously conducted, or now being conducted, by or on behalf of the
Company were not conducted in all material respects in accordance with
experimental protocols, procedures and controls pursuant to accepted
professional scientific standards.
(t) No Undisclosed Relationships. No relationship, direct or
indirect, exists between or among the Company or any of its
subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its
subsidiaries, on the other, that is required by the Securities Act to
be described in the Registration Statement and the Prospectus and that
is not so described.
(u) Investment Company Act. The Company is not and, after
giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus,
will not be required to register as an "investment company" or an
entity "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder (collectively, "Investment
Company Act").
(v) Public Utility Holding Company Act. Neither the Company
nor any of its subsidiaries is a "holding company" or a "subsidiary
company" of a holding company or an "affiliate" thereof within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(w) Taxes. The Company and its subsidiaries have paid all
federal, state, local and foreign taxes and filed all tax returns
required to be paid or filed through the date hereof except where the
failure to file would not have a Material Adverse Effect; and except as
otherwise disclosed in the Prospectus, there is no material tax
deficiency that has been, or could reasonably be expected to be,
asserted against the Company or any of its subsidiaries or any of their
respective properties or assets.
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(x) Licenses and Permits. The Company and its subsidiaries
possess all licenses, certificates, permits and other authorizations
issued by, and have made all declarations and filings with, the
appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their
respective properties or the conduct of their respective businesses as
described in the Registration Statement and the Prospectus, except
where the failure to possess or make the same would not, individually
or in the aggregate, have a Material Adverse Effect; and except as
described in the Prospectus, neither the Company nor any of its
subsidiaries has received written, or to the knowledge of the Company,
other notice of any revocation or modification of any such license,
certificate, permit or authorization or has any reason to believe that
any such license, certificate, permit or authorization will not be
renewed in the ordinary course.
(y) SPA. The clinical trials conducted by or on behalf of the
Company that are described in the Prospectus as ongoing are, in all
material respects, being conducted in compliance with protocols
approved by the FDA in Investigational New Drug applications filed by
the Company, if required, and any agreements reached in special
protocol assessments pursuant to 21 USC 355(b)(4)(B).
(z) No Labor Disputes. No labor disturbance by or material
dispute with employees of the Company or any of its subsidiaries exists
or, to the knowledge of the Company, is contemplated or threatened.
(aa) Compliance With Environmental Laws. The Company and its
subsidiaries (i) are in compliance with any and all applicable federal,
state, local and foreign laws, rules, regulations, decisions and orders
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, "Environmental Laws"); (ii) have received and are in
compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses; and (iii) have not received written or, to the knowledge of
the Company, other notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except in any
such case in clauses (i), (ii) or (iii) for any such failure to comply,
or failure to receive required permits, licenses or approvals, or
liability as would not, individually or in the aggregate, have a
Material Adverse Effect.
(bb) Compliance With ERISA. Each employee benefit plan, within
the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), that is maintained, administered or
contributed to by the Company or any of its affiliates for employees or
former employees of the Company and its affiliates has been maintained
in material compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"); no prohibited transaction, within the meaning of Section 406
of ERISA or Section 4975 of the Code, has occurred with respect to any
such plan excluding transactions effected pursuant to a statutory or
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administrative exemption; and for each such plan that is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA, no
"accumulated funding deficiency" as defined in Section 412 of the Code
has been incurred, whether or not waived, and the fair market value of
the assets of each such plan (excluding for these purposes accrued but
unpaid contributions) exceeds the present value of all benefits accrued
under such plan determined using reasonable actuarial assumptions.
(cc) Accounting Controls. The Company and its subsidiaries
maintain systems of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with GAAP and to maintain asset accountability; (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 the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(dd) Insurance. The Company and its subsidiaries have
insurance covering their respective properties, operations, personnel
and businesses, including business interruption insurance, which
insurance is in amounts and insures against such losses and risks as
are adequate to protect the Company and its subsidiaries and their
respective businesses; and neither the Company nor any of its
subsidiaries has (i) received written or, to the knowledge of the
Company, other notice from any insurer or agent of such insurer that
capital improvements or other expenditures are required or necessary to
be made in order to continue such insurance or (ii) any 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 at reasonable cost from similar insurers as may be necessary
to continue its business.
(ee) No Unlawful Payments. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director,
officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries has (i) used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or
is in violation of any provision of the Foreign Corrupt Practices Act
of 1977; or (iv) made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(ff) No Restrictions on Subsidiaries. No subsidiary of the
Company is currently prohibited, directly or indirectly, under any
agreement or other instrument to which it is a party or is subject,
from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or
from transferring any of such subsidiary's properties or assets to the
Company or any other subsidiary of the Company.
(gg) No Broker's Fees. Neither the Company nor any of its
subsidiaries is a party to any contract, agreement or understanding
with any person (other than this
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Agreement) that would give rise to a valid claim against the Company or
any of its subsidiaries or any Underwriter for a brokerage commission,
finder's fee or like payment in connection with the offering and sale
of the Shares.
(hh) No Registration Rights. No person has the right to
require the Company or any of its subsidiaries to register any
securities for sale under the Securities Act by reason of the filing of
the Registration Statement with the Commission or the issuance and sale
of the Shares.
(ii) No Stabilization. The Company has not taken, directly or
indirectly, any action designed to or that could reasonably be expected
to cause or result in any stabilization or manipulation of the price of
the Shares.
(jj) Margin Rules. Neither the issuance, sale and delivery of
the Shares nor the application of the proceeds thereof by the Company
as described in the Registration Statement and the Prospectus will
violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System or any other regulation of such Board of Governors.
(kk) Forward-Looking Statements. No forward-looking statement
(within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act) contained in the Registration Statement and
the Prospectus has been made or reaffirmed by the Company without a
reasonable basis or has been disclosed by the Company other than in
good faith.
(ll) Statistical and Market Data. Nothing has come to the
attention of the Company that has caused the Company to believe that
the statistical and market-related data included in the Registration
Statement and the Prospectus is not based on or derived from sources
that are reliable and accurate in all material respects.
(mm) Xxxxxxxx-Xxxxx Act. There is and has been no failure on
the part of the Company or any of the Company's directors or officers,
in their capacities as such, to comply in all material respects with
any provision of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations promulgated in connection therewith (the "Xxxxxxxx-Xxxxx
Act"), including Section 402 related to loans and Sections 302 and 906
related to certifications.
(nn) No Rated Debt. The Company has no indebtedness rated by
any "nationally recognized statistical rating organization", as such
term is defined by the Commission for purposes of Rule 436(g)(2) under
the Securities Act.
4. Further Agreements of the Company. The Company covenants and agrees
with each Underwriter that:
(a) Effectiveness of the Registration Statement. The Company
will file the final Prospectus with the Commission within the time
periods specified by Rule 424(b) and Rule 430A under the Securities Act
and to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commis-
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sion pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Shares; and the Company will furnish copies of the
Prospectus to the Underwriters in New York City prior to 10:00 A.M.,
New York City time, on the business day next succeeding the date of
this Agreement in such quantities as the Representative may reasonably
request.
(b) Delivery of Copies. The Company will deliver, without
charge, (i) to the Representative, one signed copy of the Registration
Statement as originally filed and each amendment thereto, in each case
including all exhibits and consents filed therewith and documents
incorporated by reference therein; and (ii) to each Underwriter (A) a
conformed copy of the Registration Statement as originally filed and
each amendment thereto (without exhibits) and (B) during the Prospectus
Delivery Period, as many copies of the Prospectus (including all
amendments and supplements thereto and documents incorporated by
reference therein) as the Representative may reasonably request. As
used herein, the term "Prospectus Delivery Period" means such period of
time after the first date of the public offering of the Shares as in
the opinion of counsel for the Underwriters a prospectus relating to
the Shares is required by law to be delivered in connection with sales
of the Shares by any Underwriter or dealer.
(c) Amendments or Supplements. Before filing any amendment or
supplement to the Registration Statement or the Prospectus, the Company
will furnish to the Representative and counsel for the Underwriters a
copy of the proposed amendment or supplement for review and will not
file any such proposed amendment or supplement to which the
Representative reasonably objects.
(d) Notice to the Representative. The Company will advise the
Representative promptly, and confirm such advice in writing, (i) when
the Registration Statement has become effective; (ii) when any
amendment to the Registration Statement has been filed or becomes
effective; (iii) when any supplement to the Prospectus or any amendment
to the Prospectus has been filed; (iv) of any request by the Commission
for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or the receipt of any comments from the
Commission relating to the Registration Statement or any other request
by the Commission for any additional information; (v) of the issuance
by the Commission of any order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or the initiation or
threatening of any proceeding for that purpose; (vi) of the occurrence
of any event within the Prospectus Delivery Period as a result of which
the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser,
not misleading; and (vii) of the receipt by the Company of any notice
with respect to any suspension of the qualification of the Shares for
offer and sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and the Company will use its best
efforts to prevent the issuance of any such order suspending the
effectiveness of the Registration Statement, preventing or suspending
the use of any Pre-
-13-
liminary Prospectus or the Prospectus or suspending any such
qualification of the Shares and, if any such order is issued, will
obtain as soon as possible the withdrawal thereof.
(e) Ongoing Compliance of the Prospectus. If during the
Prospectus Delivery Period (i) any event shall occur or condition shall
exist as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser,
not misleading or (ii) it is necessary to amend or supplement the
Prospectus to comply with law, the Company will immediately notify the
Underwriters thereof and forthwith prepare and, subject to paragraph
(c) above, file with the Commission and furnish to the Underwriters and
to such dealers as the Representative may designate, such amendments or
supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances existing when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus will
comply with law.
(f) Blue Sky Compliance. The Company will qualify the Shares
for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representative shall reasonably request and will
continue such qualifications in effect so long as required for
distribution of the Shares; provided that the Company shall not be
required to (i) qualify as a foreign corporation or other entity or as
a dealer in securities in any such jurisdiction where it would not
otherwise be required to so qualify, (ii) file any general consent to
service of process in any such jurisdiction or (iii) subject itself to
taxation in any such jurisdiction if it is not otherwise so subject.
(g) Earning Statement. The Company will make generally
available to its security holders and the Representative as soon as
practicable an earning statement that satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission
promulgated thereunder covering a period of at least twelve months
beginning with the first fiscal quarter of the Company occurring after
the "effective date" (as defined in Rule 158) of the Registration
Statement.
(h) Clear Market. For a period of 90 days after the date of
the initial public offering of the Shares, the Company will not (i)
offer, pledge, announce the intention to sell, sell, contract to sell,
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, directly or indirectly, any shares of
Stock or any securities convertible into or exercisable or exchangeable
for Stock or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Stock or such
other securities, in cash or otherwise, without the prior written
consent of the Representative, other than the Shares to be sold
hereunder, shares underlying stock options and warrants outstanding as
of the date hereof that are not subject to a "lockup agreement" with
the Underwriters, and any shares of Stock of the Company issued upon
the exercise of options granted under existing employee stock option
plans.
-14-
Notwithstanding the foregoing, if (1) during the last 17 days of the
90-day restricted period, the Company issues an earnings release or
material news or a material event relating to the Company occurs; or
(2) prior to the expiration of the 90-day restricted period, the
Company announces that it will release earnings results during the
16-day period beginning on the last day of the 90-day period, the
restrictions imposed by this Agreement shall continue to apply until
the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material
event.
(i) Use of Proceeds. The Company will apply the net proceeds
from the sale of the Shares as described in the Prospectus under the
heading "Use of Proceeds."
(j) No Stabilization. The Company will not take, directly or
indirectly, any action designed to or that could reasonably be expected
to cause or result in any stabilization or manipulation of the price of
the Shares.
(k) Listing. The Company will use its best efforts to list for
quotation the Shares on the National Association of Securities Dealers
Automated Quotations National Market (the "Nasdaq National Market").
(l) Reports. So long as the Shares are outstanding, the
Company will furnish to the Representative, as soon as they are
available, copies of all reports or other communications (financial or
other) furnished to holders of the Shares, and copies of any reports
and financial statements furnished to or filed with the Commission or
any national securities exchange or automatic quotation system.
5. Conditions of Underwriters' Obligations. The obligation of each
Underwriter to purchase the Underwritten Shares on the Closing Date or the
Option Shares on the Additional Closing Date, as the case may be as provided
herein is subject to the performance by the Company of its covenants and other
obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. The Registration
Statement (or if a post-effective amendment thereto is required to be
filed under the Securities Act, such post-effective amendment) shall
have become effective, and the Representative shall have received
notice thereof, not later than 5:00 P.M., New York City time, on the
date hereof; no order suspending the effectiveness of the Registration
Statement shall be in effect, and no proceeding for such purpose shall
be pending before or threatened by the Commission; the Prospectus shall
have been timely filed with the Commission under the Securities Act and
in accordance with Section 4(a) hereof; and all requests by the
Commission for additional information shall have been complied with to
the reasonable satisfaction of the Representative.
(b) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct on
the date hereof and on and as of the Closing Date or the Additional
Closing Date, as the case may be; and the statements of the Company and
its officers made in any certificates delivered pursuant to this
Agreement shall be true and correct on and as of the Closing Date or
the Additional Closing Date, as the case may be.
-15-
(c) No Material Adverse Change. Subsequent to the execution
and delivery of this Agreement, no event or condition of a type
described in Section 3(e) hereof shall have occurred or shall exist,
which event or condition is not described in the Prospectus (excluding
any amendment or supplement thereto) and the effect of which in the
judgment of the Representative makes it impracticable or inadvisable to
proceed with the offering, sale or delivery of the Shares on the
Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated by this Agreement and the
Prospectus.
(d) Officer's Certificate. The Representative shall have
received on and as of the Closing Date or the Additional Closing Date,
as the case may be, a certificate of the chief financial officer or
chief accounting officer of the Company and one additional senior
executive officer of the Company who is satisfactory to the
Representative (i) confirming that such officers have carefully
reviewed the Registration Statement and the Prospectus and, to the best
knowledge of such officers, the representation set forth in Section
3(b) hereof is true and correct, (ii) confirming that the other
representations and warranties of the Company in this Agreement are
true and correct and that the Company has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date and (iii) to the effect set
forth in paragraphs (a) and (c) above.
(e) Comfort Letters. On the date of this Agreement and on the
Closing Date or the Additional Closing Date, as the case may be, KPMG
LLP shall have furnished to the Representative, at the request of the
Company, letters, dated the respective dates of delivery thereof and
addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representative, containing statements and
information of the type customarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained or incorporated by reference in
the Registration Statement and the Prospectus; provided, that the
letter delivered on the Closing Date or the Additional Closing Date, as
the case may be shall use a "cut-off" date no more than three business
days prior to such Closing Date or such Additional Closing Date, as the
case may be.
(f) Opinion of Counsel for the Company. Xxxxxx & Bird LLP,
counsel for the Company, shall have furnished to the Representative, at
the request of the Company, their written opinion, dated the Closing
Date or the Additional Closing Date, as the case may be, and addressed
to the Underwriters, in form and substance reasonably satisfactory to
the Representative, to the effect set forth in Annex A hereto.
(g) Opinion of Intellectual Property Counsel for the Company.
Xxxxx Day, intellectual property counsel for the Company, shall have
furnished to the Representative, at the request of the Company, their
written opinion, dated the Closing Date or the Additional Closing Date,
as the case may be, and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representative.
(h) Opinion of Counsel for the Underwriters. The
Representative shall have received on and as of the Closing Date or the
Additional Closing Date, as the case may
-16-
be, an opinion of Xxxxxx Xxxxxx & Xxxxxxx LLP, counsel for the
Underwriters, with respect to such matters as the Representative may
reasonably request, and such counsel shall have received such documents
and information as they may reasonably request to enable them to pass
upon such matters.
(i) No Legal Impediment to Issuance. No action shall have been
taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date
or the Additional Closing Date, as the case may be, prevent the
issuance or sale of the Shares; and no injunction or order of any
federal, state or foreign court shall have been issued that would, as
of the Closing Date or the Additional Closing Date, as the case may be,
prevent the issuance or sale of the Shares.
(j) Good Standing. The Representative shall have received on
and as of the Closing Date or the Additional Closing Date, as the case
may be, satisfactory evidence of the good standing of the Company and
its subsidiaries in their respective jurisdictions of organization and
their good standing as foreign entities in such other jurisdictions as
the Representative may reasonably request, in each case in writing or
any standard form of telecommunication from the appropriate
Governmental Authorities of such jurisdictions.
(k) Listing. The Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved
for listing on the Nasdaq National Market, subject to official notice
of issuance.
(l) Lock-up Agreements. The "lock-up" agreements, each
substantially in the form of Exhibit A hereto, between you and certain
stockholders, executive officers and directors of the Company relating
to sales and certain other dispositions of shares of Stock or certain
other securities, delivered to you on or before the date hereof, shall
be full force and effect on the Closing Date or Additional Closing
Date, as the case may be.
(m) Additional Documents. On or prior to the Closing Date or
the Additional Closing Date, as the case may be, the Company shall have
furnished to the Representative such further certificates and documents
as the Representative may reasonably request.
All opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
6. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter, its affiliates, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, legal fees and other expenses incurred in connection with
any suit, action or proceeding or any claim asserted, as such fees and expenses
are incurred), joint or several, that
-17-
arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus (or any amendment or supplement thereto) or any Preliminary
Prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities arise out of, or are based upon, any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with any information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representative expressly for use
therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in subsection
(b) below.
(b) Indemnification of the Company. Each Underwriter agrees, severally
and not jointly, to indemnify and hold harmless the Company, its directors, its
officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or
liabilities that arise out of, or are based upon, any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to such Underwriter furnished to the
Company in writing by such Underwriter through the Representative expressly for
use in the Registration Statement and the Prospectus (or any amendment or
supplement thereto) or any Preliminary Prospectus, it being understood and
agreed upon that the only such information furnished by any Underwriter consists
of the following information in the Prospectus furnished on behalf of each
Underwriter: the concession and reallowance figures appearing in the fourth
paragraph under the caption "Underwriting" and the information contained in the
tenth paragraph under the caption "Underwriting".
(c) Notice and Procedures. If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be brought
or asserted against any person in respect of which indemnification may be sought
pursuant to either paragraph (a) or (b) above, such person (the "Indemnified
Person") shall promptly notify the person against whom such indemnification may
be sought (the "Indemnifying Person") in writing; provided that the failure to
notify the Indemnifying Person shall not relieve it from any liability that it
may have under this Section 6 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such
failure; and provided, further, that the failure to notify the Indemnifying
Person shall not relieve it from any liability that it may have to an
Indemnified Person otherwise than under this Section 6. If any such proceeding
shall be brought or asserted against an Indemnified Person and it shall have
notified the Indemnifying Person thereof, the Indemnifying Person shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others entitled to indemnification pursuant to this
Section 6 that the Indemnifying Person may designate in such proceeding and
shall pay the fees and expenses of such counsel related to such proceeding, as
incurred. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed to the contrary; (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Per-
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son; (iii) the Indemnified Person shall have reasonably concluded that there may
be legal defenses available to it that are different from or in addition to
those available to the Indemnifying Person; or (iv) the named parties in any
such proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be paid or reimbursed as they are incurred. Any
such separate firm for any Underwriter, its affiliates, directors and officers
and any control persons of such Underwriter shall be designated in writing by
X.X. Xxxxxx Securities Inc. and any such separate firm for the Company, its
directors, its officers who signed the Registration Statement and any control
persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested that an Indemnifying
Person reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by the Indemnifying
Person of such request and (ii) the Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs (a)
and (b) above is unavailable to an Indemnified Person or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Shares or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
respective proportions as the net proceeds (before deducting expenses) received
by the Company from the sale of the Shares and
-19-
the total underwriting discounts and commissions received by the Underwriters in
connection therewith, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate offering price of the Shares. The relative
fault of the Company on the one hand and the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) Limitation on Liability. The Company and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
6 were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an Indemnified Person as a result of the
losses, claims, damages and liabilities referred to in paragraph (d) above shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses incurred by such Indemnified Person in connection with any such
action or claim. Notwithstanding the provisions of this Section 6, in no event
shall an Underwriter be required to contribute any amount in excess of the
amount by which the total underwriting discounts and commissions received by
such Underwriter with respect to the offering of the Shares exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 6 are several
in proportion to their respective purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 6
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any Indemnified Person at law or in equity.
7. Effectiveness of Agreement. This Agreement shall become effective
upon the execution and delivery hereof by the parties hereto.
8. Termination. This Agreement may be terminated in the absolute
discretion of the Representative, by notice to the Company, if after the
execution and delivery of this Agreement and prior to the Closing Date or, in
the case of the Option Shares, prior to the Additional Closing Date (i) trading
generally shall have been suspended or materially limited on or by any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade; (ii) trading of any
securities issued or guaranteed by the Company shall have been suspended on any
exchange or in any over-the-counter market; (iii) a general moratorium on
commercial banking activities shall have been declared by federal or New York
State authorities; or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis,
either within or outside the United States, that, in the judgment of the
Representative, is material and adverse and makes it impracticable or
-20-
inadvisable to proceed with the offering, sale or delivery of the Shares on the
Closing Date or the Additional Closing Date, as the case may be, on the terms
and in the manner contemplated by this Agreement and the Prospectus.
9. Defaulting Underwriter. (a) If, on the Closing Date or the
Additional Closing Date, as the case may be, any Underwriter defaults on its
obligation to purchase the Shares that it has agreed to purchase hereunder on
such date, the non-defaulting Underwriters may in their discretion arrange for
the purchase of such Shares by other persons satisfactory to the Company on the
terms contained in this Agreement. If, within 36 hours after any such default by
any Underwriter, the non-defaulting Underwriters do not arrange for the purchase
of such Shares, then the Company shall be entitled to a further period of 36
hours within which to procure other persons satisfactory to the non-defaulting
Underwriters to purchase such Shares on such terms. If other persons become
obligated or agree to purchase the Shares of a defaulting Underwriter, either
the non-defaulting Underwriters or the Company may postpone the Closing Date or
the Additional Closing Date, as the case may be, for up to five full business
days in order to effect any changes that in the opinion of counsel for the
Company or counsel for the Underwriters may be necessary in the Registration
Statement and the Prospectus or in any other document or arrangement, and the
Company agrees to promptly prepare any amendment or supplement to the
Registration Statement and the Prospectus that effects any such changes. As used
in this Agreement, the term "Underwriter" includes, for all purposes of this
Agreement unless the context otherwise requires, any person not listed in
Schedule 1 hereto that, pursuant to this Section 9, purchases Shares that a
defaulting Underwriter agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the aggregate
number of Shares that remain unpurchased on the Closing Date or the Additional
Closing Date, as the case may be does not exceed one-eleventh of the aggregate
number of Shares to be purchased on such date, then the Company shall have the
right to require each non-defaulting Underwriter to purchase the number of
Shares that such Underwriter agreed to purchase hereunder on such date plus such
Underwriter's pro rata share (based on the number of Shares that such
Underwriter agreed to purchase on such date) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the aggregate
number of Shares that remain unpurchased on the Closing Date or the Additional
Closing Date, as the case may be, exceeds one-eleventh of the aggregate amount
of Shares to be purchased on such date, or if the Company shall not exercise the
right described in paragraph (b) above, then this Agreement or, with respect to
any Additional Closing Date, the obligation of the Underwriters to purchase
Shares on the Additional Closing Date, as the case may be, shall terminate
without liability on the part of the non-defaulting Underwriters. Any
termination of this Agreement pursuant to this Section 9 shall be without
liability on the part of the Company, except that the Company will continue to
be liable for the payment of expenses as set forth in Section 10 hereof and
except that the provisions of Section 6 hereof shall not terminate and shall
remain in effect.
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(d) Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company or any non-defaulting Underwriter for
damages caused by its default.
10. Payment of Expenses. (a) Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is terminated,
the Company will pay or cause to be paid all costs and expenses incident to the
performance of its obligations hereunder, including without limitation, (i) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Shares and any taxes payable in that connection; (ii) the costs incident to
the preparation, printing and filing under the Securities Act of the
Registration Statement, the Preliminary Prospectus and the Prospectus (including
all exhibits, amendments and supplements thereto) and the distribution thereof;
(iii) the costs of reproducing and distributing this Agreement; (iv) the fees
and expenses of the Company's counsel and independent accountants; (v) the fees
and expenses incurred in connection with the registration or qualification and
determination of eligibility for investment of the Shares under the laws of such
jurisdictions as the Representative may designate and the preparation, printing
and distribution of a Blue Sky Memorandum (including the related fees and
expenses of counsel for the Underwriters); (vi) the cost of preparing stock
certificates; (vii) the costs and charges of any transfer agent and any
registrar; (viii) all expenses and application fees incurred in connection with
any filing with, and clearance of the offering by, the National Association of
Securities Dealers, Inc.; (ix) all expenses incurred by the Company in
connection with any "road show" presentation to potential investors ; and (x)
all expenses and application fees related to the listing of the Shares on the
Nasdaq National Market.
(b) If (i) the Company for any reason fails to tender the Shares for
delivery to the Underwriters or (ii) the Underwriters decline to purchase the
Shares for any reason permitted under this Agreement (other than pursuant to
clauses (i), (iii) and (iv) of Section 8), the Company agrees to reimburse the
Underwriters for all out-of-pocket costs and expenses (including the fees and
expenses of their counsel) reasonably incurred by the Underwriters in connection
with this Agreement and the offering contemplated hereby.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and any controlling persons
referred to in Section 6 hereof. Nothing in this Agreement is intended or shall
be construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
No purchaser of Shares from any Underwriter shall be deemed to be a successor
merely by reason of such purchase.
12. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Underwriters
contained in this Agreement or made by or on behalf of the Company or the
Underwriters pursuant to this Agreement or any certificate delivered pursuant
hereto shall survive the delivery of and payment for the Shares and shall remain
in full force and effect, regardless of any termination of this Agreement or any
investigation made by or on behalf of the Company or the Underwriters.
13. Certain Defined Terms. For purposes of this Agreement, (a) except
where otherwise expressly provided, the term "affiliate" has the meaning set
forth in Rule 405 under the Securities Act; (b) the term "business day" means
any day other than a day on which banks are permitted or
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required to be closed in New York City; and (c) the term "subsidiary" has the
meaning set forth in Rule 405 under the Securities Act.
14. Miscellaneous. (a) Authority of the Representative. Any action by
the Underwriters hereunder may be taken by X.X. Xxxxxx Securities Inc. on behalf
of the Underwriters, and any such action taken by X.X. Xxxxxx Securities Inc.
shall be binding upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted and
confirmed by any standard form of telecommunication. Notices to the Underwriters
shall be given to the Representative c/o X.X. Xxxxxx Securities Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax: (000) 000-0000); Attention: Xxxxx X.
Xxxxxx. Notices to the Company shall be given to it at Keryx Biopharmaceuticals,
Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, (fax: (000) 000-0000);
Attention: Xxx Xxxxxxx.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which
may include counterparts delivered by any standard form of telecommunication),
each of which shall be an original and all of which together shall constitute
one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto.
(f) Headings. The headings herein are included for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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If the foregoing is in accordance with your understanding, please
indicate your acceptance of this Agreement by signing in the space provided
below.
Very truly yours,
KERYX BIOPHARMACEUTICALS, INC.
By:
------------------------------
Title:
Accepted: July 14, 2005
X.X. XXXXXX SECURITIES INC.
For itself and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
By:
------------------------------
Authorized Signatory
Schedule 1
Underwriter Number of Shares
----------- ----------------
X.X. Xxxxxx Securities Inc. 2,137,750
Bear, Xxxxxxx & Co. Inc. 1,131,750
Xxxxxxxxx & Company, Inc. 603,600
Xxxxxxxxxxx & Co., Inc. 603,600
Xxxxx Xxxxxx & Co., Inc. 276,650
Punk, Xxxxxx & Company, L.P. 276,650
---------
Total 5,030,000
Annex A
[Form of Opinion of Xxxxxx & Bird LLP]
(a) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion; the Prospectus
was filed with the Commission pursuant to the subparagraph of Rule 424(b) under
the Securities Act specified in such opinion on the date specified therein; and
no order suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose is pending or, to the best knowledge
of such counsel, threatened by the Commission.
(b) The Registration Statement and the Prospectus (other than the
financial statements and related schedules therein, as to which such counsel
need express no opinion) complied as of the effective date thereof and as of the
effective date of any amendment thereto, complied as of the date of the
Underwriting Agreement and comply as to form in all material respects with the
requirements of the Securities Act.
(c) The Company and each of its domestic subsidiaries are validly
existing and in good standing under the laws of their respective jurisdictions
of organization, are duly qualified to do business and are in good standing in
each jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification, and have
all power and authority necessary to own or hold their respective properties and
to conduct the businesses in which they are engaged, except where the failure to
be so qualified or have such power or authority would not, individually or in
the aggregate, have a Material Adverse Effect.
(d) The Company has an authorized capitalization as set forth in the
Prospectus under the heading "Capitalization"; all the outstanding shares of
capital stock of the Company listed on Schedule A have been, or will be upon
exercise of outstanding options, warrants or other rights listed on Schedule A,
duly and validly authorized and issued and are fully paid and non-assessable;
the capital stock of the Company conforms in all material respects to the
description thereof contained in the Registration Statement and the Prospectus;
and all the outstanding shares of capital stock or other equity interests of
each domestic subsidiary of the Company have been, or will be upon exercise of
outstanding options, warrants or other rights, duly and validly authorized and
issued, are fully paid and non-assessable.
(e) The Company has full right, power and authority to execute and
deliver the Underwriting Agreement and to perform its obligations thereunder.
(f) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(g) The Underwriting Agreement conforms in all material respects to the
description thereof in the Registration Statement and the Prospectus.
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(h) The Shares to be issued and sold by the Company hereunder have been
duly authorized, and when delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be validly issued, fully paid
and non-assessable and the issuance of the Shares is not subject to any
preemptive or similar rights.
(i) To the best knowledge of such counsel, neither the Company nor any
of its subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
property or assets is subject; or (iii) in violation of any law or statute or
any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except in the case of clauses (ii) and
(iii) for any such default or violation that would not, individually or in the
aggregate, have a Material Adverse Effect.
(j) The execution, delivery and performance by the Company of the
Underwriting Agreement, the issuance and sale of the Shares being delivered on
the Closing Date or the Additional Closing Date, as the case may be, and
compliance by the Company with the terms of, and the consummation of the
transactions contemplated by, the Underwriting Agreement will not (i) conflict
with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or any of its
subsidiaries or (iii) result in the violation of any law or statute or any
judgment, order or regulation of any court or arbitrator or governmental or
regulatory authority except, in the case of clauses (i) and (iii) above, for
such conflict, breach or violation that would not, individually or in the
aggregate, have a Material Adverse Effect.
(k) No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory
authority is required for the execution, delivery and performance by the Company
of the Underwriting Agreement, the issuance and sale of the Shares being
delivered on the Closing Date or the Additional Closing Date, as the case may
be, and compliance by the Company with the terms thereof and the consummation of
the transactions contemplated by the Underwriting Agreement, except for the
registration of the Shares under the Securities Act and such consents,
approvals, authorizations, orders and registrations or qualifications as may be
required under applicable state securities laws in connection with the purchase
and distribution of the Shares by the Underwriters.
(l) To the best knowledge of such counsel, except as described in the
Prospectus, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending (including any brought by or before the
FDA) to which the Company or any of its subsidiaries is a party or to which any
property of the Company or any of its subsidiaries is the subject, nor is there
any adverse judgment, decree, or order currently in effect that has been issued
by the
A-2
FDA against the Company which, individually or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, could reasonably be
expected to have a Material Adverse Effect; and to the best knowledge of such
counsel, no such investigations, actions, suits or proceedings are threatened or
contemplated by any governmental or regulatory authority or threatened by
others.
(m) The descriptions in the Prospectus of statutes, legal, governmental
and regulatory proceedings and contracts and other documents are accurate in all
material respects; the statements in the Prospectus under the headings
"Regulatory," "Description of Common Stock" and "Underwriting", in the
Prospectus incorporated by reference from Item 3 of Part I of the Company's
Annual Report on Form 10-K for the year ended December 31, 2004 and in the
Registration Statement in Item 15, to the extent that they constitute summaries
of the terms of stock, matters of law or regulation or legal conclusions, fairly
summarize the matters described therein in all material respects; and, to the
best knowledge of such counsel, (A) there are no current or pending legal,
governmental or regulatory actions, suits or proceedings that are required under
the Securities Act to be described in the Prospectus and that are not so
described and (B) there are no statutes, regulations or contracts and other
documents that are required under the Securities Act to be filed as exhibits to
the Registration Statement or described in the Prospectus and that have not been
so filed or described.
(n) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be required to register as an "investment company" or
an entity "controlled" by an "investment company" within the meaning of the
Investment Company Act.
(o) The documents incorporated by reference in the Prospectus or any
further amendment or supplement thereto made by the Company prior to the Closing
Date or the Additional Closing Date, as the case may be, (other than the
financial statements and related schedules therein, as to which such counsel
need express no opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material respects
with the requirements of the Securities Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder; and such counsel has
no reason to believe that any of such documents, when such documents became
effective or were so filed, as the case may be contained, in the case of a
registration statement which became effective under the Securities Act, any
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or, in the case of other documents which were filed under the Exchange with the
Commission, any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statement therein, in the light of
the circumstances under which they were made when such documents were so filed,
not misleading.
(p) The statements in (i) the second sentence of the third full
paragraph on page S-2 of the Prospectus Supplement, (ii) the last sentence of
the first paragraph of the Development Status section of the Form 10-K, (iii)
the second and third sentences of the second paragraph of the Other Intellectual
Property Rights section of the Form 10-K and (iv) the Government and Industry
Regulation section of the Form 10-K, in each case insofar as such statements
constitute summaries of matters of law, accurately summarize, in all material
respects, the matters referred
A-3
to therein. The Company and its subsidiaries possess all licenses and permits
necessary under FDA laws and have made all required filings with the FDA under
such laws, in each case necessary to conduct the clinical trials discussed in
the Prospectus.
(q) The statements in: (i) the second and third full paragraphs on page
S-2 of the Prospectus Supplement and (ii) the second full paragraph of the
KRX-101 section of the Form 10-K (the "IP Statements") are accurate in all
material respects.
(r) During the course of its work for the Company, Counsel has not
become aware that the Company is infringing or otherwise violating any patents
of others.
(s) To the best of Counsel's knowledge, the IP Statements do not
contain any untrue statement of fact or omit to state any fact necessary to make
the statements therein not misleading. Further, to the best of Counsel's
knowledge, at the Closing Date, the IP Statements do not contain any untrue
statement of fact or omit to state any fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Such counsel shall also state that they have participated in
conferences with representatives of the Company and with representatives of its
independent accountants and counsel at which conferences the contents of the
Registration Statement and the Prospectus and any amendment and supplement
thereto and related matters were discussed and, although such counsel assume no
responsibility for the accuracy, completeness or fairness of the Registration
Statement, the Prospectus and any amendment or supplement thereto (except as
expressly provided above), nothing has come to the attention of such counsel to
cause such counsel to believe that the Registration Statement, at the time of
its effective date (including the information, if any, deemed pursuant to Rule
430A to be part of the Registration Statement at the time of effectiveness),
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, or that the Prospectus or any amendment or supplement thereto as
of its date and the Closing Date contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading
(other than the financial statements and other financial information contained
therein, as to which such counsel need express no belief).
In rendering such opinion, such counsel may rely as to matters of fact
on certificates of responsible officers of the Company and public officials that
are furnished to the Underwriters.
The opinion of Xxxxxx & Bird LLP described above shall be rendered to
the Underwriters at the request of the Company and shall so state therein.
A-4
Exhibit A
FORM OF LOCK-UP AGREEMENT
July , 2005
X.X. XXXXXX SECURITIES INC.
As Representative of
the several Underwriters listed in
Schedule I to the Underwriting
Agreement referred to below
c/o X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Keryx Biopharmaceuticals, Inc. -- Public Offering
Ladies and Gentlemen:
The undersigned understands that you, as Representative of the several
Underwriters, propose to enter into an Underwriting Agreement (the "Underwriting
Agreement") with Keryx Biopharmaceuticals, Inc., a Delaware corporation (the
"Company"), providing for the public offering (the "Public Offering") by the
several Underwriters named in Schedule I to the Underwriting Agreement (the
"Underwriters"), of Common Stock, par value $ 0.001 per share, of the Company
(the "Securities"). Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Underwriting Agreement.
In consideration of the Underwriters' agreement to purchase and make
the Public Offering of the Securities, and for other good and valuable
consideration receipt of which is hereby acknowledged, the undersigned hereby
agrees that, without the prior written consent of X.X. Xxxxxx Securities Inc. on
behalf of the Underwriters, the undersigned will not, during the period ending
90 days after the date of the final prospectus supplement relating to the Public
Offering (the "Prospectus"), (1) offer, pledge, announce the intention to sell,
sell, contract to sell, 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, directly or indirectly, any shares of Common
Stock, par value $0.001 per share, of the Company (the "Common Stock") or any
securities convertible into or exercisable or exchangeable for Common Stock
(including without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and securities which may
be issued upon exercise of a stock option or warrant) or (2) enter into any swap
or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. In addition, the
undersigned agrees that, without the prior written consent of X.X. Xxxxxx
Securities Inc. on behalf of the Underwriters, it will not, during the period
ending 90 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
Notwithstanding the foregoing, if (1) during the last 17 days of the
90-day restricted period, the Company issues an earnings release or material
news or a material event relating to the Company occurs; or (2) prior to the
expiration of the 90-day restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the 90-day restricted period, the restrictions imposed by this Letter Agreement
shall continue to apply until the expiration of the 18-day period beginning on
the issuance of the earnings release or the occurrence of the material news or
material event.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does
not become effective, or if the Underwriting Agreement (other than the
provisions thereof which survive termination) shall terminate or be terminated
prior to payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released form all obligations under this Letter Agreement.
The undersigned understands that the Underwriters are entering into the
Underwriting Agreement and proceeding with the Public Offering in reliance upon
this Letter Agreement.
This Letter Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of laws
principles thereof.
Very truly yours,
[NAME OF STOCKHOLDER]
By:
------------------------------
Name:
Title:
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