1
EXHIBIT 1
EXECUTION COPY
1,450,000 Shares
ENTREMED, INC.
Common Stock
UNDERWRITING AGREEMENT
February 26, 2001
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
EntreMed, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell 1,450,000 shares (the "Firm Shares") of the Company's Common
Stock, $0.01 par value per share (the "Common Stock"), to ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
& Co., Inc., a Delaware corporation ("GKM"). The Company has also agreed to
grant to GKM an option (the "Option") to purchase up to an additional 100,000
shares of Common Stock (the "Option Shares") on the terms and for the purposes
set forth in Section 1(b). The Firm Shares and the Option Shares are hereinafter
collectively referred to as the "Shares."
The public offering price per share at which the Shares are initially
offered and the purchase price per share for the Shares to be paid by GKM shall
be agreed upon by the Company and GKM, and such agreement shall be set forth in
a separate written instrument substantially in the form of Exhibit A hereto (the
"Price Determination Agreement"). The Price Determination Agreement may take the
form of an exchange of any standard form of written telecommunication between
the Company and GKM and shall specify such applicable information as is
indicated in Exhibit A hereto. The offering of the Shares shall be governed by
this Agreement, as supplemented by the Price Determination Agreement. From and
after the date of the execution and delivery of the Price Determination
Agreement, this Agreement shall be deemed to incorporate, and, unless the
context otherwise indicates, all references contained herein to "this Agreement"
and to the phrase "herein" shall be deemed to include, the Price Determination
Agreement.
The Company confirms as follows its agreement with GKM:
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the
2
Company agrees to sell to GKM and GKM agrees to purchase from the Company the
Firm Shares at the purchase price per share to be agreed upon by the Company and
GKM in accordance with Section 1(c) hereof and as set forth in the Price
Determination Agreement.
(b) Subject to all the terms and conditions of this
Agreement, the Company grants the Option to GKM to purchase up to 100,000 Option
Shares from the Company at the same price per share as GKM shall pay for the
Firm Shares. The Option may be exercised only to cover over-allotments in the
sale of the Firm Shares by GKM and may be exercised in whole or in part at any
time (but not more than once) on or before the 30th day after the date of this
Agreement (or, if the Company has elected to rely on Rule 430A, on or before the
30th day after the date of the Price Determination Agreement), upon written or
telegraphic notice (the "Option Shares Notice") by GKM to the Company no later
than 12:00 noon, New York City time, at least two and no more than five business
days before the date specified for closing in the Option Shares Notice (the
"Option Closing Date") setting forth the aggregate number of Option Shares to be
purchased and the time and date for such purchase. On the Option Closing Date,
the Company shall issue and sell to GKM and GKM shall purchase from the Company
the number of Option Shares set forth in the Option Shares Notice.
(c) The public offering price per share at which the Firm
Shares are initially offered and the purchase price per share for the Firm
Shares to be paid by GKM shall be agreed upon and set forth in the Price
Determination Agreement. In the event such price has not been agreed upon and
the Price Determination Agreement has not been executed by the close of business
on the fourteenth business day following the date of this Agreement, this
Agreement shall terminate forthwith, without liability of any party to any other
party except that Sections 4(i), 4(j) and 6 shall remain in effect.
2. Delivery and Payment.
(a) Delivery of the Firm Shares shall be made to GKM
against payment of the purchase price by wire transfer of immediately available
funds to the order of the Company at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP.
Such payment shall be made at 10:00 a.m., New York City time, on the third
business day (the fourth business day, should the offering be priced after 4:30
PM, EST/EDT) after the date on which the first bona fide offering of the Firm
Shares to the public is made by GKM or at such time on such other date, not
later than ten business days after such date, as may be agreed upon by the
Company and GKM (such date is hereinafter referred to as the "Closing Date").
(b) To the extent the Option is exercised, delivery of
the Option Shares against payment by GKM (in the manner specified above) shall
take place at the offices specified above for the closing, at the time and date
(which may be the Closing
Date) specified in the Option Shares Notice.
(c) Certificates evidencing the Shares shall be in
definitive form and shall be registered in such names and in such denominations
as GKM shall request at least two business days prior to the Closing Date by
written notice to the Company. For the purpose of expediting the checking and
packaging of certificates for the Shares, the Company agrees to make such
certificates available for inspection at least 24 hours prior to the Closing
Date.
2
3
(d) The cost of original issue tax stamps, if any, in
connection with the issuance and delivery of the Shares by the Company to GKM
shall be borne by the Company. The Company shall pay and hold GKM and any
subsequent holder of the Shares
harmless from any and all liabilities with respect to or resulting from any
failure or delay in paying Federal and state stamp and other transfer taxes, if
any, which may be payable or determined to be payable in connection with the
original issuance or sale to GKM of the Shares.
3. Representations and Warranties of the Company. The Company
represents and warrants to, and covenants with, GKM as follows:
(a) The Company meets the requirements for use of Form
S-3 and has filed with the Securities and Exchange Commission (the "Commission")
a registration statement on Form S-3 (No. 333-94665), including a prospectus
relating to the Common Shares, for the registration of such securities under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Act"). The Company meets the requirements of Rule
415 under the Act for the registration, offer and sale of the Shares. A
prospectus supplement reflecting the terms of the Shares, the terms of the
offering thereof and the other matters set forth therein has been prepared or
will be prepared and will be filed pursuant to Rule 424 under the Act. Such
prospectus supplement, in the form first filed after the date hereof pursuant to
Rule 424, is herein referred to as the "Prospectus Supplement." Such
registration statement, as amended at the date hereof, including all documents
incorporated or deemed to be incorporated by reference therein and the exhibits
thereto, in the form it was declared effective by the Commission under the Act
is herein referred to as the "Registration Statement" and the basic prospectus
included therein and relating to all offerings of securities under the
Registration Statement, as amended on March 31, 2000 and as supplemented by the
Prospectus Supplement, is herein referred to as the "Prospectus," except that if
such basic prospectus is amended or supplemented on or prior to the date on
which the Prospectus Supplement is first filed pursuant to Rule 424, the term
"Prospectus" shall refer to the basic prospectus as so amended or supplemented
and as supplemented by the Prospectus Supplement, in either case including the
documents filed by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Exchange Act"), that are incorporated by
reference therein. If the Company files a registration statement to register a
portion of the Shares and relies on Rule 462(b) under the Act for such
registration statement to become effective upon filing with the Commission (the
"Rule 462 Registration Statement"), then any reference to the "Registration
Statement" shall be deemed to include the Rule 462 Registration Statement, as
amended from time to time. All references in this Agreement to the Registration
Statement, the Rule 462 Registration Statement, the Prospectus Supplement or the
Prospectus, or any amendments or supplements to the foregoing, shall include any
copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("▇▇▇▇▇").
(b) The Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto have been
declared effective by the Commission under the Act. The date that the
Registration Statement was declared effective by the Commission is referred to
in this Agreement as the "Effective Date." The Company has responded to all
requests, if any, of the Commission for additional or supplemental information.
No stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration
3
4
Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the best knowledge of the Company, are contemplated or
threatened by the Commission.
(c) Each of the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto, at the time it
became effective and at all subsequent times, complied and will comply in all
material respects with the 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. The Prospectus, as amended or supplemented, as of its date and at
all subsequent times, complied and will comply in all material respects with the
Act and did not or will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein not
misleading, in light of the circumstances under which they were made. The
foregoing representations and warranties in this Section 3(c) do not apply to
any statements or omissions made in reliance on and in conformity with
information relating to GKM furnished in writing to the Company by GKM
specifically for inclusion in the Registration Statement or Prospectus or any
amendment or supplement thereto. For all purposes of this Agreement, the only
information relating to GKM furnished in writing to the Company by GKM
specifically for inclusion in the preliminary prospectus, the Registration
Statement or the Prospectus are the amounts of the selling concession and
reallowance set forth in the third paragraph in the section entitled
"Underwriting" in the Prospectus and the eighth paragraph in the section
entitled "Underwriting" in the Prospectus concerning stabilization and
overallotment by GKM. The Company has not distributed any offering material in
connection with the offering or sale of the Shares other than the Registration
Statement, the preliminary prospectus and the Prospectus.
(d) The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, conformed and will conform in all material
respects to the requirements of the Exchange Act, and, when read together with
the other information in the Prospectus, at the time the Registration Statement
and any amendments thereto become effective and at the Closing Date, will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the 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.
(e) TheraMed, Inc. (the "Subsidiary") is a subsidiary (as
defined in the Act) of the Company. Each of the Company and its Subsidiary is,
and at the Closing Date will be, a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation. Each
of the Company and its Subsidiary has, and at the Closing Date will have, full
power and authority to own or lease all the assets owned or leased by it and to
conduct its business as described or incorporated by reference in the
Registration Statement and the Prospectus. Each of the Company and its
Subsidiary is, and at the Closing Date will be, duly licensed or qualified to do
business in and in good standing as a foreign corporation in all jurisdictions
in which the nature of the activities conducted by it or the character of the
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing would
not have a Material Adverse Effect (as defined in section 3(k) hereof). All of
the outstanding shares of capital stock of the Subsidiary have been duly
authorized and validly issued, and are fully paid and non-assessable. Complete
and correct copies of the certificate of incorporation and of the by-laws of
each of the Company
4
5
and its Subsidiary and all amendments thereto have been delivered to GKM, and no
changes therein will be made subsequent to the date hereof and prior to the
Closing Date. Other than the Subsidiary, the Company does not own or control any
other subsidiary that presently conducts business operations or has material
assets.
(f) The outstanding shares of Common Stock have been, and
the Shares to be issued and sold by the Company upon such issuance in accordance
with this Agreement will be, duly authorized, validly issued, fully paid and
non-assessable and will not be subject to any preemptive, first refusal, or
similar right. The description of the Common Stock included or incorporated by
reference in the Registration Statement and the Prospectus is now, and at the
Closing Date will be, complete and accurate in all material respects. Except as
set forth or incorporated by reference in the Prospectus, the Company does not
have outstanding, and at the Closing Date will not have outstanding, any options
to purchase, or any rights or warrants to subscribe for, or any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
any shares of Common Stock or any such warrants, convertible securities or
obligations.
(g) The financial statements and schedules included or
incorporated by reference in the Registration Statement or the Prospectus
present fairly in all material respects the consolidated financial condition of
the Company and its subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows of the Company and its
subsidiaries for the respective periods covered thereby, all in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the entire period involved, except as set forth or incorporated by
reference in the Prospectus. No other financial statements or schedules of the
Company are required by the Act or the Exchange Act to be included or
incorporated by reference in the Registration Statement or the Prospectus. Ernst
& Young LLP (the "Accountants") who have reported on such financial statements
and schedules, are, to the best knowledge of the Company, independent
accountants with respect to the Company as required by the Act. The statements
included in the Registration Statement with respect to the Accountants pursuant
to Rule 509 of Regulation S-K under the Act are true and correct in all material
respects.
(h) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(i) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth or incorporated by reference in the Prospectus, (i)
there has not been and will not have been a material adverse change in the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company and its Subsidiary, taken as a whole,
arising for any reason whatsoever (a "Material Adverse Change") or a material
adverse change in the
5
6
capitalization of the Company, (ii) the Company has incurred, nor will it incur,
any material liabilities or obligations, direct or contingent, nor has it
entered into, nor will it enter into, any material transactions not in the
ordinary course of business, other than pursuant to this Agreement and the
transactions referred to herein, and (iii) the Company has not and will not have
paid or declared any dividends or other distributions of any kind on any class
of its capital stock.
(j) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.
(k) Except as set forth or incorporated by reference in
the Prospectus, there are no actions, suits or proceedings pending, or to the
Company's knowledge threatened against or affecting, the Company or its
Subsidiary or any of their respective officers in their capacity as such, before
or by any Federal or state court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, wherein an unfavorable
ruling, decision or finding would reasonably be expected to have a material
adverse effect on the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiary, taken as a whole (a "Material Adverse Effect"). Neither the Company
nor its Subsidiary has received any notice of proceedings relating to the
revocation or modification of any authorization, approval, order, license,
certificate, franchise or permit that, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would reasonably be
expected to have a Material Adverse Effect. There are no pending investigations
known to the Company involving the Company or its Subsidiary by any governmental
agency having jurisdiction over the Company or its Subsidiary or their
respective businesses or operations. The disclosures included or incorporated by
reference in the Prospectus and the Registration Statement concerning the
effects of Federal, state, local and foreign laws, rules and regulations on the
business of each of the Company and its Subsidiary as currently conducted and as
proposed to be conducted are correct in all material respects and do not omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading, in light of the circumstances under
which they were made.
(l) Each of the Company and its Subsidiary has, and at
the Closing Date will have, (i) all governmental licenses, permits, consents,
orders, approvals and other authorizations necessary to carry on its business as
contemplated in the Prospectus, except where the failure to have such licenses,
permits, consents, orders, approvals or other authorizations would not
reasonably be expected to have a Material Adverse Effect, (ii) complied in all
material respects with all laws, regulations and orders applicable to it or its
business and (iii) performed all obligations required to be performed by it, and
is not, and at the Closing Date will not be, in default under any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement, lease or other agreement or instrument (collectively,
a "Contract") to which it is a party or by which its property is bound or
affected, except for such defaults as would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect. To the
knowledge of the Company, except as would not have a Material Adverse Effect, no
other party under any Contract to which it is a party is in default in any
respect thereunder or has given written, or to the knowledge of the officers and
directors of the Company oral, notice to the Company, its Subsidiary or any of
their respective officers or
6
7
directors of such other party's intention to terminate, cancel or refuse to
renew any Contract. Except as would not have a Material Adverse Effect, each of
the Company and its Subsidiary is not now, and at the Closing Date will not be,
in violation of any provision of its certificate of incorporation or by-laws.
(m) No consent, approval, authorization or order of, or
any filing or declaration with, any court or governmental agency or body is
required in connection with the authorization, issuance, transfer, sale or
delivery of the Shares by the Company, in connection with the execution,
delivery and performance of this Agreement by the Company or in connection with
the taking by the Company of any action contemplated hereby, except as have been
obtained under the Act and such as may be required under state securities or
Blue Sky laws or the by-laws and rules of the National Association of Securities
Dealers, Inc. (the "NASD") in connection with the purchase and distribution by
GKM of the Shares to be sold by the Company.
(n) The aggregate value of voting Common Stock held by
non-affiliates of the Company is $150,000,000 or more. The Company has been
subject to the reporting requirements of the Exchange Act for 36 months and has
filed all required reports, and has timely filed all required reports under the
Exchange Act for the previous 12 months. The Company has not defaulted on any
preferred stock dividend, sinking fund payment, interest payment, or lease
obligation since the end of the most recent fiscal year for which certified
financial statements of the issuer were included in a report filed under Section
13 (a) or 15(d) of the Exchange Act.
(o) The Company has full corporate power and authority to
enter into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company enforceable against the Company in accordance with the terms hereof,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or general equitable principles. The
performance of this Agreement and the consummation of the transactions
contemplated hereby, and the application of the net proceeds from the offering
and sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds" will not result in the creation or imposition
of any lien, charge or encumbrance upon any of the assets of the Company
pursuant to the terms or provisions of, or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or give any
other party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, (x) the certificate of incorporation or
by-laws of the Company or its Subsidiary, or (y) any Contract to which the
Company or its Subsidiary is a party or by which the Company or its Subsidiary
or any of its properties is bound or affected, or violate or conflict with any
judgment, ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body applicable to the business or properties of
the Company or its Subsidiary, except in the case of clause (y) where such
breach, violation or default would not, singly or in the aggregate, have a
Material Adverse Effect.
(p) Each of the Company and its Subsidiary has good and
marketable title to all properties and assets described or incorporated by
reference in the Prospectus to be owned respectively by it, free and clear of
all liens, charges, encumbrances or restrictions, except as set forth or
incorporated by reference in the Prospectus or are not material to the business
of the
7
8
Company. The Company has valid, subsisting and enforceable leases for the
properties described or incorporated by reference in the Prospectus as leased by
it, with such exceptions as are not material and do not materially interfere
with the use made and proposed to be made of such properties by the Company.
(q) There is no document or Contract of a character
required to be described or incorporated by reference in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described or filed as required. All such documents and
Contracts described or incorporated by reference in the Registration Statement
or the Prospectus or filed as an exhibit to the Registration Statement were duly
authorized, executed and delivered by the Company.
(r) No statement, representation, warranty or covenant
made by the Company in this Agreement or made in any certificate or document
required by this Agreement to be delivered to GKM was or will be, when made,
inaccurate, untrue or incorrect.
(s) Neither the Company nor any of its directors,
officers or controlling persons has taken, directly or indirectly, any action
intended to cause or result in, or which might reasonably be expected to cause
or result in, or which has constituted, stabilization or manipulation, under the
Act or otherwise, of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(t) No holder of securities of the Company has rights to
register any securities of the Company because of the filing of the Registration
Statement, the Prospectus or the offering of the Shares, except for rights that
have been duly waived by such holder, have expired or have been fulfilled by
registration prior to the date of this Agreement.
(u) The Shares are duly authorized for listing on the
Nasdaq National Market System, subject only to notice of issuance.
(v) The Company is not involved in any material labor
dispute nor, to the knowledge of the Company, is any such dispute threatened.
(w) The Company and its Subsidiary own, or are licensed
or otherwise have adequate rights to use, material trademarks and trade names
that are used in or reasonably necessary for the conduct of their respective
businesses as described in the Prospectus, except to the extent that the failure
to own, be licensed or otherwise possess adequate rights to such trademarks and
trade names would not reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor its Subsidiary has received any notice of
infringement of or conflict with asserted rights of others with respect to any
such trademarks or trade names, that, singly or in the aggregate, if the subject
of any unfavorable decision, ruling or finding, would reasonably be expected to
have a Material Adverse Effect. The use, in connection with the business and
operations of the Company and its Subsidiary of such trademarks and trade names
does not, to the Company's knowledge, infringe on the rights of any person.
(x) Neither the Company nor its Subsidiary nor, to the
best of the Company's knowledge, any of their respective officers, directors,
employees or agents, have made any
8
9
contribution or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law or of the character required to
be disclosed in the Prospectus.
(y) The Company has filed all necessary federal, state
and foreign income and franchise tax returns and has paid all taxes required to
be paid by it and, if due and payable, any related or similar assessment, fine
or penalty levied against it except where such failure to file required returns
or pay such taxes, assessments, fines or penalties would not reasonably be
expected to result in a Material Adverse Change. The Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in Section 3(g) above in respect of all material federal, state and foreign
income and franchise taxes for all periods as to which the tax liability of the
Company has not been finally determined.
(z) Each of the Company and its Subsidiary carries, or is
covered by, insurance in such amounts and covering such risks as it believes is
adequate for the conduct of its business and the value of its properties and is
customary for companies engaged in similar industries.
(aa) Neither the Company nor its Subsidiary has maintained
or contributed to a defined benefit plan as defined in Section 3(35) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). No plan
maintained or contributed to by the Company that is subject to ERISA (an "ERISA
Plan") (or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code that could subject the Company or its Subsidiary to any material tax
penalty on prohibited transactions and that has not adequately been corrected.
Each ERISA Plan is in compliance in all material respects with all reporting,
disclosure and other requirements of the Code and ERISA as they relate to such
ERISA Plan, except for any noncompliance which would not result in the
imposition of a material tax or monetary penalty. With respect to each ERISA
Plan that is intended to be "qualified" within the meaning of Section 401(a) of
the Code, either (i) a determination letter has been issued by the Internal
Revenue Service stating that such ERISA Plan and the attendant trust are
qualified thereunder, or (ii) the remedial amendment period under Section 401(b)
of the Code with respect to the establishment of such ERISA Plan has not ended
and a determination letter application will be filed with respect to such ERISA
Plan prior to the end of such remedial amendment period. Neither the Company nor
its Subsidiary has ever completely or partially withdrawn from a "multiemployer
plan," as defined in Section 3(37) of ERISA.
(bb) Except as set forth or incorporated by reference in
the Prospectus, each of the Company and its Subsidiary owns, is licensed or
otherwise has adequate rights to use trade secrets, know-how, technology
(including other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), inventions, designs, processes, works of
authorship, computer programs and technical data and information (collectively,
the "Intellectual Property") that are or could reasonably be expected to be
material to its business as currently conducted or proposed to be conducted or
to the development, manufacture, operation and sale of any products and services
sold or proposed to be sold by any of the Company or its Subsidiary, except to
the extent that the failure to own, be licensed or otherwise possess adequate
rights to such Intellectual Property would not reasonably be expected to result
in a Material Adverse Effect. Neither the Company nor its Subsidiary has
received any notice of infringement
9
10
of or conflict with asserted rights of others with respect to any Intellectual
Property that, singly or in the aggregate, if the subject of any unfavorable
decision, ruling or finding, would reasonably be expected to have a Material
Adverse Effect. Except as set forth or incorporated by reference in the
Prospectus, the Company and its Subsidiary are not obligated or under any
liability whatsoever to make any material payment by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any Intellectual
Property, with respect to the use thereof or in connection with the conduct of
their respective businesses or otherwise.
(cc) There are no business relationships or related
party transactions involving the Company or any other person required to be
described in the Prospectus that have not been described or incorporated therein
by reference.
(dd) The Company (i) is in compliance with any and
all applicable federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, "Environmental
Laws"), (ii) has received all permits, licenses or other approvals required of
it under applicable Environmental Laws to conduct its businesses and (iii) is in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a Material Adverse Effect.
4. Agreements of the Company. The Company agrees with GKM as
follows:
(a) The Company shall not, during such period as the
Prospectus is required by law to be delivered in connection with sales of the
Shares by an underwriter or dealer, file any amendment or supplement to the
Registration Statement or the Prospectus, unless a copy thereof shall first have
been submitted to GKM within a reasonable period of time prior to the filing
thereof and GKM shall not have objected thereto in good faith.
(b) The Company shall notify GKM promptly, and shall
confirm such advice in writing, (i) when any post-effective amendment to the
Registration Statement has become effective, (ii) of any request by the
Commission for amendments or supplements to the Registration Statement or the
Prospectus or for additional information, (iii) of the commencement by the
Commission or by any state securities commission of any proceedings for the
suspension of the qualification of any of the Shares for offering or sale in any
jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, including, without limitation, the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, (iv) of
the happening of any event during the period mentioned in the second sentence of
Section 4(e) hereof that in the judgment of the Company makes any statement made
in the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in order
to make the statements therein, in light of the circumstances in which they are
made, not misleading and (v) of receipt by the Company or any representative of
the Company of any other communication from the Commission relating to the
Company, the Registration Statement, any preliminary prospectus or the
Prospectus. If at any time the Commission shall issue any order suspending the
effectiveness of the Registration
10
11
Statement, the Company shall use best efforts to obtain the withdrawal of such
order at the earliest possible moment. The Company shall use its best efforts to
comply with the provisions of and make all requisite filings with the Commission
pursuant to Rule 430A and to notify GKM promptly of all such filings.
(c) The Company shall furnish to GKM, without charge,
two signed copies of the Registration Statement and of any post-effective
amendment thereto, including financial statements and schedules, and all
exhibits thereto (including any document filed under the Exchange Act and deemed
to be incorporated by reference into the Prospectus), and shall furnish to GKM,
without charge, a copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules but without
exhibits.
(d) The Company shall comply with all the provisions
of any undertakings contained in the Registration Statement.
(e) The Company shall deliver to GKM, without charge,
as many copies of the Prospectus and any amendment or supplement thereto as GKM
may reasonably request. The Company consents to the use of the Prospectus and
any amendment or supplement thereto by GKM and by all dealers to whom the Shares
may be sold, both in connection with the offering or sale of the Shares and for
any period of time thereafter during which the Prospectus is required by law to
be delivered in connection therewith. If during such period of time any event
shall occur that in the judgment of the Company or counsel to GKM should be set
forth in the Prospectus in order to make any statement therein, in the light of
the circumstances under which it was made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with law, the Company shall
forthwith prepare and duly file with the Commission an appropriate supplement or
amendment thereto, and shall deliver to GKM, without charge, such number of
copies thereof as GKM may reasonably request. The Company shall not file any
document under the Exchange Act before the termination of the offering of the
Shares by GKM if such document would be deemed to be incorporated by reference
into the Prospectus unless a copy thereof shall first have been submitted to GKM
within a reasonable period of time prior to the filing thereof and GKM shall not
have objected thereto in good faith.
(f) Prior to any public offering of the Shares by
GKM, the Company shall cooperate with GKM and its counsel in connection with the
registration or qualification (or the obtaining of exemptions from the
application thereof) of the Shares for offer and sale under the securities or
Blue Sky laws of such jurisdictions as GKM may request, including, without
limitation, the provinces and territories of Canada and other jurisdictions
outside the United States; provided, however, that in no event shall the Company
be obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject or where it would be
subject to taxation as a foreign corporation.
(g) During the period of five years commencing on the
Effective Date, the Company shall furnish to GKM copies of such financial
statements and other periodic and special reports as the Company may from time
to time distribute generally to the holders of any class of its capital stock,
and will furnish to GKM a copy of each annual or other report it shall be
required to file with the Commission.
11
12
(h) The Company shall make generally available to
holders of its securities as soon as may be practicable an earnings statement
(which need not be audited but shall be in reasonable detail) for a period of 12
months ended commencing after the Effective Date, and satisfying the provisions
of Section 11(a) of the Act (including Rule 158 under the Act).
(i) Whether or not any of the transactions
contemplated by this Agreement are consummated or this Agreement is terminated,
the Company shall pay, or reimburse if paid by GKM, all costs and expenses
incident to the performance of the obligations of the Company under this
Agreement, including but not limited to costs and expenses of or relating to (i)
the preparation, printing and filing of the Registration Statement and exhibits
to it, each preliminary prospectus, the Prospectus and any amendment or
supplement to the Registration Statement or the Prospectus, (ii) the preparation
and delivery of certificates representing the Shares, (iii) the printing of this
Agreement and any Dealer Agreements, (iv) furnishing (including costs of
shipping, mailing and courier) such copies of the Registration Statement, the
Prospectus and any preliminary prospectus, and all amendments and supplements
thereto, as may be requested for use in connection with the offering and sale of
the Shares by GKM or by dealers to whom Shares may be sold, (v) the listing of
the Shares on the Nasdaq National Market, (vi) any filings required to be made
by GKM with the NASD, and the fees, disbursements and other charges of counsel
for GKM in connection therewith (not to exceed $6,000 in the aggregate), (vii)
the registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions designated pursuant to Section
4(f) hereof, including the fees, disbursements and other charges of counsel to
GKM in connection therewith (not to exceed $5,000 in the aggregate), and, if
requested by GKM, the preparation and printing of preliminary, supplemental and
final Blue Sky memoranda, (viii) counsel to the Company, (ix) the transfer agent
for the Shares, (x) the Accountants, (xi) the marketing of the offering by the
Company, including, without limitation, all costs and expenses of commercial
airline tickets, hotels, meals and other travel expenses of officers, employees,
agents and other representatives of the Company (but not officers, employees,
agents or other representatives of GKM) and (xii) all fees, costs and expenses
for consultants used by the Company in connection with the offering.
(j) If this Agreement shall be terminated by the
Company pursuant to any of the provisions hereof or if for any reason the
Company shall be unable to perform its obligations hereunder, the Company shall
reimburse GKM for all out-of-pocket expenses (including the fees, disbursements
and other charges of counsel to GKM) reasonably incurred by them in connection
herewith.
(k) The Company shall not at any time, directly or
indirectly, take any action intended to cause or result in, or which might
reasonably be expected to cause or result in, or which will constitute,
stabilization or manipulation, under the Act or otherwise, of the price of the
shares of Common Stock to facilitate the sale or resale of any of the Shares.
(l) The Company shall apply the net proceeds from the
offering and sale of the Shares to be sold by the Company substantially in the
manner set forth in the Prospectus under "Use of Proceeds."
(m) The Company shall not, and shall cause each of
its executive officers and directors to enter into agreements with GKM in the
form set forth in Exhibit B to the effect that
12
13
they shall not, for a period of 90 days after the date of the Prospectus,
without the prior written consent of GKM (which consent may be withheld in its
sole discretion), offer to sell, sell, pledge, contract to sell, purchase any
option to sell, grant any option for the purchase of, lend, or otherwise dispose
of, or require the Company to file with the Commission a registration statement
under the Act to register, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or warrants or
other rights to acquire shares of Common Stock of which they are now, or may in
the future become, the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) (other than, with respect to the Company, in connection with
business acquisitions and strategic alliances, provided that the parties to such
agreements agree to this lock-up, or pursuant to employee stock option plans
existing on, or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of the Prospectus).
5. Conditions of the Obligations of GKM. In addition to the
execution and delivery of the Price Determination Agreement, the obligations of
GKM are subject to the following conditions:
(a) The Company shall have filed the Prospectus with
the Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by Rule 424(b)
under the Securities Act; or the Company shall have filed a post-effective
amendment to the Registration Statement containing the information required by
such Rule 430A, and such post-effective amendment shall have become effective;
or, if the Company elected to rely upon Rule 434 under the Securities Act and
obtained GKM's written consent thereto, the Company shall have filed a term
sheet with the Commission in the manner and within the time period required by
Rule 424(b).
(b) (i) No stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or are, to the best knowledge of the Company,
threatened by the Commission, (ii) no order suspending the effectiveness of the
Registration Statement or the qualification or registration of the Shares under
the securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending before or threatened or
contemplated by the Commission or the authorities of any such jurisdiction,
(iii) any request for additional information on the part of the staff of the
Commission or any such authorities shall have been complied with to the
satisfaction of the staff of the Commission or such authorities and (iv) after
the date hereof no amendment or supplement to the Registration Statement or the
Prospectus shall have been filed unless a copy thereof was first submitted to
GKM and GKM did not object thereto in good faith, and GKM shall have received
certificates, dated the Closing Date and the Option Closing Date and signed by
the Chief Executive Officer and the Chief Financial Officer of the Company (who
may, as to proceedings threatened, rely upon the best of their information and
belief), to the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
set forth or incorporated by reference in the Prospectus (i) there shall not
have been a Material Adverse Change, (ii) the Company shall not have incurred
any material liabilities or obligations, direct or contingent, if in the
judgment of GKM any such development makes it impracticable to consummate the
sale and delivery of the
13
14
Shares by GKM at the initial public offering price, (iii) the Company shall not
have entered into any material transactions not in the ordinary course of
business other than pursuant to this Agreement and the transactions referred to
herein, (iv) the Company has not issued any securities (other than the Shares)
or declared or paid any dividend or made any distribution in respect of its
capital stock of any class or debt (long-term or short-term), and (v) no
material amount of the assets of the Company shall have been pledged, mortgaged
or otherwise encumbered.
(d) Since the respective dates as of which
information is given or incorporated by reference in the Registration Statement
and the Prospectus, there shall have been no actions, suits or proceedings
instituted, or to the Company's knowledge, threatened against or affecting, the
Company or its Subsidiary or any of their respective officers in their capacity
as such, before or by any Federal, state or local court, commission, regulatory
body, administrative agency or other governmental body, domestic or foreign,
wherein an unfavorable ruling, decision or finding would reasonably be expected
to have a Material Adverse Effect.
(e) Each of the representations and warranties of the
Company contained herein shall be true and correct in all material respects at
the Closing Date as if made at the Closing Date and, with respect to the Option
Shares, at the Option Closing Date as if made at the Option Closing Date, and
all covenants and agreements contained herein to be performed by the Company and
all conditions contained herein to be fulfilled or complied with by the Company
at or prior to the Closing Date and, with respect to the Option Shares, at or
prior to the Option Closing Date, shall have been duly performed, fulfilled or
complied with.
(f) GKM shall have received the opinions and letters,
each dated the Closing Date and, with respect to the Option Shares, the Option
Closing Date, reasonably satisfactory in form and substance to counsel for GKM,
from ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, to the effect set forth in Exhibit
C-1 and Exhibit C-2, and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, patent counsel to the Company,
to the effect set forth in Exhibit D.
(g) GKM shall have received an opinion, dated the
Closing Date and the Option Closing Date, from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel
to GKM, with respect to the Registration Statement, the Prospectus and this
Agreement, which opinion shall be satisfactory in all respects to GKM.
(h) On the date of the Prospectus, GKM shall have
received from the Accountants a letter dated the date of its delivery, addressed
to GKM, in form and substance reasonably satisfactory to GKM, containing
statements and information of the type ordinarily included in accountant's
"comfort letters" to underwriters, delivered according to Statement of Auditing
Standards No. 72 (or any successor bulletin), with respect to the audited and
unaudited financial statements and certain financial information contained and
incorporated by reference in the Registration Statement and the Prospectus. At
the Closing Date and, as to the Option Shares, the Option Closing Date, GKM
shall have received from the Accountants a letter dated such date, in form and
substance reasonably satisfactory to GKM, to the effect that they reaffirm the
statements made in the letter furnished by them pursuant to the preceding
sentence, except that the specified date referred to therein for the carrying
out of procedures shall be no more than three business days prior to the Closing
Date.
14
15
(i) At the Closing Date and, as to the Option Shares, the
Option Closing Date, there shall be furnished to GKM an accurate certificate,
dated the date of its delivery, signed by each of the Chief Executive Officer
and the Chief Financial Officer of the Company, in form and substance
satisfactory to GKM, to the effect that:
(i) each signer of such certificate has carefully
examined the Registration Statement and the Prospectus (including any documents
filed under the Exchange Act and deemed to be incorporated by reference into the
Prospectus);
(ii) there has not been a Material Adverse Change;
(iii) each of the representations and warranties of
the Company contained in this Agreement are, at the time such certificate is
delivered, true and correct in all material respects; and
(iv) each of the covenants required herein to be
performed by the Company on or prior to the date of such certificate has been
duly, timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of such certificate has
been duly, timely and fully complied with.
(j) On or prior to the Closing Date, GKM shall have received the
executed "lock-up" agreements referred to in Section 4(m).
(k) The Shares shall be qualified for sale in such states and
jurisdictions as GKM may reasonably request, including, without limitation, the
provinces and territories of Canada and other jurisdictions outside the United
States, and each such qualification shall be in effect and not subject to any
stop order or other proceeding on the Closing Date and the Option Closing Date.
(l) Prior to the Closing Date, the Shares shall have been duly
authorized for listing on the Nasdaq National Market, subject only to notice of
issuance.
(m) The Company shall have furnished to GKM such certificates, in
addition to those specifically mentioned herein, as GKM may have reasonably
requested as to the accuracy and completeness at the Closing Date and the Option
Closing Date of any statement in the Registration Statement or the Prospectus or
any documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus, as to the accuracy at the Closing Date and the
Option Closing Date of the representations and warranties of the Company herein,
as to the performance by the Company of its obligations hereunder, or as to the
fulfillment of the conditions concurrent and precedent to the obligations
hereunder of GKM.
6. Indemnification.
(a) The Company shall indemnify and hold harmless GKM, the
directors, officers, employees and agents of GKM and each person, if any, who
controls GKM within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act from and against any and all losses, claims, liabilities, expenses
and damages (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
15
16
any action, suit or proceeding between any of the indemnified parties and any
indemnifying parties or between any indemnified party and any third party, or
otherwise, or any claim asserted), to which they, or any of them, may become
subject under the Act, the Exchange Act or other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including all documents
incorporated therein by reference, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus supplement or the Prospectus (or any amendment or supplement thereto)
or the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the Company shall
not be liable to the extent that such loss, claim, liability, expense or damage
arises from the sale of the Shares in the public offering to any person by GKM
and is based on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to GKM
furnished in writing to the Company by GKM expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus; and,
provided, further, that the foregoing indemnity shall not apply, if copies of
the Prospectus were timely delivered to GKM pursuant to this Agreement and a
copy of the Prospectus (as then amended or supplemented, if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of GKM to the person asserting the loss, claim, liability, expense
or damage, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, liability, expense or damage. This indemnity agreement
will be in addition to any liability that the Company might otherwise have.
(b) GKM shall indemnify and hold harmless the Company, its
agents, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signs the Registration Statement to
the same extent as the foregoing indemnity from the Company to GKM, but only
insofar as losses, claims, liabilities, expenses or damages arise out of or are
based on any untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to GKM
furnished in writing to the Company by GKM expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus. This indemnity will be
in addition to any liability that GKM might otherwise have.
(c) Any party that proposes to assert the right to be
indemnified under this Section 6 shall, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 6, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
shall not relieve the indemnifying party from any liability that it may have to
any indemnified party under the foregoing provisions of this Section 6 unless,
and only to the extent that, such omission results in the forfeiture of
substantive rights or defenses by the indemnifying party. If any such
16
17
action is brought against any indemnified party and it notifies the indemnifying
party of its commencement, the indemnifying party will be entitled to
participate in and, to the extent that it elects by delivering written notice to
the indemnified party promptly after receiving notice of the commencement of the
action from the indemnified party, jointly with any other indemnifying party
similarly notified, to assume the defense of the action, with counsel
satisfactory to the indemnified party, and after notice from the indemnifying
party to the indemnified party of its election to assume the defense, the
indemnifying party will not be liable to the indemnified party for any legal or
other expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection with
the defense. The indemnified party will have the right to employ its own counsel
in any such action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless (i) the employment of
counsel by the indemnified party has been authorized in writing by the
indemnifying party, (ii) the indemnified party has reasonably concluded (based
on advice of counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
the indemnifying party, (iii) a conflict or potential conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iv) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel shall be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. All such
fees, disbursements and other charges shall be reimbursed by the indemnifying
party promptly as they are incurred. An indemnifying party shall not be liable
for any settlement of any action or claim effected without its written consent
(which consent will not be unreasonably withheld or delayed). No indemnifying
party shall, without the prior written consent of each indemnified party, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding relating to the matters contemplated by
this Section 6 (whether or not any indemnified party is a party thereto), unless
such settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising or that may arise out of such
claim, action or proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or GKM, the Company and
GKM shall contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than GKM, such as persons who control
the Company within the meaning of the Act, officers of the Company who signed
the Registration Statement and directors of the Company, who also may be liable
for contribution) to which the Company and GKM may be subject in such proportion
as shall be appropriate to reflect the relative benefits received by the Company
on the one hand and GKM on the other. The relative benefits received by the
Company on the one
17
18
hand and GKM on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by
GKM, in each case as set forth in the table on the cover page of the Prospectus.
If, but only if, the allocation provided by the foregoing sentence is not
permitted by applicable law, the allocation of contribution shall be made in
such proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative fault of the
Company, on the one hand, and GKM, on the other, with respect to the statements
or omissions which resulted in such loss, claim, liability, expense or damage,
or action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or GKM, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and GKM agree that it would not
be just and equitable if contributions pursuant to this Section 6(d) were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof, referred to above in
this Section 6(d) shall be deemed to include, for purpose of this Section 6(d),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6(d), GKM shall not be required
to contribute any amount in excess of the underwriting discounts and commissions
received by it, and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6(d), any person who controls a
party to this Agreement within the meaning of the Act will have the same rights
to contribution as that party, and each officer of the Company who signed the
Registration Statement will have the same rights to contribution as the Company,
subject in each case to the provisions hereof. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 6(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 6(d). No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in
this Section 6 and the representations and warranties of the Company contained
in this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of GKM, (ii) acceptance of any of
the Shares and payment therefor or (iii) any termination of this Agreement.
7. Termination. The obligations of GKM under this Agreement may
be terminated at any time prior to the Closing Date (or, with respect to the
Option Shares, on or prior to the Option Closing Date), by notice to the Company
from GKM, without liability on the part of GKM to the Company, if, prior to
delivery and payment for the Firm Shares (or the Option Shares, as the case may
be), in the sole judgment of GKM, any the following shall occur:
18
19
(a) trading or quotation in any of the equity securities of the
Company shall have been suspended or limited by the Commission or by the Nasdaq
National Market;
(b) trading in securities generally on the New York Stock
Exchange or the Nasdaq National Market shall have been suspended or limited or
minimum or maximum prices shall have been generally established on such
exchange, or additional material governmental restrictions, not in force on the
date of this Agreement, shall have been imposed upon trading in securities
generally by such exchange or by order of the Commission or any court or other
governmental authority;
(c) a general banking moratorium shall have been declared by
any of Federal, New York or Delaware authorities;
(d) any material adverse change in the financial or securities
markets in the United States or in political, financial or economic conditions
in the United States or any outbreak or material escalation of hostilities or
declaration by the United States of a national emergency or war or other
calamity or crisis shall have occurred, the effect of any of which is such as to
make it impracticable or inadvisable to market the Shares on the terms and in
the manner contemplated by the Prospectus;
(e) if the Company shall have sustained a loss material or
substantial to the Company by reason of flood, fire, accident, hurricane,
earthquake, theft, sabotage, or other calamity or malicious act, whether or not
such loss shall have been insured, the effect of any of which is such as to make
it impracticable or inadvisable to market the Shares on the terms and in the
manner contemplated by the Prospectus; or
(f) if there shall have been a Material Adverse Change.
8. Miscellaneous.
(a) Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Executive Officer, or
(b) if to GKM, at the offices of GKM, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Any such notice shall be effective only
upon receipt. Any notice under Section 7 may be made by telecopy or telephone,
but if so made shall be subsequently confirmed in writing.
(b) This Agreement has been and is made solely for the benefit
of GKM and the Company and of the controlling persons, directors and officers
referred to in Section 6, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall not
include a purchaser of Shares from GKM in his, her or its capacity as such a
purchaser.
(c) All representations, warranties and agreements of the
Company contained herein or in certificates or other instruments delivered
pursuant hereto, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of GKM or any of their controlling
persons and shall survive delivery of and payment for the Shares hereunder.
19
20
(d) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. Each party hereto hereby
irrevocably submits for purposes of any action arising from this Agreement
brought by the other party hereto to the jurisdiction of the courts of New York
State located in the Borough of Manhattan and the U.S. District Court for the
Southern District of New York. This Agreement may be signed in two or more
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
(e) In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
(f) The Company and GKM each hereby irrevocably waive any right
they may have to a trial by jury in respect of any claim based upon or arising
out of this Agreement or the transactions contemplated hereby.
(g) This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. This Agreement may not be
amended or otherwise modified or any provision hereof waived except by an
instrument in writing signed by GKM and the Company.
20
21
Please confirm that the foregoing correctly sets forth the agreement
among the Company and GKM.
Very truly yours,
ENTREMED, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
Confirmed as of the date first
above mentioned:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Managing Director
22
EXHIBIT A
ENTREMED, INC.
PRICE DETERMINATION AGREEMENT
February 26, 2001
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated February 26,
2001 (the "Underwriting Agreement"), among EntreMed, Inc., a Delaware
corporation (the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc., a Delaware
corporation (the "Underwriter" or "GKM"). The Underwriting Agreement provides
for the purchase by GKM from the Company subject to the terms and conditions set
forth therein, of an aggregate of 1,450,000 shares (the "Firm Shares") of the
Company's common stock, par value $0.01 per share. This Agreement is the Price
Determination Agreement referred to in the Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the undersigned
agree with GKM as follows:
1. The public offering price per share at which the Firm
Shares shall initially be offered shall be $18.00.
2. The purchase price per share for the Firm Shares to be paid
by GKM shall be $16.92, representing an amount equal to the public offering
price set forth above, less $1.08 per share, representing the underwriting
discounts and commissions.
The Company represents and warrants to GKM that the representations and
warranties of the Company set forth in Section 3 of the Underwriting Agreement
are accurate as though expressly made at and as of the date hereof.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH
23
STATE. Each party hereto hereby irrevocably submits for purposes of any action
arising from this Agreement brought by the other party hereto to the
jurisdiction of the courts of New York State located in the Borough of Manhattan
and the U.S. District Court for the Southern District of New York.
If the foregoing is in accordance with your understanding of the
agreement among the Company and GKM, please sign and return to the Company a
counterpart hereof, whereupon this instrument along with all counterparts and
together with the Underwriting Agreement shall be a binding agreement among the
Company and GKM in accordance with its terms and the terms of the Underwriting
Agreement.
Very truly yours,
ENTREMED, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
Confirmed as of the date
first above mentioned:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Managing Director
24
EXHIBIT B
February __, 2001
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In consideration of the agreement of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc.
("GKM") to underwrite a proposed public offering (the "Offering") of 1,450,000
shares of Common Stock, par value $0.01 per share (the "Common Stock") of
EntreMed, Inc., a Delaware corporation, the undersigned hereby agrees that the
undersigned shall not, for a period of 90 days after the date of the Prospectus,
without the prior written consent of GKM (which consent may be withheld in its
sole discretion), offer to sell, sell, pledge, contract to sell, purchase any
option to sell, grant any option for the purchase of, lend, or otherwise dispose
of, or require the Company to file with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended (the "Act"),
to register, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or warrants or other rights to
acquire shares of Common Stock of which the undersigned is now, or may in the
future become, the beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended). The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of shares of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock owned either of
record or beneficially by the undersigned except in compliance with the
foregoing restrictions.
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Act of any shares of
Common Stock owned either of record or beneficially by the undersigned,
including rights to receive notice of the Offering.
Very truly yours,
By:________________________
Print Name: _______________
25
EXHIBIT C-1
Form of Opinion
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇
Opinion of counsel for the Company to be delivered pursuant to Section
5(f) of the Underwriting Agreement.
References to the Prospectus in this Exhibit C-1 include any
supplements thereto at the Closing Date.
1. The Company is validly existing as a corporation in good standing
under the laws of the State of Delaware.
2. The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Underwriting
Agreement.
3. TheraMed, Inc. is validly existing as a corporation in good standing
under the laws of the State of Delaware, and has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus.
4. The Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of the State of
Maryland.
5. The authorized, issued and outstanding capital stock of the Company
(including the Common Stock) conforms, in all material respects, to the
description set forth or incorporated by reference in the Prospectus. The form
of certificate used to evidence the Common Stock is in due and proper form and
complies in all material respects with all applicable requirements of the
charter and by-laws of the Company and the General Corporation Law of the State
of Delaware.
6. The Underwriting Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable
in accordance with its terms.
7. The Common Shares to be purchased by the Underwriter from the
Company have been duly authorized for issuance and sale pursuant to the
Underwriting Agreement and, when issued and delivered by the Company pursuant to
the Underwriting Agreement against payment of the consideration set forth
therein, will be validly issued, fully paid and non-assessable and the issuance
of the Common Shares will not be subject to any preemptive or similar rights (i)
by operation of the charter of by-laws of the Company or the General Corporation
Law of the State of Delaware or (ii) to the best of our knowledge, otherwise.
26
8. The Registration Statement has been declared effective by the
Commission under the Securities Act. To the best of our knowledge, no stop order
suspending the effectiveness of either the Registration Statement has been
issued under the Securities Act and no proceedings for that purpose has been
instituted or are pending or are contemplated or, to the best of our knowledge,
threatened by the Commission. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the Securities Act has been
made in the manner and within the time period required by such Rule 424(b).
9. The Registration Statement and the Prospectus, including any
document incorporated by reference therein, and each amendment or supplement to
the Registration Statement and the Prospectus, including any document
incorporated by reference therein, as of their respective effective or issue
dates (other than the financial statements and supporting schedules included or
incorporated by reference therein or in exhibits to or excluded from the
registration statement, as to which we express no opinion) comply or complied as
to form in all material respects with the applicable requirements of the
Securities Act and Securities Exchange Act.
10. The Common Shares have been approved for quotation on the Nasdaq
National Market.
11. The statements in the Prospectus under "Risk Factors -- Our
potential products are subject to governmental regulatory requirements and a
lengthy approval process" and Item 15 of the Registration Statement, insofar as
such statements constitute a summary of applicable law and regulatory process,
fairly summarize the information contained therein.
12. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is required
for the issue and sale of the Common Shares or the consummation of the other
transactions contemplated by the Underwriting Agreement, except for such
consents, approvals, authorizations, orders, registrations or qualifications as
have been obtained or made under the Securities Act and except as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Common Shares by the Underwriter.
13. The execution and delivery of the Underwriting Agreement by the
Company and the performance by the Company of its obligations thereunder (i)
have been duly authorized by all necessary corporate action on the part of the
Company; (ii) will not result in any violation of the provisions of the charter
or by-laws of the Company; (iii) will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any agreement or instrument filed as an exhibit to the Company's Annual Report
on Form 10-K for the year ended December 31, 1999, or to any statements, reports
or other information filed with the Commission thereafter to which the Company
is a party or by which the Company is bound or to which any of the property or
assets of the Company is subject, except for such breaches or violations that
would not, individually or in the aggregate, result in a Material Adverse
Change; or (iv) to the best of our knowledge, will not result in any violation
of any law, administrative regulation or administrative or court decree
applicable to the Company except for such violations that would not,
individually or in the aggregate, result in a Material Adverse Change.
27
14. The Company is not, and after receipt of payment for the Common
Shares will not be, an "investment company" within the meaning of Investment
Company Act of 1940, as amended.
15. Except as disclosed in the Prospectus or incorporated therein by
reference, to the best of our knowledge, there are no persons with registration
or other similar rights to have any equity or debt securities registered for
sale under the Registration Statement or included in the offering contemplated
by the Underwriting Agreement, except for such rights as have been duly waived
or that would not result in a Material Adverse Change.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware, the General Corporation Law of the
State of New York or the federal law of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion (which shall be
dated the Closing Date, shall be reasonably satisfactory in form and substance
to the Underwriter, shall expressly state that the Underwriter may rely on such
opinion as if it were addressed to them and shall be furnished to the
Underwriter) of other counsel of good standing whom they believe to be reliable
and who are reasonably satisfactory to counsel for the Underwriter; provided,
however, that such counsel shall further state that they believe that they and
the Underwriter are justified in relying upon such opinion of other counsel, and
(B) as to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
28
EXHIBIT C-2
Form of Statement
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇
Statement of counsel for the Company to be delivered pursuant to
Section 5(f) of the Underwriting Agreement.
References to the Prospectus in this Exhibit C-2 include any
supplements thereto at the Closing Date.
Counsel to the Company has participated in conferences with officers
and other representatives of the Company, representatives of the independent
public or certified public accountants for the Company and with representatives
of the Underwriter at which the contents of the Registration Statement and the
Prospectus, and any supplements or amendments thereto, and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (other than as
specified above), and any supplements or amendments thereto, and although such
counsel has made no independent investigation or verification of the correctness
and completeness of the information included in the Registration Statement, the
Prospectus, and any supplements or amendments thereto, in the course of such
counsel's participation in the preparation of the Registration Statement, the
Prospectus, and any supplements or amendments thereto, on the basis of the
foregoing nothing has come to such counsel's attention that has caused them to
believe that (i) the Registration Statement, as amended, (other than the
financial statements, including supporting schedules, other financial and
statistical data therein and documents incorporated by reference therein, as to
all of which we express no belief) at the time the Registration Statement or
such amendments became effective contained an 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
(other than the financial statements, including supporting schedules, other
financial and statistical data therein and documents incorporated by reference
therein, as to all of which we express no belief), as of its date or at the
Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, (ii)
there are any legal proceedings pending or threatened against the Company that
are required to be disclosed in the Registration Statement or Prospectus, other
than those disclosed or incorporated by reference therein, and (iii) there are
any contracts or documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not described or referred to therein or so
filed.
29
EXHIBIT D
Form of Opinion of
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
February_____, 2001
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: EntreMed , Inc.
Ladies and Gentlemen:
We are intellectual property counsel to EntreMed, Inc., a Delaware corporation
(the "Company"), for certain of its intellectual property. This opinion is being
furnished to you pursuant to Section 5(f) of the Underwriting Agreement dated as
of February 26, 2001 (the "Agreement") between you and the Company, relating to
the issuance and sale to you of certain shares of Common Stock of the Company.
Unless otherwise defined herein, the definition of the capitalized terms used
herein shall be the same as those in the Agreement.
We are familiar with the technology used by the Company in its business and the
manner of its use thereof as described in the Registration Statement and the
Prospectus. We have read the sections of the Registration Statement and the
Prospectus (including the Prospectus Supplement dated February 27, 2001)
referring to patents, trade secrets, trademarks, or other proprietary
information or materials; specifically, but without limitation, we have read the
statements in the Registration Statement and the Prospectus under the captions,
"Risk Factors -- We depend on patents and other proprietary rights, some of
which are uncertain," "Business -- Our Antiangiogenesis Program," "Business --
Other Technologies," "Business - Collaborative Relationships," and "Business --
Patents, Licenses and Proprietary Rights" (the "collectively the Intellectual
Property Portion").
This is solely for your information, and to assist you as the underwriters in
conducting your investigation of the affairs of the Company in connection with
the aforesaid Registration Statement and Prospectus, and it is not to be quoted
or otherwise referred to in any public disclosure document, furnished to any
other person, or filed with any governmental agency.
(i) Such counsel is familiar with the technology used by the Company in
its business and the manner of its use thereof and have read the Registration
Statement and the Prospectus, as amended and supplemented, including
particularly the portions of the Registration Statement and the Prospectus
referring to patents, trade secrets, trademarks, service marks or other
proprietary information or materials.
30
(ii) The statements in the Registration Statement and the Prospectus
under the captions "Risk Factors -- We depend on patents and other proprietary
rights, some of which are uncertain," "Business -- Our Antiangiogenesis
Program," "Business -- Other Technologies," "Business - Collaborative
Relationships," and "Business -- Patents, Licenses and Proprietary Rights" (the
"collectively the Intellectual Property Portion"), to such counsel's knowledge,
insofar as such statements constitute a summary of the Company's patents and
patent applications (including patents and patent applications licensed to the
Company) are in all material respects complete and accurate summaries and fairly
summarize in all material respects the legal matters, documents and proceedings
relating to the Company's patents and the Company's patent applications
(including patents and patent application license to the Company).
(iii) The Company either has exclusively licensed, or is listed in the
records of the United States Patent and Trademark Office as the holder of
record, of the patents listed on Schedule I attached to this opinion which are
all of the U.S. patents (the "Patents") and each of the applications listed on
Schedule I attached to this opinion are all of the U.S. patent applications (the
"Applications") to which the Company has rights as owner or licensee as set
forth in Schedule I attached to this opinion. To the best knowledge of such
counsel, there are no claims of third parties to any ownership interest or lien
with respect to any of the Patents or Applications. To the best knowledge of
such counsel, the Company owns as its sole property or has exclusively licensed
the Patents and pending Applications.
(iv) To the best of its knowledge, such counsel knows of no claims of
third parties to any ownership interest or lien with respect to the Company's
foreign patents listed on Schedule II attached to this opinion which are all of
the Company's foreign patents (the "Foreign Patents"), or any of the Company's
foreign patent applications listed on Schedule II attached to this opinion which
are all of the Company's foreign patent applications (the "Foreign
Applications"). To the best knowledge of such counsel, the Company either owns
as its sole property or has exclusively licensed, the Foreign Patents and
pending Foreign Applications.
(v) To the best of its knowledge, such counsel is not aware of any
material defects of form in the preparation or filing of the Company's Patents,
Foreign Patents, Applications or Foreign Applications. The Company's Patents,
Foreign Patents, Applications or Foreign Applications are being diligently
pursued by the Company.
(vi) To the best of its knowledge, such counsel knows of no reason why
the Patents or Foreign Patents are not valid as issued. Such counsel has no
knowledge of any reason why any patent to be issued as a result of any
Application or Foreign Application would not be valid or would not afford the
Company useful patent protection with respect thereto.
(vii) To the best of its knowledge, such counsel is not aware of any
pending or threatened action, suit, proceeding or claim by others challenging
the validity or the scope of the Patents, Foreign Patents, Applications, Foreign
Applications or other proprietary information to which the Company is a party or
of which any property of the Company is subject.
31
(viii) To the best of its knowledge, such counsel is not aware of any
pending or threatened action, suit proceeding or claim by others that the
Company is infringing or otherwise violating any patent, trademarks or trade
secrets of others, nor, to the best of its knowledge, is such counsel aware of
any rights of third parties to any of the Company's inventions described in the
Applications, issued, approved or licensed patents which could reasonably be
expected to materially affect the ability of the Company to conduct its business
as described in the Registration Statement or the Prospectus.
In addition to the matters set forth above, , to the best of counsel's
knowledge, the Registration Statement and the Prospectus, including the
Intellectual Property Portion, fairly and accurately describe the Company's
rights with respect to the Patents, Foreign Patents, Applications, Foreign
Applications and other intellectual property, and that nothing has come to the
attention of such counsel which leads them to believe that (i) the Registration
Statement, at the time it became effective under the Act (but after giving
effect to any modifications incorporated therein pursuant to Rule 430A under the
Act) and as of the Closing Date or the Option Closing Date, as the case may be,
contained an 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 (ii) the Prospectus, or any supplement thereto, on the date
it was filed pursuant to the Rules and Regulations and as of the Closing Date or
the Option Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading. With respect to such statement, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP may state
that our belief is based upon the procedures set forth therein, but is without
independent check and verification.
Very truly yours,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP
By:
Date:
