EXHIBIT 1.1
____ Shares
SGX Pharmaceuticals, Inc.
Common Stock
UNDERWRITING AGREEMENT
________, 2005
CIBC World Markets Corp.
Xxxxx Xxxxxxx & Co.
JMP Securities LLC
c/o CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
SGX Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions contained herein, to sell to you
and the other underwriters named on Schedule I to this Agreement (the
"Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of ____ shares (the "Firm Shares") of the
Company's common stock, $0.001 par value per share (the "Common Stock"). All of
the Firm Shares are to be issued and sold by the Company. The respective amounts
of the Firm Shares to be purchased by each of the several Underwriters are set
forth opposite their names on Schedule I hereto. In addition, the Company
proposes to grant to the Underwriters an option to purchase up to an additional
____ shares (the "Option Shares") of Common Stock from the Company for the
purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are collectively called the
"Shares."
The Company has prepared and filed in conformity with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Securities and
Exchange Commission (the "Commission") a Registration Statement (as hereinafter
defined) on Form S-1 (No. 333-_________), including a preliminary prospectus
relating to the Shares, and such amendments thereof as may have been required to
the date of this Agreement. Copies of such Registration Statement (including all
amendments thereof) and of the related Preliminary Prospectus (as hereinafter
defined) have heretofore been delivered by the Company to you. The term
"Preliminary Prospectus" means any preliminary prospectus included at any time
as a part of the Registration Statement or filed with the Commission by the
Company pursuant to Rule 424(a) of the Rules. The term "Registration Statement"
as used in this Agreement means the initial registration statement (including
all exhibits and financial schedules thereto), as amended at the time and on the
date it becomes effective (the "Effective Date"), including the information (if
any) contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and deemed to be part thereof at the time
of effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant to
Rule 462(b) under the Rules (the "462(b) Registration Statement"), then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement at the time of effectiveness or, if Rule 430A of the Rules is relied
on, the term Prospectus shall also include the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules.
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The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus in connection with the offering of the Shares and are authorized to
distribute the Prospectus (as from time to time amended or supplemented if the
Company furnishes amendments or supplements thereto to the Underwriters) in
connection with the sale of the Shares.
1. Sale, Purchase, Delivery and Payment for the Shares. On the basis of
the representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $____ per
share (the "Initial Price"), the number of Firm Shares set forth opposite
the name of such Underwriter under the column "Number of Firm Shares to be
Purchased" on Schedule I to this Agreement, subject to adjustment in
accordance with Section 8 hereof.
(b) The Company hereby grants to the several Underwriters an option
to purchase, severally and not jointly, all or any part of the Option
Shares at the Initial Price. The number of Option Shares to be purchased
by each Underwriter shall be the same percentage (adjusted by the
Representatives to eliminate fractions) of the total number of Option
Shares to be purchased by the Underwriters as such Underwriter is
purchasing of the Firm Shares. Such option may be exercised only to cover
over-allotments in the sales of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time on or before 12:00 noon,
New York City time, on the business day before the Firm Shares Closing
Date (as defined below), and from time to time thereafter within 30 days
after the date of this Agreement, in each case upon written, facsimile or
telegraphic notice, or verbal or telephonic notice confirmed by written,
facsimile or telegraphic notice, by the Representatives to the Company no
later than 12:00 noon, New York City time, on the business day before the
Firm Shares Closing Date or at least two business days before the Option
Shares Closing Date (as defined below), as the case may be, setting forth
the number of Option Shares to be purchased and the time and date (if
other than the Firm Shares Closing Date) of such purchase.
(c) Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the offices of CIBC World Markets
Corp., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New
York City time, on the third business day following the date of this
Agreement or at such time on such other date, not later than ten (10)
business days after the date of this Agreement, as shall be agreed upon by
the Company and the Representatives (such time and date of delivery and
payment are called the "Firm Shares Closing Date"). In addition, in the
event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price, and delivery of the
certificates, for such Option Shares shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the
Representatives and the Company, on each date of delivery as specified in
the notice from the Representatives to the Company (such time and date of
delivery and payment are called the "Option Shares Closing Date"). The
Firm Shares Closing Date and any Option Shares Closing Date are called,
individually, a "Closing Date" and, together, the "Closing Dates."
(d) Payment shall be made to the Company by wire transfer of
immediately available funds or by certified or official bank check or
checks payable in New York Clearing House (same day) funds drawn to the
order of the Company against delivery of the respective certificates to
the Representatives for the respective accounts of the Underwriters of
certificates for the Shares to be purchased by them.
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(e) Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall
request at least two full business days before the Firm Shares Closing
Date or, in the case of Option Shares, on the day of notice of exercise of
the option as described in Section 1(b) and shall be delivered by or on
behalf of the Company to the Representatives through the facilities of the
Depository Trust Company ("DTC") for the account of such Underwriter. The
Company will cause the certificates representing the Shares to be made
available for checking and packaging, at such place as is designated by
the Representatives, on the full business day before the Firm Shares
Closing Date (or the Option Shares Closing Date in the case of the Option
Shares).
2. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Firm Shares
Closing Date and as of each Option Shares Closing Date (if any), as follows:
(a) On the Effective Date, the Registration Statement complied, and
on the date of the Prospectus, the date any post-effective amendment to
the Registration Statement becomes effective, the date any supplement or
amendment to the Prospectus is filed with the Commission and each Closing
Date, the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material respects, with
the requirements of the Securities Act and the Rules and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder. The Registration Statement did
not, as of the Effective Date, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and on
the Effective Date and the other dates referred to above neither the
Registration Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will contain any untrue statement of a material fact
or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. When the
Preliminary Prospectus was first filed with the Commission (whether filed
as part of the Registration Statement or any amendment thereto or pursuant
to Rule 424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such Preliminary Prospectus
as amended or supplemented complied in all material respects with the
applicable provisions of the Securities Act and the Rules and did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading. If applicable, each Preliminary
Prospectus and the Prospectus delivered to the Underwriters for use in
connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T. If Rule 434 is used, the
Company will comply with the requirements of Rule 434 and the Prospectus
shall not be "materially different," as such term is used in Rule 434,
from the Prospectus included in the Registration Statement at the time it
became effective. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 2(a) shall apply to
statements in, or omissions from, the Registration Statement or the
Prospectus or any amendments thereof or supplements thereto made in
reliance upon, and in conformity with, information herein or otherwise
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus. With
respect to the preceding sentence and Section 5(b), the Company
acknowledges that the only information furnished in writing by the
Representatives on behalf of the several Underwriters for use in the
Registration Statement or the Prospectus or any amendments thereof or
supplements thereto is the statements contained in the tenth, thirteenth
and fourteenth paragraphs under the caption "Underwriting" in the
Prospectus.
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(b) The Registration Statement is effective under the Securities Act
and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the
Prospectus has been issued by the Commission and, to the Company's
knowledge, no proceedings for that purpose have been instituted or are
threatened under the Securities Act. Any required filing of the Prospectus
and any supplement thereto pursuant to Rule 424(b) of the Rules has been
or will be made in the manner and within the time period required by such
Rule 424(b).
(c) The financial statements of the Company (including all notes and
schedules thereto) included in the Registration Statement and Prospectus
present fairly, in all material respects, the financial position of the
Company and its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified; and
such financial statements and related schedules and notes thereto, and the
unaudited financial information filed with the Commission as part of the
Registration Statement, have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the
periods involved (provided that non-year-end financial statements are
subject to normal recurring year-end audit adjustments that are not
expected to be material in the aggregate and do not contain all footnotes
required by generally accepted accounting principles). The summary and
selected consolidated financial data included in the Prospectus present
fairly, in all material respects, the information shown therein as at the
respective dates and for the respective periods specified and have been
presented on a basis consistent with the consolidated financial statements
set forth in the Prospectus and other financial information.
(d) Ernst & Young LLP (the "Auditor"), whose reports are filed with
the Commission as a part of the Registration Statement, are and, during
the periods covered by their reports, were independent public accountants
as required by the Securities Act and the Rules.
(e) The Company and each of its subsidiaries is duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation or organization and is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted by it or
location of the assets or properties owned, leased or licensed by it
requires such qualification, except for such jurisdictions where the
failure to so qualify or be in good standing, individually or in the
aggregate, would not have a material adverse effect on the assets,
properties, condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company and its
subsidiaries considered as a whole (a "Material Adverse Effect"); and to
the Company's knowledge, no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.
(f) The Company and each of its subsidiaries has all requisite
corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and
from all governmental or regulatory bodies or any other person or entity
(collectively, the "Permits"), to own, lease and license its assets and
properties and conduct its business, all of which are valid and in full
force and effect, except where the lack of such Permits, individually or
in the aggregate, would not have a Material Adverse Effect. The Company
and each of its subsidiaries has fulfilled and performed in all material
respects all of its material obligations with respect to such Permits and,
to the Company's knowledge, no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the Company
thereunder. Except as may be required under the Securities Act, the rules
of the National Association of Securities Dealers, Inc. (the "NASD") and
state and
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foreign Blue Sky laws, no other Permits are required to enter into,
deliver and perform this Agreement and to issue and sell the Shares.
(g) The Company and each of its subsidiaries owns or possesses
legally enforceable rights to use all patents, patent rights, inventions,
trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how and other similar
rights and proprietary knowledge necessary for the conduct of its business
(collectively, "Intangibles") as conducted on the date hereof and
described in the Registration Statement and Prospectus. Neither the
Company nor any of its subsidiaries has received any written notice of and
neither the Company nor any of its subsidiaries has any knowledge of any
infringement of or conflict with asserted rights of others with respect to
any Intangibles.
(h) The Company and each of its subsidiaries has good and marketable
title in fee simple to all real property, and good and marketable title to
all tangible personal property owned by it, in each case free and clear of
all liens, encumbrances, claims, security interests and defects, except as
are disclosed in the Prospectus or such as are not material to the Company
and its subsidiaries, taken as a whole, and do not materially interfere
with the use made or proposed to be made of such property, as of the date
hereof, by the Company and its subsidiaries. All property held under lease
by the Company and its subsidiaries is held by them under valid, existing
and enforceable leases, with only such exceptions as are not material and
do not materially interfere with the use made or proposed to be made of
such property by the Company and its subsidiaries. Subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, (i) there has not been any Material Adverse
Effect; (ii) neither the Company nor any of its subsidiaries has sustained
any loss or interference with its assets, businesses or properties
(whether owned or leased) from fire, explosion, earthquake, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree
which would have a Material Adverse Effect; and (iii) since the date of
the latest balance sheet included in the Registration Statement and the
Prospectus, except as otherwise disclosed in the Prospectus, neither the
Company nor its subsidiaries has (A) incurred any liability or obligation,
direct or contingent, for borrowed money, except such liabilities or
obligations incurred in the ordinary course of business, (B) entered into
any transaction not in the ordinary course of business or (C) declared or
paid any dividend or made any distribution on any shares of its stock or
redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its capital stock.
(i) There is no document, contract or other agreement required to be
described in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required by the Securities Act or Rules. Each description of a contract,
document or other agreement in the Registration Statement and the
Prospectus accurately reflects in all material respects the terms of the
underlying contract, document or other agreement. Each contract, document
or other agreement described in the Registration Statement and Prospectus
or listed in the Exhibits to the Registration Statement is in full force
and effect and is valid and enforceable by and against the Company or its
subsidiaries, as the case may be, in accordance with its terms. Neither
the Company nor any of its subsidiaries, if a subsidiary is a party, nor
to the Company's knowledge, any other party is in default in the
observance or performance of any term or obligation to be performed by it
under any such contract, document or other agreement and no event has
occurred which with notice or lapse of time or both would constitute such
a default, in any such case which default or event, individually or in the
aggregate, would have a Material Adverse Effect. No default exists, and no
event has occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any term,
covenant or condition, by the Company or its subsidiary, if a subsidiary
is a party thereto, of any other
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agreement or instrument to which the Company or any of its subsidiaries is
a party or by which Company or its properties or business of a subsidiary
or its properties or business may be bound or affected which default or
event, individually or in the aggregate, would have a Material Adverse
Effect.
(j) The statistical and market related data included in the
Registration Statement are based on or derived from sources that the
Company believes to be reliable and accurate.
(k) Neither the Company nor any of its subsidiaries is in violation
of any term or provision of its charter or bylaws or of any franchise,
license, permit, judgment, decree, order, statute, rule or regulation,
where the consequences of such violation, individually or in the
aggregate, would have a Material Adverse Effect.
(l) This Agreement has been duly authorized, executed and delivered
by the Company.
(m) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale
by the Company of the Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or constitute a default
(or an event which with notice or lapse of time or both would constitute a
default) under, or require any consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or its subsidiaries pursuant to the
terms of, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which either the Company or its subsidiaries or any of their properties
or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or
any of its subsidiaries, expect where it would not have a Material Adverse
Effect, or violate any provision of the charter or by-laws of the Company
or any of its subsidiaries, except for such consents or waivers which have
already been obtained and are in full force and effect.
(n) On the date set forth therein, the Company had the authorized
and outstanding capital stock as set forth under the caption
"Capitalization" in the Prospectus. The certificates evidencing the Shares
are in due and proper legal form and have been duly authorized for
issuance by the Company. All of the issued and outstanding shares of
Common Stock have been duly and validly issued and are fully paid and
nonassessable. Except as disclosed in the Registration Statement and the
Prospectus or as set forth in the Amended and Restated Investor Rights
Agreement dated April 21, 2005 by and among the Company and the parties
named therein, there are no statutory preemptive or other similar rights
granted by the Company to subscribe for or to purchase or acquire any
shares of Common Stock of the Company or any of its subsidiaries or any
such rights pursuant to its Certificate of Incorporation or bylaws or any
agreement or instrument to or by which the Company or any of its
subsidiaries is a party or bound, other than such rights that have been
properly waived. The Shares, when issued and sold pursuant to this
Agreement, will be duly and validly issued, fully paid and nonassessable
and none of them will be issued in violation of any preemptive or other
similar right granted by the Company. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and there is no
commitment, plan or arrangement to issue, any share of stock of the
Company or any of its subsidiaries or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock and the
Shares conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus. All
outstanding shares of capital stock of each of the Company's subsidiaries
have been duly authorized and validly issued, and are fully paid and
nonassessable and are owned directly by the Company or by another
6
wholly-owned subsidiary of the Company free and clear of any security
interests, liens, encumbrances, equities or claims, other than those
described in the Prospectus.
(o) No holder of any security of the Company has any right, which
has not been waived, to have any security owned by such holder included in
the Registration Statement or to demand registration of any security owned
by such holder for a period of 180 days after the date of this Agreement.
Each director and executive officer of the Company and each stockholder of
the Company listed on Schedule II has delivered to the Representatives his
enforceable written lock-up agreement in the form attached to this
Agreement as Exhibit A hereto ("Lock-Up Agreement").
(p) All necessary corporate action has been duly and validly taken
by the Company and to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Shares by the Company.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitute and will constitute legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(q) Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company, is any such
dispute threatened, which dispute would have a Material Adverse Effect.
The Company is not aware of any existing or imminent labor disturbance by
the employees of any of its principal suppliers or contractors which would
have a Material Adverse Effect. The Company is not aware of any threatened
or pending litigation between the Company or its subsidiaries and any of
its executive officers which, if adversely determined, could have a
Material Adverse Effect.
(r) No transaction has occurred between or among the Company and any
of its officers or directors, stockholders or any affiliate or affiliates
of any such officer or director or stockholder that is required to be
described in and is not described in the Registration Statement and the
Prospectus.
(s) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in, or which has constituted or which might reasonably
be expected to constitute, the stabilization or manipulation of the price
of the Common Stock or any security of the Company to facilitate the sale
or resale of any of the Shares.
(t) The Company and each of its subsidiaries has filed all Federal,
state, local and foreign tax returns which are required to be filed
through the date hereof, which returns are true and correct in all
material respects or has received valid extensions thereof, and has paid
all taxes shown on such returns and all assessments received by it to the
extent that the same are material and have become due. To the Company's
knowledge, there are no tax audits or investigations pending, which if
adversely determined would have a Material Adverse Effect; nor to the
Company's knowledge are there any material proposed additional tax
assessments against the Company or any of its subsidiaries.
(u) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market System, subject to official Notice of Issuance. A
registration statement has been filed on Form 8-A pursuant to Section 12
of the Exchange Act, which registration statement complies in all material
respects with the Exchange Act.
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(v) The Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Stock under the
Exchange Act or the quotation of the Common Stock on the Nasdaq National
Market, nor has the Company received any notification that the Commission
or the Nasdaq National Market is contemplating terminating such
registration or quotation.
(w) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries. The Company and each of
its subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(x) The Company is actively taking steps to establish disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the
Exchange Act), which: (i) are designed to ensure that material information
relating to the Company is made known to the Company's principal executive
officer and its principal financial officer by others within the Company,
particularly during the periods in which the periodic reports required
under the Exchange Act are required to be prepared; (ii) provide for the
periodic evaluation of the effectiveness of such disclosure controls and
procedures at the end of the periods in which the periodic reports are
required to be prepared; and (iii) are effective in all material respects
to perform the functions for which they were established.
(y) Based on the evaluation of its disclosure controls and
procedures as established to date, the Company is not aware of (i) any
significant deficiency in the design or operation of internal controls
which could adversely affect the Company's ability to record, process,
summarize and report financial data or any material weaknesses in internal
controls; or (ii) any fraud, whether or not material, that involves
management or other employees who have a role in the Company's internal
controls.
(z) Except as described in the Prospectus, there are no material
off-balance sheet arrangements (as defined in Item 303 of Regulation S-K)
that have or are reasonably likely to have a material current or future
effect on the Company's financial condition, revenues or expenses, changes
in financial condition, results of operations, liquidity, capital
expenditures or capital resources.
(aa) Except as described in the Prospectus and as preapproved in
accordance with the requirements set forth in Section 10A of the Exchange
Act, the Auditor has not been engaged by the Company to perform any
"prohibited activities" (as defined in Section 10A of the Exchange Act).
(bb) The Company's Board of Directors has validly appointed an audit
committee whose composition satisfies the requirements of Rule 4350(d)(2)
of the Rules of the National Association of Securities Dealers, Inc. (the
"NASD Rules") and the Board of Directors and/or the audit committee has
adopted a charter that satisfies the requirements of Rule 4350(d)(1) of
the NASD Rules.
(cc) The Company is actively taking steps to ensure that it will be
in compliance with all other applicable provisions of the Xxxxxxxx-Xxxxx
Act of 2002, any related rules and regulations
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promulgated by the Commission and corporate governance requirements under
the NASD Rules upon the effectiveness of such provisions as may be
applicable.
(dd) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged
or propose to engage after giving effect to the transactions as described
in the Prospectus; all policies of insurance insuring the Company or any
of its subsidiaries or the Company's or its subsidiaries' respective
businesses, assets, employees, officers and directors are in full force
and effect; the Company and each of its subsidiaries are in compliance
with the terms of such policies and instruments in all material respects;
and neither the Company nor any subsidiary of the Company has any reason
to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business.
Neither the Company nor any of its subsidiaries has been denied any
insurance coverage which it has sought or for which it has applied.
(ee) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the NASD
or may be necessary to qualify the Shares for public offering by the
Underwriters under the state securities or Blue Sky laws) has been
obtained or made and is in full force and effect.
(ff) There are no affiliations with the NASD among the Company's
officers, directors or, to the best of the knowledge of the Company, any
five percent or greater stockholder of the Company, except as set forth in
the Registration Statement or otherwise disclosed in writing to the
Representatives.
(gg) (i) Neither the Company nor any of its subsidiaries are in
violation of any applicable rules, laws and regulation relating to the
use, treatment, storage and disposal of toxic substances and protection of
health or the environment ("Environmental Law") which are applicable to
its business except for any violation which would not have a Material
Adverse Effect; (ii) neither the Company nor its subsidiaries has received
any notice from any governmental authority or third party of an asserted
claim under Environmental Laws; (iii) each of the Company and each of its
subsidiaries has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to the conduct its
business and is in compliance with all terms and conditions of any such
permit, license or approval, except for where non-compliance would not
have a Material Adverse Effect; (iv) to the Company's knowledge, no facts
currently exist that will require the Company or any of its subsidiaries
to make future material capital expenditures to comply with Environmental
Laws; and (v) no property which is or has been owned, or to the Company's
knowledge, leased or occupied by the Company or its subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive Environmental
Response, Compensation of Liability Act of 1980, as amended (42 U.S.C.
Section 9601, et. seq.) ("CERCLA") or otherwise designated as a
contaminated site under applicable state or local law. Neither the Company
nor any of its subsidiaries has been named as a "potentially responsible
party" under CERCLA.
(hh) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the net proceeds therefrom as
described in the Prospectus, will not be subject to registration as an
"investment company" within the meaning of the Investment Company Act of
1940, as amended (the "Investment Company Act").
9
(ii) Neither the Company nor any other person associated with or
acting on behalf of the Company including, without limitation, any
director or officer or, to the Company's knowledge, any agent or employee
of the Company or its subsidiaries, has, directly or indirectly while
acting on behalf of the Company or its subsidiaries, (i) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (ii) made any unlawful
payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate funds;
(iii) violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended; or (iv) made any other unlawful payment.
(jj) The operations of the Company and its subsidiaries are and have
been conducted at all times in material compliance with applicable
financial recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions applicable to the Company, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the "Money Laundering Laws") and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of it
subsidiaries with respect to the Money Laundering Laws is pending, or to
the best knowledge of the Company, threatened.
(kk) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject
to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department ("OFAC"); and the Company will not
directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of
financing the activities of any person who, to the Company's knowledge, is
currently subject to any U.S. sanctions administered by OFAC.
(ll) The clinical, pre-clinical and other trials, studies and tests
conducted by or on behalf of or sponsored by the Company or in which the
Company or its products or product candidates have participated that are
described in the Registration Statement and Prospectus or the results of
which are referred to in the Registration Statement or Prospectus were
and, if still pending, are being conducted in all material respect in
accordance with medical and scientific protocols and research procedures
that the Company reasonably believes are appropriate. The descriptions in
the Registration Statement and Prospectus of the results of such trials,
studies and tests are accurate in all material respects and fairly present
the data derived from such trials, studies and tests, and the Company has
no knowledge of any other trials, studies or tests the results of which
are materially inconsistent with or otherwise materially call into
question the results described or referred to in the Registration
Statement and Prospectus. The Company has operated and currently is in
compliance in all material respects with applicable statutes and
implementing regulations administered or enforced by the United States
Food and Drug Administration ("FDA"), except where the failure to so
comply would not have a Material Adverse Effect. Except to the extent
disclosed in the Registration Statement and the Prospectus, the Company
has not received any notices or other correspondence from the FDA or any
other governmental agency requiring the termination, suspension or
modification of any clinical trials or pre-clinical studies or tests that
are described in the Registration Statement or Prospectus or the results
of which are referred to in the Registration Statement or Prospectus.
(mm) Except as described in the Prospectus and the Registration
Statement, the Company has not sold or issued any shares of Common Stock
during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D or S of,
the
10
Securities Act, other than shares issued pursuant to employee benefit
plans, equity incentive plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants.
(nn) The Company has fulfilled its obligations, if any, in all
material respects, under the minimum funding standards of Section 302 of
the U.S. Employee Retirement Income Security Act of 1974 ("ERISA") and the
regulations and published interpretations thereunder with respect to each
"plan" as defined in Section 3(3) of ERISA and such regulations and
published interpretations in which its employees are eligible to
participate and each such plan is in compliance in all material respects
with the presently applicable provisions of ERISA and such regulations and
published interpretations. No "Reportable Event" (as defined in 12 ERISA)
has occurred with respect to any "Pension Plan" (as defined in ERISA) for
which the Company would have any material liability.
(oo) Each of the Company, its directors and officers has not
distributed or contributed to the distribution, and will not distribute or
contribute to the distribution prior to the later of (i) the Firm Shares
Closing Date, or the Option Shares Closing Date, and (ii) completion of
the distribution of the Shares, any offering material in connection with
the offering and sale of the Shares other than any Preliminary Prospectus,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act.
3. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement became effective on
the Effective Date shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in accordance
with Section 4(a) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission to be included in the Registration Statement
or the Prospectus or otherwise shall have been complied with to the
satisfaction of the Commission and the Representatives. If the Company has
elected to rely upon Rule 430A, Rule 430A information previously omitted
from the effective Registration Statement pursuant to Rule 430A shall have
been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period and the Company shall have provided
evidence satisfactory to the Underwriters of such timely filing, or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements
of Rule 430A. If the Company has elected to rely upon Rule 434, a term
sheet shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) within the prescribed time period.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 3(d)
shall be true and correct when made and on and as of each Closing Date as
if made on such date. The Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by them at or before such Closing
Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that: (i)
the
11
representations and warranties and agreements of the Company in this
Agreement were true and correct when made and are true and correct as of
such Closing Date; (ii) the Company has performed all covenants and
agreements and satisfied all conditions contained herein required to be
performed or satisfied by it at or prior to the Closing Date; (iii) they
have examined the Registration Statement and the Prospectus and, in their
opinion (A) as of the Effective Date, the Registration Statement did not,
and as of its date, the Prospectus did not include any untrue statement of
a material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (B)
since the Effective Date no event has occurred which should have been set
forth in a supplement or an amendment to the Registration Statement or the
Prospectus; and (iv) to their knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending under the
Securities Act.
(e) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from the
Auditor addressed to the Representatives and dated, respectively, the date
of this Agreement and each such Closing Date, in form and substance
reasonably satisfactory to the Representatives containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus.
(f) The Representatives shall have received on each Closing Date
from Xxxxxx Godward LLP, counsel for the Company, an opinion, addressed to
the Representatives and dated such Closing Date containing the opinions
substantially as set forth in Exhibit B attached hereto.
(g) The Representatives shall have received on each Closing Date
from Xxxxx, Xxxxxx & XxXxxxxx, P.C., special counsel for the Company with
respect to United States Food and Drug Administration ("FDA") regulatory
matters, an opinion, addressed to the Representatives and dated such
Closing Date, containing the opinions substantially as set forth in
Exhibit C attached hereto.
(h) The Representatives shall have received on each Closing Date
from Xxxxxxxx and Xxxxxxxx and Crew LLP and Millen, White, Xxxxxx &
Xxxxxxxx, P.C., intellectual property counsel for the Company, opinions,
addressed to the Representatives and dated such Closing Date, containing
the opinions substantially as set forth in Exhibits D and E, respectively,
attached hereto.
(i) The Representatives shall have received on each Closing Date
from Xxxxxx & Xxxxxxx LLP, counsel for the Representatives, an opinion,
addressed to the Representatives and dated such Closing Date, containing
the opinions substantially as set forth in Exhibit F attached hereto.
(j) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives with respect to
the Shares, the Registration Statement and the Prospectus, and such other
related matters, as the Representatives may reasonably request, and the
Company shall have furnished to Underwriters counsel such documents as
they may reasonably request for the purpose of enabling them to pass upon
such matters.
(k) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person listed on Schedule II hereto.
(l) The Shares shall have been approved for quotation on the Nasdaq
National Market, subject only to official notice of issuance.
12
(m) The Company shall have furnished or caused to be furnished to
the Representatives such further certificates or documents as the
Representatives shall have reasonably requested.
4. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company will use its reasonable efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, and any amendments thereto, to become effective as
promptly as possible. The Company shall prepare the Prospectus in a
form reasonably approved by the Representatives and file such
Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission's close of business on the second business
day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by the Rules.
(ii) The Company shall promptly advise the Representatives in
writing after it receives notice thereof (A) when any post-effective
amendment to the Registration Statement shall have become effective
or any supplement to the Prospectus shall have been filed, (B) of
any request by the Commission for any amendment of the Registration
Statement or the Prospectus or for any additional information, (C)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or
the institution or threatening of any proceeding for that purpose
and (D) of the suspension of the qualification of the Shares for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the Representatives a
copy for its review prior to filing and shall not file any such
proposed amendment or supplement to which the Representatives
reasonably object. The Company shall use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Securities Act and the Rules,
any event occurs as a result of which the Prospectus as then amended
or supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which
they were made not misleading, or if it shall be necessary, in the
Company's reasonable judgment, to amend or supplement the Prospectus
to comply with the Securities Act or the Rules, the Company promptly
shall prepare and file with the Commission, subject to the second
sentence of paragraph (ii) of this Section 4(a), an amendment or
supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
(iv) The Company shall make generally available to its
security holders and to the Representatives as soon as practicable,
but not later than 45 days after the end of the 12-month period
beginning at the end of the fiscal quarter of the Company during
which the Effective Date occurs (or 90 days if such 12-month period
coincides with the Company's fiscal year), an earning statement
(which need not be audited) of the Company, covering such 12-month
period, which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Rules.
13
(v) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, such number of the
following documents as the Representatives shall reasonably request:
conformed copies of the Registration Statement (including all
exhibits thereto and amendments thereof) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and all amendments thereof and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the
Securities Act or the Rules, as many copies of any preliminary
prospectus and the Prospectus and any amendments thereof and
supplements thereto as the Representatives may reasonable request.
If applicable, the copies of the Registration Statement and
Prospectus and each amendment and supplement thereto furnished to
the Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T.
(vi) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and
sale in connection with the offering under the laws of such
jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided, however, that the Company
shall not be required in connection therewith, or as a condition
thereof, to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject itself
to taxation as doing business in any jurisdiction.
(vii) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act and the Rules or
the Exchange Act, will file all reports and other documents required
to be filed with the Commission pursuant to Section 13, 14 or 15 of
the Exchange Act within the time periods required by the Exchange
Act and the regulations promulgated thereunder.
(viii) Without the prior written consent of CIBC World Markets
Corp. and Xxxxx Xxxxxxx & Co., for a period of 180 days after the
date of this Agreement, the Company shall not issue, sell or
register with the Commission (other than on Form S-8 or on any
successor form), or otherwise dispose of, directly or indirectly,
any equity securities of the Company (or any securities convertible
into, exercisable for or exchangeable for equity securities of the
Company), except for (A) the issuance of the Shares pursuant to the
Registration Statement, and (B) the issuance of equity securities of
the Company (or any securities convertible into, exercisable for or
exchangeable for equity securities of the Company), (i) pursuant to
the Company's existing equity plans or bonus plan as described in
the Registration Statement and the Prospectus, (ii) pursuant to
currently outstanding options, warrants or convertible notes as
described in the Registration Statement, (iii) upon the conversion
of the Company's Series A or Series B Preferred Stock, (iv) in
connection with a strategic partnership, joint venture,
collaboration, lending or other similar arrangement, or (v) in
connection with the acquisition or license by the Company of any
business, products or technologies; provided, however, that the
shares issuable under clauses (iv) and (v) shall not exceed, in the
aggregate during such 180-day period, ten percent (10.0%) of the
Company's outstanding capital stock measured as of the Firm Shares
Closing Date, including the Shares to be issued and sold hereunder.
In the event that during this period, (A) any such shares are issued
or (B) any registration is effected on Form S-8 or any successor
form relating to shares that are exercisable within such 180-day
period, the Company shall obtain the written agreement of such
grantee or purchaser or holder of such registered securities that,
for a period of 180 days after the date of this Agreement, such
person will not, without the prior written consent of CIBC World
Markets Corp. and Xxxxx Xxxxxxx & Co., offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, or exercise any registration rights with
respect to, any shares
14
of Common Stock (or any securities convertible into, exercisable
for, or exchangeable for any shares of Common Stock) owned by such
person. Notwithstanding the foregoing, (i) the Company represents
and warrants that each such grantee or purchaser or holder of such
registered securities shall be subject to lockup restrictions
materially consistent with those set forth on Exhibit A attached
hereto and the Company shall enforce such rights and impose
stop-transfer restrictions on any such sale or other transfer or
disposition of such shares until the end of the period set forth in
the applicable lock-up restrictions, and to the extent such grantee
or purchaser or holder of such registered securities is subject to
the lock-up attached hereto as Exhibit A (ii) if (x) during the last
17 days of the 180 day period described in this Section 4(a)(viii)
the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (y) prior to the
expiration of such 180 day period, the Company announces that it
will release earnings results during the 16-day period beginning on
the last day of the 180 day period; the restrictions imposed in this
Section 4(a)(viii) shall continue to apply until the expiration of
the 18-day period beginning on the issuance of the earnings release
or the occurrence of the material news or material event; provided,
however, that this sentence shall not apply if the research
published or distributed on the Company is compliant under Rule 139
of the Securities Act and the Company's securities are actively
traded as defined in Rule 101(c)(1) of Regulation M of the Exchange
Act.
(ix) On or before completion of this offering, the Company
shall make all filings required to be made by the Company under
applicable securities laws and by the Nasdaq National Market
(including any required registration under the Exchange Act).
(x) Prior to the Closing Date, the Company will issue no press
release or other communications directly or indirectly and hold no
press conference with respect to the Company, the condition,
financial or otherwise, or the earnings, business affairs or
business prospects of any of them, or the offering of the Shares
without giving prior notification and a copy or summary of such
press release or other communication to legal counsel for the
Representatives, not less than two business days prior to the
intended release date of such press release or other communication,
and discussing with the Representative and its counsel promptly and
in good faith any modifications or amendments thereto requested by
the Representative unless in the judgment of the Company and its
counsel, and after notification to the Representatives, such press
release or communication is required by law; provided, however, that
any such press release or other communication which refers to any of
the Representatives shall require the prior written consent of the
Representatives.
(xi) The Company will apply the net proceeds from the offering
of the Shares in the manner set forth under "Use of Proceeds" in the
Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each Preliminary
Prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities or
Blue Sky laws of the various jurisdictions referred to in Section
4(a)(vi), including the reasonable fees and disbursements of counsel for
the Underwriters in connection with such registration and qualification
and the preparation, printing, distribution and shipment of preliminary
and supplementary Blue Sky memoranda; (iv) the furnishing (including
15
costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of each preliminary prospectus, the Prospectus and
all amendments or supplements to the Prospectus, and of the several
documents required by this Section to be so furnished, as may be
reasonably requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be sold;
(v) the filing fees of the NASD in connection with its review of the terms
of the public offering and reasonable fees and disbursements of counsel
for the Underwriters in connection with such review; (vi) inclusion of the
Shares for quotation on the Nasdaq National Market; and (vii) all transfer
taxes, if any, with respect to the sale and delivery of the Shares by the
Company to the Underwriters. Subject to the provisions of Section 7, the
Underwriters agree to pay, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, all costs and
expenses incident to the performance of the obligations of the
Underwriters under this Agreement not payable by the Company pursuant to
the preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages and liabilities,
joint or several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they,
or any of them, become subject under the Securities Act, the Exchange Act
or other Federal or state law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, the Registration Statement
or the Prospectus or any amendment thereof or supplement thereto, or in
any Blue Sky application or other information or other documents executed
by the Company filed in any state or other jurisdiction to qualify any or
all of the Shares under the securities laws thereof (any such application,
document or information being hereinafter referred to as a "Blue Sky
Application") or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of any
losses, claims, damages or liabilities if such untrue statement or
omission or alleged untrue statement or omission was made in (i) the
Preliminary Prospectus, which untrue statement or omission or alleged
untrue statement or omission was corrected in the Prospectus and (x) the
Company sustains the burden of proving that any Underwriter sold Shares to
the person alleging such loss, claim, damage or liability without sending
or giving, at or prior to written confirmation of such sale, a copy of the
Prospectus, if required by law to have so delivered it, (y) the Company
had previously furnished sufficient quantities of the Prospectus to the
Underwriters within a reasonable amount of time prior to such sale or such
confirmation and (z) such delivery would have been a complete defense
against the person asserting such loss, claim, damage or liability; and
(ii) the preliminary prospectus, the Registration Statement or the
Prospectus, or such amendment or supplement thereto, or in any Blue Sky
Application, in reliance upon and in conformity with information furnished
in writing to the Company by the Representative specifically for use
therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, each director of the Company, and each officer of the Company who
signs the Registration Statement, against any losses, claims, damages or
liabilities, joint or several
16
(including any reasonable investigation, legal and other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted), to which such party may become
subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in any preliminary prospectus,
the Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by or through the Representative expressly for
use therein; provided, however, that the obligation of each Underwriter to
indemnify the Company (including any controlling person, director or
officer thereof) shall be limited to the net proceeds received by the
Company from such Underwriter. This indemnity agreement will be in
addition to any liability which any Underwriter may otherwise have.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 5(a) or 5(b) shall be available to
any party who shall fail to give notice as provided in this Section 5(c)
if the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party for contribution or
otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof and the approval by the indemnified party of such
counsel (not to be unreasonably withheld or delayed), the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses, except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have the
right to employ its counsel in any such action, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the indemnified
party shall have been advised by counsel that there may be one or more
legal defenses available to it which are different from or in addition to
those available to the indemnifying party (in which case the indemnifying
parties shall not have the right to direct the defense of such action on
behalf of the indemnified party) or (iii) the indemnifying parties shall
not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which
cases the fees and expenses of counsel to the indemnified party shall be
at the expense of the indemnifying parties. An indemnifying party shall
not be liable for any settlement of any action, suit, and proceeding or
claim effected without its written consent, which consent shall not be
unreasonably withheld or delayed.
6. Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Section 5(a) or
5(b) is due in accordance with its terms but for any reason
17
is unavailable to or insufficient to hold harmless an indemnified party in
respect to any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate losses,
liabilities, claims, damages and expenses (including any investigation, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claims asserted, but
after deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares pursuant to this
Agreement or, if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Company on the one hand and the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 6 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of
this Section 6, no Underwriter (except as may be provided in the Agreement Among
Underwriters) shall be required to contribute any amount in excess of the amount
by which the total price at which the shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of damages which
such underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this Section 6, notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties from whom contribution may be sought shall not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this Section 6. No party
shall be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent. The Underwriter's obligations to
contribute pursuant to this Section 6 are several in proportion to their
respective underwriting commitments and not joint.
7. Termination.
(a) This Agreement may be terminated with respect to the Shares to
be purchased on a Closing Date by the Representatives by notifying the
Company at any time at or before a Closing Date in the absolute discretion
of the Representatives if: (i) there has occurred any material adverse
change in the securities markets or any event, act or occurrence that has
materially disrupted, or in the opinion of the Representatives, will in
the future materially disrupt, the securities markets or there shall be
such a material adverse change in general financial, political or economic
conditions or the effect of
18
international conditions on the financial markets in the United States is
such as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares or enforce contracts for the sale of
the Shares; (ii) there has occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the
judgment of the Representatives, inadvisable or impracticable to market
the Shares or enforce contracts for the sale of the Shares; (iii) trading
in the Shares or any securities of the Company has been suspended or
materially limited by the Commission or trading generally on the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. or the Nasdaq
National Market has been suspended or materially limited, or minimum or
maximum ranges for prices for securities shall have been fixed, or maximum
ranges for prices for securities have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc., or any other governmental or
regulatory authority; or (iv) a banking moratorium has been declared by
any state or Federal authority; or (v) in the judgment of the
Representatives, there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given
in the Prospectus, any material adverse change in the assets, properties,
condition, financial or otherwise, or in the results of operations,
business affairs or business prospects of the Company and its subsidiaries
considered as a whole, whether or not arising in the ordinary course of
business.
(b) If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to any
Underwriter, and no Underwriter shall be under any liability to the
Company, except that (y) if this Agreement is terminated by the
Representatives or the Underwriters because of any failure, refusal or
inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will
reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with the proposed purchase and sale of the Shares or in
contemplation of performing their obligations hereunder and (z) no
Underwriter who shall have failed or refused to purchase the Shares agreed
to be purchased by it under this Agreement, without reason sufficient
hereunder to justify cancellation or termination of its obligations under
this Agreement, shall be relieved of liability to the Company or to the
other Underwriters for damages occasioned by its failure or refusal.
8. Substitution of Underwriters. If any Underwriter shall default in its
obligation to purchase on any Closing Date the Shares agreed to be purchased
hereunder on such Closing Date, the Representatives shall have the right, within
36 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase such Shares on the terms
contained herein. If, however, the Representatives shall not have completed such
arrangements within such 36-hour period, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to the Underwriters to purchase such Shares on such
terms. If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the Representatives and
the Company as provided above, the aggregate number of Shares which remains
unpurchased on such Closing Date does not exceed one-eleventh of the aggregate
number of all the Shares that all the Underwriters are obligated to purchase on
such date, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Shares which such Underwriter agreed to
purchase hereunder at such date and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Shares which
such Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default. In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
seven days in order to effect any necessary changes and arrangements (including
any necessary amendments or
19
supplements to the Registration Statement or Prospectus or any other documents),
and the Company agrees to file promptly any amendments to the Registration
Statement or the Prospectus which in the opinion of the Company and the
Underwriters and their counsel may thereby be made necessary.
If, after giving effect to any arrangements for the purchase of the Shares
of a defaulting Underwriter or Underwriters by the Representatives and the
Company as provided above, the aggregate number of such Shares which remains
unpurchased exceeds 10% of the aggregate number of all the Shares to be
purchased at such date, then this Agreement, or, with respect to a Closing Date
which occurs after the First Closing Date, the obligations of the Underwriters
to purchase and of the Company, as the case may be, to sell the Option Shares to
be purchased and sold on such date, shall terminate, without liability on the
part of any non-defaulting Underwriter to the Company, and without liability on
the part of the Company, except as provided in Sections 4(b), 5, 6 and 7. The
provisions of this Section 8 shall not in any way affect the liability of any
defaulting Underwriter to the Company or the nondefaulting Underwriters arising
out of such default. The term "Underwriter" as used in this Agreement shall
include any person substituted under this Section 8 with like effect as if such
person had originally been a party to this Agreement with respect to such
Shares.
9. Miscellaneous. The respective agreements, representations, warranties,
indemnities and other statements of the Company and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or the Company or any of their respective officers, directors
or controlling persons referred to in Sections 5 and 6 hereof, and shall survive
delivery of and payment for the Shares. In addition, the provisions of Sections
4(b), 5, 6 and 7 shall survive the termination or cancellation of this
Agreement.
This Agreement has been and is made for the benefit of the Underwriters,
the Company and their respective successors and assigns, and, to the extent
expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, 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" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Representatives, c/o CIBC World Markets Corp., 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 Attention: Legal Department, and Xxxxx Xxxxxxx & Co., U.S.
Bancorp Center, 000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention:
Legal Department, with a copy to Xxxxxx & Xxxxxxx LLP, 000 Xxxxxxxxxxxx Xxxxx,
Xxxxx Xxxx, XX 00000-0000, Attention: Xxx X. Xxxxxx, Esq. and (b) if to the
Company, to its agent for service as such agent's address appears on the cover
page of the Registration Statement with a copy to Xxxxxx Godward LLP, 0000
Xxxxxxxx Xxxx, Xxx Xxxxx, XX 00000, Attention: Xxxxxxxxx X. Xxxx, Esq.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among
us.
Very truly yours,
SGX Pharmaceuticals, Inc.
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
20
CONFIRMED:
CIBC World Markets Corp.
Xxxxx Xxxxxxx & Co.
JMP Securities LLC
Acting severally on behalf of itself and as representative of the several
Underwriters named in Schedule I annexed hereto.
CIBC World Markets Corp Xxxxx Xxxxxxx & Co.
By: By:
----------------------------------- -----------------------------------
Print Name: Print Name:
--------------------------- ---------------------------
Title: Title:
-------------------------------- --------------------------------
21
SCHEDULE I
NUMBER OF
FIRM SHARES TO
NAME BE PURCHASED
---- ------------
CIBC World Markets Corp.
Xxxxx Xxxxxxx & Co.
JMP Securities LLC
------------
Total
SCHEDULE II
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
, 2005
_________
CIBC World Markets Corp.
Xxxxx Xxxxxxx & Co.
JMP Securities LLC
As Representative of the Several Underwriters
c/o CIBC World Markets Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Public Offering of SGX Pharmaceuticals, Inc.
Ladies and Gentlemen:
The undersigned, a holder of common stock, par value $0.001 per share
("Common Stock") or rights to acquire Common Stock of SGX Pharmaceuticals, Inc.
(the "Company"), understands that you, as Representative of the several
Underwriters, propose to enter into an Underwriting Agreement (the "Underwriting
Agreement") with the Company, providing for the public offering (the "Public
Offering") by the several Underwriters named in Schedule I to the Underwriting
Agreement (the "Underwriters"), of shares of Common Stock of the Company (the
"Securities"). Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Underwriting Agreement.
In consideration of the Underwriters' agreement to enter into the
Underwriting Agreement and to proceed with the Public Offering of the
Securities, and for other good and valuable consideration receipt of which is
hereby acknowledged, the undersigned hereby agrees for the benefit of the
Company, you and the other Underwriters that, without the prior written consent
of CIBC World Markets Corp. on behalf of the Underwriters, the undersigned will
not, during the period ending 180 days after the date of the prospectus relating
to the Public Offering (the "Lock-Up Period"), directly or indirectly (1) offer,
pledge, assign, encumber, announce the intention to sell, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, any shares of Common Stock of the Company or any securities
convertible into or exercisable or exchangeable for Common Stock owned either of
record or beneficially (as defined in the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) by the undersigned on the date hereof or hereafter
acquired or (2) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise, or publicly announce an intention to do any of the foregoing. In
addition, the undersigned agrees that, without the prior written consent of CIBC
World Markets Corp. on behalf of the Underwriters, it will not, during the
Lock-Up Period, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The foregoing shall not apply to:
(i) the sale of the Securities to be sold pursuant to the prospectus relating to
the Public Offering; (ii) sales under any 10b-5 plan; or (iii) transfers of
Common Stock (A) as a bona fide gift or gifts, (B) to any trust
for the direct or indirect benefit of the undersigned or the immediate family of
the undersigned, (C) if the undersigned is a corporation, to any wholly-owned
subsidiary of such corporation, (D) if the undersigned is a limited liability
company, to a member or affiliated limited liability company, or (E) if the
undersigned is a partnership, to a partner or affiliated partnership; provided,
however, that in each such case under clause (iii) above, (1) it shall be a
condition to the transfer that the donee or transferee execute an agreement
stating that the donee or transferee is receiving and holding such capital stock
subject to the provisions of this Lock-Up Agreement and there shall be no
further transfer of such capital stock except in accordance with this Lock-Up
Agreement, (2) any such transfer shall not involve a disposition for value, (3)
no filing by any party (donor, donee, transferor or transferee) under the
Exchange Act shall be required or shall be voluntarily made in connection with
such transfer (other than a filing on a Form 5, Schedule 13D or Schedule 13G
made after the expiration of the Lock-Up Period), (4) each party (donor, donee,
transferor or transferee) shall not be required by law (including without
limitation the disclosure requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the Exchange Act) to make, and shall agree to not
voluntarily make, any public announcement of the transfer or disposition, and
(5) the undersigned notifies CIBC World Markets Corp. at least two business days
prior to the proposed transfer or disposition. For purposes of this Lock-Up
Agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin.
Notwithstanding the foregoing, if (1) during the last 17 days of the
Lock-Up Period the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (2) prior to the expiration of
the Lock-Up Period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the Lock-Up Period, the
restrictions imposed in this Lock-Up Agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event; provided,
however, that this sentence shall not apply if the research published or
distributed on the Company is compliant under Rule 139 of the Securities Act and
the Company's securities are actively traded as defined in Rule 101(c)(1) of
Regulation M of the Exchange Act.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Lock-Up Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released form all obligations under this Lock-Up Agreement.
The undersigned, whether or not participating in the Public Offering,
understands that the Underwriters are entering into the Underwriting Agreement
and proceeding with the Public Offering in reliance upon this Lock-Up Agreement.
[signature page follows]
This Lock-Up Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of laws
principles thereof.
Very truly yours,
[STOCKHOLDER]
By:
-------------------------------------
Name:
Title:
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
EXHIBIT F