4,750,000 Shares SUNESIS PHARMACEUTICALS, INC. Common Stock, $0.0001 par value per share UNDERWRITING AGREEMENT
4,750,000
Shares
SUNESIS
PHARMACEUTICALS, INC.
Common
Stock, $0.0001 par value per share
May
24,
2007
Xxxxxx
Brothers Inc.,
As
Representative of the several
Underwriters
named in Schedule 1 attached hereto,
c/x
Xxxxxx Brothers Inc.
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Ladies
and Gentlemen:
Sunesis
Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
proposes to sell 4,750,000 shares (the “Stock”)
of the
Company’s common stock, par value $0.0001 per share (the “Common
Stock”).
This
is to confirm the agreement concerning the purchase of the Stock from the
Company by the Underwriters.
1. Representations,
Warranties and Agreements of the Company.
The
Company represents, warrants and agrees that:
(a) A
registration statement on Form S-3 (File No. 333-138736) relating to the Stock
has (i) been prepared by the Company in conformity with the requirements of
the Securities Act of 1933, as amended (the “Securities
Act”),
and
the rules and regulations (the “Rules
and Regulations”)
of the
Securities and Exchange Commission (the “Commission”)
thereunder; (ii) been filed with the Commission under the Securities Act;
and (iii) become effective under the Securities Act. Copies of such
registration statement and any amendment thereto have been delivered by the
Company to you as the representative (the “Representative”)
of the
Underwriters. As used in this agreement (this “Agreement”):
(i) “Applicable
Time”
means
8:30 a.m. (New York City time) on the date of this Agreement;
(ii) “Effective
Date”
means
the date and time as of which such registration statement was declared effective
by the Commission;
(iii) “Issuer
Free Writing Prospectus”
means
each “free writing prospectus” (as defined in Rule 405 of the Rules and
Regulations) in the form filed or required to be filed with the Commission,
or
if not required to be filed, in the form retained in the Company’s records
pursuant to Rule 433(g) prepared by or on behalf of the Company and used or
referred to by the Company in connection with the offering of the Stock;
(iv) “Preliminary
Prospectus”
means
the preliminary prospectus relating to the Stock included in such Registration
Statement or filed with the Commission pursuant to Rule 424(b) of the Rules
and
Regulations on December 18, 2006;
(v) “Pricing
Disclosure Package”
means,
as of the Applicable Time, the Preliminary Prospectus, together with the
information included in Schedule
3
hereto
and the Issuer Free Writing Prospectus dated May 23, 2007;
(vi) “Prospectus”
means
the final prospectus relating to the Stock, including
any prospectus supplement thereto relating to the Stock, as filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations;
and
(vii) “Registration
Statement”
means
such registration statement on Form S-3 (File No. 333-138736), as amended as
of
the Effective Date, including any Preliminary Prospectus or the Prospectus
and
all exhibits to such registration statement.
Any
reference to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any documents incorporated by reference therein pursuant
to
Form S-3 under the Securities Act as of the date of such Preliminary Prospectus
or the Prospectus, as the case may be. Any reference to any amendment or
supplement to any Preliminary Prospectus or the Prospectus shall be deemed
to
refer to and include any document filed under the Securities Exchange Act of
1934, as amended (the “Exchange
Act”),
after
the date of such Preliminary Prospectus or the Prospectus, as the case may
be,
and incorporated by reference in such Preliminary Prospectus or the Prospectus,
as the case may be; and any reference to any amendment to the Registration
Statement shall be deemed to include any annual report of the Company on Form
10-K filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Date that is incorporated by reference in
the
Registration Statement. The Commission has not issued any order preventing
or
suspending the use of the Preliminary Prospectus or the Prospectus or suspending
the effectiveness of the Registration Statement, and no proceeding or
examination for such purpose has been instituted or threatened by the
Commission.
(b) The
Company was not at the time of initial filing of the Registration Statement
and
at the earliest time thereafter that the Company or another offering participant
made a bona
fide
offer
(within the meaning of Rule 164(h)(2) of the Rules and Regulations) of the
Stock, is not on the date hereof and will not be on the applicable Delivery
Date
an “ineligible issuer” (as defined in Rule 405). The Company has been since the
time of initial filing of the Registration Statement and continues to be
eligible to use Form S-3 for the offering of the Stock.
(c) The
Registration Statement conformed and will conform in all material respects
on
the Effective Date and on the applicable Delivery Date, and any amendment to
the
Registration Statement filed after the date hereof will conform in all material
respects when filed, to the requirements of the Securities Act and the Rules
and
Regulations. The Preliminary Prospectus conformed, and the Prospectus will
conform, in all material respects when filed with the Commission pursuant to
Rule 424(b) and on the applicable Delivery Date to the requirements of the
Securities Act and the Rules and Regulations. The documents incorporated by
reference in the Preliminary Prospectus or the Prospectus conformed, and any
further documents so incorporated will conform, when filed with the Commission,
in all material respects to the requirements of the Exchange Act or the
Securities Act, as applicable, and the rules and regulations of the Commission
thereunder.
(d) The
Registration Statement did not, as of the Effective Date, 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 statements therein not misleading;
provided
that no
representation or warranty is made as to information contained in or omitted
from the Registration Statement in reliance upon and in conformity with written
information furnished to the Company through the Representative by or on behalf
of any Underwriter specifically for inclusion therein, which information is
specified in Section 8(e).
(e) The
Prospectus will not, as of its date and on the applicable Delivery Date, 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 statements therein, in the light
of the circumstances under which they were made, not misleading; provided
that no
representation or warranty is made as to information contained in or omitted
from the Prospectus in reliance upon and in conformity with written information
furnished to the Company through the Representative by or on behalf of any
Underwriter specifically for inclusion therein, which information is specified
in Section 8(e).
(f) The
documents incorporated by reference in the Prospectus did not, and any further
documents filed and incorporated by reference therein will not, when filed
with
the Commission, 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
statements therein, in the light of the circumstances under which they were
made, not misleading.
(g) The
Pricing Disclosure Package did not, as of the Applicable Time, contain an untrue
statement of a material fact or omit to state a material fact necessary to
make
the statements therein, in the light of the circumstances under which they
were
made, not misleading; provided
that no
representation or warranty is made as to information contained in or omitted
from the Pricing Disclosure Package in reliance upon and in conformity with
written information furnished to the Company through the Representative by
or on
behalf of any Underwriter specifically for inclusion therein, which information
is specified in Section 8(e).
(h) Each
Issuer Free Writing Prospectus (including, without limitation, any road show
that is a free writing prospectus under Rule 433), when considered together
with
the Pricing Disclosure Package as of the Applicable Time, did 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 statements therein, in the light
of
the circumstances under which they were made, not misleading.
(i) Each
Issuer Free Writing Prospectus conformed or will conform in all material
respects to the requirements of the Securities Act and the Rules and Regulations
on the date of first use, and the Company has complied with any filing
requirements applicable to such Issuer Free Writing Prospectus pursuant to
the
Rules and Regulations. The Company has not made any offer relating to the Stock
that would constitute an Issuer Free Writing Prospectus without the prior
written consent of the Representative. The Company has retained in accordance
with the Rules and Regulations all Issuer Free Writing Prospectuses that were
not required to be filed pursuant to the Rules and Regulations.
(j) Each
of
the Company and its subsidiaries (as defined in Section 17) has been duly
organized, is validly existing and in good standing as a corporation or other
business entity under the laws of its jurisdiction of organization and is duly
qualified to do business and in good standing as a foreign corporation or other
business entity in each jurisdiction in which its ownership or lease of property
or the conduct of its businesses requires such qualification, except where
the
failure to be so qualified or in good standing could not, in the aggregate,
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), results of operations, stockholders’ equity,
properties, business or prospects of the Company and its subsidiaries taken
as a
whole (a “Material
Adverse Effect”);
each
of the Company and its subsidiaries has all power and authority necessary to
own
or hold its properties and to conduct the businesses in which it is engaged.
The
Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the subsidiaries listed in Exhibit 21
to
the Company’s Annual Report on Form 10-K for the most recent fiscal year. None
of the subsidiaries of the Company is a “significant subsidiary” (as defined in
Rule 405).
(k) The
Company has an authorized capitalization as set forth in each of the Pricing
Disclosure Package and the Prospectus, each as of the applicable date set forth
therein, and all of the issued shares of capital stock of the Company have
been
duly authorized and validly issued, are fully paid and non-assessable, conform
to the description thereof contained in the Pricing Disclosure Package and
were
issued in compliance with federal and state securities laws and not in violation
of any preemptive right, resale right, right of first refusal or similar right.
All of the Company’s options, warrants and other rights to purchase or exchange
any securities for shares of the Company’s capital stock have been duly
authorized and validly issued, conform to the description thereof contained
in
the Pricing Disclosure Package and were issued in compliance with federal and
state securities laws. All of the issued shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued, are
fully paid and non-assessable and (except for directors’ qualifying shares for
foreign subsidiaries and except as set forth in the Pricing Disclosure Package
)
are owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, except for such liens, encumbrances, equities
or claims as would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(l) The
shares of the Stock to be issued and sold by the Company to the Underwriters
hereunder have been duly authorized and, upon payment and delivery in accordance
with this Agreement, will be validly issued, fully paid and non-assessable,
will
conform to the description thereof contained in the Pricing Disclosure Package,
will be issued in compliance with federal and state securities laws and will
be
free of statutory and contractual preemptive rights, rights of first refusal
and
similar rights.
(m) The
Company has all requisite corporate power and authority to execute, deliver
and
perform its obligations under this Agreement. This Agreement has been duly
and
validly authorized, executed and delivered by the Company.
(n) The
execution, delivery and performance of this Agreement by the Company, the
consummation of the transactions contemplated hereby and the application of
the
proceeds from the sale of the Stock as described under “Use of Proceeds” in the
Pricing Disclosure Package will not (i) conflict with or result in a breach
or violation of any of the terms or provisions of, impose any lien, charge
or
encumbrance upon any property or assets of the Company and its subsidiaries,
or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, license or other agreement or instrument to which the Company or
any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject; (ii) result in any violation of the
provisions of the charter or by-laws (or similar organizational documents)
of
the Company or any of its subsidiaries; or (iii) result in any violation of
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries or
any
of their properties or assets; except in the cases of clauses (i) and (iii),
to
the extent that any such conflict, breach, violation or default would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(o) No
consent, approval, authorization or order of, or filing or registration with,
any court or governmental agency or body having jurisdiction over the Company
or
any of its subsidiaries or any of their properties or assets is required for
the
execution, delivery and performance of this Agreement by the Company, the
consummation of the transactions contemplated hereby, the application of the
proceeds from the sale of the Stock as described under “Use of Proceeds” in the
Pricing Disclosure Package, except for the registration of the Stock under
the
Securities Act and such consents, approvals, authorizations, registrations
or
qualifications as may be required under the Exchange Act and applicable state
securities laws in connection with the purchase and sale of the Stock by the
Underwriters.
(p) Except
as
described in the Pricing Disclosure Package, there are no contracts, agreements
or understandings between the Company and any person granting such person the
right (other than rights which have been waived in writing or otherwise
satisfied) to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in
the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(q) Except
as
described in the Pricing Disclosure Package, 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 Securities Act other than shares issued pursuant to employee
benefit plans, qualified stock options plans or other employee compensation
plans or pursuant to outstanding options, rights or warrants.
(r) Except
as
described in the Pricing Disclosure Package, neither the Company nor any of
its
subsidiaries has sustained, since the date of the latest audited financial
statements included or incorporated by reference in the Pricing Disclosure
Package, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from
any labor dispute or court or governmental action, order or decree, and since
such date, there has not been any change in the capital stock (other than stock
option exercises and stock repurchases in the ordinary course of business)
or
long-term debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change,
in
or affecting the condition (financial or otherwise), results of operations,
stockholders’ equity, properties, management, business or prospects of the
Company and its subsidiaries taken as a whole, in each case other than as set
forth or contemplated in the Pricing Disclosure Package.
(s) Since
the
date as of which information is given in the Pricing Disclosure Package, the
Company has not (i) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations that were incurred in the
ordinary course of business or in connection with this offering, (ii) entered
into any material transaction not in the ordinary course of business or (iii)
declared or paid any dividend on its capital stock.
(t) The
historical financial statements (including the related notes and supporting
schedules) included or incorporated by reference in the Pricing Disclosure
Package comply as to form in all material respects with the requirements of
Regulation S-X under the Securities Act and present fairly the financial
condition, results of operations and cash flows of the entities purported to
be
shown thereby at the dates and for the periods indicated and have been prepared
in conformity with accounting principles generally accepted in the United States
applied on a consistent basis throughout the periods involved.
(u) Ernst
& Young LLP, who have certified certain financial statements of the Company
and its consolidated subsidiaries, whose report appears in the Pricing
Disclosure Package or is incorporated by reference therein and who have
delivered the initial letter referred to in Section 7(f) hereof, are independent
public accountants as required by the Securities Act and the Rules and
Regulations .
(v) The
Company does not own any real property. The Company has a valid leasehold
interest in the real property used in the conduct of the business of the Company
as described in the Pricing Disclosure Package, and has good and marketable
title to all personal property owned by it, in each case free and clear of
all
liens, encumbrances and defects except such as are described in the Pricing
Disclosure Package or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to
be
made of such property by the Company; and all assets held under lease by the
Company are held by it under valid, subsisting and enforceable leases, with
such
exceptions as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company.
(w) The
statistical and market-related data included in the Pricing Disclosure Package
are based on or derived from sources that the Company believes to be reliable
and accurate in all material respects.
(x) Neither
the Company nor any subsidiary is, and as of the applicable Delivery Date and,
after giving effect to the offer and sale of the Stock and the application
of
the proceeds therefrom as described under “Use of Proceeds” in the Pricing
Disclosure Package and the Prospectus, none of them will be, an “investment
company” within the meaning of such term under the Investment Company Act of
1940, as amended (the “Investment
Company Act”),
and
the rules and regulations of the Commission thereunder.
(y) There
are
no legal or governmental proceedings pending to which the Company or any of
its
subsidiaries is a party or of which any property or assets of the Company or
any
of its subsidiaries is the subject that would, in the aggregate, reasonably
be
expected to have a Material Adverse Effect or would, in the aggregate,
reasonably be expected to have a Material Adverse Effect on the performance
of
this Agreement or the consummation of the transactions contemplated hereby;
and
to the Company’s knowledge, no such proceedings are threatened or contemplated
by governmental authorities or others.
(z) There
are
no contracts or other documents that are required to be described in the Pricing
Disclosure Package or filed as exhibits to the Registration Statement by the
Securities Act or the Rules and Regulations that have not been described in
the
Pricing Disclosure Package or filed as exhibits to the Registration
Statement.
(aa) Except
as
described in the Pricing Disclosure Package, no relationship, direct or
indirect, exists between or among the Company, on the one hand, and the
directors, officers, stockholders, customers or suppliers of the Company, on
the
other hand, that is required to be described in the Pricing Disclosure Package
which is not so described.
(bb) No
labor
disturbance by the employees of the Company or its subsidiaries exists or,
to
the knowledge of the Company, is imminent that would reasonably be expected
to
have a Material Adverse Effect.
(cc) The
Company is in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
(“ERISA”);
no
“reportable event” (as defined in ERISA) has occurred with respect to any
“pension plan” (as defined in ERISA) for which the Company would have any
material liability; the Company has not incurred and does not expect to incur
material liability under (i) Title IV of ERISA with respect to termination
of,
or withdrawal from, any “pension plan” or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the “Code”);
each
“pension plan” for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which
would reasonably be expected to cause the loss of such qualification; and the
Company has not incurred any unpaid liability to the Pension Benefit Guaranty
Corporation.
(dd) The
Company and each of its subsidiaries have filed all federal, state, local and
foreign income and franchise tax returns required to be filed through the date
hereof, subject to permitted extensions, and have paid all taxes due thereon,
and no tax deficiency has been determined adversely to the Company or any of
its
subsidiaries, nor does the Company have any knowledge of any tax deficiencies
that would, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(ee) [Intentionally
omitted.]
(ff) Neither
the Company nor any of its subsidiaries (i) is in violation of its charter
or
by-laws (or similar organizational documents), (ii) is in default, and no event
has occurred that, with notice or lapse of time or both, would constitute such
a
default, in the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, license
or
other agreement or instrument to which it is a party or by which it is bound
or
to which any of its properties or assets is subject or (iii) is in violation
of
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over it or its property or assets or has failed
to
obtain any license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or to the
conduct of its business, except in the case of clauses (ii) and (iii), to the
extent any such conflict, breach, violation or default would not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(gg) There
is
and has been no failure on the part of the Company and any of the Company’s
directors or officers, in their capacities as such, to comply with the
provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated in connection therewith.
(hh) The
Company for it and, if applicable, its subsidiaries (i) makes and keeps accurate
books and records and (ii) maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are executed
in
accordance with management’s authorization, (B) transactions are recorded as
necessary to permit preparation of the Company’s financial statements in
conformity with accounting principles generally accepted in the United States
and to maintain accountability for its assets, (C) access to the Company’s
assets is permitted only in accordance with management’s authorization and (D)
the recorded accountability for the Company’s assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect
to
any differences.
(ii) (i)
The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-14 under the Exchange Act); (ii) such
disclosure controls and procedures are designed to ensure that information
required to be disclosed by the Company in the reports it files or submits
under
the Exchange Act is accumulated and communicated to the management of the
Company, including its principal executive officer and principal financial
officer, as appropriate, to allow timely decisions regarding required
disclosure; and (iii) such disclosure controls and procedures are effective
in
all material respects to perform the functions for which they were
established.
(jj) Since
the
date of the most recent balance sheet of the Company audited by Ernst &
Young LLP, the Company has not been advised of (i) any significant deficiencies
in the design or operation of its internal controls that could adversely affect
the ability of the Company to record, process, summarize and report financial
data, (ii) any material weaknesses in its internal controls or (iii) any fraud,
whether or not material, that involves management or other employees who have
a
significant role in the internal controls of the Company.
(kk) Since
the
date of the most recent balance sheet of the Company audited by Ernst &
Young LLP, there has been no significant changes in internal controls or in
other factors that could significantly affect internal controls, including
any
corrective actions with regard to significant deficiencies and material
weaknesses.
(ll) Except
set forth in the Pricing Disclosure Package, the Company and each of its
subsidiaries have such permits, licenses, patents, franchises, certificates
of
need and other approvals or authorizations of governmental or regulatory
authorities (“Permits”)
as are
necessary under applicable law to own their properties and conduct their
businesses in the manner described in the Pricing Disclosure Package (including
without limitation all such certificates, authorizations and permits required
by
the United States Food and Drug Administration (the “FDA”)
or any
other similar federal, state or foreign agencies or bodies); each of the Company
and its subsidiaries has fulfilled and performed all of its obligations with
respect to the Permits, and no event has occurred that allows, or after notice
or lapse of time would allow, revocation or termination thereof or would result
in any other impairment of the rights of the holder or any such Permits, except
as disclosed in or contemplated by the Pricing Disclosure Package, except for
any of the foregoing that would not reasonably be expected to have a Material
Adverse Effect.
(mm) The
preclinical and clinical trials conducted by or on behalf of the Company that
are described in the Registration Statement, the Pricing Disclosure Package
and
the Prospectus were and, if still pending, are to the extent required by law
being, conducted in compliance with all applicable current Good Laboratory
Practices, Good Clinical Practices and local, state and federal laws, rules
and
regulations in all material respects. The descriptions of the results of such
studies and trials contained in the Registration Statement and Prospectus are
accurate and complete in all material respects. The Company is not aware of
any
studies, tests or trials, the results of which reasonably call into question
the
studies, tests or clinical trials described or referred to in the Registration
Statement and the Prospectus when viewed in the context in which such results
are described and the clinical state of development. The Company has not
received any notices or correspondence from the FDA or other governmental agency
requiring the termination, suspension or material modification of any clinical
trials conducted by, or on behalf, of the Company or in which the Company has
participated.
(nn) The
Company carries, or is covered by, insurance from insurers of recognized
financial responsibility in such amounts and covering such risks is adequate
for
the conduct of its business and the value of its properties and as is customary
for companies engaged in similar businesses in similar industries; all policies
of insurance insuring the Company or its businesses, assets, employees, officers
and directors are in full force and effect in all material
respects.
(oo) The
Company has duly and properly filed or caused to be filed with the United States
Patent and Trademark Office (the “PTO”)
and
applicable foreign and international patent authorities all patent applications
owned by the Company (the “Company
Patent Applications”).
To
the knowledge of the Company, the Company has complied with the PTO’s duty of
candor and disclosure for the Company Patent Applications and has made no
material misrepresentation in the Company Patent Applications. The Company
is
not aware of any information material to a determination of patentability
regarding the Company Patent Applications not called to the attention of the
PTO
or similar foreign authority. The Company is not aware of any information not
called to the attention of the PTO or similar foreign authority that would
preclude the grant of a patent for the Company Patent Applications. The Company
has no knowledge of any information that would preclude the Company from having
clear title to the Company Patent Applications.
(pp) The
Company and each of its subsidiaries own or possess adequate rights to use
all
material patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights, licenses,
know-how, software, systems and technology (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures) necessary for the conduct of their respective businesses and
have
no reason to believe that the conduct of their respective businesses will
conflict with, and have not received any notice of any claim of conflict with,
any such rights of others.
(qq) Except
as
described in the Pricing Disclosure Package, (A) there are no proceedings that
are pending, or known to be contemplated, against the Company or any of its
subsidiaries under any laws, regulations, ordinances, rules, orders, judgments,
decrees, permits or other legal requirements of any governmental authority,
including without limitation any international, national, state, provincial,
regional, or local authority, relating to the protection of human health or
safety, the environment, or natural resources, or to hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental
Laws”)
in
which a governmental authority is also a party, other than such proceedings
regarding which it is reasonably believed no monetary sanctions of $100,000
or
more will be imposed, (B) the Company and its subsidiaries are not aware of
any
issues regarding compliance with Environmental Laws, or liabilities or other
obligations under Environmental Laws or concerning hazardous or toxic substances
or wastes, pollutants or contaminants, that would reasonably be expected to
have
a material effect on the capital expenditures, earnings or competitive position
of the Company and its subsidiaries, and (C) none of the Company and its
subsidiaries anticipates material capital expenditures relating to Environmental
Laws.
(rr) [Intentionally
omitted.]
(ss) Neither
the Company, nor any of its subsidiaries, nor any director, officer, agent,
employee or other person associated with or acting on behalf of the Company
or
any of its subsidiaries, has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment from corporate funds.
(tt) The
operations of the Company and its subsidiaries are and have been conducted
at
all times in 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, 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 its
subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened, except, in each case, as would not
reasonably be expected to have a Material Adverse Effect.
(uu) 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 currently subject to any U.S. sanctions
administered by OFAC.
(vv) The
Company has not distributed and, prior to the later to occur of any Delivery
Date and completion of the distribution of the Stock, will not distribute any
offering material in connection with the offering and sale of the Stock other
than the Pricing Disclosure Package, the Prospectus and any Issuer Free Writing
Prospectus to which the Representative has consented in accordance with Section
1(i) or 5(a)(vi).
(ww) The
Company has not taken and will not take, directly or indirectly, any action
designed to or that has constituted or that could reasonably be expected to
cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the shares of the
Stock.
(xx) The
Stock
has been approved for inclusion, subject to official notice of issuance, in
The
NASDAQ Global Market.
(yy) Neither
the Company nor any of its subsidiaries owns any “margin securities” as that
term is defined in Regulation U of the Board of Governors of the Federal Reserve
System (the “Federal
Reserve Board”),
and
none of the proceeds of the sale of the Stock will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security,
for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose
which
might cause any of the Securities to be considered a “purpose credit” within the
meanings of Regulation T, U or X of the Federal Reserve Board.
(zz) Except
as
contemplated by this Agreement, neither the Company nor any of its subsidiaries
is a party to any contract, agreement or understanding with any person that
would give rise to a valid claim against the Company or the Underwriters for
a
brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Stock.
2. Purchase
of the Stock by the Underwriters.
On the
basis of the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, the Company agrees to sell 4,750,000
shares of the Stock to the several Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Stock
set forth opposite that Underwriter’s name in Schedule
1
hereto.
The respective purchase obligations of the Underwriters with respect to the
Stock shall be rounded among the Underwriters to avoid fractional shares, as
the
Representative may determine.
The
price
of the Stock purchased by the Underwriters shall be $4.186 per
share.
The
Company shall not be obligated to deliver any of the Stock to be delivered
on
the applicable Delivery Date, except upon payment for all such Stock to be
purchased on such Delivery Date as provided herein.
3. Offering
of Stock by the Underwriters.
Upon
authorization by the Representative of the release of the Stock, the several
Underwriters propose to offer the Stock for sale upon the terms and conditions
to be set forth in the Prospectus.
4. Delivery
of and Payment for the Stock.
Delivery
of and payment for the Stock shall be made at 10:00 A.M., New York City
time, on the third full business day following the date of this Agreement or
at
such other date or place as shall be determined by agreement between the
Representative and the Company. This date and time are sometimes referred to
as
the “Delivery
Date.”
Delivery of the Stock shall be made to the Representative for the account of
each Underwriter against payment by the several Underwriters through the
Representative and of the respective aggregate purchase prices of the Stock
being sold by the Company to or upon the order of the Company of the purchase
price by wire transfer in immediately available funds to the accounts specified
by the Company. Time shall be of the essence, and delivery at the time and
place
specified pursuant to this Agreement is a further condition of the obligation
of
each Underwriter hereunder. The Company shall deliver the Stock through the
facilities of DTC unless the Representative shall otherwise
instruct.
5. Further
Agreements of the Company and the Underwriters.
(a) The
Company agrees:
(i) To
prepare the Prospectus in a form approved by the Representative and to 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; to make no further amendment or any
supplement to the Registration Statement or the Prospectus prior to the Delivery
Date except as provided herein; to advise the Representative, promptly after
it
receives notice thereof, of the time when any amendment or supplement to the
Registration Statement or the Prospectus has been filed and to furnish the
Representative with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or sale
of
the Stock; to advise the Representative, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of the Prospectus or any Issuer Free Writing
Prospectus, of the suspension of the qualification of the Stock for offering
or
sale in any jurisdiction, of the initiation or threatening of any proceeding
or
examination for any such purpose or of any request by the Commission for the
amending or supplementing of the Registration Statement, the Prospectus or
any
Issuer Free Writing Prospectus or for additional information; and, in the event
of the issuance of any stop order or of any order preventing or suspending
the
use of the Prospectus or any Issuer Free Writing Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain its withdrawal;
(ii) To
furnish promptly to the Representative and to counsel for the Underwriters
a
signed copy of the Registration Statement as originally filed with the
Commission, and each amendment thereto filed with the Commission, including
all
consents and exhibits filed therewith;
(iii) To
deliver promptly to the Representative such number of the following documents
as
the Representative shall reasonably request: (A) conformed copies of the
Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits other than this Agreement
and
the computation of per share earnings), (B) the Pricing Disclosure Package,
the
Prospectus and any amended or supplemented Prospectus, (C) each Issuer Free
Writing Prospectus and (D) any document incorporated by reference in the
Preliminary Prospectus or the Prospectus; and, if the delivery of a prospectus
is required at any time after the date hereof in connection with the offering
or
sale of the Stock or any other securities relating thereto and if at such time
any events shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact
or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such
Prospectus is delivered, not misleading, or, if for any other reason it shall
be
necessary to amend or supplement the Prospectus or to file under the Exchange
Act any document incorporated by reference in the Prospectus in order to comply
with the Securities Act or the Exchange Act, to notify the Representative and,
upon its request, to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies as
the
Representative may from time to time reasonably request of an amended or
supplemented Prospectus that will correct such statement or omission or effect
such compliance;
(iv) To
file
promptly with the Commission any amendment or supplement to the Registration
Statement or the Prospectus that may, in the judgment of the Company or the
Representative, be required by the Securities Act or requested by the
Commission;
(v) Prior
to
filing with the Commission any amendment or supplement to the Registration
Statement or the Prospectus, , to furnish a copy thereof to the Representative
and counsel for the Underwriters and obtain the consent of the Representative
to
the filing;
(vi) Not
to
make any offer relating to the Stock that would constitute an Issuer Free
Writing Prospectus without the prior written consent of the
Representative;
(vii) To
comply
with all applicable requirements of Rule 433 with respect to any Issuer Free
Writing Prospectus; and if at any time after the date hereof any events shall
have occurred as a result of which any Issuer Free Writing Prospectus, as then
amended or supplemented, would conflict with the information in the Registration
Statement, the Pricing Disclosure Package or the Prospectus or would include
an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under
which they were made, not misleading, or, if for any other reason it shall
be
necessary to amend or supplement any Issuer Free Writing Prospectus, to notify
the Representative and, upon its request, to file such document and to prepare
and furnish without charge to each Underwriter as many copies as the
Representative may from time to time reasonably request of an amended or
supplemented Issuer Free Writing Prospectus that will correct such conflict,
statement or omission or effect such compliance;
(viii) As
soon
as practicable after the Applicable Time and in any event not later than 16
months after the date hereof, to make generally available to the Company’s
security holders and to deliver to the Representative an earnings statement
of
the Company and its subsidiaries (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and Regulations;
(ix) Promptly
from time to time to take such action as the Representative may reasonably
request to qualify the Stock for offering and sale under the securities laws
of
such jurisdictions as the Representative may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of
the Stock; provided
that in
connection therewith the Company shall not be required to (i) qualify as a
foreign corporation in any jurisdiction in which it would not otherwise be
required to so qualify, (ii) file a general consent to service of process in
any
such jurisdiction or (iii) subject itself to taxation in any jurisdiction in
which it would not otherwise be subject;
(x) For
a
period commencing on the date hereof and ending on the 90th day after the date
of the Prospectus (the “Lock-Up
Period”),
not
to, directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the disposition by any person at any time in
the
future of) any shares of Common Stock or securities convertible into or
exchangeable for Common Stock ( (i) other than the Stock and shares issued
pursuant to employee stock purchase plans, employee benefit plans, qualified
stock option plans or other employee compensation plans existing on the date
hereof or pursuant to currently outstanding options, warrants or rights not
issued under one of those plans or (ii) up to an aggregate of $20.0 million
of
Common Stock or options, warrants or rights to purchase Common Stock in
connection with a business development transaction or transactions involving
the
licensing of one of the Company's products), or sell or grant options, rights
or
warrants with respect to any shares of Common Stock or securities convertible
into or exchangeable for Common Stock (other than the grant of options pursuant
to option plans existing on the date hereof), (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any
of
the economic benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
(3) file or cause to be filed a registration statement, including any
amendments, with respect to the registration of any shares of Common Stock
or
securities convertible, exercisable or exchangeable into Common Stock or any
other securities of the Company (other than any registration statement on Form
X-0, Xxxx X-0 or other similar form) or (4) publicly disclose the intention
to
do any of the foregoing, in each case without the prior written consent of
Xxxxxx Brothers Inc., on behalf of the Underwriters, and to cause each officer,
director and stockholder of the Company set forth on Schedule
2
hereto
to furnish to the Representative, prior to the Delivery Date, a letter or
letters, substantially in the form of Exhibit
A
hereto
(the “Lock-Up
Agreements”);
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, then
the restrictions imposed in this paragraph shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the announcement of the material news or the occurrence of the
material event, unless Xxxxxx Brothers Inc., on behalf of the Underwriters,
waive such extension in writing; and
(xi) To
apply
the net proceeds from the sale of the Stock being sold by the Company as set
forth in the Prospectus.
(b) Each
Underwriter severally agrees that such Underwriter shall not include any “issuer
information” (as defined in Rule 433) in any “free writing prospectus” (as
defined in Rule 405) used or referred to by such Underwriter without the prior
consent of the Company (any such issuer information with respect to whose use
the Company has given its consent, “Permitted
Issuer Information”);
provided
that (i)
no such consent shall be required with respect to any such issuer information
contained in any document filed by the Company with the Commission prior to
the
use of such free writing prospectus and (ii) “issuer information,” as used in
this Section 5(b), shall not be deemed to include information prepared by or
on
behalf of such Underwriter on the basis of or derived from issuer
information.
6. Expenses.
The
Company agrees, whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, to pay all costs, expenses,
fees and taxes incident to and in connection with (a) the authorization,
issuance, sale and delivery of the Stock and any stamp duties or other taxes
payable in that connection, and the preparation and printing of certificates
for
the Stock; (b) the preparation, printing and filing under the Securities Act
of
the Registration Statement (including any exhibits thereto), the Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any amendment
or supplement thereto; (c) the distribution of the Registration Statement
(including any exhibits thereto), the Preliminary Prospectus, the Prospectus,
any Issuer Free Writing Prospectus and any amendment or supplement thereto,
or
any document incorporated by reference therein, all as provided in this
Agreement; (d) the production and distribution of this Agreement, any
supplemental agreement among Underwriters, and any other related documents
in
connection with the offering, purchase, sale and delivery of the Stock; (e)
any
required review by the NASD of the terms of sale of the Stock (including related
fees and expenses of counsel to the Underwriters in an amount that is not
greater than $15,000); (f) the inclusion of the Stock on The NASDAQ Global
Market and/or any exchange; (g) the qualification of the Stock under the
securities laws of the several jurisdictions as provided in Section 5(a)(ix)
and
the preparation, printing and distribution of a Blue Sky Memorandum (including
related fees and expenses of counsel to the Underwriters); (h) the investor
presentations on any “road show” undertaken in connection with the marketing of
the Stock, including, without limitation, expenses associated with any
electronic roadshow, travel and lodging expenses of the Representative and
officers of the Company and the cost of any aircraft chartered in connection
with the road show with the prior approval of the Company, but excluding other
travel expenses of the Underwriters; and (i) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement; provided
that,
except as provided in this Section 6 and in Section 11, the Underwriters shall
pay their own costs and expenses, including the costs and expenses of their
counsel, any transfer taxes on the Stock which they may sell and the expenses
of
advertising any offering of the Stock made by the Underwriters. The Company
will
reimburse the Representative upon demand for the Representative’s reasonable
expenses (including fees and expenses of counsel to the underwriters) incurred
as a result of its services in connection with the transactions contemplated
by
this Agreement up to an aggregate maximum of $100,000.
7. Conditions
of Underwriters’ Obligations.
The
respective obligations of the Underwriters hereunder are subject to the
accuracy, when made and on the Delivery Date, of the representations and
warranties of the Company contained herein, to the performance by the Company
of
its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The
Prospectus shall have been timely filed with the Commission in accordance with
Section 5(a)(i); no stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus or any Issuer
Free Writing Prospectus shall have been issued and no proceeding or examination
for such purpose shall have been initiated or threatened by the Commission;
and
any request of the Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise shall have been complied
with.
(b) No
Underwriter shall have discovered and disclosed to the Company on or prior
to
the Delivery Date that the Registration Statement, the Prospectus or the Pricing
Disclosure Package, or any amendment or supplement thereto, contains an untrue
statement of a fact which, in the reasonable opinion of Xxxxxxxx & Xxxxxxxx
LLP, counsel for the Underwriters, is material or omits to state a fact which,
in the reasonable opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not misleading,
other than the information furnished to the Company through the Representative
as set forth in Section 8(e).
(c) All
corporate proceedings and other legal matters incident to the authorization,
form and validity of this Agreement, the Stock, the Registration Statement,
the
Prospectus and any Issuer Free Writing Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.
(d) Xxxxxx
Godward Kronish LLP shall have furnished to the Representative its written
opinion, as counsel to the Company, addressed to the Underwriters and dated
the
Delivery Date, in form and substance agreed to as of the date of this Agreement.
(e) The
Representative shall have received from Xxxxxxxx & Xxxxxxxx LLP, counsel for
the Underwriters, such opinion or opinions, dated the Delivery Date, with
respect to the issuance and sale of the Stock, the Registration Statement,
the
Prospectus and the Pricing Disclosure Package and other related matters as
the
Representative may reasonably require, and the Company shall have furnished
to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(f) At
the
time of execution of this Agreement, the Representative shall have received
from
Ernst & Young LLP a letter, in form and substance satisfactory to the
Representative, addressed to the Underwriters and dated the date hereof (i)
confirming that they are independent public accountants within the meaning
of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation
S-X of the Commission, and (ii) stating, as of the date hereof (or, with respect
to matters involving changes or developments since the respective dates as
of
which specified financial information is given in the Pricing Disclosure
Package, as of a date not more than three days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants’ “comfort letters” to
underwriters in connection with registered public offerings.
(g) With
respect to the letter of Ernst & Young LLP referred to in the preceding
paragraph and delivered to the Representative concurrently with the execution
of
this Agreement (the “initial
letter”),
the
Company shall have furnished to the Representative a letter (the “bring-down
letter”)
of
such accountants, addressed to the Underwriters and dated such Delivery Date
(i) confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date of the
bring-down letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than three days prior to the date
of
the bring-down letter), the conclusions and findings of such firm with respect
to the financial information and other matters covered by the initial letter
and
(iii) confirming in all material respects the conclusions and findings set
forth in the initial letter.
(h) The
Company shall have furnished to the Representative a certificate, dated such
Delivery Date, of its Chief Executive Officer and its Chief Financial Officer
stating that:
(i) The
representations and warranties of the Company in Section 1
are true and correct on and as of the Delivery Date, and the Company has
complied with all its agreements contained herein and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior to
the
Delivery Date;
(ii) No
stop
order suspending the effectiveness of the Registration Statement has been
issued; and no proceedings or examination for that purpose have been instituted
or, to the knowledge of such officers, threatened; and
(iii) They
have
carefully examined the Registration Statement, the Prospectus and the Pricing
Disclosure Package, and, in their opinion, (A) (1) the Registration Statement,
as of the Effective Date, (2) the Prospectus, as of its date and on the
applicable Delivery Date, or (3) the Pricing Disclosure Package, as of the
Applicable Time, did not and do not contain any untrue statement of a material
fact and did not and do not omit to state a material fact required to be stated
therein or necessary to make the statements therein (except in the case of
the
Registration Statement, in the light of the circumstances under which they
were
made) not misleading, and (B) since the Effective Date, no event has occurred
that should have been set forth in a supplement or amendment to the Registration
Statement, the Prospectus or any Issuer Free Writing Prospectus that has not
been so set forth.
(i) (i)
Neither the Company nor any of its subsidiaries shall have sustained, since
the
date of the latest audited financial statements included or incorporated by
reference in the Pricing Disclosure Package, any loss or interference with
its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree or (ii) since such date there shall not have been any change in the
capital stock (other than stock option exercises and stock repurchases in the
ordinary course of business) or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change,
in or affecting the condition (financial or otherwise), results of operations,
stockholders’ equity, properties, management, business or prospects of the
Company and its subsidiaries taken as a whole, the effect of which, in any
such
case described in clause (i) or (ii), is, in the judgment of the Representative,
so material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(j) Subsequent
to the execution and delivery of this Agreement (i) no downgrading shall have
occurred in the rating accorded the Company’s debt securities or preferred stock
by any “nationally recognized statistical rating organization” (as that term is
defined by the Commission for purposes of Rule 436(g)(2) of the Rules and
Regulations), and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications, its
rating of any of the Company’s debt securities or preferred stock.
(k) Subsequent
to the execution and delivery of this Agreement there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock
Exchange, the NASDAQ Global Market or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or
materially limited or the settlement of such trading generally shall have been
materially disrupted or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by federal or state authorities, (iii)
the
United States shall have become engaged in hostilities, there shall have been
an
escalation in hostilities involving the United States or there shall have been
a
declaration of a national emergency or war by the United States or (iv) there
shall have occurred such a material adverse change in general economic,
political or financial conditions, including, without limitation, as a result
of
terrorist activities after the date hereof (or the effect of international
conditions on the financial markets in the United States shall be such), as
to
make it, in the judgment of the Representative, impracticable or inadvisable
to
proceed with the public offering or delivery of the Stock being delivered on
such Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(l) The
Company will use its best efforts to ensure that the Stock is included on The
NASDAQ Global Market at the time of the Closing.
(m) The
Lock-Up Agreements between the Representative and the officers, directors and
stockholders of the Company set forth on Schedule
2,
delivered to the Representative on or before the date of this Agreement, shall
be in full force and effect on such Delivery Date.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Underwriters.
8. Indemnification
and Contribution.
(a) The
Company shall indemnify and hold harmless each Underwriter, its directors,
officers and employees and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability
or
action relating to purchases and sales of Stock), to which that Underwriter,
director, officer, employee or controlling person may become subject, under
the
Securities Act or otherwise, insofar as such loss, claim, damage, liability
or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in (A) the Preliminary Prospectus,
the Registration Statement, the Prospectus or in any amendment or supplement
thereto, (B) any Issuer Free Writing Prospectus or in any amendment or
supplement thereto or, (C) any Permitted Issuer Information used or referred
to
in any “free writing prospectus” (as defined in Rule 405) used or referred to by
any Underwriter, or (D) any “road show” (as defined in Rule 433) not
constituting an Issuer Free Writing Prospectus (a “Non-Prospectus
Road Show”),
or
(ii) the omission or alleged omission to state in the Preliminary Prospectus,
the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus
or in any amendment or supplement thereto or in any Permitted Issuer Information
or any Non-Prospectus Road Show, any material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall reimburse
each Underwriter and each such director, officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by
that
Underwriter, director, officer, employee or controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however,
that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged omission
made in the Preliminary Prospectus, the Registration Statement, the Prospectus,
any Issuer Free Writing Prospectus or in any such amendment or supplement
thereto or in any Permitted Issuer Information or any Non-Prospectus Road Show,
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representative by or on behalf
of any Underwriter specifically for inclusion therein, which information
consists solely of the information specified in Section 8(e). The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any Underwriter or to any director, officer, employee or
controlling person of that Underwriter.
(b) Each
Underwriter, severally and not jointly, shall indemnify and hold harmless the
Company, its directors, officers and employees, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or
any
action in respect thereof, to which the Company or any such director, officer,
employee or controlling person may become subject, under the Securities Act
or
otherwise, insofar as such loss, claim, damage, liability or action arises
out
of, or is based upon, (i) any untrue statement or alleged untrue statement
of a
material fact contained in the Preliminary Prospectus, the Registration
Statement, the Prospectus, any Issuer Free Writing Prospectus or in any
amendment or supplement thereto or in any Non-Prospectus Road Show, or (ii)
the
omission or alleged omission to state in the Preliminary Prospectus, the
Registration Statement, the Prospectus, any Issuer Free Writing Prospectus
or in
any amendment or supplement thereto or in any Non-Prospectus Road Show, any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representative by or on behalf
of that Underwriter specifically for inclusion therein, which information is
limited to the information set forth in Section 8(e), and shall reimburse the
Company, and any such director, officer, employee or controlling person for
any
legal or other expenses reasonably incurred by the Company, or any such
director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability that any Underwriter may
otherwise have to the Company or any such director, officer, employee or
controlling person of the Company.
(c) Promptly
after receipt by an indemnified party under this Section 8 of notice of any
claim or the commencement of any action, the indemnified party shall, if a
claim
in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the claim or the
commencement of that action; provided,
however,
that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided,
further,
that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
provided,
however,
that
the indemnified party shall have the right to employ counsel to represent
jointly the indemnified party and those other indemnified parties and their
respective directors, officers, employees and controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity
may
be sought under this Section 8 if (i) the indemnified party and the indemnifying
party shall have so mutually agreed; (ii) the indemnifying party has failed
within a reasonable time to retain counsel reasonably satisfactory to the
indemnified party; (iii) the indemnified party and its directors, officers,
employees and controlling persons shall have reasonably concluded that there
may
be legal defenses available to them that are different from or in addition
to
those available to the indemnifying party; or (iv) the named parties in any
such
proceeding (including any impleaded parties) include both the indemnified
parties or their respective directors, officers, employees or controlling
persons, on the one hand, and the indemnifying party, on the other hand, and
represen-tation of both sets of parties by the same counsel would be
inappropriate due to actual or potential differing interests between them,
and
in any such event the fees and expenses of such separate counsel shall be paid
by the indemnifying party. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding and does not include
any
findings of fact or admissions of fault or culpability as to the indemnified
party, or (ii) be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably withheld), but
if
settled with the consent of the indemnifying party or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees
to
indemnify and hold harmless any indemnified party from and against any loss
or
liability by reason of such settlement or judgment.
(d) If
the
indemnification provided for in this Section 8 shall for any reason be
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or 8(b) in respect of any loss, claim, damage or liability, or
any
action in respect thereof, referred to therein, then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Company,
on the one hand, and the Underwriters, on the other, from the offering of the
Stock or (ii) if the allocation provided by clause (i) above is not permitted
by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of
the Company, on the one hand, and the Underwriters, on the other, with respect
to the statements or omissions that resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other, with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Stock purchased under this Agreement (before deducting expenses) received
by the Company, as set forth in the table on the cover page of the Prospectus,
on the one hand, and the total underwriting discounts and commissions received
by the Underwriters with respect to the shares of the Stock purchased under
this
Agreement, as set forth in the table on the cover page of the Prospectus, on
the
other hand. The 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 the Underwriters, 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 the Underwriters agree that it would not be just
and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity
for
such purpose) or by any other method of allocation that 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, damage or
liability, or action in respect thereof, referred to above in this Section
8(d)
shall be deemed to include, for purposes of this Section 8(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 8(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the net proceeds from the sale
of
the Stock underwritten by it exceeds the amount of any damages that such
Underwriter has otherwise paid or become liable to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters’ obligations to
contribute as provided in this Section 8(d) are several in proportion to their
respective underwriting obligations and not joint.
(e) The
Underwriters severally confirm and the Company acknowledges and agrees that
(i)
the statements regarding delivery of shares by the Underwriters set forth on
the
cover page of, (ii) the concession and reallowance figures appearing under
the
caption “Commissions and Expenses in the “Underwriting” section in, and (iii)
disclosure appearing under the captions “Stabilization, Short Positions and
Penalty Bids,” “Passive Market Making,” “Electronic Distribution,” in the
“Underwriting” section in, the Pricing Disclosure Package and the Prospectus are
correct and constitute the only information concerning such Underwriters
furnished in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Pricing Disclosure Package, the Registration
Statement, the Prospectus, any Issuer Free Writing Prospectus or in any
amendment or supplement thereto or in any Non-Prospectus Road Show.
9. Defaulting
Underwriters.
If, on
any Delivery Date, any Underwriter defaults in the performance of its
obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the Stock that the defaulting Underwriter agreed
but failed to purchase on the Delivery Date in the respective proportions which
the number of shares of the Stock set forth opposite the name of each remaining
non-defaulting Underwriter in Schedule
1
hereto
bears to the total number of shares of the Stock set forth opposite the names
of
all the remaining non-defaulting Underwriters in Schedule
1
hereto;
provided,
however,
that
the remaining non-defaulting Underwriters shall not be obligated to purchase
any
of the Stock on the Delivery Date if the total number of shares of the Stock
that the defaulting Underwriter or Underwriters agreed but failed to purchase
on
such date exceeds 9.09% of the total number of shares of the Stock to be
purchased on the Delivery Date, and any remaining non-defaulting Underwriter
shall not be obligated to purchase more than 110% of the number of shares of
the
Stock that it agreed to purchase on the Delivery Date pursuant to the terms
of
Section 2. If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representative
who
so agree, shall have the right, but shall not be obligated, to purchase, in
such
proportion as may be agreed upon among them, all the Stock to be purchased
on
such Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representative do not elect to purchase the shares that
the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement shall terminate without liability on the part
of
any non-defaulting Underwriter or the Company, except that the Company will
continue to be liable to the non-defaulting Underwriters for the payment of
expenses to the extent set forth in Sections 6 and 11. As used in this
Agreement, the term “Underwriter” includes, for all purposes of this Agreement
unless the context requires otherwise, any party not listed in Schedule
1
hereto
that, pursuant to this Section 9, purchases Stock that a defaulting Underwriter
agreed but failed to purchase.
Nothing
contained herein shall relieve a defaulting Underwriter of any liability it
may
have to the Company for damages caused by its default. If other Underwriters
are
obligated or agree to purchase the Stock of a defaulting or withdrawing
Underwriter, either the Representative or the Company may postpone the Delivery
Date for up to seven full business days in order to effect any changes that
in
the opinion of counsel for the Company or counsel for the Underwriters may
be
necessary in the Registration Statement, the Prospectus or in any other document
or arrangement.
10. Termination.
The
obligations of the Underwriters hereunder may be terminated by the
Representative by notice given to and received by the Company prior to delivery
of and payment for the Stock if, prior to that time, any of the events described
in Sections 7(i), 7(j) and 7(k) shall have occurred or if the Underwriters
shall
decline to purchase the Stock for any reason permitted under this
Agreement.
11. Reimbursement
of Underwriters’ Expenses.
If (a)
the Company shall fail to tender the Stock for delivery to the Underwriters
by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed or because any other condition
of the Underwriters’ obligations hereunder required to be fulfilled by the
Company is not fulfilled or (b) the Underwriters shall decline to purchase
the
Stock for any reason permitted under this Agreement, the Company will reimburse
the Underwriters for all reasonable out-of-pocket expenses (including fees
and
disbursements of counsel) incurred by the Underwriters in connection with this
Agreement and the proposed purchase of the Stock, and upon demand the Company
shall pay the full amount thereof to the Representative, subject to the
limitations set forth in Section 6. Notwithstanding anything to the contrary
herein, if this Agreement is terminated pursuant to Section 9 by reason of
the
default of one or more Underwriters, the Company shall not be obligated to
reimburse any defaulting Underwriter on account of those expenses.
12. Research
Analyst Independence. The
Company acknowledges that the Underwriters’ research analysts and research
departments are required to be independent from their respective investment
banking divisions and are subject to certain regulations and internal policies,
and that such Underwriters’ research analysts may hold views and make statements
or investment recommendations and/or publish research reports with respect
to
the Company and/or the offering that differ from the views of their respective
investment banking divisions. The Company hereby waives and releases, to the
fullest extent permitted by law, any claims that the Company may have against
the Underwriters with respect to any conflict of interest that may arise from
the fact that the views expressed by their independent research analysts and
research departments may be different from or inconsistent with the views or
advice communicated to the Company by such Underwriters’ investment banking
divisions. The Company acknowledges that each of the Underwriters is a full
service securities firm and as such from time to time, subject to applicable
securities laws, may effect transactions for its own account or the account
of
its customers and hold long or short positions in debt or equity securities
of
the companies that may be the subject of the transactions contemplated by this
Agreement.
13. No
Fiduciary Duty.
The
Company acknowledges and agrees that in connection with this offering, sale
of
the Stock or any other services the Underwriters may be deemed to be providing
hereunder, notwithstanding any preexisting relationship,
advisory or otherwise,
between
the parties or any oral representations or assurances previously or subsequently
made by the Underwriters:
(i) no
fiduciary or agency relationship between the Company and any other person,
on
the one hand, and the Underwriters, on the other, exists;
(ii) the
Underwriters are not acting as advisors, expert or otherwise, to the
Company,
including, without limitation, with respect to the determination of the public
offering price of the Stock,
and such relationship between the Company, on the one hand, and the
Underwriters, on the other, is entirely and solely commercial,
based
on arms-length negotiations; (iii)
any
duties and obligations that the Underwriters may have to the Company shall
be
limited to those duties and obligations specifically stated herein;
and
(iv) the
Underwriters and their respective affiliates may have interests that differ
from
those of the Company.
The
Company hereby waives any claims that the Company may have against the
Underwriters with respect to any breach of fiduciary duty in connection with
this offering.
14. Notices,
Etc.
All
statements, requests, notices and agreements hereunder shall be in writing,
and:
(a) if
to the
Underwriters, shall be delivered or sent by mail or facsimile transmission
to
Xxxxxx Brothers Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Syndicate Registration (Fax: 000-000-0000), with a copy, in the case of any
notice pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Xxxxxx Brothers Inc., 000 Xxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (Fax: 000-000-0000); and
(b) if
to the
Company, shall be delivered or sent by mail or facsimile transmission to the
address of the Company set forth in the Registration Statement, Attention:
General Counsel (Fax: (000)
000-0000).
Any
such
statements, requests, notices or agreements shall take effect at the time of
receipt thereof. The Company shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
Xxxxxx Brothers Inc.
15. Persons
Entitled to Benefit of Agreement.
This
Agreement shall inure to the benefit of and be binding upon the Underwriters,
the Company, and their respective successors. This Agreement and the terms
and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
directors, officers and employees of the Underwriters and each person or
persons, if any, who control any Underwriter within the meaning of
Section 15 of the Securities Act and (B) the indemnity agreement of the
Underwriters contained in Section 8(b) of this Agreement shall be deemed to
be
for the benefit of the directors of the Company, the officers of the Company
who
have signed the Registration Statement and any person controlling the Company
within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than
the
persons referred to in this Section 15, any legal or equitable right, remedy
or
claim under or in respect of this Agreement or any provision contained
herein.
16. Survival.
The
respective indemnities, representations, warranties and agreements of the
Company and the Underwriters contained in this Agreement or made by or on behalf
of them, respectively, pursuant to this Agreement, shall survive the delivery
of
and payment for the Stock and shall remain in full force and effect, regardless
of any investigation made by or on behalf of any of them or any person
controlling any of them.
17. Definition
of the Terms “Business Day” and “Subsidiary”.
For
purposes of this Agreement, (a) “business
day”
means
each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which
banking institutions in New York are generally authorized or obligated by law
or
executive order to close and (b) “subsidiary”
has
the
meaning set forth in Rule 405.
18. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York.
19. Counterparts.
This
Agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be
an
original but all such counterparts shall together constitute one and the same
instrument.
20. Headings.
The
headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
If
the
foregoing correctly sets forth the agreement between the Company and the
Underwriters, please indicate your acceptance in the space provided for that
purpose below.
Very
truly yours,
Sunesis
Pharmaceuticals, Inc.
By:
/s/
Xxxx X.
Xxxxxxxxx
Name:
Xxxx X. Xxxxxxxxx
Title:
Senior Vice President, Corporate Development and Finance, Chief Financial
Officer
|
Accepted:
Xxxxxx
Brothers Inc.
For
itself and as Representative
of
the
several Underwriters named
in
Schedule 1 hereto
By:
/s/
Xxxx
Xxxxxxxxxx
Authorized
Representative
SCHEDULE
1
Underwriters
|
Number
of Shares of Stock
|
|||
Xxxxxx
Brothers Inc.
|
3,182,500
|
|||
Xxxxx
and Company, LLC
|
950,000
|
|||
X.X.
Xxxxxxxxx, Towbin, LLC
|
617,500
|
|||
Total
|
4,750,000
|
SCHEDULE
2
PERSONS
DELIVERING LOCK-UP AGREEMENTS
Directors
Xxxxx
X.
Xxxxx, Ph.D.*
Xxxxxx
X.
Xxxxxxx, Xx.
Xxxxxxx
X. Xxxxx, Ph.X.
Xxxxxxx
P.A. Xxxxx, Ph.D.
Xxxxxxx
X. Xxxx
Xxxxxx
X.
Xxxxxx
Xxxxxxxx
X. Xxxx
Xxxxx
X.
Xxxxxx, Ph.D.
Xxxxx
X.
Xxxxx, M.D.
Xxxxx
X.
Xxxxx, Ph.D.*
Officers/Key
Employees
Xxxx
X.
Xxxxxxxxx
Xxxxxx
X.
Xxxxxxx, M.D.*
Xxxxxxx
Xxxxxx, X.X.
Stockholders
Biogen
Idec MA, Inc.
Venrock
Associates
Venrock
Associates II, L.P.
Venrock
Entrepreneur’s Fund, X.X.
Xxxxxxx,
Xxxxxx Equity Partners, X.X.
Xxxxxxx,
Xxxxxx Netherlands Equity Partners I, X.X.
Xxxxxxx,
Xxxxxx Netherlands Equity Partners III, C.V.
*Subject
to certain carve-outs for 10b-5(1) plans.
SCHEDULE
3
ORALLY
CONVEYED PRICING INFORMATION
1.
Public
offering price: $4.43
2.
Number
of shares offered: 4,750,000
3.
Estimate net proceeds to the Company: $19,437,663
4.
Cash
and cash equivalents and marketable securities as of March 31, 2007 on an
as-adjusted basis to give effect to the sale of 4,750,000 shares of common
stock
in this offering: $72,560,656
5.
Dilution per share to new investors: $2.45
EXHIBIT
A
FORM
OF
LOCK-UP LETTER AGREEMENT
Xxxxxx
Brothers Inc.
As
Representative of the several
Underwriters
named in Schedule 1,
c/x
Xxxxxx Brothers Inc.
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Ladies
and Gentlemen:
The
undersigned understands that you and certain other firms (the “Underwriters”)
propose to enter into an Underwriting Agreement (the “Underwriting
Agreement”)
providing for the purchase by the Underwriters of shares (the “Stock”)
of
Common Stock, par value $0.0001 per share (the “Common
Stock”),
of
Sunesis Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
and
that the Underwriters propose to reoffer the Stock to the public (the
“Offering”).
In
consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Xxxxxx
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
shares of Common Stock (including, without limitation, shares of Common Stock
that may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange Commission and
shares of Common Stock that may be issued upon exercise of any options or
warrants) or securities convertible into or exercisable or exchangeable for
Common Stock, (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or
risks
of ownership of shares of Common Stock, whether any such transaction described
in clause (1) or (2) above is to be settled by delivery of Common Stock or
other
securities, in cash or otherwise, (3)
make
any demand for or exercise any right or cause to be filed a registration
statement, including any amendments thereto, with respect to the registration
of
any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock or any other securities of the Company or (4)
publicly disclose the intention to do any of the foregoing, for a period
commencing on the date hereof and ending on the 90th day after the date of
the
Prospectus relating to the Offering (such 90-day period, the “Lock-Up
Period”).
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, then the restrictions imposed
by this Lock-Up Letter Agreement shall continue to apply until the expiration
of
the 18-day period beginning on the issuance of the earnings release or the
announcement of the material news or the occurrence of the material event,
unless Xxxxxx Brothers Inc. waives such extension in writing. The undersigned
hereby further agrees that, prior to engaging in any transaction or taking
any
other action that is subject to the terms of this Lock-Up Letter Agreement
during the period from the date of this Lock-Up Letter Agreement to and
including the 34th
day
following the expiration of the Lock-Up Period, it will give notice thereof
to
the Company and will not consummate such transaction or take any such action
unless it has received written confirmation from the Company that the Lock-Up
Period (as such may have been extended pursuant to this paragraph) has
expired.
The
foregoing paragraph shall not apply to (1) transfers of Common Stock or
securities convertible into or exchangeable or exercisable for any shares of
Common Stock made as a bona
fide
gift or
gifts, provided that the donee or donees thereof agree in writing to be bound
by
the terms of this Lock-Up Letter Agreement prior to such transfer,
(2) transfers of Common Stock or securities convertible into or
exchangeable or exercisable for any shares of Common Stock to an immediate
family member of the undersigned or to any trust for the direct or indirect
benefit of the undersigned or an immediate family member of the undersigned,
provided that the transferee agrees in writing to be bound by the terms of
this
Lock-Up Letter Agreement prior to such transfer and (3) distributions to
partners, members, shareholders or affiliates of the undersigned, provided
that
the undersigned is a limited partnership, limited liability company or
corporation and the distributees thereof agree in writing to be bound by the
terms of this Lock-Up Letter Agreement prior to such distribution.
In
furtherance of the foregoing, the Company and its transfer agent are hereby
authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this Lock-Up Letter Agreement.
It
is
understood that, if the Company notifies the Underwriters that it does not
intend to proceed with the Offering, 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 Stock, the undersigned will be released from
its
obligations under this Lock-Up Letter Agreement.
The
undersigned understands that the Company and the Underwriters will proceed
with
the Offering in reliance on this Lock-Up Letter Agreement.
Whether
or not the Offering actually occurs depends on a number of factors, including
market conditions. Any Offering will only be made pursuant to an Underwriting
Agreement, the terms of which are subject to negotiation between the Company
and
the Underwriters.
2
[Signature
page follows]
3
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Letter Agreement and that, upon
request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned
shall
be binding upon the heirs, personal representatives, successors and assigns
of
the undersigned.
Very
truly yours,
By:______________________________
Name:
Title:
|
Dated:
_______________
4