_________ SHARES OF COMMON STOCK
3 - DIMENSIONAL PHARMACEUTICALS, INC.
UNDERWRITING AGREEMENT
----------------------
______, 2000
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
CHASE SECURITIES INC.
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
3-Dimensional Pharmaceuticals, Inc., a corporation organized and existing
under the laws of Delaware (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of _________ shares (the
"Firm Shares") of its common stock, par value $0.001 per share (the "Common
Stock"), and, for the sole purpose of covering over-allotments in connection
with the sale of the Firm Shares, at the option of the Underwriters, up to an
additional _______ shares (the "Additional Shares") of Common Stock. The Firm
Shares and any Additional Shares purchased by the Underwriters are referred to
herein as the "Shares." The Shares are more fully described in the Registration
Statement referred to below.
1. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended (the "Act"), and the rules and regulations of the Commission
thereunder (the "Regulations") a registration statement, and may have filed an
amendment or amendments thereto, on Form S-1 (No. 333-37606), for the
registration of the Shares under the Act. Such registration statement, including
the prospectus, financial statements and schedules, exhibits and all other
documents filed as a part thereof, as amended at the time of effectiveness of
the registration statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A
or Rule 434 of the Regulations, is herein called the "Registration
Statement" and the prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations or filed as part of the Registration
Statement at the time of effectiveness if no Rule 424(b) or Rule 434 filing is
required, is herein called the "Prospectus". Any registration statement filed
pursuant to Rule 462(b) of the Regulations is herein called the "Rule 462(b)
Registration Statement", and after such filing any reference herein to the term
"Registration Statement" shall include such Rule 462(b) Registration Statement.
The term "preliminary prospectus" as used herein means a preliminary prospectus
as described in Rule 430 of the Regulations. All of the Shares have been duly
registered under the Act pursuant to the Registration Statement or, if any Rule
462(b) Registration Statement is filed, have been or will be duly registered
under the Act with the filing of such Rule 462(b) Registration Statement.
Neither the Commission nor the Blue Sky or securities authority of any
jurisdiction has issued a stop order suspending the effectiveness of the
Registration Statement, preventing or suspending the use of any preliminary
prospectus, the Prospectus, the Registration Statement or any amendment or
supplement thereto, refusing to permit the effectiveness of the Registration
Statement or suspending the registration or qualification of the Shares, nor, to
the Company's knowledge, has any of such authorities instituted or threatened to
institute any proceedings with respect to a stop order.
(b) At the time of the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement or the effectiveness of any post-effective
amendment to the Registration Statement, when the Prospectus is first filed with
the Commission pursuant to Rule 424(b) or Rule 434 of the Regulations, when any
supplement to or amendment of the Prospectus is filed with the Commission and at
the Closing Date and the Additional Closing Date, if any (as hereinafter
respectively defined), the Registration Statement and the Prospectus and any
amendments thereof and supplements thereto (including any prospectus wrapper)
complied or will comply in all material respects with the applicable provisions
of the Act and the Regulations and does not or will not contain an untrue
statement of a material fact and does not or will not omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein (i) in the case of the Registration Statement, not misleading and (ii)
in the case of the Prospectus, in light of the circumstances under which they
were made, not misleading, and the Prospectus, any preliminary prospectus and
any supplement thereto or prospectus wrapper prepared in connection therewith,
at their respective times of issuance and at the Closing Date, complied and will
comply in all material respects with any applicable laws or regulations of
foreign jurisdictions in which the Prospectus and such preliminary prospectus,
as amended or supplemented, if applicable, are distributed in connection with
the offer and sale of the Directed Shares (as hereinafter defined). When any
related preliminary prospectus was first filed with the Commission (whether
filed as part of the registration statement for the registration of the Shares
or any amendment thereto or pursuant to Rule 424(a) of the Regulations) and when
any amendment thereof or supplement thereto was first filed with the Commission,
such preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the Act and
the Regulations and did not contain an untrue statement of a material fact and
did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. No representation and warranty is
made in this subsection (b), however, with respect to any information contained
in or omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information
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furnished in writing to the Company by or on behalf of any Underwriter through
you as herein stated expressly for use in connection with the preparation
thereof. If Rule 434 is used, the Company will comply with the requirements of
Rule 434.
(c) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, who have certified the financial statements
and supporting schedules included in the Registration Statement, are independent
public accountants as required by the Act and the Regulations.
(d) The Company does not have any subsidiaries other than those listed on
Schedule II and does not own or control, directly or indirectly, any interest in
any other corporation, association or other business entity. All the issued and
outstanding capital stock of each subsidiary of the Company have been duly and
validly issued and are fully paid and nonassessable and were not issued in
violation of preemptive rights (unless such rights have been duly waived by the
holders of such rights), and are owned directly or indirectly by the Company,
free and clear of any lien, encumbrance, claim, security interest, restriction
on transfer, shareholders' agreement, voting trust or other defect of title
whatsoever.
(e) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as set forth in the
Registration Statement and the Prospectus, there has been no material adverse
change in the business, prospects, properties, operations, condition (financial
or other) or results of operations of the Company and its subsidiaries, taken as
a whole ("Material Adverse Change"), whether or not arising from transactions in
the ordinary course of business, and since the date of the latest balance sheet
presented in the Registration Statement and the Prospectus, neither the Company
nor any of its subsidiaries has incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company and its
subsidiaries, taken as a whole, except for liabilities or obligations which are
reflected in the Registration Statement and the Prospectus.
(f) This Agreement and the transactions contemplated herein have been duly
and validly authorized by the Company, and this Agreement has been duly and
validly executed and delivered by the Company and is enforceable against the
Company in accordance with its terms, except as rights to indemnity and
contribution may be limited by federal or state securities laws relating thereto
and except as (i) may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights and
remedies generally and (ii) enforcement is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or law).
(g) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any contract, agreement, instrument,
understanding, franchise, license or permit to which the Company or any of its
subsidiaries is a party or by which any of such companies or any of their
respective properties or assets may be bound or (ii) violate or conflict with
any provision of the certificate of incorporation or the by-laws of the Company
or any of its subsidiaries or any judgment, decree, order, statute, rule or
regulation of any court or
3
any public, governmental or regulatory agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective properties or
assets. No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their respective properties or assets is
required for the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, including the issuance,
sale and delivery of the Shares to be issued, sold and delivered by the Company
hereunder, except the registration under the Act of the Shares and such
consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities
or Blue Sky laws or foreign equivalents of such regulations or statutes, where
applicable, in connection with the purchase and distribution of the Shares by
the Underwriters.
(h) Upon the sale of the Firm Shares on the Closing Date, the only shares
of capital stock of the Company issued and outstanding (other than the Shares)
will be ________ shares of Common Stock. All of the issued and outstanding
shares of capital stock of the Company are duly and validly authorized and
issued, fully paid and nonassessable, and none of such shares was issued in
violation of or is subject to any preemptive or similar rights. The Shares have
been duly and validly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when delivered by the Company in accordance with
this Agreement, will be duly and validly issued and outstanding, fully paid and
nonassessable and will not have been issued in violation of or be subject to any
preemptive or similar rights. The Company had, at ________, 2000, an authorized
and outstanding capitalization as set forth in the Registration Statement and
the Prospectus. The authorized capital stock of the Company, including the Firm
Shares and the Additional Shares, conforms in all material respects to the
description thereof contained in the Registration Statement and the Prospectus.
Except as disclosed in the Registration Statement and the Prospectus, there are
no outstanding options, warrants or other rights calling for the issuance of,
and no commitments, obligations, plans or arrangements to issue, any shares of
capital stock of the Company or any security convertible into or exchangeable
for capital stock of the Company. The outstanding stock options and warrants
relating to the Common Stock have been duly authorized and validly issued and
conform in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(i) Each of the Company and its subsidiaries has been duly organized and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. Each of the Company and its subsidiaries is duly
qualified to transact business and is in good standing as a foreign corporation
in each jurisdiction in which the character and location of its properties
(owned, leased or licensed) or nature or conduct of its business makes such
qualification necessary, except where the failure to so qualify would not have a
material adverse effect (considered individually or when aggregated with other
such instances) on the business, prospects, properties, operations, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"). Each of the
Company and its subsidiaries has all requisite power and authority and all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits (collectively, "Governmental Licenses") of
and from all public, regulatory or governmental agencies and bodies, to own,
lease and operate its respective properties and conduct its business as now
being
4
conducted and as described in the Registration Statement and the Prospectus, and
each such Governmental License is valid and in full force and effect. No such
Governmental License contains a materially burdensome restriction not adequately
disclosed in the Registration Statement and the Prospectus, and neither the
Company nor any of its subsidiaries, as applicable, has received any notice of
proceedings to the revocation of any such Governmental Licenses. Each of the
Company and its subsidiaries is in compliance with all applicable laws, orders,
rules, regulations, ordinances and directives, except where the failure to be in
compliance could not have a Material Adverse Effect.
(j) Each of the Company and its subsidiaries is not in violation of any
provision of its certificate of incorporation or of its by-laws or in breach of,
or in default under (nor has any event occurred that with notice, lapse of time,
or both, would constitute a breach of, or default under), except where such
breach or default would not have a Material Adverse Effect, any provision of any
agreement, instrument, franchise, lease, license or permit to which the Company
or any of its subsidiaries is a party or by which any of their respective
properties or assets may be bound or affected or any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets.
(k) There is no litigation, arbitration, proceeding, investigation or claim
to which the Company or any of its subsidiaries is a party or to which any
property or assets of the Company or any of its subsidiaries are subject which
is pending or, to the knowledge of the Company, threatened or contemplated
against the Company or any of its subsidiaries which (in the case of any pending
such matter) might result in or (in the case of any threatened or contemplated
such matter) could reasonably be expected might result in any Material Adverse
Effect or any development involving a Material Adverse Effect or which is
required to be disclosed in the Registration Statement and the Prospectus.
(l) Neither the Company nor any of its directors, officers or affiliates
(as defined in the Regulations) has taken or will take, directly or indirectly,
any action designed to cause or result in, or which constitutes or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Shares or a violation of Regulation M under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
(m) The financial statements, including the notes thereto, and supporting
schedules included in the Registration Statement and the Prospectus present
fairly the financial position of the Company as of the dates indicated and the
results of its operations for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis; and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein; and the selected financial data and the summary financial information
included in the Registration Statement and the Prospectus present fairly the
information shown therein and have been compiled on a basis consistent with that
of the financial statements included in the Registration Statement and the
Prospectus. No other financial statements are required by Form S-1 or otherwise
to be included in the Registration Statement of the Prospectus other than those
included therein.
5
(n) Except as described in the Registration Statement and the Prospectus
and except for rights that have been effectively waived in writing (complete and
accurate copies of which have been made available to the Underwriters prior to
the date of this Agreement), which waivers are in full force and effect, no
holder of securities of the Company has any rights to cause the Company to issue
to it, or register pursuant to the Act, any securities of the Company because of
the filing of the Registration Statement or otherwise, in connection with the
sale of the Shares contemplated hereby or otherwise. No holder of securities of
the Company has preemptive rights or other rights to purchase any of the Shares.
(o) The Company is not, and upon consummation of the transactions
contemplated hereby and the application of the proceeds therefrom as described
in the Prospectus will not be, an "investment company" or a person "controlled"
by an "investment company" under the Investment Company Act of 1940.
(p) The Common Stock of the Company, including the Shares, have been
approved for quotation on the National Association of Securities Dealers
Automated Quotation National Market System.
(q) The Company owns or possesses valid and enforceable licenses or other
rights to use all inventions, patents, patent applications, trademarks, service
marks, trade names, copyrights, technology, software, databases, Internet domain
names, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
proprietary techniques (including processes and substances) and other
intellectual property rights used in, or necessary to conduct, the business now
conducted by the Company and its subsidiaries, as described in the Registration
Statement and the Prospectus (collectively, "Intellectual Property") free and
clear of all liens, claims and encumbrances, except where the failure to own or
possess such rights would not reasonably be expected to have a Material Adverse
Effect; other than as described in the Registration Statement and the Prospectus
or as would not reasonably be expected to have a Material Adverse Effect: (i)
there are no third parties who have any rights in the Intellectual Property that
could preclude the Company or any of its subsidiaries from conducting their
respective business as currently conducted; (ii) there are no pending or
threatened actions, suits, proceedings, investigations or claims by others
challenging the rights of the Company or any of its subsidiaries or (if the
Intellectual Property is licensed) the licensor thereof in any Intellectual
Property owned or licensed to the Company or any of its subsidiaries; (iii)
neither the Company or any of its subsidiaries nor (if the Intellectual Property
is licensed) the licensor thereof has infringed, or received any notice of
infringement of or conflict with, any rights of others with respect to the
Intellectual Property; and (iv) there is no dispute between it and any licensor
with respect to any Intellectual Property. The Company has taken all reasonable
steps to protect, maintain and safeguard the Intellectual Property for which
improper or unauthorized disclosure would impair its value or validity and has
entered into appropriate nondisclosure and confidentiality agreements and made
appropriate filings and registrations in connection with the foregoing. True and
correct copies of all licenses and other agreements between the Company or any
of its subsidiaries and any third party relating to the Intellectual Property,
and all amendments and supplements thereto, have been made available to the
Underwriters.
6
(r) The Company and its subsidiaries have timely filed all federal, state,
local and foreign income and franchise tax returns and reports required to be
filed and have paid all taxes shown thereon and all assessments received by them
to the extent that such taxes have become due and are not being contested in
good faith, and there is no tax deficiency that has been or, to the Company's
knowledge, might be asserted or threatened against the Company or any of its
subsidiaries that might have a Material Adverse Effect; and all tax liabilities
are adequately provided for on the books of the Company.
(s) The Company and its subsidiaries maintain insurance with insurers of
recognized financial responsibility of the types and in the amounts (i)
generally deemed adequate for their businesses and consistent with insurance
coverage maintained by similar companies in similar businesses and (ii) required
under any of the Company's or any of its subsidiaries' agreements, licenses or
other contracts, all of which insurance is in full force and effect; the Company
has no reason to believe that it or any of its subsidiaries will not be able to
renew its existing insurance as and when such coverage expires or to obtain
similar insurance with similar insurers adequate and customary for its business
and sufficient to satisfy any requirements of its contracts at a cost that would
not have a Material Adverse Effect.
(t) Each of the Company and its subsidiaries is in compliance with all
applicable federal, state, local or foreign laws, regulations, rules,
ordinances, orders or directives effective as of the date hereof relating to
pollution or (in connection therewith) protection of human health and safety,
the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), except where such failure to comply with the
Environmental Laws would not have a Material Adverse Effect; to the Company's
knowledge, no material expenditures are or will be required to comply with the
Environmental Laws, and each of the Company and its subsidiaries holds all
permits, licenses and approvals required to conduct its business thereunder and
is in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance or failure to comply with the terms
and conditions of, or failure to receive, such permits, licenses or approvals
will not singly or in the aggregate have a Material Adverse Effect; to the
Company's knowledge, all properties and assets leased or owned by the Company or
its subsidiaries, including, without limitation, all structures, contents, soil,
subsoil and groundwater, do not contain Hazardous Materials that would require
remediation under the Environmental Laws; and to the Company's knowledge,
neither the Company nor any of its subsidiaries has any material liability or
obligation, whether to any governmental authority or to any other person or
entity, for damages, claims, penalties, forfeitures or otherwise, as a
consequence of the generation, transportation or disposal of any Hazardous
Materials or otherwise under the Environmental Laws.
(u) As of the date of this Agreement and except as described in the
Registration Statement and the Prospectus, neither the Company nor any of its
subsidiaries is required to file or obtain any registration, application,
license, request for exemption, permit or other regulatory authorization with
the U.S. Food and Drug Administration (the "FDA") or any
7
other federal, state, local or foreign regulatory body in order to conduct its
business as described in the Registration Statement and Prospectus.
(v) The human clinical trials, animal studies and other preclinical tests
conducted by or on behalf of the Company or any of its subsidiaries that are
described in the Registration Statements and the Prospectus (the "Company
Studies"), have been and will continue to be conducted in accordance with
experimental protocols, procedures and controls generally used by qualified
experts in preclinical or clinical trials; the descriptions of the results of
such Company Studies contained in the Registration Statements and Prospectus are
accurate and constitute a fair summary of such results in all material respects;
and the Company has no knowledge of any other trials, studies or tests, the
results of which reasonably call into question the results described or referred
to in the Registration Statement and Prospectus.
(w) Each of the Company and its subsidiaries has good and marketable title
to all properties (real and personal) owned by the Company or any of its
subsidiaries, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such as do
not, singly or in the aggregate, 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 or any of its subsidiaries; and all properties held
under lease or license by the Company or any of its subsidiaries are held under
valid, existing and enforceable leases or licenses, except where the failure to
do so would not have a Material Adverse Effect.
(x) Each of the Company and its subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general and specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorizations, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(y) No labor dispute with the employees of the Company or any of its
subsidiaries is pending, or, to the Company's knowledge, is imminent; and the
Company is not aware of any existing, threatened or imminent labor disturbance
by the employees of any of its or any of its subsidiaries principal suppliers,
collaborative or strategic partners, manufacturers or contractors that could
result in any Material Adverse Effect.
(z) Each employee benefit plan, within the meaning of Section 3(3) of the
Employee Retirement Income Securities Act of 1974, as amended ("ERISA"), that is
maintained, administered or contributed to by the Company or any of its
affiliates for employees or former employees of the Company and its affiliates
has been maintained in compliance in all material respects with its respective
terms and the requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Internal Revenue Code of
1986, as amended (the "Code"). No prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to
any such plan that could result in a material liability to the Company or any of
its affiliates, excluding transactions effected pursuant to a statutory or
administrative exemption. For each such plan that is subject to the funding
rules
8
of Section 412 of the Code or Section 302 of ERISA, no "accumulated
funding deficiency," as defined in Section 412 of the Code, has been incurred,
whether or not waived, and the fair market value of the assets of each such plan
(excluding for these purposes accrued but unpaid contributions) exceeds the
present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions.
(aa) The Company has reviewed its and its subsidiaries' operations and those
of any third parties with which the Company or any of its subsidiaries has a
material relationship to evaluate the extent to which the business or operations
of the Company and its subsidiaries have been or will be affected by the Year
2000 Problem (as defined herein). As a result of such review, the Company has no
reason to believe, and does not believe, that the Year 2000 Problem will have a
Material Adverse Effect or result in any material loss or interference with the
Company's business or operations or those of any of its subsidiaries. The "Year
2000 Problem" as used herein means any significant risk that computer hardware
or software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in the case
of dates or time periods occurring after December 31, 1999, function at least as
effectively as in the case of dates or time periods occurring prior to January
1, 2000.
(bb) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the
Prospectus.
(cc) The statistical and market-related data included in the Registration
Statement and the Prospectus are derived from sources which the Company
reasonably and in good faith believes to be accurate, reasonable and reliable,
and such data agree with the sources from which they were derived.
(dd) There are no contracts, licenses, agreements or other documents which
are required to be described in the Registration Statement and the Prospectus or
filed as exhibits to the Registration Statement by the Act or by the Regulations
which have not been described in the Registration Statement and the Prospectus
or filed as exhibits to the Registration Statement.
(ee) No relationship, direct or indirect, exists between or among the
Company or any of its affiliates on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand, which is
required to be described in the Registration Statement and the Prospectus that
is not so described.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters and the Underwriters,
severally and not jointly, agree to purchase from the Company, at a purchase
price per share of $_____, the number of Firm Shares set forth
9
opposite the respective names of the Underwriters in Schedule I hereto plus any
additional number of Shares which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates for,
the Firm Shares shall be made at the offices of Coudert Brothers, or at such
other place as shall be agreed upon by you and the Company, at ____ A.M. on the
third or fourth business day (as permitted under Rule 15c6-1 under the Exchange
Act) (unless postponed in accordance with the provisions of Section 9 hereof)
following the date of the effectiveness of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A of the Regulations, the third or
fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
after the determination of the initial public offering price of the Shares), or
such other time not later than ten business days after such date as shall be
agreed upon by you and the Company (such time and date of payment and delivery
being herein called the "Closing Date"). Payment shall be made to the Company by
wire transfer of immediately available funds, against delivery to you for the
respective accounts of the Underwriters of certificates for the Firm Shares to
be purchased by them. Certificates for the Firm Shares shall be registered in
such name or names and in such authorized denominations as you may request in
writing at least two full business days prior to the Closing Date. The Company
will permit you to examine and package such certificates for delivery at least
one full business day prior to the Closing Date. As used herein, the term
"business day" means any day other than a day on which banks are permitted or
required to be closed in New York City.
(c) In addition, the Company hereby grants to the Underwriters the option
to purchase up to _______ Additional Shares at the same purchase price per share
to be paid by the Underwriters to the Company for the Firm Shares as set forth
in this Section 2, for the sole purpose of covering over-allotments in the sale
of Firm Shares by the Underwriters. This option may be exercised at any time, in
whole or in part, on or before the thirtieth day following the date of the
Prospectus, by written notice by you to the Company. Such notice shall set forth
the aggregate number of Additional Shares as to which the option is being
exercised and the date and time, as reasonably determined by you, when the
Additional Shares are to be delivered (such date and time being herein sometimes
referred to as the "Additional Closing Date"); provided, however, that the
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Additional Closing Date shall not be earlier than the Closing Date or earlier
than the second full business day after the date on which the option shall have
been exercised nor later than the eighth full business day after the date on
which the option shall have been exercised (unless such time and date are
postponed in accordance with the provisions of Section 9 hereof). Certificates
for the Additional Shares shall be registered in such name or names and in such
authorized denominations as you may request in writing at least two full
business days prior to the Additional Closing Date. The Company will permit you
to examine and package such certificates for delivery at least one full business
day prior to the Additional Closing Date.
(d) The number of Additional Shares to be sold to each Underwriter shall be
the number which bears the same ratio to the aggregate number of Additional
Shares being purchased as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto (or such number increased as set forth
in Section 9 hereof) bears to the total
10
number of Firm Shares being purchased from the Company, subject, however, to
such adjustments to eliminate any fractional shares as you in your sole
discretion shall make.
(e) Payment of the purchase price for the Additional Shares shall be made
by wire transfer of immediately available funds at the offices of Coudert
Brothers, or such other place as shall be agreed upon by you and the Company,
upon delivery of the certificates for the Additional Shares to you for the
respective accounts of the Underwriters.
3. Offering.
(a) Upon your authorization of the release of the Firm Shares, the
Underwriters propose to offer the Shares for sale to the public upon the terms
set forth in the Prospectus.
(b) The Company and the Underwriters hereby agree that up to five percent
(5%) of the Firm Shares to be purchased by the Underwriters (the "Directed
Shares") shall be reserved for sale by the Underwriters to certain eligible
employees of, and certain persons designated by, the Company (the "Directed
Shares Purchasers") as part of the distribution of the Shares by the
Underwriters, subject to the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. and all other applicable laws, rules and regulations, provided,
--------
however, that under no circumstances will Bear, ▇▇▇▇▇▇▇ & Co. Inc. or any other
-------
Underwriter be liable to the Company or to any of the Directed Shares Purchasers
for any action taken or omitted in good faith in connection with transactions
effected with regard to the Directed Shares Purchasers. To the extent that such
Directed Shares are not orally confirmed for purchase by such persons by the end
of the first day after the date of this Agreement, such Directed Shares will be
offered to the public as part of the offering contemplated hereby.
4. Covenants of the Company. The Company covenants and agrees with the
Underwriters that:
(a) If the Registration Statement has not yet been declared effective the
Company will use its best efforts to cause the Registration Statement and any
amendments thereto to become effective as promptly as possible, and if Rule 430A
is used or the filing of the Prospectus is otherwise required under Rule 424(b)
or Rule 434, the Company will file the Prospectus (properly completed if Rule
430A has been used) pursuant to Rule 424(b) or Rule 434 within the prescribed
time period and will provide evidence satisfactory to you of such timely filing.
If the Company elects to rely on Rule 434, the Company will prepare and file a
term sheet that complies with the requirements of Rule 434.
The Company will notify you immediately (and, if requested by you, will
confirm such notice in writing) (i) when the Registration Statement and any
amendments thereto become effective, (ii) of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any post-
effective amendment
11
thereto or of the initiation, or the threatening, of any proceedings therefor
and (v) of the receipt of any comments from the Commission. If the Commission
shall propose or enter a stop order at any time, the Company will make every
reasonable effort to prevent the issuance of any such stop order and, if issued,
to obtain the lifting of such order as soon as possible. The Company will not
file any amendment to the Registration Statement, make any filing under Rule
462(b) of the Regulations or file any amendment of or supplement to the
Prospectus (including the prospectus required to be filed pursuant to Rule
424(b) or Rule 434) that differs from the prospectus on file at the time of the
effectiveness of the Registration Statement before or after the effective date
of the Registration Statement to which you shall reasonably object in writing
after being timely furnished in advance a copy thereof.
(b) The Company will comply with the Act and the Regulations so as to
permit the completion of the distribution of the Shares as contemplated in this
Agreement and the Prospectus. If at any time when a prospectus relating to the
Shares is required to be delivered under the Act any event shall have occurred
as a result of which the Prospectus as then amended or supplemented would, in
the judgment of the Underwriters or the Company, include an untrue statement of
a material fact or omit to state any 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, or if it shall be necessary at any
time to amend or supplement the Prospectus or Registration Statement to comply
with the Act or the Regulations, the Company will notify you promptly and
prepare and file with the Commission an appropriate amendment or supplement (in
form and substance reasonably satisfactory to you) which will correct such
statement or omission and will use its best efforts to have any amendment to the
Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you three signed copies of the
Registration Statement, as initially filed with the Commission, and all
amendments thereto (including exhibits) and will maintain in the Company's files
manually signed copies of such documents for at least five years from the date
of filing. The Company will promptly deliver to each of the Underwriters such
number of copies of any preliminary prospectus, the Prospectus, the Registration
Statement, and all amendments of and supplements to such documents, if any, as
you may reasonably request, and the Company hereby consents to the use of such
copies for purposes permitted by the Act.
(d) The Company will endeavor in good faith, in cooperation with you, at or
prior to the time of effectiveness of the Registration Statement, to qualify the
Shares for offering and sale under the securities laws relating to the offering
or sale of the Shares of such jurisdictions as you may designate and to maintain
such qualification in effect for so long as required for the distribution
thereof; except that in no event shall the Company be obligated in connection
therewith to qualify as a foreign corporation or to execute a general consent to
service of process. The Company will promptly advise you of the receipt by the
Company of any notification with respect to suspension of the qualification of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose and will use every reasonable effort to obtain the
withdrawal of any order of suspension as soon as possible.
12
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 180 days from the date of the Prospectus, (i) the
Company will not, without the prior written consent of Bear, ▇▇▇▇▇▇▇ & Co. Inc.
on behalf of the Underwriters, directly or indirectly, issue, sell, offer or
agree to sell, grant any option, warrant or other right to purchase or otherwise
sell or dispose of (or announce any offer of sale, contract of sale, sale, grant
of any option, warrant or other right to purchase or other sale or disposition
of), pledge, make any short sale or maintain any short position, establish or
maintain a "put equivalent position" (within the meaning of Rule 16-a-1(h) under
the Exchange Act), enter into any swap, derivative transaction or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock (whether any such transaction is
to be settled by delivery of Common Stock, other securities, cash or other
consideration) or otherwise dispose of, any Common Stock (or any securities
convertible into, exercisable for or exchangeable for Common Stock) or interest
therein of the Company, except for the grant of options under, or the issuance
by the Company of shares of Common Stock pursuant to the exercise of options
outstanding under, its Equity Compensation Plans on the date hereof and
disclosed in the Registration Statement and the Prospectus (provided that the
Company shall only so grant options or so issue shares during such 180 days to
persons who are not, at the time of the closing of the sale of the Firm Shares
on the Closing Date, and who do not become during such 180 days, officers or
directors of the Company or stockholders having beneficial ownership of at least
1% of the outstanding Common Stock of the Company, unless such persons have
agreed not to engage in any of the aforementioned transactions prior to the
expiration of the period of 180 days from the date of the Prospectus), and (ii)
the Company will obtain the undertaking of each of its officers and directors
and all of its stockholders having beneficial ownership of at least 1% of the
outstanding Common Stock of the Company, as of the time of the closing of the
sale of the Firm Shares hereunder on the Closing Date, not to engage in any of
the aforementioned transactions on their own behalf, other than the Company's
sale of Shares hereunder. Notwithstanding anything to the contrary herein, the
foregoing restrictions shall not apply to the Company's issuance of shares of
Common Stock in connection with any acquisition of, or strategic relationship
with, another company if (x) the terms of such issuance provide that such other
company shall not engage in any of the aforementioned transactions prior to the
expiration of the period of 180 days from the date of the Prospectus and (y) the
value of the total consideration to be paid for such acquisitions or strategic
relationships does not exceed $20 million with respect to any single transaction
or $40 million with respect to all transactions during the 180 days from the
date of the Prospectus; in the event that the value of any such transaction or
transactions exceeds the immediately foregoing limits, the Company will be
required to obtain the consent of Bear, ▇▇▇▇▇▇▇ & Co. Inc. on behalf of the
Underwriters, which consent shall not be unreasonably withheld.
(g) During a period of three years from the date of the Prospectus, the
Company will furnish to you and, upon request, to each of the other Underwriters
(i) copies of any reports or other communications that the Company shall send to
its stockholders or shall
13
from time to time publish or publicly disseminate, (ii) copies of all reports,
financial statements and proxy or information statements filed by the Company
with the Commission or any national securities exchange or automated quotation
system, and (iii) such other reasonably available information as you may
reasonably request regarding the Company.
(h) The Company will apply the proceeds from the sale of the Shares as set
forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares to be
included in the National Association of Securities Dealers Automated Quotation
National Market System and to maintain such quotation so long as any of the
Shares are outstanding.
(j) The Company will file with the Commission in its periodic reports
pursuant to Section 13 or 15 of the Exchange Act such information as may be
required pursuant to Rule 463 of the Regulations.
(k) The Company, during the period when the Prospectus is required to be
delivered under the Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15
of the Exchange Act within the time periods required by the Exchange Act
and the rules and regulations thereunder.
(l) The Company hereby agrees that it will ensure that the Directed Shares
are restricted as required by the National Association of Securities Dealers,
Inc. rules from sale, transfer, assignment, pledge or hypothecation for a period
of three months following the date of this Agreement. The Underwriters will
notify the Company as to which persons will need to be so restricted. At the
request of the Underwriters, the Company will direct the transfer agent to place
a stop transfer restriction upon such securities for such a period of time.
Should the Company release, or seek to release, from such restrictions any of
the Directed Shares, the Company agrees to reimburse the Underwriters for any
reasonable expenses (including without limitation legal expenses) they incur in
connection with such release.
(m) The Company will use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to or after the Closing Date or any Additional Closing Date, as
the case may be, and to satisfy all conditions precedent to the delivery of the
Shares.
5. Payment of Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company hereby
agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Registration
Statement, as originally filed and all amendments thereof (including all
exhibits thereto), any preliminary prospectus, the Prospectus and any amendments
or supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents (including this
Agreement, the Master Agreement Among Underwriters and the Master Selling
Agreement) and all other documents related to the public offering of the Shares
(including those supplied to the Underwriters in quantities as hereinabove
stated), (ii) the issuance, transfer and delivery of the Shares to the
Underwriters, including any transfer or other
14
taxes payable thereon, (iii) the qualification of the Shares under state or
foreign securities or Blue Sky laws or regulations, including the costs of
printing and mailing a preliminary and final "Blue Sky Survey" and the fees of
counsel for the Underwriters and such counsel's disbursements in relation
thereto, (iv) quotation of the Shares on the National Association of Securities
Dealers Automated Quotation National Market System, (v) filing fees of the
Commission and the National Association of Securities Dealers, Inc., (vi) the
cost of printing certificates representing the Shares, (vii) the cost and
charges of any transfer agent or registrar for the Shares and (viii) all costs
and expenses of the Underwriters, including the fees and disbursements of
counsel for the Underwriters, in connection with matters related to the Directed
Shares which are designated by the Company for sale to Directed Share
Purchasers.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Coudert Brothers
("Underwriters' Counsel") pursuant to this Section 6 of any misstatement or
omission, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, shall have become effective and all necessary approvals of the
National Association of Securities Dealers Automated Quotation National Market
System shall have been received, not later than, if pricing pursuant to Rule
430A, 5:30 P.M., New York time, on the date of this Agreement, if pricing
pursuant to a pricing amendment, 12:00 Noon, New York time, on the date an
amendment to the Registration Statement containing the public offering price has
been filed with the Commission, or at such later time and date as shall have
been consented to in writing by you; if the Company shall have elected to rely
upon Rule 430A or Rule 434 of the Regulations, the Prospectus shall have been
filed with the Commission in a timely fashion in accordance with Section 4(a)
hereof; and, at or prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof shall have been issued and no proceedings therefor shall have been
initiated or threatened by the Commission.
(b) At the Closing Date you shall have received the opinion of ▇▇▇▇▇▇,
▇▇▇▇▇ & Bockius L.L.P., counsel for the Company, dated the date of such Closing
Date addressed to the Underwriters and in the form previously agreed with the
Underwriters' Counsel.
(c) At the Closing Date, you shall have received the opinion of Sterne,
Kessier, ▇▇▇▇▇▇▇▇▇ & ▇▇▇, patent counsel for the Company, dated the Closing Date
addressed to the Underwriters and in the form previously agreed with the
Underwriters' Counsel.
(d) All proceedings taken in connection with the sale of the Firm Shares
and the Additional Shares as herein contemplated shall be satisfactory in form
and substance to you and to Underwriters' Counsel, and the Underwriters shall
have received from said Underwriters' Counsel a favorable opinion, dated as of
the Closing Date with respect to the issuance and sale of
15
the Shares, the Registration Statement and the Prospectus and such other related
matters as you may reasonably require, and the Company shall have furnished to
Underwriters' Counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(e) At the Closing Date you shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company, dated the Closing
Date, to the effect that (i) the condition set forth in subsection (a) of this
Section 6 has been satisfied, (ii) as of the date hereof and as of the Closing
Date the representations and warranties of the Company set forth in Section 1
hereof are true and correct, (iii) as of the Closing Date the obligations of the
Company to be performed hereunder on or prior thereto have been duly performed
and (iv) subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company and its subsidiaries
have not sustained any loss or interference with their businesses or properties
from fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental proceeding,
and there has not been any Material Adverse Change, or any development involving
a Material Adverse Effect, except in each case as described in or contemplated
by the Prospectus.
(f) At the time this Agreement is executed and at the Closing Date, you
shall have received a letter from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, independent public
accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in form
and substance satisfactory to you, stating that: (i) they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the Regulations; (ii) in their opinion, the financial statements and
schedules of the Company included in the Registration Statement and the
Prospectus and covered by their opinion therein comply as to form in all
material respects with the applicable accounting requirements of the Act and the
applicable published rules and regulations of the Commission thereunder; (iii)
on the basis of procedures consisting of a reading of the latest available
unaudited interim financial statements of the Company and of the latest
available unaudited monthly financial statements of the Company (which, in the
case of the letter delivered on the Closing Date, shall be at least as of
______, 2000), a reading of the minutes of meetings and consents of the
stockholders and board of directors of the Company and the committees of such
board subsequent to December 31, 1999, inquiries of officers and other employees
of the Company who have responsibility for financial and accounting matters of
the Company with respect to transactions and events subsequent to December 31,
1999 and other specified procedures and inquiries to a date not more than five
days prior to the date of such letter (provided that the letter delivered on the
Closing Date shall use a "cut-off" date not earlier than the date hereof),
nothing has come to their attention that would cause them to believe that: (A)
the unaudited financial statements and schedules of the Company presented in the
Registration Statement and the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act and the
applicable published rules and regulations of the Commission thereunder or that
such unaudited financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Registration Statement
and the Prospectus; (B) with respect to the period subsequent to March 31, 2000
there were, as of the date of the most recent available monthly financial
statements of the Company, if any, and as of a specified date not more than five
days
16
prior to the date of such letter (provided that the letter delivered on the
Closing Date shall use a "cut-off" date not earlier than the date hereof), any
changes in the capital stock or long-term indebtedness of the Company or any
decrease in the net current assets or increase in the capital deficiency of the
Company, in each case as compared with the amounts shown in the most recent
balance sheet presented in the Registration Statement and the Prospectus, except
for changes or decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur or which are set forth in such letter; or
(C) that during the period from April 1, 2000 to the date of the most recent
available monthly financial statements of the Company, if any, and to a
specified date not more than five days prior to the date of such letter
(provided that the letter delivered on the Closing Date shall use a "cut-off"
date not earlier than the date hereof), there was any decrease, as compared with
the corresponding period in the prior fiscal year, in revenues, or increase in
net loss, except for decreases or increases, as the case may be, which the
Registration Statement and the Prospectus disclose have occurred or may occur or
which are set forth in such letter; and (iv) stating that they have compared
specific dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the Company set forth in
the Registration Statement and the Prospectus, which have been specified by you
prior to the date of this Agreement, to the extent that such amounts, numbers,
percentages, and information may be derived from the general accounting and
financial records of the Company or from schedules furnished by the Company, and
excluding any questions requiring an interpretation by legal counsel, with the
results obtained from the application of specified readings, inquiries, and
other appropriate procedures specified by you set forth in such letter, and
found them to be in agreement.
(g) Prior to the Closing Date the Company shall have furnished to you such
further information, certificates and documents as you may reasonably request.
(h) You shall have received from each person who is a director or officer
of the Company or stockholder beneficially owning at least 1% of the outstanding
Common Stock of the Company, as of the time of the closing of the sale of the
Firm Shares hereunder at the Closing Date, an agreement (a "Lock-up Agreement")
to the effect that such person will not, directly or indirectly, without the
prior written consent of Bear, ▇▇▇▇▇▇▇ & Co. Inc. on behalf of the Underwriters,
during the period commencing on the date of the Prospectus and ending 180 days
thereafter, (1) issue, sell, offer or agree to sell, grant any option for the
sale of, pledge, make any short sale or maintain any short position, establish
or maintain a "put equivalent position" (within the meaning of Rule 16-a-1(h)
under the Exchange Act), enter into any swap, derivative transaction or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of Common Stock (whether any such transaction is to be
settled by delivery of shares of Common Stock, other securities, cash or other
consideration) or otherwise dispose of any Common Stock (or any securities
convertible into, exercisable for or exchangeable for Common Stock) or interest
therein of the Company or (2) make any demand for, or exercise his, her or its
rights, if any, to require the Company to register its Common Stock and to
receive notice thereof. Notwithstanding the foregoing, (i) if any such person
executing a Lock-up Agreement is a partnership, the partnership may transfer any
shares of Common Stock (or any securities convertible into, exercisable for, or
exchangeable for Common Stock) to a partner of such partnership; and (ii) if any
such person is an individual, he or she may transfer shares of Common Stock (or
any securities convertible into, exercisable for, or exchangeable for Common
Stock) by gift, will, or intestate succession to his or her immediate family or
to a trust
17
the beneficiaries of which are exclusively himself, herself and/or a member or
members of his or her immediate family (for purposes of this paragraph,
"immediate family" shall mean spouse, lineal descendant, father, mother, brother
or sister of the transferor); provided, however, that in any such case it shall
-------- -------
be a condition to the transfer that (i) each transferee execute an agreement
stating that the transferee is receiving and holding the shares of Common Stock
(or any securities convertible into, exercisable for, or exchangeable for Common
Stock) subject to the provisions of the transferor's Lock-up Agreement, and
there shall be no further transfer of such shares of Common Stock (or any
securities convertible into, exercisable for, or exchangeable for Common Stock)
except in accordance with the transferor's Lock-up Agreement, and (ii) that each
transferee certifies in writing to Bear, ▇▇▇▇▇▇▇ & Co. Inc. that such transferee
is in compliance with the terms of the transferor's Lock-up Agreement as if such
transferee had been bound by the transferor's Lock-up Agreement from the
original date of the transferor's Lock-up Agreement.
(i) At the Closing Date, the Shares shall have been quoted on the National
Association of Securities Dealers Automated Quotation National Market System.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to you or to Underwriters'
Counsel pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and substance to you and to Underwriters'
Counsel, all obligations of the Underwriters hereunder may be cancelled by you
at, or at any time prior to, the Closing Date and the obligations of the
Underwriters to purchase the Additional Shares may be cancelled by you at, or at
any time prior to, the Additional Closing Date. Notice of such cancellation
shall be given to the Company in writing, or by telephone, facsimile, telex or
telegraph, confirmed in writing.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon (i)(A) any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Shares, as originally filed, or any amendment thereof, or
any related preliminary prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or (B) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii)(A) the violation of any applicable
laws or regulations of foreign jurisdictions where Directed Shares have been
offered or (B) any untrue statement or alleged untrue statement of a material
fact included in the supplement or prospectus wrapper material distributed in
connection with the reservation and sale of the Directed Shares to Directed
Share Purchasers or the omission or alleged omission therefrom of a material
fact necessary to make the statements therein, when considered in
18
conjunction with the Prospectus or preliminary prospectus, not misleading;
provided, however, that the Company will not be liable in any such case to the
-------- -------
extent but only to the extent that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify and
hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the registration
of the Shares, as originally filed, or any filed amendment thereof, or any
related preliminary prospectus or the Prospectus, or any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein; provided,
--------
however, that in no case shall any Underwriter be liable or responsible for any
-------
amount in excess of the underwriting discount and commission applicable to the
Shares purchased by such Underwriter hereunder. This indemnity will be in
addition to any liability which any Underwriter may otherwise have including
under this Agreement. The Company acknowledges that the statements set forth in
the last paragraph of the cover page and in the third, twelfth, thirteenth and
fourteenth paragraphs and the list of Underwriters and the number of shares
listed opposite their respective names in the first paragraph under the caption
"Underwriting" in the Prospectus constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the registration
statement for the registration of the Shares, as originally filed, or any filed
amendment thereof, or any related preliminary prospectus or the Prospectus, or
any amendment thereof or supplement thereto, as the case may be.
(c) In connection with the offer and sale of the Directed Shares, the
Company agrees, promptly upon a request in writing, to indemnify and hold
harmless the Underwriters from and against any and all losses, liabilities,
claims, damages and expenses incurred by it as a result of (i) the failure of
the Directed Shares Purchasers to pay for and accept delivery of the Directed
Shares which, by the end of the day following the date of this Agreement, were
subject to a properly confirmed agreement to purchase such Directed Shares or
(ii) the refusal of any
19
Directed Shares Purchasers that are also employees of the Company properly to
confirm their respective agreements to purchase the Directed Shares that they
had agreed to purchase by the end of the first day after the date of this
Agreement.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
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8. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 7 hereof is applicable by its
terms but for any reason held to be unavailable from any indemnifying party or
is insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 7 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of
20
the Company and the Underwriters in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Underwriters shall be deemed to be in the same proportion
as (x) the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and (y) the
underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and of the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission or any
violation of the nature referred to in Section 7(a)(ii). The Company and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8, (i) in no
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting discount and commission applicable to the Shares purchased by
such Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 8 and the
preceding sentence, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. For purposes of this Section 8, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this Section 8. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; provided, however, that such consent was not unreasonably
withheld.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, the Firm Shares or Additional Shares to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
the respective proportions which the numbers
21
of Firm Shares set forth opposite their respective names in Schedule I hereto
bear to the aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the Firm
Shares or Additional Shares, as the case may be, you may in your discretion
arrange for yourself or for another party or parties (including any non-
defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within five calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Sections 5, 7(a) and 8 hereof) or the Underwriters, but nothing
in this Agreement shall relieve a defaulting Underwriter or Underwriters of its
or their liability, if any, to the other Underwriters and the Company for
damages occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which the
default relates are to be purchased by the non-defaulting Underwriters, or are
to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Additional Closing Date, as
the case may be, for a period, not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of Underwriters' Counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 9 with like
effect as if it had originally been a party to this Agreement with respect to
such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the later of when (i) you
and the Company shall have received notification of the effectiveness of the
Registration Statement
22
or (ii) the execution of this Agreement. If either the
initial public offering price or the purchase price per Share has not been
agreed upon prior to 5:00 P.M., New York time, on the sixth full business day
after the Registration Statement shall have become effective, this Agreement
shall thereupon terminate without liability to the Company or the Underwriters
except as herein expressly provided. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Company by notifying you or by you by
notifying the Company. Notwithstanding the foregoing, the provisions of this
Section 11 and of Sections 1, 5, 7 and 8 hereof shall at all times be in full
force and effect.
(b) You shall have the right to terminate this Agreement at any time prior
to the Closing Date or the obligations of the Underwriters to purchase the
Additional Shares at any time prior to the Additional Closing Date, as the case
may be, if (A) any domestic or international event or act or occurrence has
materially disrupted, or in your opinion will in the immediate future materially
disrupt, the market for the Company's securities or securities in general; or
(B) if trading on the New York or American Stock Exchanges or on NASDAQ shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York or American Stock Exchanges or on NASDAQ by the New York or
American Stock Exchanges or NASDAQ or by order of the Commission or any other
governmental authority having jurisdiction; or (C) if a banking moratorium has
been declared by a state or federal authority or if any new restriction
materially adversely affecting the distribution of the Firm Shares or the
Additional Shares, as the case may be, shall have become effective; or (D) (i)
if the United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States or (ii) if there shall have been such
change in political, financial or economic conditions, if the effect of any such
event in (i) or (ii) in your judgment makes it impracticable or inadvisable to
proceed with the offering, sale and delivery of the Firm Shares or the
Additional Shares, as the case may be, on the terms contemplated by the
Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, facsimile, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the provisions
hereof (otherwise than pursuant to (i) notification by you as provided in
Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if the sale of
the Shares provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth herein is not satisfied or because of
any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, the Company will, subject
to demand by you, reimburse the Underwriters for all out-of-pocket expenses
(including the fees and expenses of their counsel) incurred by the Underwriters
in connection herewith.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, sent by facsimile, telex or telegraph
and confirmed in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Equity Syndicate; facsimile number
(▇▇▇) ▇▇▇-▇▇▇▇; if sent to the Company, shall be mailed, delivered, sent by
facsimile, telex or telegraph and confirmed in writing to the Company, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief
Financial Officer; facsimile number (▇▇▇) ▇▇▇-▇▇▇▇.
13. Parties. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters and the Company and the controlling persons,
directors, officers, employees and agents referred to in Sections 7 and 8, and
their respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Shares from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
15. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
16. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
[Signature Page Follows]
24
If the foregoing correctly sets forth the understanding between you and the
Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
3-DIMENSIONAL PHARMACEUTICALS, INC.
By
-----------------------
Name:
Title:
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
CHASE SECURITIES INC.
By BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By
--------------------
Name:
Title:
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
------------------- ----------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇ Securities Inc.
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE II
Subsidiaries
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