EXHIBIT 1.1
4,000,000 SHARES
BARRIER THERAPEUTICS, INC.
COMMON STOCK, PAR VALUE $0.0001 PER SHARE
UNDERWRITING AGREEMENT
FEBRUARY ___, 2005
February ___, 2005
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Pacific Growth Equities, LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
BARRIER THERAPEUTICS, INC., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "UNDERWRITERS") and certain stockholders of the Company (the
"SELLING STOCKHOLDERS") named in Schedule II hereto severally propose to sell to
the several Underwriters, an aggregate of 4,000,000 shares of the common stock,
par value $0.0001 per share of the Company (the "FIRM SHARES"), of which
2,000,000 Firm Shares are to be sold by the Company and 2,000,000 Firm Shares
are to be sold by the Selling Stockholders, each selling the number of shares
set forth opposite such Selling Stockholder's name in Schedule II hereto.
The Company also proposes to issue and sell to the several Underwriters
not more than an additional 600,000 shares of common stock, par value $0.0001
per share, of the Company (the "ADDITIONAL SHARES") if and to the extent that
you, as Managers of the offering, shall have determined to exercise, on behalf
of the Underwriters, the right to purchase such shares of common stock granted
to the Underwriters in Section 3 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "SHARES." The shares of
common stock, par value $0.0001 per share, of the Company to be outstanding
after giving effect to the sales contemplated hereby are hereinafter referred to
as the "COMMON STOCK." The Company and the Selling Stockholders are hereinafter
sometimes collectively referred to as the "SELLERS."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-1 (File No. 333-122261),
including a prospectus, relating to the Shares. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), is hereinafter referred to as the "REGISTRATION STATEMENT";
the prospectus in the form first used to confirm sales of Shares is hereinafter
referred to as the "PROSPECTUS." If the Company has filed an abbreviated
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"),
then any reference herein to
the term "Registration Statement" shall be deemed to include such Rule 462
Registration Statement.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the
Company's knowledge, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any 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, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iii) the
Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any 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,
except that the representations and warranties set forth in this paragraph
do not apply to statements or omissions in the Registration Statement or
the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the State of Delaware,
has the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not have a material adverse
effect on the Company and the Subsidiary (as defined below), taken as a
whole (a "Material Adverse Effect").
(d) The Company's only subsidiary is Barrier Therapeutics, N.V., a
company incorporated under the laws of Belgium (the "Subsidiary"). The
Subsidiary is not a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X. The Subsidiary has been duly incorporated, is validly
existing as a corporation under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
Material
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Adverse Effect. All of the issued shares of capital stock of the
Subsidiary have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims. There are no
outstanding securities convertible into or exchangeable for, or warrants,
rights or options to purchase from the Company or the Subsidiary, or
obligations of the Company or the Subsidiary to issue, any shares of
capital stock of the Subsidiary.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock (including the Shares to be sold by
the Selling Stockholders) outstanding prior to the issuance of the Shares
to be issued and sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable. No person is entitled to
preemptive or similar rights to acquire any securities of the Company.
There are no outstanding securities convertible into or exchangeable for,
or warrants, rights or options to purchase from the Company, or
obligations of the Company to issue, any shares of its Common Stock or any
other class of shares of capital stock of the Company, except as set forth
in the Prospectus.
(h) The Shares to be issued and sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms of
this Agreement, will be validly issued, fully paid and non-assessable, and
the issuance of such Shares will not be subject to any preemptive or
similar rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of (i) applicable law, (ii) the certificate
of incorporation or by-laws of the Company, (iii) any agreement or other
instrument binding upon the Company that is material to the Company, or
(iv) any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company except, with respect to clauses
(i), (iii) and (iv), for any contraventions which would not, alone or in
the aggregate, result in a Material Adverse Effect. No consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement, except (i) such as have been obtained or made under
the Securities Act, (ii) such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of
the Shares or (iii) such as may be required by the National Association of
Securities Dealers, Inc. in connection with the purchase and distribution
of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition,
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financial or otherwise, or in the earnings, business or operations of the
Company and the Subsidiary, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or the Subsidiary
is a party or to which any of the properties of the Company or the
Subsidiary is subject that are required to be described in the
Registration Statement or the Prospectus pursuant to the Securities Act or
the rules and regulations promulgated thereunder and are not so described
or any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement, in each case
pursuant to the Securities Act or the rules and regulations promulgated
thereunder, that are not described or filed as required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder.
(m) The Company is not and, after giving effect to the offering
and sale of the Shares to be issued and sold by the Company and the
application of the proceeds thereof as described in the Prospectus will
not be, required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(n) The Company and the Subsidiary (i) are in compliance with all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly or
in the aggregate, have a Material Adverse Effect.
(o) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities
to third parties) which would, singly or in the aggregate, have a Material
Adverse Effect.
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(p) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company. No person has any right to require the Company to include any
securities of the Company with the Shares registered pursuant to the
Registration Statement.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company
and the Subsidiary, taken as a whole, have not incurred any material
liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (ii) the
Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind
on its capital stock, except, in each case, as described in the Prospectus
and other than ordinary and customary dividends; and (iii) there has not
been any material change in the capital stock, short-term debt or
long-term debt of the Company and the Subsidiary, except in each case as
described in the Prospectus.
(r) The Company and the Subsidiary do not own any real property.
The Company and the Subsidiary have good and marketable title to all
personal property owned by them which is material to the business of the
Company and the Subsidiary, taken as a whole, free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the Company and the Subsidiary; and any real property and buildings held
under lease by the Company and the Subsidiary are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and the Subsidiary, in each
case except as described in the Prospectus.
(s) The Company and the Subsidiary own or have valid, binding and
enforceable licenses or other rights to use the patents and patent
applications, inventions, copyrights, trademarks, service marks, trade
names, service names, technology and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary rights and excluding
generally commercially available "off the shelf" software programs
licensed pursuant to shrink wrap or "click and accept" licenses) necessary
to conduct the business of the Company and the Subsidiary in the manner
described in the Prospectus (collectively, the "COMPANY INTELLECTUAL
PROPERTY") and the absence of which, individually or in the aggregate,
would not have a Material Adverse Effect. Neither the Company nor the
Subsidiary is obligated to pay a royalty, grant a license, or provide
other consideration to any third party in connection with the Company
Intellectual Property other than as disclosed in the Prospectus. Except as
disclosed in the Prospectus or as would not have a Material Adverse
Effect, (i) neither the Company nor the Subsidiary has received any notice
of infringement or conflict with asserted rights of others with respect to
any Company Intellectual Property,
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(ii) the conduct of the business of the Company in the manner described in
the Prospectus does not and will not, to the knowledge of the Company,
infringe, interfere or conflict with any valid issued patent claim or
other Intellectual Property right of any third party, or any claim of a
patent application filed by any third party, which patent application has
been published by the PTO (as defined below) or other similar foreign
authority or is otherwise known to the Company, and (iii) no third party,
including any academic or governmental organization, possesses or could
obtain rights to the Company Intellectual Property which, if exercised,
could enable such party to develop products competitive to those of the
Company and the Subsidiary.
(t) The Company and the Subsidiary have 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 or the Subsidiary (the "COMPANY
PATENT APPLICATIONS"). To the knowledge of the Company, the Company and
the Subsidiary have complied with the PTO's duty of candor and disclosure
for the Company Patent Applications and have made no material
misrepresentation in the Company Patent Applications; the Company and the
Subsidiary are not aware of any facts material to a determination of
patentability regarding the Company Patent Applications not called to the
attention of the PTO; the Company and the Subsidiary are not aware of any
facts not called to the attention of the PTO or similar foreign authority
which would preclude the grant of a patent for the Company Patent
Applications; and the Company and the Subsidiary have no knowledge of any
facts which would preclude them from having clear title to the Company
Patent Applications.
(u) No material labor dispute with the employees of the Company or
the Subsidiary exists, except as described in the Prospectus or, to the
knowledge of the Company or the Subsidiary, is imminent; and the Company
is not aware of any existing, threatened or imminent labor disturbance by
the employees of any of its principal suppliers, manufacturers or
contractors that would have a Material Adverse Effect on the Company and
the Subsidiary, taken as a whole.
(v) The Company and the Subsidiary are insured by insurance in
such amounts as the Company reasonably believes are adequate for the
conduct of its business and the value of its properties and as are
customary in the businesses in which they are engaged; neither the Company
nor the Subsidiary has been refused any insurance coverage sought or
applied for; and neither the Company nor the Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost
that would not have a Material Adverse Effect on the Company and the
Subsidiary, taken as a whole, except as described in the Prospectus.
(w) Except as described in the Prospectus, the Company and the
Subsidiary possess all certificates, authorizations and permits issued by
the
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appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses as currently conducted, including
without limitation all such certificates, authorizations and permits
required by the United States Food and Drug Administration (the "FDA") or
any other federal, state or foreign agencies or bodies engaged in the
regulation of pharmaceuticals or biohazardous materials, except where the
failure to so possess such certificates, authorizations, and permits,
singly or in the aggregate, would not result in a Material Adverse Effect.
Except as described in the Prospectus, neither the Company nor the
Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect.
(x) The studies, tests and preclinical and clinical trials
conducted by the Company or on behalf of the Company by third parties
specifically engaged by the Company to conduct such studies and tests that
are described in the Registration Statement and the Prospectus were and,
if still pending, are being, conducted in all material respects in
accordance with experimental protocols, procedures and controls pursuant
to, where applicable, accepted professional and scientific standards; the
descriptions of the results of such studies, tests and trials contained in
the Registration Statement and the Prospectus are accurate in all material
respects; and the Company has not received any notices or correspondence
from the FDA or any foreign, state or local governmental body exercising
comparable authority requiring the termination, suspension or material
modification of any studies, tests or preclinical or clinical trials
conducted by or on behalf of the Company which termination, suspension or
material modification would reasonably be expected to have a Material
Adverse Effect.
(y) The Company and the Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals; and the
Company is otherwise in compliance in all material respects with all
applicable effective provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
rules and regulations issued thereunder by the Commission.
(z) The consolidated financial statements of the Company and the
Subsidiary (in each case, together with the related notes thereto)
included in the Registration Statement and the Prospectus present fairly
the consolidated financial position and results of the operations of the
respective companies as of the respective dates indicated and for the
respective periods specified; and such consolidated financial statements
(together with the related notes thereto) have been prepared in conformity
with generally accepted accounting principles,
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consistently applied throughout the periods involved except as otherwise
stated therein. The selected financial data included in the Registration
Statement and the Prospectus present fairly, on the basis stated in the
Registration Statement and the Prospectus, the information shown therein
and have been compiled on a basis consistent with that of the audited
consolidated financial information included in the Registration Statement
and the Prospectus.
(aa) Each material contract, agreement and license to which the
Company or the Subsidiary is bound is legal, valid, binding, enforceable,
and in full force and effect against the Company or the Subsidiary, and to
the knowledge of the Company and the Subsidiary, each other party thereto,
except to the extent such enforceability is subject to (i) laws of general
application relating to bankruptcy, insolvency, moratorium and the relief
of debtors and (ii) the availability of specific performance, injunctive
relief and other equitable remedies. Neither the Company or the Subsidiary
nor, to the Company's and the Subsidiary's knowledge, any other party is
in material breach or default with respect to any such contract, agreement
and license, and, to the Company's and the Subsidiary's knowledge, no
event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under any such contract, agreement or license. No party has
repudiated any material provision of any such contract, agreement or
license.
2. Representations and Warranties of the Selling Stockholders.
Each of the Selling Stockholders, severally as to itself only, represents and
warrants to and agrees with each of the Underwriters that:
(a) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder.
(b) The Custody Agreement signed by such Selling Stockholder and
the Company, as Custodian, relating to the custody of the Shares to be
sold by such Selling Stockholder (the "CUSTODY AGREEMENT") and the
Irrevocable Power of Attorney of such Selling Stockholder appointing
certain individuals as such Selling Stockholder's attorney-in-fact to the
extent set forth therein, relating to the transactions contemplated hereby
(the "POWER OF ATTORNEY") have been duly authorized by such Selling
Stockholder and, when executed and delivered by such Selling Stockholder,
will constitute a valid and binding agreement of such Selling Stockholder
enforceable against such Selling Stockholders in accordance with its terms
except as enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and the availability
of equitable remedies may be limited by equitable principles of general
applicability.
(c) The execution and delivery by such Selling Stockholder of, and
the performance by such Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement and the Power of Attorney of such Selling
Stockholder will not contravene any provision of (i) the certificate of
incorporation or by-laws
8
or other constitutive documents of such Selling Stockholder, (ii) any
applicable law or any agreement or other instrument binding upon such
Selling Stockholder, except for any contraventions as would not
individually or in the aggregate materially and adversely affect the
consummation by such Selling Stockholder of the transactions contemplated
by this Agreement or (iii) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such Selling
Stockholder; and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by such Selling Stockholder of its obligations under this
Agreement, the Custody Agreement or the Power of Attorney of such Selling
Stockholder, except such as may be required by the Securities Act, the
securities or Blue Sky laws of the various states or the securities or
similar laws of any foreign jurisdiction in connection with the offer and
sale of the Shares.
(d) Such Selling Stockholder has, and, on the Closing Date (as
defined below), such Selling Stockholder will have, valid title to the
Shares to be sold by such Selling Stockholder free and clear of all
security interests, claims, liens, equities or other encumbrances and the
legal right and power, and all authorization and approval required by law,
to enter into this Agreement, the Custody Agreement and the Power of
Attorney of such Selling Stockholder and to sell, transfer and deliver the
Shares to be sold by such Selling Stockholder.
(e) Delivery of the Shares to be sold by such Selling Stockholder
pursuant to this Agreement and payment therefor by the Underwriters
pursuant to this Agreement will pass valid title to such Shares free and
clear of any adverse claim within the meaning of Section 8-102 of the New
York Uniform Commercial Code to each Underwriter that has purchased such
Shares without notice of an adverse claim.
(f) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any 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, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iii) the
Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any 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 the representations and warranties set forth in this
paragraph 2(f) apply only to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to such
Selling Stockholder furnished to the Company in writing by such Selling
Stockholder expressly for use therein.
(g) Such Selling Stockholder has not taken, and will not take,
directly or indirectly, any action designed to, or which might reasonably
be expected to,
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cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares
pursuant to the distribution contemplated by this Agreement, and other
than as permitted by the Securities Act, such selling Stockholder has not
distributed and will not distribute any prospectus or other offering
material in connection with the offering and sale of the Shares.
3. Agreements to Sell and Purchase. Each Seller, severally and
not jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at $_____ a share (the "PURCHASE
PRICE") the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
number of Firm Shares to be sold by such Seller as the number of Firm Shares set
forth in Schedule I hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to 600,000 Additional Shares at
the Purchase Price. You may exercise this right on behalf of the Underwriters in
whole or from time to time in part by giving written notice of each election to
exercise the option not later than 30 days after the date of this Agreement. Any
exercise notice shall specify the number of Additional Shares to be purchased by
the Underwriters and the date on which such shares are to be purchased. Each
purchase date must be at least one business day after the written notice is
given and may not be earlier than the closing date for the Firm Shares nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 5 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. On each
day, if any, that Additional Shares are to be purchased (an "OPTION CLOSING
DATE"), each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the total number
of Additional Shares to be purchased on such Option Closing Date as the number
of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period
ending 90 days after the date of the Prospectus, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (ii) enter into any swap 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 described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The
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foregoing sentence shall not apply to (A) the Shares to be sold hereunder, (B)
the issuance by the Company of shares of Common Stock upon the exercise of an
option or warrant or the conversion of a security outstanding on the date hereof
that is described in the Prospectus or of which the Underwriters have been
advised in writing, (C) the grant of any stock option or stock purchase right
pursuant to the Company's 2004 Stock Incentive Plan or 2004 Employee Stock
Purchase Plan and the issuance by the Company of any shares of Common Stock upon
the exercise of such stock option or stock purchase right, provided that, prior
to the grant of any such stock option or stock purchase right, the Company shall
cause the recipients of such grants to execute and deliver to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
"lock-up" agreements, each substantially in the form of Exhibit A hereto or (D)
the issuance of any shares of Common Stock in connection with acquisition,
licensing, collaboration or similar strategic arrangements, provided that, prior
to the issuance of any such shares of Common Stock, the Company shall cause the
recipients of such shares to execute and deliver to you "lock-up" agreements,
each substantially in the form of Exhibit A hereto.
Each Selling Stockholder hereby agrees that, without the prior
written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the
Underwriters, it will not, during the period commencing on the date hereof and
ending 90 days after the date of the Prospectus (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (ii) enter into any swap 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 described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the sale of the
Shares hereunder, (B) transactions relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
public offering of the Shares contemplated hereunder or (C) the exercise of
options to purchase shares of Common Stock; provided, that, the shares of Common
Stock acquired upon exercise of such options remain subject to the provisions of
this paragraph. Furthermore, the provisions of this paragraph shall not apply to
(1) bona fide gifts of securities, (2) transfers of securities to "affiliates"
of the transferor if the transfers do not involve a public distribution or
public offering or (3) transfers of participation interests in the Company's
securities held by a Selling Stockholder to affiliates of such Selling
Stockholder; provided, that: (i) the recipient of any gift described in clause
(1) or the transferee of any transfer in clause (2) or (3) agrees in writing as
a condition precedent to such transfer to execute and deliver to you "lock-up"
agreements, each substantially in the form of Exhibit A hereto; and (ii) in the
case of any gift or transfer described in clause (1), (2) or (3), no filing by
such Selling Stockholder or any other party to such gift or transfer under
Section 16(a) of the Exchange Act shall be required or shall be made voluntarily
in connection with such gift or transfer (other than a filing on a Form 5 made
after the expiration of the 90-day period referred to above).
11
In addition, each Selling Stockholder agrees that, without the prior
written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the
Underwriters, it will not, during the period commencing on the date hereof and
ending 90 days after the date of the Prospectus, make any demand for or exercise
any right with respect to, the registration of any shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock. Each
Selling Stockholder also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of such Selling Stockholder's shares of Common Stock except in
compliance with the foregoing restrictions.
The Company and each Selling Stockholder further agree that,
notwithstanding the foregoing, if (1) during the last 17 days of the 90-day
restricted period described in the three preceding paragraphs, the Company
issues an earnings release, or (2) prior to the expiration of such 90-day
restricted period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the 90-day restricted
period, then the restrictions set forth in the three preceding paragraphs shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release.
4. Terms of Public Offering. The Sellers are advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$_____ a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by
you at a price that represents a concession not in excess of $0.___ a share
under the Public Offering Price.
5. Payment and Delivery. Payment for the Firm Shares to be sold
by each Seller shall be made to such Seller in Federal or other funds
immediately available in New York City against delivery of such Firm Shares for
the respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on February ___, 2005, or at such other time on the same or such other
date, not later than February ___, 2005, as shall be designated in writing by
you. The time and date of such payment are hereinafter referred to as the
"CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
corresponding notice described in Section 3 or at such other time on the same or
on such other date, in any event not later than _____________, 2005, as shall be
designated in writing by you.
Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several
12
Underwriters, with any transfer taxes payable in connection with the transfer of
the Shares to the Underwriters duly paid, against payment of the Purchase Price
therefor.
6. Conditions to the Underwriters' Obligations. The obligations
of the Sellers to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than 3:00 p.m. (New York City time) on the date
hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the Company and the Subsidiary, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date:
(i) a certificate of the Company, dated the Closing Date and
signed by an executive officer on behalf of the Company, to the
effect set forth in Section 6(a)(i) above and to the effect that the
representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the
Company has complied in all material respects with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date (the
officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened); and
13
(ii) a certificate of each Selling Stockholder, dated the
Closing Date, to the effect that the representations and warranties
of such Selling Stockholder contained in this Agreement are true and
correct as of the Closing Date and that such Selling Stockholder has
complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or
before the Closing Date.
(c) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, outside counsel for the Company,
dated the Closing Date, to the effect that:
(i) The Company has been duly incorporated and is a
corporation validly existing and in good standing under the laws of
the State of Delaware, with the requisite corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and the
Prospectus;
(ii) The Company is duly qualified and is in good standing as
a foreign corporation authorized to do business as a foreign
corporation in the State of New Jersey;
(iii) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(iv) The Shares to be issued and sold by the Company have been
duly authorized by the Company and, when issued and sold by the
Company, and delivered by the Company to, and paid for by, the
Underwriters in accordance with the terms of the Underwriting
Agreement, will be validly issued, fully paid and non-assessable.
The issuance of such Shares is free of statutory and, to such
counsel's knowledge, contractual preemptive rights;
(v) The Company has authorized and issued capital stock as set
forth in the Registration Statement and the Prospectus, and the
outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable;
(vi) All of the issued and outstanding shares of capital stock
of the Subsidiary are, to such counsel's knowledge, owned of record
by the Company;
(vii) The statements set forth under the caption "Description
of Capital Stock" in the Prospectus, insofar as such statements
purport to summarize certain provisions of the certificate of
incorporation and by-laws of the Company, provide a fair summary of
such provisions in all material respects;
14
(viii) No consent, authorization, approval or order of or
filing or qualification with any federal or state governmental or
regulatory commission, board, body, authority or agency is required
to be obtained or made by the Company in connection with the
issuance and sale of the Shares, and the consummation by the Company
of the transactions contemplated by the Underwriting Agreement,
other than such as have previously been obtained, including, without
limitation, registration of the Shares under the Securities Act and
of the Common Stock under the Exchange Act; provided, however, that
such counsel expresses no opinion as to (a) state -------- -------
securities or blue sky laws or foreign securities laws of the
various jurisdictions in which the Shares are being offered by the
underwriters thereof, and (b) the approval by the National
Association of Securities Dealers, Inc. of the terms and conditions
of the Underwriting Agreement;
(ix) The execution, delivery and performance of the
Underwriting Agreement by the Company, and the consummation by the
Company of the transactions contemplated thereby, do not and will
not result in any breach of, or constitute a default under (nor
constitute any event that, with notice, lapse of time, or both,
would result in any breach of or default under), or conflict with
any provision of the certificate of incorporation or by-laws of the
Company, or any provision of any agreement or instrument filed as an
exhibit to the Registration Statement, the Delaware General
Corporation Law, or any U.S. federal or New York state law, rule or
regulation or, to such counsel's knowledge, any decree, judgment or
order of any court;
(x) To such counsel's knowledge, there are no contracts,
licenses, agreements, leases or documents of a character which are
required to be filed as exhibits to the Registration Statement, or
to be summarized or described in the Prospectus, which have not been
so filed, summarized, or described as required;
(xi) To such counsel's knowledge, there are no actions, suits,
claims, investigations or proceedings pending or threatened to which
the Company or the Subsidiary is subject, or by which any of their
respective properties are bound, before or by any federal or state
governmental or regulatory commission, board, body, authority or
agency which are required to be described in the Registration
Statement or the Prospectus, or any statutes or regulations that are
required to be described in the Registration Statement or the
Prospectus, and which are not so described as required;
(xii) The Company is not and, after giving effect to the
offering and sale of the Shares, and the application of the proceeds
thereof as described in the Prospectus, will not be, an "investment
company," as
15
such term is defined in the Investment Company Act of 1940, as
amended;
(xiii) Such counsel has read the statements in the Prospectus
under the captions "Risk Factors - Risks Related to Our Business -
Risks Related to Intellectual Property - If we fail to comply with
our obligations in the agreements under which we license development
or commercialization rights to products or technology from third
parties, we could lose license rights that are important to our
business."; "Risk Factors - Risks Related to Our Business - Risks
Related to Intellectual Property - Various aspects of our ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ license agreements may adversely affect our business.";
"Risk Factors - Risks Related to Our Business - Risks Related to
Regulatory Approval of Our Product Candidates - We may not receive
regulatory approvals for our product candidates or approvals may be
delayed, either of which could materially harm our business."; "Risk
Factors - Risks Related to Our Business - Risks Related to
Regulatory Approval of Our Product Candidates - We may not be able
to obtain or maintain orphan drug exclusivity for our product
candidates for the treatment of rare dermatological diseases, and
our competitors may obtain orphan drug exclusivity prior to us,
which could significantly harm our business."; "Risk Factors - Risks
Related to Our Business - Risks Related to Regulatory Approval of
Our Product Candidates - If we fail to comply with regulatory
requirements, regulatory agencies may take action against us, which
could significantly harm our business."; "Risk Factors - Risks
Related to Our Industry - New federal legislation will increase the
pressure to reduce the price of pharmaceutical products paid for by
Medicare, which will adversely affect our revenues, if any."; "Risk
Factors - Risks Related to Our Common Stock - Provisions in our
certificate of incorporation and bylaws and under Delaware law may
prevent or frustrate a change in control or a change in management
that stockholders believe is desirable."; "Business - Product
Development Pipeline - Later Stage Product Candidates - Hyphanox -
▇▇▇▇▇▇▇ Option"; "Business - ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ License Agreements";
"Business - ▇▇▇▇▇▇ Development and Supply Agreement"; "Business -
Grupo ▇▇▇▇▇▇ Distribution and License Agreement"; "Business - Patent
Protection and Intellectual Property; Orphan Drug; ▇▇▇▇▇-▇▇▇▇▇▇ Act;
Pediatric Treatment Exclusivity - Orphan Drug Designation";
"Business - Patent Protection and Intellectual Property; Orphan
Drug; ▇▇▇▇▇-▇▇▇▇▇▇ Act; Pediatric Treatment Exclusivity - The
▇▇▇▇▇-▇▇▇▇▇▇ Act"; "Business - Patent Protection and Intellectual
Property; Orphan Drug; ▇▇▇▇▇-▇▇▇▇▇▇ Act; Pediatric Treatment
Exclusivity - Pediatric Treatment Exclusivity"; "Business -
Government Regulation - United States Government Regulation";
"Business - Third Party Reimbursement and Pricing Controls";
"Description of Capital Stock" and "Underwriters" (only with respect
to the description of the
16
Underwriting Agreement) and Items 14 and Item 15 of Part II of the
Registration Statement, and insofar as such statements constitute
summaries of legal matters, contracts, agreements, documents or
proceedings referred to therein, or refer to statements of law or
legal conclusions, such statements are accurate in all material
respects and fairly present the information purported to be shown;
(xiv) The Registration Statement, as of the Effective date,
and the Prospectus, as of the date thereof (except for the financial
statements, including the notes and schedules thereto, other
financial and accounting data and information and statistical data
derived from the financial statements included therein or omitted
therefrom, as to which such counsel expresses no view) comply as to
form in all material respects to the requirements of the Securities
Act and the applicable rules and regulations of the Commission
thereunder; and
(xv) No fact has come to such counsel's attention that has led
them to believe that the Registration Statement, as of the time it
was declared effective, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, or that the Prospectus, as of its date and at the date
hereof, contained or contains any untrue statement of a material
fact, or omitted or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need not express
any belief with respect to the financial statements, schedules,
notes or other financial, statistical, and accounting data included
in the Registration Statement or the Prospectus).
(d) You shall have received on the Closing Date an opinion of
counsel for each of the Selling Stockholders, in form and substance
reasonable satisfactory to counsel to the Underwriters, dated the Closing
Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder;
(ii) the execution and delivery by such Selling Stockholder
of, and the performance by such Selling Stockholder of its
obligations under, this Agreement and the Custody Agreement and
Power of Attorney of such Selling Stockholder will not contravene
any provision of applicable law, or the certificate of incorporation
or by-laws or other constitutive documents of such Selling
Stockholder (if such Selling Stockholder is a corporation or other
entity), or, to the best of such counsel's knowledge, any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over such Selling Stockholder, and no consent,
approval, authorization or order of,
17
or qualification with, any governmental body or agency is required
for the performance by such Selling Stockholder of its obligations
under this Agreement or the Custody Agreement or Power of Attorney
of such Selling Stockholder, except such as have been obtained, as
may be required by the securities or Blue Sky laws of the various
states in connection with offer and sale of the Shares to be sold by
such Selling Stockholder or as may be required by the National
Association of Securities Dealers, Inc.;
(iii) such Selling Stockholder has the necessary authority
under the Delaware General Corporation law or the Delaware
Partnership Act and under its constitutional documents to sell,
transfer and deliver the Shares to be sold by such Selling
Stockholder or a security entitlement in respect of such Shares;
(iv) the Custody Agreement and the Power of Attorney of such
Selling Stockholder have been duly authorized, executed and
delivered by such Selling Stockholder and are valid and binding
agreements of such Selling Stockholder; and
(v) delivery of the stock certificates representing the Shares
to be sold by such Selling Stockholder, endorsed to the Underwriters
and payment therefor pursuant to this Agreement will pass all of
such Selling Stockholder's rights and interests in such Shares, free
and clear of any adverse claims within the meaning of Section 8-102
of the New York Uniform Commercial Code, to each Underwriter who has
purchased such Shares without notice of an adverse claim.
(e) The Underwriters shall have received on the Closing Date an
intellectual property opinion from ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, special
patent counsel to the Company, dated the Closing Date, to the effect that:
(i) the Company and the Subsidiary own, possess or have
adequate rights to use the patents and patent applications,
inventions, technology and know-how (the "Company Intellectual
Property") reasonably necessary to develop, manufacture, market and
sell Sebazole, Zimycan, Hyphanox, Liarozole and Rambazole in the
manner described in the Registration Statement and the Prospectus,
except to the extent that the failure to own or possess or have
adequate rights to use such Company Intellectual Property would not,
individually or in the aggregate, have a material adverse effect on
the Company and the Subsidiary taken as a whole;
(ii) other than as set forth or contemplated in the
Registration Statement and the Prospectus, neither the Company nor
its Subsidiary has received any notice of infringement of, or
conflict with, and such counsel has no knowledge of any such
infringement of, or conflict with,
18
asserted rights of a third party with respect to the Company
Intellectual Property except as would not, individually or in the
aggregate, have a material adverse effect on the Company and the
Subsidiary taken as a whole;
(iii) other than as set forth or contemplated in the
Registration Statement and the Prospectus or as would not have a
material adverse effect on the Company and the Subsidiary taken as a
whole, the conduct of the current and future business of the Company
or the Subsidiary in the manner described in the Prospectus does not
and will not infringe, interfere or conflict with any valid claim in
an issued patent or other intellectual property right of any third
party;
(iv) other than as set forth or contemplated in the
Registration Statement and the Prospectus, no third party, including
any academic or governmental organization, possesses or could obtain
rights to the patents, patent applications or patent rights of the
Company or the Subsidiary, which, if exercised would allow such
third party to develop products competitive with those of the
Company and the Subsidiary and would, individually or in the
aggregate, have a material adverse effect on the Company and the
Subsidiary taken as a whole;
(v) all information material to patentability has been
disclosed, or will be disclosed in a timely manner to the U.S.
Patent and Trademark Office or similar foreign authority during the
prosecution of the Company's patents and patent applications and no
misrepresentation was made to, or material fact withheld from, the
U.S. Patent and Trademark Office or similar foreign authority during
such prosecution;
(vi) the statements relating to legal matters, documents or
proceedings included in the Prospectus under the captions "Risk
Factors - Risks Related to Our Business - Risks Related to
Intellectual Property - There are limitations on our patent rights
relating to our product candidates that may affect our ability to
exclude third parties from competing against us if we receive
approval to market these product candidates"; "Risk Factors - Risks
Related to Our Business - Risks Related to Intellectual Property -
If we are unable to obtain and maintain patent protection for our
intellectual property, our competitors could develop and market
products similar or identical to ours, which may reduce demand for
our product candidates"; "Risk Factors - Risks Related to Our
Business - Risks Related to Intellectual Property - If we are unable
to protect the confidentiality of our proprietary information and
know-how, the value of our technology may be adversely affected";
"Risk Factors - Risks Related to Our Business - Risks Related to
Intellectual Property - If the development of our product candidates
infringes the intellectual property of our competitors or other
third parties, we may be required to pay license fees or cease our
development
19
activities and pay damages, which could significantly harm our
business"; "Business - Product Development Pipeline - Later Stage
Product Candidates - Zimycan - Proprietary Rights"; Business -
Product Development Pipeline - Later Stage Product Candidates -
Sebazole - Proprietary Rights"; "Business - Product Development
Pipeline - Later Stage Product Candidates - Hyphanox - Proprietary
Rights"; "Business - Product Development Pipeline - Later Stage
Product Candidates - Liarozole - Proprietary Rights"; "Business -
Patents and Intellectual Property; Orphan Drug; ▇▇▇▇▇-▇▇▇▇▇▇ Act;
Pediatric Treatment Exclusivity"; "Business - Trademarks"; fairly
summarize in all material respects such matters, documents or
proceedings; and
(vii) the Company's patents are valid and enforceable and are
entitled to a statutory presumption of validity and of ownership by
the assignee; there are no asserted or unasserted claims of any
persons relating to the scope or ownership of any of the Company's
patents; and there are no liens which have been filed against any of
the Company's patents.
(f) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ LLP, counsel for the
Underwriters, dated the Closing Date, covering the matters referred to in
Sections 6(c)(iii), 6(c)(iv), 6(c)(xiii) (but only as to the statements in
the Prospectus under "Description of Capital Stock" and "Underwriters"),
6(c)(xiv) and 6(c)(xv) above.
With respect to Section 6(c)(xiv), Section 6(c)(xv) and Section 6(f) (with
respect to the matters in Sections 6(c)(xiv) and 6(c)(xv) only) above,
such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified.
The opinions of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP described in Sections 6(c) and
(e) above and the opinions of counsel to the Selling Stockholders
described in Section 6(d) above shall be rendered to the Underwriters at
the request of the Company or the Selling Stockholders, as the case may
be, and shall so state therein.
(g) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Underwriters, from Ernst & Young LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus; provided
20
that the letter delivered on the Closing Date shall use a "cut-off date"
not earlier than the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain stockholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the
Closing Date.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, four signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, as soon
as practicable following the date of this Agreement and in no event later
than 4 p.m. New York City time on the business day next succeeding the
date of this Agreement and during the period mentioned in Section 7(c)
below, as many copies of the Prospectus and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which Shares may have been sold by you on behalf of the Underwriters and
to any other
21
dealers upon request, either amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented
will not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus, as
amended or supplemented, will comply with law. The costs of complying with
this Section 7(c) shall be borne by the Company with respect to any
amendment of supplement required during the nine-month period after the
date of this Agreement and by the Underwriters thereafter.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending _____________, 2006 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(f) Except as otherwise provided herein, whether or not the
transactions contemplated in this Agreement are consummated or this
Agreement is terminated, to pay or cause to be paid all expenses incident
to the performance of its obligations under this Agreement, including: (i)
the fees, disbursements and expenses of the Company's counsel and the
Company's accountants in connection with the registration and delivery of
the Shares under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration Statement,
any preliminary prospectus, the Prospectus and amendments and supplements
to any of the foregoing, including all printing costs associated
therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii)
all costs and expenses related to the transfer and delivery of the Shares
to the Underwriters, including any transfer or other taxes payable
thereon, (iii) the cost of printing or producing any Blue Sky or Legal
Investment memorandum in connection with the offer and sale of the Shares
under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws
as provided in Section 7(d) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky
memorandum, (iv) all filing fees and the reasonable fees and disbursements
of counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., including any counsel fees incurred on behalf of
or disbursements by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in its capacity as a "qualified
independent underwriter," (v) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A relating
to the Common Stock and all costs and expenses incident to listing the
Shares on the NASDAQ National Market, (vi) the cost of printing
certificates representing the Shares, (vii) the costs and charges of any
transfer agent, registrar or depositary, (viii) the costs and expenses of
the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Shares,
including, without
22
limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in connection
with the road show presentations with the prior approval of the Company,
travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered
in connection with the road show, (ix) document production charges and
expenses associated with printing this Agreement, (x) all expenses
incurred in connection with any offer and sale of the Shares outside of
the United States, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with offers
and sales of the Shares outside of the United States, (xi) the fees and
disbursements of one counsel for the Selling Stockholders and (xii) all
other costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section. Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, each Selling Stockholder
agrees to pay or cause to be paid all expenses incident to the performance
of its obligations under this Agreement, including the fees, disbursements
and expenses of such Selling Stockholder's counsel (other than the one
counsel for the Selling Stockholders referred to above), but not including
any of the expenses payable by the Company as set forth above. It is
understood, however, that except as provided in this Section, Section 8
entitled "Indemnity and Contribution" and the last paragraph of Section 10
below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes
payable on resale of any of the Shares by them and any advertising
expenses connected with any offers they may make.
8. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), each
affiliate of any Underwriter within the meaning of Rule 405 under the
Securities Act, each Selling Stockholder, and each person, if any, who
controls any Selling Stockholder within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, and the
directors, officers, employees and agents of each Selling Stockholder and
such control person from and against any and all losses, claims, damages
and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
any amendment thereof, any preliminary prospectus or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged
23
untrue statement or omission based upon information relating to any
Underwriter or Selling Stockholder furnished to the Company in writing by
such Underwriter through you or by such Selling Stockholder, respectively,
expressly for use therein, provided, however, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Shares, any person
controlling such Underwriter, or any affiliate of such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required
by law so to have been delivered, at or prior to the written confirmation
of the sale of the Shares to such person, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result
of noncompliance by the Company with Section 7(a) hereof.
(b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter, each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and each affiliate of any
Underwriter within the meaning of Rule 405 under the Securities Act, from
and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only with reference to
information relating to such Selling Stockholder furnished in writing by
or on behalf of such Selling Stockholder expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto, provided, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Shares, any person
controlling such Underwriter, or any affiliate of such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required
by law so to have been delivered, at or prior to the written confirmation
of the sale of the Shares to such person, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result
of noncompliance by the Company with Section 7(a) hereof.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who
sign the
24
1
Registration Statement, the Selling Stockholders and each person, if any,
who controls the Company or any Selling Stockholder within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
to the same extent as the foregoing indemnity from the Company to such
Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(d) The aggregate liability of each Selling Stockholder under the
indemnity agreement contained in this Section 8 shall be limited in amount
to the aggregate Public Offering Price of the Shares sold by such Selling
Stockholder under this Agreement.
(e) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Section 8(a), 8(b) or 8(c), such
person (the "INDEMNIFIED PARTY") shall promptly notify the person against
whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is
understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (x) the fees
and expenses of more than one separate firm (in addition to any local
counsel) for all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act or who are affiliates of any Underwriter
within the meaning of Rule 405 under the Securities Act, (y) the fees and
expenses of more than one separate firm (in addition to any local counsel)
for the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the
meaning of either such Section, or (z) the fees and expenses of more than
one separate firm (in addition to any local counsel) for all Selling
Stockholders and all persons, if any, who control any Selling Stockholder
within the meaning of either such Section, and that all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters and such control persons and affiliates
of any Underwriters, such firm shall be designated in
25
writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated. In the case of any such
separate firm for the Company and such directors, officers and control
persons of the Company, such firm shall be designated in writing by the
Company. In the case of any such separate firm for the Selling
Stockholders and such control persons of any Selling Stockholders, such
firm shall be designated in writing by a majority in interest of the
Selling Stockholders. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement
or judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated by
the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered
into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to
the date of such settlement (other than reimbursement for fees and
expenses that the indemnifying party is contesting in good faith). No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
(f) To the extent the indemnification provided for in Section
8(a), 8(b) or 8(c) is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to
therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Sellers on
the one hand and the Underwriters on the other hand from the offering of
the Shares or (ii) if the allocation provided by clause 8(f)(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 8(f)(i) above
but also the relative fault of the Sellers on the one hand and of the
Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other
hand in connection with the offering of the Shares shall be deemed to be
in the same respective proportions as the net proceeds from the offering
of the Shares (before deducting expenses) received by each Seller and the
total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the
26
table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one
hand and the Underwriters on the other hand (and the relative fault of the
Sellers as among themselves) 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 Sellers or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Underwriters'
respective obligations to contribute pursuant to this Section 8 are
several in proportion to the respective number of Shares they have
purchased hereunder, and not joint. The liability of each Selling
Stockholder under the contribution agreement contained in this paragraph
shall be limited to an amount equal to the Public Offering Price of the
Shares sold by such Selling Stockholder under this Agreement.
(g) The Sellers and the Underwriters agree that it would not be
just or 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 that
does not take account of the equitable considerations referred to in
Section 8(f). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, 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, 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. 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 remedies provided for in this
Section 8 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in
equity.
(h) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company and the Selling Stockholders contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter, any person controlling any Underwriter or any
affiliate of any Underwriter, any Selling Stockholder or any person
controlling any Selling Stockholder or the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of
and payment for any of the Shares.
9. Termination. The Underwriters may terminate this Agreement by
notice given by you to the Company and the Selling Stockholders, if after the
execution
27
and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ National Market, the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a material disruption in securities settlement,
payment or clearance services in the United States shall have occurred, (iv) any
moratorium on commercial banking activities shall have been declared by Federal
or New York State authorities or (v) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis that, in your judgment, is material and adverse and which, singly or
together with any other event specified in this clause (v), makes it, in your
judgment, impracticable or inadvisable to proceed with the offer, sale or
delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Stockholders for the purchase of such Firm Shares are not made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Stockholders. In any such case either you or the relevant Sellers shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on an Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased on such
Option Closing Date, the non-defaulting Underwriters shall have the option to
(i) terminate their obligation hereunder to purchase the Additional Shares to be
sold on such
28
Option Closing Date or (ii) purchase not less than the number of Additional
Shares that such non-defaulting Underwriters would have been obligated to
purchase in the absence of such default. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of any Seller to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. 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.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
29
Very truly yours,
BARRIER THERAPEUTICS, INC.
By: __________________________________
Name:
Title:
The SELLING STOCKHOLDERS named in
Schedule II hereto
By: __________________________________
Name:
As Attorney-in-Fact
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Pacific Growth Equities, LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule I hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By: _____________________________________
Name:
Title:
SCHEDULE I
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.......................
Pacific Growth Equities, LLC............................
▇.▇. ▇▇▇▇▇▇ Securities Inc..............................
---------
Total ...................... 4,000,000
=========
I-1
SCHEDULE II
Selling Stockholders
Number of Firm
Selling Stockholder Shares to Be Sold
------------------- -----------------
Total.................................. ---------
2,000,000
=========
II-2
Exhibit A
[FORM OF LOCK-UP LETTER]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Pacific Growth Equities, LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Barrier Therapeutics, Inc., a Delaware
corporation (the "COMPANY"), providing for the public offering (the "PUBLIC
OFFERING") by the several underwriters, including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"UNDERWRITERS"), of shares (the "SHARES") of the Common Stock, $0.0001 par value
per share, of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (2) enter into any swap 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 described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement, (b) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering or (c) the exercise of
options to purchase shares of Common Stock; provided, that, the shares of Common
Stock acquired upon exercise of such options remain subject to this Lock-up
Agreement.
A-1
Furthermore, this Lock-Up Agreement shall not apply to (1) bona fide gifts
of securities, (2) transfers of securities to "affiliates" of the transferor if
the transfers do not involve a public distribution or public offering or (3)
transfers of participation interests in the Company's securities held by the
undersigned to affiliates of the undersigned; provided, that: (i) the recipient
of any gift described in clause (1) or the transferee of any transfer in clause
(2) or (3) agrees in writing as a condition precedent to such transfer to be
bound by the terms hereof; and (ii) in the case of any gift or transfer
described in clause (1), (2) or (3), no filing by the undersigned or any other
party to such gift or transfer under Section 16(a) of the Securities Exchange
Act of 1934, as amended, shall be required or shall be made voluntarily in
connection with such gift or transfer (other than a filing on a Form 5 made
after the expiration of the 90 day period referred to above). The term
"affiliate" shall have the meaning given such term in Rule 144(a) under the
Securities Act of 1933, as amended.
In addition, the undersigned agrees that, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 90 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the undersigned's share of Common
Stock except in compliance with the foregoing restrictions.
Notwithstanding the foregoing, if:
(1) during the last 17 days of the 90-day restricted period the Company
issues an earnings release; or
(2) prior to the expiration of the 90-day restricted period, the Company
announces that it will release earnings results during the 16-day
period beginning on the last day of the 90-day period,
the restrictions imposed by this letter shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up Agreement
is irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters. This Lock-Up Agreement
shall automatically terminate
A-2
upon the earliest to occur, if any, of: (a) if the Underwriting Agreement is not
executed prior to April 30, 2005; (b) either ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, on the one hand, or
the Company, on the other hand, advising the other in writing, prior to the
execution of the Underwriting Agreement, that it has determined not to proceed
with the Public Offering; or (c) termination of the Underwriting Agreement
before the sale of any shares to the Underwriters.
Very truly yours,
______________________________________
(Name)
______________________________________
(Address)
A-3