EXHIBIT 1.1
U.S. and International Underwriting Agreement
July 27, 2000
Roth Capital Partners, Inc.
Gruntal & Co., L.L.C.
As Representatives of the Several U.S. Underwriters
c/o Roth Capital Partners, Inc.
24 Corporate Plaza
Newport Beach, CA 92660
-and-
WestLB Panmure Limited
New Broad Street House
35 New Broad Street
London EC2M 1SQ
United Kingdom
Ladies and Gentlemen:
Introductory. On the terms and subject to the conditions hereinafter
set forth, Keryx Biopharmaceuticals, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several U.S. Underwriters (as
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defined below) and to the placees procured by the International Underwriter (as
defined below), shares of its common stock, $.001 par value per share (the
"Common Shares"). It is understood that, on the terms and subject to the
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conditions hereinafter stated: (a) 1,150,000 Common Shares (the "U.S. Firm
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Shares") will be sold to the several U.S. underwriters named in Schedule A
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hereto (the "U.S. Underwriters") in connection with the offering (the "U.S.
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Offering") and sale of such U.S. Firm Shares in the United States, and (b)
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3,450,000 Common Shares (the "International Firm Shares") will be issued to the
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placees procured by WestLB Panmure Limited (the "International Underwriter" or
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"WestLB") in connection with the offering (the "International Offering" and,
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together with the U.S. Offering, the "Offering") and sale of such International
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Firm Shares outside the United States. Roth Capital Partners, Inc. (the "U.S.
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Lead Manager" or "Roth") and Gruntal & Co., L.L.C. (together with the U.S. Lead
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Manager, the "U.S. Representatives") shall act as the representatives of the
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several U.S. Underwriters. The U.S. Representatives and the International
Underwriter are hereinafter collectively referred to as the "Representatives."
U.S. Lead Manager and the International Underwriter will also serve as the joint
global coordinators of the Offering (the "Global Coordinators"). The U.S.
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Underwriters and the International Underwriter are hereinafter collectively
referred to as the "Underwriters."
In addition, for the sole purpose of covering over-allotments from the
sale of the U.S. Firm Shares and the International Firm Shares, the Company
proposes to issue and sell, at the option of Roth: to the U.S. Underwriters an
aggregate of not more than 690,000 Common Shares (the "Option Shares"). The
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U.S. Firm Shares and the Option Shares are hereinafter called the "U.S. Shares;"
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the U.S. Firm Shares and the International Firm Shares are hereinafter
collectively referred to as the "Firm Shares." The U.S. Shares and the
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International Firm Shares are hereinafter collectively referred to as the
"Shares."
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The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
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333-37402), which contains the form of prospectus, subject to completion, to be
used in connection with the public offering and sale of the Shares (it being
understood that all of the Shares are being registered under the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Securities Act")). Each such prospectus, subject to
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completion, used in connection with such public U.S. Offering and International
Offering is called a "preliminary prospectus." Such registration statement, as
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amended, including the financial statements, exhibits and schedules thereto, in
the form in which it was declared effective by the Commission under the
Securities Act, including any information deemed to be a part thereof at the
time of effectiveness pursuant to Rule 430A under the Securities Act, is called
the "Registration Statement." Any registration statement filed by the Company
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pursuant to Rule 462(b) under the Securities Act is called the "Rule 462(b)
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Registration Statement," and from and after the date and time of filing of the
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Rule 462(b) Registration Statement the term "Registration Statement" shall
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include the Rule 462(b) Registration Statement. The form of prospectus relating
to the Shares, as first filed with the Commission pursuant to and in accordance
with Rule 424(b) ("Rule 424(b)") under the Securities Act or, if no such filing
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is required, the form of final prospectus included in the Registration Statement
at the time the Registration Statement is declared effective, is called the
"Prospectus." All references in this underwriting agreement (the "Agreement")
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to the Registration Statement, the Rule 462(b) Registration Statement, a
preliminary prospectus, the Prospectus or any amendments or supplements to any
of the foregoing, shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("EDGAR").
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The Company hereby confirms its agreements with the Underwriters as
follows:
SECTION 1. Representations and Warranties of the Company.
The Company hereby represents, warrants and covenants to each
Underwriter as follows:
(a) Compliance with Registration Requirements. (i) The Registration
Statement has been declared effective by the Commission under the Securities
Act. The Company has complied with all requests of the Commission for additional
or supplemental information. No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is in effect
and no proceedings for such purpose have been instituted or are pending or, to
the Company's knowledge, contemplated or threatened by the Commission.
(ii) Each preliminary prospectus and the Prospectus, when filed,
complied in all material respects with the Securities Act and complied in all
respects with the Public Offers of Securities Regulations 1995 (the "Pos Regs"),
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and, if filed by electronic transmission pursuant to EDGAR (except as may be
permitted by Regulation S-T under the Securities Act), was identical to the copy
thereof delivered to the Underwriters for use in connection with the offer and
sale of
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the Shares. Each of the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendment thereto, at the time it became or
becomes effective, complied or will comply in all material respects with the
Securities Act and in all respects with the Pos Regs and did not or 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. Each preliminary prospectus, as of its date, and the Prospectus, as
of its date, each as amended or supplemented, did not and will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The representations and warranties set
forth in the two immediately preceding sentences do not apply to statements in
or omissions from the Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment thereto, preliminary prospectus or
the Prospectus, or any amendments or supplements thereto, made in reliance upon
and in conformity with information relating to any Underwriter furnished to the
Company in writing by the Global Coordinators expressly for use therein. The
expert reports (the "Expert Reports") prepared by each of PA Consulting Group
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and Gill Jennings & Every, as of their date, each as amended or supplemented, as
of their date and at all subsequent times through the 30th day after the date
hereof, did not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(iii) The Prospectus and the press announcement to be released on
July 28, 2000 announcing the Offering (the "Press Announcement") contain all
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information required by, and the allotment and issue of the Shares and the issue
of the Press Announcement and the issue and distribution of the Prospectus in
the manner proposed will comply with, the Financial Services Act 1986 (the
"FSA"), the Pos Regs, the applicable rules and regulations of the London Stock
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Exchange and all other applicable laws, rules and regulations of the United
Kingdom and all other relevant jurisdictions.
(iv) There are no contracts, agreements, instruments, leases,
licenses, certifications or permits or other arrangements, whether written or
oral, or other documents required to be described in the Prospectus or to be
filed as exhibits to the Registration Statement, which have not been described
or filed as required. The statements in the Registration Statement, preliminary
prospectuses and the Prospectus summarizing the provisions of laws, rules,
regulations, contracts, or other arrangements, whether written or oral,
including, without limitation, the statements set forth under the captions "Risk
Factors--Our drug candidates are in early stages of development and may never
receive necessary regulatory approvals," "Risk Factors--Because we license our
primary proprietary technologies and rely on sponsored research agreements with
third parties, termination of these agreements would prevent us from developing
our lead drug candidates," "Business-Government Regulation," "Business--
Agreements" and "Business-Intellectual Property" accurately reflect in all
material respects the provisions of laws, rules, regulations, contracts, leases
and other arrangements purported to be summarized and, to the Company's
knowledge, there are no proposed amendments or additions to any such provisions
of laws, rules, regulations, contracts, leases or other arrangements.
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(v) In light of the matters referred to in paragraph 9(3) of the Pos
Regs, the Prospectus contains all such information as investors would reasonably
require and reasonably expect to find there for the purpose of making an
informed assessment of the assets and liabilities, financial position, profits
or losses and prospects of the Company and the rights attaching to the Common
Shares.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representatives four complete conformed (and four original)
copies of the Registration Statement and of each consent and certificate of
experts filed as a part thereof, and conformed copies of the Registration
Statement (without exhibits) and each of the preliminary prospectuses and the
Prospectus, as amended or supplemented, in such quantities and at such places as
the Representatives have reasonably requested for each of the Underwriters. The
Company will deliver one copy of the Prospectus to the registrar of companies
(the "Registrar of Companies") in England and Wales in accordance with paragraph
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4(2) of the Pos Regs.
(c) Distribution of Offering Material by the Company. The Company has
not distributed and will not distribute, prior to the Second Closing Date (as
defined below) and the completion of the Underwriters' distribution of the
Shares, any offering material in connection with the offering and sale of the
Shares other than the preliminary prospectus, the Prospectus or the Registration
Statement.
(d) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(e) Authorization of the Shares to be Sold by the Company. The Shares
to be purchased by or issued to the Underwriters or persons nominated by the
Underwriters from the Company have been duly authorized for issuance and sale
pursuant to this Agreement and, when issued and delivered by the Company against
payment therefor as provided pursuant to this Agreement, will be validly issued,
fully paid and nonassessable. None of the Shares will be issued in violation of
any preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company.
(f) No Applicable Registration or Other Similar Rights. Except as
expressly disclosed in the Prospectus, there are no persons with registration or
other similar rights to have any equity or debt securities registered for sale
under the Registration Statement or included in the offerings contemplated by
this Agreement.
(g) No Material Adverse Change. Subsequent to the respective dates as
of which information is given in the Prospectus: (i) there has been no material
adverse change, or any development that could reasonably be expected to result
in a material adverse change, in the condition, financial or otherwise, or in
the earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and the
Subsidiary (as defined below), considered as one entity (any such change or
effect, where the
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context so requires, is called a "Material Adverse Change" or a "Material
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Adverse Effect"); (ii) the Company and the Subsidiary, considered as one entity,
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have not incurred any liability or obligation, indirect, direct or contingent,
not in the ordinary course of business nor entered into any transaction or
agreement not in the ordinary course of business; and (iii) there has been (A)
no dividend or distribution of any kind declared, paid or made by the Company or
the Subsidiary on any class of capital stock, or (B) no repurchase or redemption
by the Company or the Subsidiary of any class of capital stock.
(h) Independent Accountants. Somekh Chaikin (a member firm of KPMG
International), whose report on the consolidated financial statements (which
term as used in this Agreement includes the related notes thereto) of the
Company and its subsidiary, Keryx (Israel) Biopharmaceuticals Limited (the
"Subsidiary"), is filed with the Commission as a part of the Registration
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Statement and included in the Prospectus, are independent public or certified
public accountants as required by the Securities Act.
(i) Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the consolidated financial position of the
Company and the Subsidiary as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. The financial
statements of the Company and the Subsidiary have been prepared in conformity
with generally accepted accounting principles in the U.S. applied on a
consistent basis throughout the periods involved, except as may be expressly
stated in the related notes thereto. No other financial statements or
supporting schedules are required by the Securities Act to be included in the
Registration Statement. The financial data set forth in the Prospectus under
the captions "Prospectus Summary--Summary Consolidated Financial Information,"
"Capitalization" and "Selected Financial Data" fairly present the information
set forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement.
The as adjusted condensed financial statements of the Company and the
Subsidiary and the related notes thereto included under the captions "Prospectus
Summary--Summary Consolidated Financial Information," "Selected Financial Data"
and elsewhere in the Prospectus and in the Registration Statement present fairly
the information contained therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to such financial statements, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(j) Company's Accounting Systems. Each of the Company and the
Subsidiary maintains a system of accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles in the U.S. and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with
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existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(k) Subsidiaries of the Company. Except as otherwise disclosed in the
Prospectus, the Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the Subsidiary.
(l) Incorporation and Good Standing of the Company and the Subsidiary.
Each of the Company and the Subsidiary has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction in
which it is organized with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus, and is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such qualification, except where
the failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect.
(m) Capitalization of the Company's Subsidiary. All the outstanding
shares of capital stock of the Subsidiary have been duly and validly authorized
and issued and are fully paid and nonassessable and all outstanding shares of
capital stock of the Subsidiary are owned by the Company free and clear of any
security interests, claims, liens or encumbrances.
(n) No Prohibition from Paying Dividends or Making Other
Distributions. The Subsidiary is not currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary's capital stock, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary's property or assets to the Company.
(o) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "Capitalization." The Common Shares (including the
Shares) conform in all material respects to the description thereof contained in
the Prospectus. All of the issued and outstanding Common Shares have been duly
authorized and validly issued, are fully paid and nonassessable and have been
issued in compliance with federal and state securities laws. None of the
outstanding Common Shares were issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or purchase
securities of the Company. The Underwriters (or the placees procured by WestLB)
will receive good and valid title to the Shares purchased or subscribed for by
them, free and clear of all liens, claims, security interests, pledges, charges,
encumbrances and other defects of title. There are no authorized or outstanding
options, warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable or
exercisable for, any capital stock of the Company or the Subsidiary as
accurately described in the Prospectus. The description of the Company's stock
option and other stock plans and arrangements, and the options or other rights
granted thereunder, in each case as set forth in the Prospectus, accurately and
fairly presents, in all material respects, the information required to be shown
with respect to such plans, arrangements, options and rights.
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(p) Stock Exchange Listing. The Shares have been approved for
inclusion on The Nasdaq National Market ("Nasdaq") and the Alternative
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Investment Market of the London Stock Exchange ("AIM"), subject only to official
notice of issuance.
(q) No Consents, Approvals or Authorizations Required. No consent,
approval, authorization, filing with or order of any court or governmental
agency or regulatory body is required in connection with the transactions
contemplated herein, except such as have been obtained or made under the
Securities Act and the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange Act") and such as
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may be required (and which have been obtained) (i) under the securities or blue
sky laws of any jurisdiction in connection with the purchase and distribution of
the Shares by the Underwriters in the manner contemplated herein and in the
Prospectus, (ii) by the National Association of Securities Dealers, Inc. (the
"NASD"), and (iii) by or with the Nasdaq Stock Market, Inc.
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(r) Non-Contravention of Existing Instruments Agreements. Neither the
issue and sale of the Shares nor the consummation of the Offering or any other
of the transactions herein contemplated nor the fulfillment of the terms hereof
will conflict with, result in a breach or violation of, or will result in the
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or the Subsidiary pursuant to (i) the charter or by-laws of the Company
or the Subsidiary, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or the Subsidiary is a
party or is bound or to which its property is subject, or (iii) any statute,
law, rule, regulation, judgment, order or decree applicable to the Company or
the Subsidiary of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company or the Subsidiary or any of its respective properties.
(s) No Defaults or Violations. Neither the Company nor the Subsidiary
is in violation or default of (i) any provision of its charter or by-laws, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or is bound or to which its property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or decree
of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or the
Subsidiary or any of its respective properties, except such violation or default
as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(t) No Actions, Suits or Proceedings. No action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or the Subsidiary or any of their respective
properties is pending or, to the knowledge of the Company, is threatened.
(u) All Necessary Permits, Etc. Each of the Company and the
Subsidiary possesses such valid and current certificates, authorizations or
permits issued by the appropriate state, federal or foreign regulatory agencies
or bodies as is necessary to conduct its business
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other than those certificates, authorizations or permits the absence of which
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect, and neither the Company nor the Subsidiary has received
any notice of proceedings relating to the revocation or modification of, or
noncompliance with, any such certificate, authorization or permit.
(v) Title to Properties. Each of the Company and the Subsidiary has
good and marketable title to all the properties and assets reflected as owned in
the financial statements of the Company and the Subsidiary referred to in
Section 1(i) above (or elsewhere in the Prospectus), in each case free and clear
of any security interests, mortgages, liens, encumbrances, equities, claims and
other defects, except such as do not materially and adversely affect the value
of such property and do not materially interfere with the use made or proposed
to be made of such property by the Company or the Subsidiary. The real
property, improvements, equipment and personal property held under lease by the
Company or the Subsidiary, as the case may be, are held under valid and
enforceable leases.
(w) Tax Law Compliance. Each of the Company and the Subsidiary has
filed all necessary federal, state and foreign income, franchise and other
applicable tax returns and has paid all taxes required to be paid by such entity
and, if due and payable, any related or similar assessment, fine or penalty
levied against any of them. The Company has made adequate charges, accruals and
reserves in the financial statements of the Company and the Subsidiary referred
to in Section 1(i) above in respect of all federal, state and foreign income,
franchise and other applicable taxes for all periods as to which the tax
liability of the Company and the Subsidiary has not been paid. The Company is
not aware of any tax deficiency that has been or might be asserted or threatened
against the Company or the Subsidiary.
(x) Intellectual Property Rights. Each of the Company and the
Subsidiary own or possess adequate rights to use all patents, patent
applications, patent rights or licenses, inventions, collaborative research
agreements, trade secrets, know-how, trademarks, service marks, trade names and
copyrights which are necessary to conduct its businesses as described in the
Registration Statement and Prospectus; the expiration of any patents, patent
applications, patent rights, trade secrets, trademarks, service marks, trade
names or copyrights would not result in a Material Adverse Change that is not
otherwise disclosed in the Prospectus; neither the Company nor the Subsidiary
has received any notice of, nor has knowledge of, any infringement of or
conflict with asserted rights of the Company or the Subsidiary by others with
respect to any patents, patent applications, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights; and
neither of the Company nor the Subsidiary has received any notice of, nor has
knowledge of, any infringement of or conflict with asserted rights of others
with respect to any patents, patent applications, patent rights, inventions,
trade secrets, know-how, trademarks, service marks, trade names or copyrights.
There is no claim being made against the Company or the Subsidiary regarding
patents, patent rights or licenses, inventions, collaborative research, trade
secrets, know-how, trademarks, service marks, trade names or copyrights. Each
of the Company and the Subsidiary do not, in the conduct of its business as now
conducted or proposed to be conducted, in each case as described in the
Prospectus, infringe or conflict with any right or patent of any third party, or
any discovery, invention, product or process which is the subject of a patent
application filed by any third party, known to the Company or the Subsidiary.
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(y) No Transfer Taxes or Other Fees. There are no stamp or transfer
taxes or other similar fees or charges under Federal law or the laws of any
country or any state or county, or any political subdivision thereof, required
to be paid in connection with the execution and delivery of this Agreement or
the issuance and sale by the Company of the Shares.
(z) Company not an "Investment Company." The Company has been advised
by Morgan, Lewis & Bockius LLP of the rules and requirements under the
Investment Company Act of 1940, as amended (the "Investment Company Act"). The
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Company is not, and after receipt of payment for the Shares will not be, an
"investment company" or an entity "controlled" by an "investment company" within
the meaning of the Investment Company Act and will conduct its business in a
manner so that it will not become subject to the Investment Company Act.
(aa) Insurance. Each of the Company and the Subsidiary are insured by
nationally recognized, financially sound institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for its business including, but not limited to,
policies covering real and personal property owned or leased by the Company or
the Subsidiary, as the case may be, product liability, clinical trial liability,
theft, damage, destruction, acts of vandalism and earthquakes and general
liability, directors and officers liability and key man life insurance for each
of Morris Laster and Shmuel Ben-Sasson (in the case of key man life insurance in
the amount of U.S. $2 million for each of Morris Laster and Shmuel Ben-Sasson).
The Company has no reason to believe that it or the will not be able (i) to
renew its existing insurance coverage as and when such policies expire, or (ii)
to obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change. Neither the Company nor the Subsidiary
has been denied any insurance coverage, which it has sought or for which it has
applied.
(bb) Labor Matters. No labor disturbance by the employees of the
Company or the Subsidiary exists or, to the Company's knowledge, is imminent.
The Company is not aware of any existing or threatened labor disturbance by the
employees of any of its or the Subsidiary's principal suppliers that might be
expected to result in a Material Adverse Change.
(cc) No Price Stabilization or Manipulation. The Company has not
taken and will not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or manipulation
of the price of the Common Shares to facilitate the sale or resale of the
Shares.
(dd) Lock-Up Agreements. The persons listed on Schedule C have signed
an agreement substantially in the form attached hereto as Exhibit A-1 (the "12-
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Month Lock-up Agreement"). The persons listed on Schedule D have signed an
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agreement substantially in the form attached hereto as Exhibit A-2 (the "Six-
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Month Lock-up Agreement" and together with the 12-Month Lock-up Agreement, the
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"Lock-Up Agreements"). The Company has provided to counsel for the Underwriters
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a complete and accurate list of all securityholders of the Company and the
number and type of securities held by each securityholder as of the date of this
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Agreement. The Company has provided to counsel for the Underwriters true,
accurate and complete copies of all of the Lock-up Agreements presently in
effect or effected hereby.
(ee) Related-Party Transactions. There are no business relationships
or related-party transactions involving the Company or the Subsidiary or any
other person of a nature required to be described in the Prospectus that have
not been described as required.
(ff) Officers' Certificates. Any certificate signed by an officer of
the Company and delivered to the Representatives or to counsel for the
Underwriters shall be deemed to be a representation and warranty by the Company
to each Underwriter as to the matters set forth therein.
(gg) No Unlawful Contributions or Other Payments. Neither the
Company, nor the Subsidiary, nor, to the knowledge of the Company, any employee
or agent of the Company or any Subsidiary, has made any contribution or other
payment to any official of, or candidate for, any federal, state or foreign
office in violation of any law or of the character required to be disclosed in
the Prospectus.
(hh) ERISA Compliance. Each of the Company and the Subsidiary and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained by
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the Company, the Subsidiary or their "ERISA Affiliates" (as defined below) is in
compliance in all material respects with ERISA and similiar applicable foreign
laws and regulations. "ERISA Affiliate" means, with respect to the Company or
the Subsidiary, any member of any group of organizations described in Sections
414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and
the regulations and published interpretations thereunder (the "Code") of which
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the Company or such Subsidiary is a member. No "reportable event" (as defined
under ERISA) has occurred or is reasonably expected to occur with respect to any
"employee benefit plan" established or maintained by the Company, the Subsidiary
or any of their ERISA Affiliates. No "employee benefit plan" established or
maintained by the Company, the Subsidiary or any of their ERISA Affiliates, if
such "employee benefit plan" were terminated, would have any "amount of
unfounded benefit liabilities" (as defined under ERISA). Neither the Company,
the Subsidiary nor any of their ERISA Affiliates has incurred, or reasonably
expects to incur, any liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "employee benefit plan" or (ii) Sections
412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan" established
or maintained by the Company, the Subsidiary or any of their ERISA Affiliates
that is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification.
(ii) Brokers and Finders. Other than as expressly provided for by
this Agreement, the Company has not incurred any liability for any finder's or
broker's fee or agent's commission in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
(jj) Working Capital. The cashflow and working capital projections
prepared by the Company to support the statements contained in the Prospectus,
including those
10
statements in paragraph 7 under the heading "Additional Information for the
Alternative Investment Market" have been prepared by the Company and its
directors on the basis of the assumptions set out in such projections and such
assumptions are fair and reasonable and there are no facts known or which could
on reasonable inquiry have been known to the Company or its directors which have
not been taken into account in the preparation of such projections and which
could reasonably be expected to have a material effect thereon and all
information supplied to the Representatives for the purpose of their examination
and review of the working capital projections of the Company was when given and
remains true and accurate in all material aspects and not misleading in any
material respect. Taking into consideration the proceeds of the Offering, the
Company will have sufficient working capital for its present and reasonably
foreseeable future requirements.
(kk) Y2K. There are no Y2K issues related to the Company or any of
its subsidiaries that (i) are of a character required to be described or
referred to in the Registration Statement or Prospectus by the Securities Act or
by the Exchange Act which have not been accurately described in all material
respects in the Registration Statement or Prospectus or (ii) might reasonably be
expected to result in any Material Adverse Change or that might materially
affect their properties, assets or rights.
(ll) Environmental Laws. (i) The Company is in compliance with all
rules, laws and regulations relating to the use, treatment, storage and disposal
of toxic substances and protection of health or the environment ("Environmental
Laws") which are applicable to its business, except where the failure to comply
would not reasonably be expected to result in a Material Adverse Change, (ii)
the Company has received no notice from any governmental authority or third
party of an asserted claim under Environmental Laws, which claim is required to
be disclosed in the Registration Statement or the Prospectus, (iii) the Company
is not currently aware that it will be required to make future material capital
expenditures to comply with Environmental Laws and (iv) to the knowledge of the
Company, no property that is owned, leased or occupied by the Company has been
designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. (S) 9601, et
seq.), or otherwise designated as a contaminated site under applicable state or
local law.
SECTION 2. Purchase, Sale and Delivery of the U.S. Shares and the
International Shares.
(a) The Firm Shares. The Company agrees to issue and sell to the
several U.S. Underwriters and agrees to issue to persons nominated by the
International Underwriter (or failing which, to the International Underwriter
itself) the U.S. Firm Shares and the International Firm Shares, respectively,
upon the terms and subject to the conditions herein set forth. On the basis of
the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, (i) the several U.S.
Underwriters agree, severally and not jointly, to purchase from the Company the
respective number of U.S. Firm Shares set forth opposite their names on Schedule
A hereto, and (ii) the International Underwriter agrees to procure placees to
subscribe (or failing which, agrees to subscribe itself) from the Company the
number of International Firm Shares set forth opposite its name on Schedule B
hereto. The
11
purchase price per U.S. Firm Share to be paid by the several U.S. Underwriters
to the Company shall be $9.30 and the subscription price per International Firm
Share to be paid by the International Underwriter shall be (Pounds)6.15 (in each
case, the "Offer Price"). The subscription price per International Firm Share to
-----------
be paid by persons nominated by the International Underwriter shall be
(Pounds)6.62 (the "Placing Price"). By way of clarification, the purchase price
-------------
has been translated for convenience purposes from U.S. dollars to pounds
sterling at an exchange rate of (Pounds) 1.00 to U.S. 1.5116, which was the noon
buying rate in New York City on the date hereof for cable transfers in U.S.
dollars as certified for customs purposes by the Federal Reserve Bank of New
York.
(b) The First Closing Date. Delivery of the Firm Shares to be
purchased by the Underwriters and payment therefor shall be made by the Company
and the Representatives at 9:30 a.m. New York time, at the offices of Morgan,
Lewis & Bockius LLP, New York, New York (or at such other place as may be
agreed upon among the Representatives and the Company), on the third (3/rd/)
business day following the first day that the Shares are admitted to trading on
Nasdaq on a "when issued" basis (or at such time and date to which payment and
delivery shall have been postponed pursuant to Section 8 hereof), such time and
date of payment and delivery being herein called the "First Closing Date;"
------------------
provided, however, that if the Company has not made available to the
- -------- -------
Representatives copies of the Prospectus within the time provided in Sections
2(g) and 3(e) hereof, the Global Coordinators may, in their sole discretion,
postpone the Closing Date until no later that two (2) full business days
following delivery of copies of the Prospectus to the Representatives.
(c) The Option Shares; the Second Closing Date. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to Roth to purchase up to an aggregate of 690,000 Option
Shares from the Company at the Offer Price. The option granted hereunder is for
use by the Underwriters solely in covering any over-allotments in connection
with the sale and distribution of the Firm Shares. The option granted hereunder
may be exercised at any time or times upon notice by Roth to the Company, which
notice may be given at any time within 30 days from the date of this Agreement.
The time and date of delivery of the Option Shares, if subsequent to the First
Closing Date, is called the "Second Closing Date" and shall be determined by the
-------------------
Global Coordinators, and shall not be earlier than three nor later than five
full business days after delivery of such notice of exercise. If any Option
Shares are to be purchased, (i) each U.S. Underwriter agrees, severally and not
jointly, to purchase the number of Option Shares (subject to such adjustments to
eliminate fractional shares as determined by the Global Coordinators that bears
the same proportion to the total number of Option Shares to be purchased as the
number of U.S. Firm Shares set forth on Schedule A opposite the name of such
U.S. Underwriter bears to the total number of U.S. Firm Shares, and (ii) the
Company agrees to sell the number of Option Shares which Roth shall specify upon
exercise of the option as set forth in the paragraph "Introductory" of this
Agreement.
(d) Public Offering of the Shares. The U.S. Representatives hereby
advise the Company that the U.S. Underwriters intend to offer for sale to the
public, as described in the Prospectus, their respective portions of the Shares
as soon after this Agreement has been
12
executed and the Registration Statement has been declared effective as the U.S.
Representatives, in their sole judgment, have determined is advisable and
practicable.
(e) Payment for the Shares. Payment for the Firm Shares shall be made
at the First Closing Date (and, if applicable, payment for the Option Shares
shall be made at the Second Closing Date) by wire transfer in immediately
available funds in U.S. dollars to the order of the Company. The International
Underwriter shall be entitled to deduct and retain for its own benefit a
commission of 7 percent of the aggregate value at the Placing Price of the
International Firm Shares bought by persons procured by it pursuant to Section
2(a) above. It is understood that the Representatives have been authorized, for
their own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Shares and any Option Shares the Underwriters have agreed to purchase. The
Representatives, individually and not as a representative of the Underwriters,
may (but shall not be obligated to) make payment for any Shares to be purchased
by any Underwriter whose funds shall not have been received by the
Representatives by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall not
relieve such defaulting Underwriter from any of its obligations under this
Agreement.
(f) Delivery of the Shares. The Company shall deliver, or cause to be
delivered, a credit representing the Firm Shares to an account or accounts at
The Depository Trust Company, as designated by the Global Coordinators for the
accounts of the Representatives and the several Underwriters at the First
Closing Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. In the event
Roth has exercised the over-allotment option with respect to the Option Shares,
the Company shall also deliver, or cause to be delivered, a credit representing
the Option Shares the Underwriters have agreed to purchase at the First Closing
Date (or the Second Closing Date, as the case may be), to an account or accounts
at The Depository Trust Company as designated by the Global Coordinators for the
accounts of the Representatives and the several Underwriters at the Second
Closing Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. Time shall be of
the essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than 12:00
noon on the second business day following the date of this Agreement, the
Company shall deliver or cause to be delivered copies of the Prospectus in such
quantities and at such places as the Representatives shall request. The Company
shall deliver one copy of the Prospectus to the Registrar of Companies in
England and Wales as required by Regulation 4(2) of the Pos Regs on the day the
Prospectus is first published, together with a letter addressed to the Registrar
of Companies confirming that the Prospectus had not been published or
distributed prior to that date. The Company shall use its best efforts to
deliver to WestLB 50 copies of the Prospectus no later than 9:00 a.m. (London
time) on July 28, 2000.
(h) Stabilization. In connection with the distribution of the Shares,
the Global Coordinators on behalf of the Underwriters may, to the extent
permitted by applicable laws, regulations and the rules of the Commission and
the Financial Services (Conduct of Business)
13
Rules 1990 as amended by the Financial Services (Conduct of Business) Rules
1994, over-allot and effect transactions in the Shares in any over-the-counter
market or otherwise, with a view to stabilizing or maintaining the market price
of the Shares at a level other than that which might otherwise prevail in the
open market, but in doing so, the Global Coordinators shall, as between the
Underwriters on the one hand and the Company on the other hand, act as principal
and not as agent for the Company and any loss resulting from over-allotment or
stabilization shall be borne, and any profit arising therefrom shall be
beneficially retained, by the Global Coordinators on behalf of the Underwriters.
One of the Global Coordinators shall act as stabilization agent in connection
with actions taken in accordance with this paragraph (h).
SECTION 3. Covenants of the Company.
The Company further covenants and agrees with each Underwriter as
follows:
(a) Registration Statement Matters. The Company will (i) use its best
efforts to cause a registration statement on Form 8-A (the "Form 8-A
--------
Registration Statement") as required by the Exchange Act, to become effective
- ----------------------
simultaneously with the Registration Statement, (ii) use its best efforts to
cause the Registration Statement to become effective and, if the procedure in
Rule 430A of the Securities Act is followed, to prepare and timely file with the
Commission under Rule 424(b) under the Securities Act a Prospectus in a form
approved by the Global Coordinators containing information previously omitted at
the time of effectiveness of the Registration Statement in reliance on Rule 430A
of the Securities Act, and (iii) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Global Coordinators shall
not previously have been advised and furnished with a copy or to which the
Global Coordinators shall have reasonably objected in writing or which is not in
compliance with the Securities Act. If the Company elects to rely on Rule 462(b)
under the Securities Act, the Company shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) under the
Securities Act prior to the time confirmations are sent or given, as specified
by Rule 462(b)(2) under the Securities Act, and shall pay the applicable fees in
accordance with Rule 111 under the Securities Act.
(b) Securities Act Compliance. The Company will advise the
Representatives promptly (i) when the Registration Statement or any post-
effective amendment thereto shall have become effective, (ii) of receipt of any
comments from the Commission, (iii) of any request of the Commission for
amendment of the Registration Statement or for supplement to the Prospectus or
for any additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or the
use of either of the Prospectus or of the institution of any proceedings for
that purpose and will promptly provide them with copies of all correspondence
including summaries of all oral correspondence. The Company will use its best
efforts to prevent the issuance of any such stop order preventing or suspending
the use of the Prospectus and to obtain as soon as possible the lifting thereof,
if issued.
(c) Blue Sky Compliance. The Company will cooperate with the
Representatives and counsel for the Underwriters in endeavoring to qualify the
Shares for sale under the securities laws of such jurisdictions (both national
and foreign) as the Representatives
14
may reasonably have designated in writing on or prior to July 28, 2000 and will
make such applications, file such documents, and furnish such information as may
be reasonably required for that purpose, provided the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified or
required to file such a consent. The Company will, from time to time, prepare
and file such statements, reports and other documents, as are or may be required
to continue such qualifications in effect for so long a period as the
Representatives may reasonably request for distribution of the Shares.
(d) Amendments and Supplements to the Prospectus and Other Securities
Act Matters. The Company will comply with the Securities Act and the Exchange
Act and the rules and regulations of the Commission thereunder, the Pos Regs and
the Rules of the London Stock Exchange, so as to permit the completion of the
distribution of the Shares as contemplated in this Agreement and the Prospectus.
If prior to the Second Closing Date any event shall occur which does or may
constitute a significant change or new matter for the purposes of Regulation 10
of the Pos Regs, the Company shall notify the Representatives forthwith upon the
Company becoming aware of the same, and without prejudice to Section 9 of this
Agreement shall procure that any such change or new matter shall be dealt with
in accordance with the Securities Act and the Exchange Act and the rules and
regulation of the Commission thereunder, the Pos Regs and the Rules of the
London Stock Exchange, and shall prepare and file with the Commission and the
Registrar of Companies in England and Wales, and furnish at its own expense to
the Underwriters and to dealers an appropriate amendment to the Registration
Statement or supplement to such Prospectus so that such Prospectus as so amended
or supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that such Prospectus will comply with all
applicable laws and regulations. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the Global Coordinators or counsel for the Underwriters, it becomes
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances existing at the time the Prospectus
is delivered to a purchaser, not misleading, or, if it is necessary at any time
to amend or supplement the Prospectus to comply with any law, the Company
promptly will prepare and file with the Commission, and furnish at its own
expense to the Underwriters and to dealers, an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus as
so amended or supplemented will not, in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will comply with the
law.
(e) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representatives, without charge, during the period
beginning on the date hereof and ending on the later of the First Closing Date
or such date, as in the opinion of counsel for the Underwriters, the Prospectus
is no longer required by law to be delivered in connection with sales by an
Underwriter or dealer (the "Prospectus Delivery Period"), as many copies of the
--------------------------
Prospectus and any amendments and supplements thereto as the Representatives may
request.
(f) Notice of Subsequent Events; Public Statements.
15
(i) Until the 25/th/ day following the date of the Prospectus, the
Company shall obtain the written consent of the Global Coordinators prior
to making any public presentations, statements or announcements regarding
the Company or its affiliates or any terms of the Offering. If at any time
during the ninety (90) day period after the Registration Statement becomes
effective, any rumor, publication or event relating to or affecting the
Company shall occur as a result of which, in the opinion of the Global
Coordinators, the market price of the Common Shares has been or is likely
to be materially affected (regardless of whether such rumor, publication or
event necessitates a supplement to or amendment of the Prospectus), the
Company will, after written notice from the Global Coordinators advising
the Company to the effect set forth above, forthwith prepare, consult with
the Representatives concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to the Global
Coordinators, responding to or commenting on such rumor, publication or
event.
(ii) Until June 30, 2001, the Company hereby undertakes to the
Representatives for itself and on behalf of the Underwriters that the
Company will use all reasonable efforts to:
(1) notify the Representatives in advance of, and discuss with the
Global Coordinators both the content and timing and manner of making or dispatch
of, any announcement concerning the financial position or affairs of the Company
or the Subsidiary or any announcement of profits or losses and dividends in
respect of any financial period or part thereof and discuss with the
Representatives any other material information which is likely to affect the
general character or nature of the business of the Company or the Subsidiary or
may be necessary to be made known to the public in order to enable the
shareholders of the Company and the public to appraise the position of the
Company and to avoid the establishment of a false market in its securities;
(2) forward to the Representatives for their review all proofs or
drafts of all documents proposed to be dispatched to holders of the Company's
securities and all press announcements; and
(3) notify the Representatives forthwith of any proposal to make any
material alteration, revision or release in respect of any of the service
agreements of the Company's officers or directors and of any material breach of
any covenant, undertaking or warranty in any such agreement by any officer or
director and consult with the Representatives prior to taking any action with
regard to the foregoing.
(g) Use of Proceeds. The Company shall apply the net proceeds from
the sale of the Shares in the manner described under the caption "Use of
Proceeds" in the Prospectus.
(h) Transfer Agent and Registrar. The Company shall engage and
maintain, at its expense, registrars and transfer agents for the Common Shares
both in the United States and in the United Kingdom.
(i) Earnings Statement. As soon as practicable, the Company will
make generally available to its security holders and to the Representatives an
earnings statement
16
(which need not be audited) covering the twelve-month period
ending June 31, 2001 that satisfies the provisions of Section 11(a) of the
Securities Act.
(j) Nasdaq Reporting Obligations. The Company shall file, on a
timely basis, with Nasdaq all reports and documents required to be filed under
the Exchange Act or the rules and regulations of Nasdaq.
(k) Agreement Not to Offer or Purchase or Sell Additional Securities.
The Company will not, without the Global Coordinators prior written consent,
offer, sell or contract to sell, or otherwise dispose of or enter into any
transaction which is designed to, or could be expected to, result in the
disposition (whether by actual disposition or effective economic disposition due
to cash settlement or otherwise by the Company or any affiliate of the Company
or any person in privity with the Company or any affiliate of the Company)
directly or indirectly, or announce the offering of, any Common Shares or any
securities convertible into, or exchangeable for, Common Shares other than the
Shares; provided, however, that the Company may (i) issue and sell Common Shares
-------- -------
pursuant to any employee stock option plan of the Company in effect at the date
of the Prospectus and described in the Prospectus so long as none of those
shares may be transferred, the options are granted or issued at an exercise
price not less than the fair market value of the Common Shares on the date of
grant and the Company shall enter stop transfer instructions with its transfer
agent and registrar against the transfer of any such Common Shares, and (ii)
issue Common Shares issuable upon the conversion of securities or the exercise
of warrants outstanding at the date of the Prospectus and described in the
Prospectus. The Company will not, without the Global Coordinators' prior
written consent, purchase or contract to purchase or enter into any transaction
which is designed to, or could be expected to, result in the acquisition,
directly or indirectly, of any Common Shares or any securities convertible into
or exchangeable for Common Shares. The restrictions set forth in this Section
3(k) shall terminate after the close of trading of the Shares on the 90/th/ day
following the day the Shares commenced trading on Nasdaq.
(l) AIM Reporting Obligations. The Company shall file, on a timely
basis, with the London Stock Exchange all reports, documents and announcements
required to be filed or released by the Rules of the London Stock Exchange.
(m) Future Reports to the Representatives. During the period of five
years hereafter, the Company will furnish to the Representatives: (i) as soon
as practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows for
the year then ended and the opinion thereon of the Company's independent public
or certified public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other report filed by the
Company with the Commission, the NASD or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.
(n) Regulatory Compliance. During the Prospectus Delivery Period,
the Company will file all documents required to be filed with the Commission
pursuant to
17
Section 13, 14 or 15 of the Exchange Act in the manner and within the time
periods required by the Exchange Act. Following the Offering, the Company shall
use its best efforts to continue to comply with the rules and regulations of the
Commission, Nasdaq, the London Stock Exchange, and the Pos Regs.
(o) Management and Directors. It is the Company's current intention
that the management, as disclosed in the Registration Statement, will continue
to be in place after the Offering for a reasonable period of time. Additionally,
the Company will maintain a professional board of directors that will include at
least three independent directors, as such term is used pursuant to rules and
regulations of Nasdaq, and complies with the Commission's Release No. 34-42266.
The Representatives acknowledge that the Company's board of directors as it
exists on the date hereof meets this requirement.
(p) Future Advertisements. The Company agrees that the Global
Coordinators have the right to place advertisements in financial and other
newspapers and journals at their own expense describing their services to the
Company hereunder.
SECTION 4. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase (or cause to
be purchased) and pay (or procure payment) for the Shares as provided herein on
the First Closing Date and, with respect to the Option Shares, on the Second
Closing Date, shall be subject to (i) the accuracy of the representations and
warranties on the part of the Company set forth in Section 1 hereof as of the
date hereof and as of the First Closing Date as though then made and, with
respect to the Option Shares, as of the Second Closing Date as though then made,
(ii) the timely performance by the Company of its covenants and other
obligations hereunder, and (iii) each of the following additional conditions:
(a) Compliance with Registration Requirements; No Stop Order, No
Objection from the NASD. The Registration Statement shall have become effective
prior to the execution of this Agreement, or at such later date as shall be
consented to in writing by the Representatives; and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that purpose
shall have been initiated or, to the knowledge of the Company or any
Underwriter, threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the satisfaction of
Underwriters' counsel; and the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and arrangements.
(b) Corporate Proceedings. All corporate proceedings and other legal
matters in connection with this Agreement, the form of Registration Statement
and the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to Underwriters'
counsel, and such counsel shall have been furnished with such papers and
information as they may reasonably have requested to enable them to pass upon
the matters referred to in this Section.
18
(c) No Material Adverse Change. Subsequent to the execution and
delivery of this Agreement and prior to the First Closing Date or the Second
Closing Date, as the case may be, there shall not have been any Material Adverse
Change from that set forth in the Registration Statement or Prospectus, which,
in the sole judgment of the Global Coordinators, is material and adverse and
that makes it, in the sole judgment of the Global Coordinators, impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated by
the Prospectus.
(d) Opinion of Counsel for the Company. (i) You shall have received
on the First Closing Date, and the Second Closing Date, as the case may be, an
opinion of Morgan, Lewis & Bockius, LLP, U.S. counsel for the Company, and Yigal
Arnon & Co., counsel to the subsidiary, in the form of Exhibits B-1 and B-2
attached hereto, dated the First Closing Date, and the Second Closing Date, as
the case may be, addressed to the Underwriters and with reproduced copies or
signed counterparts thereof for each of the Underwriters.
(ii) Counsel rendering the opinion contained in Exhibits B-1 and B-2
may rely as to questions of fact upon representations or certificates of
officers of the Company and of government officials, in which case their opinion
is to state that they are so relying and that they have no knowledge of any
material misstatement or inaccuracy in any such opinion, representation or
certificate. Copies of any opinion, representation or certificate so relied upon
shall be delivered to you, as Representatives of the Underwriters, and to
Underwriters' counsel.
(e) Opinion of Intellectual Property Counsel for the Company. You
shall have received on the First Closing Date and the Second Closing Date, as
the case may be, an opinion of Pennie & Edmonds LLP, patent counsel for the
Company, in the form of Exhibit C hereto, dated the First Closing Date and the
Second Closing Date, as the case may be. The Company shall have furnished to
such counsel such documents as they may have requested for the purpose of
enabling them to pass upon such matters.
(f) Accountants' Comfort Letter. You shall have received on the
First Closing Date and on the Second Closing Date, as the case may be, a letter
from Somekh Chaikin addressed to the U.S. Representatives and the International
Underwriter, dated the First Closing Date, or the Second Closing Date, as the
case may be, confirming that they are independent certified public accountants
with respect to the Company and the Subsidiary within the meaning of the
Securities Act and the applicable published rules and regulations and based upon
the procedures described in such letter delivered to you concurrently with the
execution of this Agreement (herein called the "Original Letter"), but carried
---------------
out to a date not more than four (4) business days prior to the First Closing
Date or the Second Closing Date, as the case maybe, (A) confirming, to the
extent true, that the statements and conclusions set forth in the Original
Letter are accurate as of the First Closing Date or the Second Closing Date, as
the case may be, and (B) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter which are necessary
to reflect any changes in the facts described in the Original Letter since the
date of such letter, or to reflect the availability of more recent financial
statements, data or information. The letter shall disclose any change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and the Subsidiary considered as one enterprise, from
that set forth in the Registration Statement or
19
Prospectus. The Original Letter shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and shall
(A) represent, to the extent true, that they are independent certified public
accountants with respect to the Company and its subsidiaries, within the meaning
of the Securities Act and the applicable published rules and regulations thereto
and (B) set forth their opinion with respect to their examination of the
consolidated balance sheet of the Company as of December 31, 1999 and 1998 and
related consolidated statements of operations, shareholders' equity, and cash
flows for the three years ended December 31, 1999. In addition, you shall have
received from KPMG London in a letter addressed to the Company, and made
available to the Underwriters for the use of the Underwriters, stating that
their review of the Company's systems of internal accounting controls, to the
extent they are deemed necessary in establishing the scope of the examination of
the Company's consolidated financial statements as of December 31, 1999 and
1998, did not disclose any weaknesses in internal controls that they considered
to be material weaknesses.
(g) Officers' Certificate. You shall have received on the First
Closing Date and the Second Closing Date, as the case may be, a certificate of
the Company, dated the First Closing Date and the Second Closing Date, as the
case may be, signed by the Chief Executive Officer and Chief Financial Officer
of the Company, to the effect that, and the Global Coordinators shall be
satisfied that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as made on and as of the First Closing Date
and the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the First Closing Date and
the Second Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to the Company's knowledge, are pending or
threatened under the Act;
(iii) When the Registration Statement became effective and at
all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, conformed in all material respects to the requirements
of the Securities Act, and the applicable rules and regulations of the
Commission thereunder, the Pos Regs and the Rules of the London Stock
Exchange, (A) the Registration Statement and any amendments thereto, did
not and does not include 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 and (B) the Prospectus and any
amendments or supplements thereto, did not and does not include any untrue
statement of a material fact or omit the statement of material fact
required to be stated therein or necessary to make the statement therein
not misleading in light of the circumstances under which they were made;
and, since the effective date of the Registration Statement, there has
occurred no event required to be set forth in an amended or supplemented
Prospectus which has not been so set forth; and
20
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, there has not been
(a) any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and the
Subsidiary considered as one enterprise, (b) any transaction involving the
Company and the Subsidiary, except transactions entered into in the
ordinary course of business, (c) any obligation, direct or contingent,
incurred by the Company or the Subsidiary, except obligations incurred in
the ordinary course of business consistent with past practices, (d) any
change in the capital stock or outstanding indebtedness of the Company or
the Subsidiary, (e) any dividend or distribution of any kind declared, paid
or made on the capital stock of the Company or the Subsidiary, or (f) any
loss or damage (whether or not insured) to the property of the Company or
the Subsidiary which has been sustained or will have been sustained.
(h) Lock-up Agreement from Certain Stockholders of the Company. The
Company shall have obtained and delivered to you agreements, in the form of
Exhibit A-1 attached hereto, from the persons listed in Schedule C attached
hereto, and agreements, in the form of Exhibit A-2, from the persons listed on
Schedule D which is annexed hereto.
(i) Stock Exchange Listing. The Common Shares shall have been
approved for quotation on Nasdaq, subject only to official notice of issuance,
and AIM shall have admitted the Common Shares, that are issued and are to be
issued pursuant to the Offering, to trading on AIM.
(j) Compliance with Prospectus Delivery Requirements. The Company
shall have complied with the provisions of Sections 2(g) and 3(e) hereof with
respect to the furnishing of the Prospectus.
(k) Opinion of Counsel for the Underwriters. You shall have received
on the First Closing Date and the Second Closing Date, as the case may be, an
opinion of Baer Marks & Upham LLP, counsel for the Underwriters, substantially
in the form of Exhibit D hereto. The Company shall have furnished to such
counsel such documents as they may have reasonably requested for the purpose of
enabling them to pass upon such matters.
(l) Deliveries to the Representatives. The Company shall deliver to
the Underwriters the following documents:
(i) three original signed copies of the Expert's Report of PA
Strategy Partners Ltd and the Patent Agent's Report of Gill Jennings &
Every;
(ii) three original signed copies of the written consent of
Somekh Chaikin to the inclusion in the Registration Statement of the Report
set out on page F-1 of the Prospectus and to their name in the form and
context in which they are included;
(iii) three original signed responsibility statements and powers
of attorney executed by each director of the Company in the form previously
approved by the Global Coordinators;
21
(iv) three original signed copies of the nominated advisor's
agreement and the nominated broker's agreement;
(v) one certified copy of each of the employment agreements
described in the Prospectus under the caption "Management";
(vi) three original copies of the Original Letter;
(vii) three original signed copies of a letter from the Company
addressed to the Representatives confirming that the working capital
available to the Company is sufficient for its present requirements in the
agreed form;
(viii) three original letters, referencing paragraph 16.30 of the
Rules of the London Stock Exchange, from each of the Company, Morgan, Lewis
& Bockius LLP, Somekh Chaikin, PA Strategy Partners Ltd. and Gill Jennings
& Every; and
(ix) three original signed copies of the written consent of PA
Strategy Partners Ltd. to the inclusion in the Prospectus of their report
set out on pages A-1 to A-14 of the Prospectus.
(m) Additional Documents. On or before each of the First Closing Date
and the Second Closing Date, as the case may be, the Representatives and counsel
for the Underwriters shall have received such information, documents,
certificates and opinions as they may reasonably require for the purposes of
enabling them to pass upon the issuance and sale of the Shares as contemplated
herein, and in order for them to determine the accuracy of any of the
representations and warranties and the satisfaction of any of the conditions or
agreements herein contained.
If any condition specified in this Section 4 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Option Shares, at any time prior to the
Second Closing Date which termination shall be without liability on the part of
any party to any other party, except that Section 5 (Payment of Expenses),
Section 6 (Reimbursement of Underwriters' Expenses), Section 7 (Indemnification
and Contribution) and Section 12 (Representations and Indemnities to Survive
Delivery) shall at all times be effective and shall survive such termination.
Section 5. Payment of Expenses.
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Common Shares (including
all printing and engraving costs), (ii) all fees and expenses of the registrar
and transfer agent of the Common Shares, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel, independent
public or certified public accountants and other advisors, (v) all costs and
expenses incurred in connection
22
with the preparation, printing, filing, shipping and distribution of the
Registration Statement (including financial statements, exhibits, schedules,
consents and certificates of experts), each preliminary prospectus and the
Prospectus, and all amendments and supplements thereto, and this Agreement, (vi)
all filing fees and expenses incurred by the Company and the Underwriters in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Shares for offer and
sale in the U.S. under the state securities or blue sky laws or the securities
laws, including any Blue Sky fees of the Underwriters' counsel in an amount not
to exceed $10,000, and applicable laws in the U.K., (vii) the filing fees
incident to, and the reasonable fees and expenses of counsel for the
Underwriters in connection with, the NASD review and approval of the
Underwriters' participation in the offering and distribution of the Common
Shares, (viii) the fees and expenses associated with including the Common Shares
on Nasdaq and AIM, (ix) all expert reports related to the listing of the Common
Shares on AIM or as otherwise required by the Representatives (including those
reports prepared by PA Consulting Group and Gill, Jennings & Every), (x) the
costs of preparing up to eight bound volumes of the Offering documents for the
Representatives and their counsel, (xi) all costs and expenses incident to the
travel and accommodation of the Company's employees on the "roadshow," and (xii)
all other fees, costs and expenses referred to in Item 12 and Item 13 of Part II
of the Registration Statement. All fees shall be payable together with all value
added tax or other local taxes thereon, if any. Except as provided in Sections
5, 6, 7 and 10 hereof, the Underwriters shall pay their own expenses, including
the fees and disbursements of their counsel.
Section 6. Reimbursement of Underwriters' Expenses.
If this Agreement is terminated by the Representatives pursuant to
Section 4, Section 8 or Section 9, or if the sale to the Underwriters (or to
persons nominated by the International Underwriter) of the Shares is not
consummated, the Company agrees to reimburse the Representatives and the other
Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand for all out-of-pocket expenses
(and any related value added tax) that shall have been reasonably incurred by
the Representatives and the other Underwriters in connection with the proposed
purchase and the offering and sale of the Shares, including but not limited to
fees and disbursements of counsel, including Blue Sky legal fees not to exceed
$10,000, printing expenses, travel and accommodation expenses, postage,
facsimile and telephone charges, provided, however, that the Company's
-------- -------
obligation for reimbursement hereunder shall be limited to an aggregate of
$600,000.
Section 7. Indemnification and Contribution.
(a) Indemnification of the Underwriters. (i) The Company agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage, liability
or expense, as incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act, the Pos Regs or
other federal, state or foreign statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company, which consent shall not be
unreasonably withheld), insofar as such
23
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A under the Securities Act, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the Company
contained herein; or (iv) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under law; or (v) any untrue statement or
alleged untrue statement of any fact contained in any audio or visual materials
provided by the Company or based upon written information furnished by or on
behalf of the Company including, without limitation, slides, videos, films or
tape recordings, used in connection with the marketing of the Shares, including
without limitation, statements communicated to securities analysts employed by
the Underwriters; or (vi) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Shares or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action arising
out of or based upon any matter covered by clause (i), (ii), (iii), (iv) or (v)
above, provided that the Company shall not be liable under this clause (vi) to
the extent that a court of competent jurisdiction shall have determined by a
final non-appealable judgment that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act undertaken or omitted to
be taken by such Underwriter through its bad faith or willful misconduct; and to
reimburse each Underwriter and each such controlling person for any and all
expenses (including the fees and disbursements of counsel chosen by the
Representatives) as such expenses are reasonably incurred by such Underwriter or
such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the foregoing indemnity agreement shall not
-------- -------
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
provided, further, that with respect to any preliminary prospectus, the
- -------- -------
foregoing indemnity agreement shall not inure to the benefit of any Underwriter
from whom the person asserting any loss, claim, damage, liability or expense
purchased Shares, or any person controlling such Underwriter, if copies of the
Prospectus were timely delivered to the Underwriter pursuant to Section 2(g) and
a copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage, liability or expense.
The indemnity agreement set forth in this Section 7(a) shall be in addition to
any liabilities that the Company may otherwise have.
24
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or regulation, or
the Pos Regs or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Company by the Representatives expressly for use therein; and
to reimburse the Company, or any such director, officer or controlling person
for any legal and other expense reasonably incurred by the Company, or any such
director, officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that in no case shall any
-------- -------
Underwriter be liable or responsible for any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter. The indemnity agreement set forth in this Section 7(b) shall
be in addition to any liabilities that each Underwriter may otherwise have.
(c) Information Provided by the Underwriters. The Company and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, hereby acknowledges that the only information that the
Underwriters (including the Representatives) have furnished to the Company
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) are the statements set
forth in the fourth paragraph under the caption "Underwriting" in the
Prospectus; and the Underwriters confirm that such statements are correct.
(d) Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it shall
elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel
25
reasonably satisfactory to such indemnified party; provided, however, if the
-------- -------
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties at the expense of the
indemnifying party. Upon receipt of notice from the indemnifying party to such
indemnified party of such indemnifying party's election so to assume the defense
of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (the Representatives in the case of Section 7(b) and Section 12),
representing the indemnified parties who are parties to such action), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying party.
(e) Settlements. The indemnifying party under this Section 7 shall
not be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, 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 against any loss, claim, damage,
liability or expense 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 Section 7(d) hereof, 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 60 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. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent (i) includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(f) Contribution. (i) If the indemnification provided for in this
Section 7 is unavailable to or insufficient to hold harmless an indemnified
party under Section 7(a) or (b)
26
above in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect the relative benefits received by such
party on the one hand and the Underwriters on the other from the offering of the
Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of such party on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or its "control" stockholders on the one hand, or the Underwriters on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(ii) The Company and Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 7(f) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7(f). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 7(f) shall be deemed to include 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 subsection (f), (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter, and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
in this Section 7(f) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(g) Timing of Any Payments of Indemnification. Any losses, claims,
damages, liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred, but in all cases, no later than forty-five
(45) days of invoice to the indemnifying party. All sums payable to any
indemnified party under this Section 7 shall be paid free and clear of all
deductions or withholdings unless the deduction or withholding is required by
law, in which event the person making payment shall pay such additional amount
as shall be required to ensure that the net amount received by the indemnified
party will equal the full amount which would have been received by it had no
such deduction or withholding been made. If the United Kingdom Inland Revenue or
any other taxing authority in any jurisdiction brings into any charge to tax (or
into any computation of income, profits or gains for the purposes of any charge
to tax) any sum payable to any indemnified party under this Section 7 then the
amount so payable shall be grossed up by such amount as will
27
ensure that after deduction of the taxation so chargeable there shall remain a
sum equal to the amount that would otherwise be payable (additional payments
being made on demand as may be necessary).
(h) Survival. The indemnity and contribution agreements contained
in this Section 7 of this Agreement shall remain operative and in full force and
effect, regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter, the Company, its
directors or officers or any persons controlling the Company, (ii) acceptance of
any Shares and payment therefor hereunder, or (iii) any termination of this
Agreement. A successor to any Underwriter, or to the Company, its directors or
officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section 7.
(i) Acknowledgments of Parties. The parties to this Agreement
hereby acknowledge that they are sophisticated business persons who were
represented by counsel during the negotiations regarding the provisions hereof
including, without limitation, the provisions of this Section 7, and are fully
informed regarding said provisions. They further acknowledge that the provisions
of this Section 7 fairly allocate the risks in light of the ability of the
parties to investigate the Company and its business in order to assure that
adequate disclosure is made in the Registration Statement and Prospectus as
required by the Securities Act, the Exchange Act and the Pos Regs.
Section 8. Default of One or More of the Several Underwriters.
(i) If, on the First Closing Date or the Second Closing Date, as
the case may be, any one or more of the several U.S. Underwriters shall fail or
refuse to purchase Shares that it or they have agreed to purchase hereunder on
such date, and the aggregate number of Common Shares which such defaulting U.S.
Underwriter or U.S. Underwriters agreed but failed or refused to purchase does
not exceed 10% of the aggregate number of the Shares to be purchased on such
date, the other U.S. Underwriters shall be obligated, severally, in the
proportions that the number of Firm Shares set forth opposite their respective
names on Schedule A hereto 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 may be specified by the Representatives with the consent of
the non-defaulting U.S. Underwriters, to purchase the Shares which such
defaulting U.S. Underwriter or U.S. Underwriters agreed but failed or refused to
purchase on such date. If, on the First Closing Date or the Second Closing Date,
as the case may be, any one or more of the Underwriters shall fail or refuse to
purchase Shares and the aggregate number of Shares with respect to which such
default occurs exceeds 10% of the aggregate number of Shares to be purchased on
such date, and arrangements satisfactory to the Representatives and the Company
for the purchase of such Shares are not made within 48 hours after such default,
this Agreement shall terminate without liability of any party to any other party
other than the defaulting Underwriter, except that the provisions of Sections 5,
6, 7, 10 and 12 shall at all times be effective and shall survive such
termination. In any such case either the Global Coordinators or the Company
shall have the right to postpone the First Closing Date or the Second Closing
Date, as the case may be, but in no event for longer than seven days in order
that the required changes,
28
if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
(ii) As used in this Agreement, the term "Underwriter" shall be
deemed to include any person substituted for a defaulting Underwriter under this
Section 8. Any action taken under this Section 8 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
Section 9. Termination of this Agreement.
This Agreement may be terminated by either of the Global
Coordinators by notice given to the Company if: (a) at any time after the
execution and delivery of this Agreement and prior to the First Closing Date (i)
trading or quotation in any of the Company's securities shall have been
suspended or limited by the Commission, Nasdaq, the London Stock Exchange or
AIM, or trading in securities generally on either Nasdaq, AIM, the London Stock
Exchange or the New York Stock Exchange shall have been suspended or limited, or
minimum or maximum prices shall have been generally established on any of such
stock exchanges by the Commission, the NASD, the New York Stock Exchange or
otherwise; (ii) a general banking moratorium shall have been declared by any of
federal or State of New York or U.K. authorities; (iii) there shall have
occurred any outbreak or escalation of national or international hostilities or
any crisis or calamity, or any change in the United States, the U.K. or
international financial markets, or any substantial change or development
involving a prospective change in the political, financial or economic
conditions of the United States, the U.K. or internationally, as in the judgment
of the Representatives is material and adverse and makes it impracticable or
inadvisable to market the Shares in the manner and on the terms contemplated in
the Prospectus or to enforce contracts for the sale of securities; (iv) in the
judgment of the Representatives there shall have occurred any Material Adverse
Change; or (v) the Company shall have sustained a loss by strike, fire, flood,
earthquake, accident or other calamity of such character as in the judgment of
the Representatives may interfere materially with the conduct of the business or
operations of the Company regardless of whether or not such loss shall have been
insured; or (b) in the case of any of the events specified in Section 9(i)
through (v), such event singly or together with any other event, makes it, in
the judgment of the Representatives, impracticable or inadvisable to market the
Shares in the manner and on the terms contemplated in the Prospectus. Any
termination pursuant to this Section 9 shall be without liability on the part of
(x) the Company to any Underwriter, except that the Company shall be obligated
to reimburse the expenses of the Representatives and the Underwriters pursuant
to Sections 5, 6, 7 and 10 hereof, (y) any Underwriter to the Company or any
person controlling the Company, or (z) of any party hereto to any other party
except that the provisions of Sections 5, 6, 7 and 10 shall at all times be
effective and shall survive such termination.
SECTION 10. Pre-Offering Transaction Involving the Company.
If (i) the Offering does not proceed and (ii) the Company is
acquired, merges or sells all or substantially all of its assets or otherwise
effects a corporate reorganization or other business combination or
extraordinary corporate transaction, including a private or public financing
(collectively, a "Transaction") on or prior to September 30, 2000, then the
-----------
Company
29
shall promptly reimburse the Underwriters for all accountable out-of-pocket
expenses incurred by the Underwriters and persons associated with such
Underwriters (and any related value added tax), without giving effect to the
limitations contained in Section 6, above, in immediately available funds.
Section 11. Value Added Tax.
(a) Where, pursuant to this Agreement, a sum (a "Relevant Sum")
------------
is to be paid or reimbursed to the Representatives in respect of any cost or
expense paid or incurred by the Representatives and that cost or expense
includes an amount in respect of value added tax (the "VAT Element"), the
-----------
Company shall pay an amount to the Representatives in respect of the VAT Element
that shall be determined as follows:
(i) if the Relevant Sum constitutes for value added tax
purposes payment to the Representatives for the supply by it of goods or
services to the Company, a sum equal to the proportion of the VAT Element
that the Representatives certify as representing irrecoverable input tax in
the hands of the Representatives, that certificate to be conclusive except
in the case of manifest error; and
(ii) if the Relevant Sum constitutes for value added tax
purposes the reimbursement of a cost or expense incurred by the
Representatives as agent, for the Company, a sum equal to the whole of the
VAT Element,
and where a sum equal to the VAT Element has been reimbursed to the
Representatives under paragraph (ii) above, the Representatives shall provide
the Company with a proper tax invoice in respect of the supply to which the
Relevant Sum relates, that is to say a tax invoice naming the Company as the
recipient of the supply and issued either by the Representatives or, if the
Representatives have treated the relevant cost or expense as a disbursement for
value added tax purposes, by the person making the supply.
(b) If the performance by the Representatives of any of their
obligations under this Agreement shall represent for value added tax purposes
the making by the Representatives of any supply of goods or services to the
Company that is taxable at a positive rate, the Company shall pay to the
Representatives, in addition to the amounts otherwise payable by the Company to
the Representatives pursuant to this Agreement (including, without limitation,
amounts payable by the Company to the Representatives pursuant to clause (a),
above, an amount equal to the value added tax chargeable on any such supply,
that payment to be made within seven days of the Representatives requesting the
same and against production by the Representatives of a proper tax invoice.
Section 12. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties
and other statements of the Company or any person controlling the Company, of
its officers, and of the several Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
its or their partners, officers or directors or any controlling person, as the
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case may be, and will survive delivery of and payment for the Shares sold
hereunder and any termination of this Agreement.
Section 13. Notices.
All communications hereunder shall be in writing and shall be mailed,
hand delivered, delivered by a nationally recognized overnight delivery service
or telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
Roth Capital Partners, Inc.
24 Corporate Plaza
Newport Beach, CA 92660
Telephone: (949) 720-5700
Facsimile: (949) 720-7223
Attention: Lisa Walters-Hoffert, Managing Director
Gruntal & Co., L.L.C.
One Liberty Plaza
New York, NY 10006-1487
Telephone:
35 New Broad Street
Attention: Roger C. Kahn, Senior Mananging Director
WestLB Panmure Limited
New Broad Street House
35 New Broad Street
London EC2M 1SQ
United Kingdom
Telephone: +44 207 860 3645
Facsimile: +44 207 860 1370
Attention: Chris Collins, Managing Director
with a copy to:
Baer Marks & Upham LLP
805 Third Avenue
20/th/ Floor
New York, New York 10022
Telephone: (212) 702-5700
Facsimile: (212) 702-5941
Attention: Steven S. Pretsfelder, Esq. and
Jonathan J. Russo, Esq.
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If to the Company:
Keryx Biopharmaceuticals, Inc.
Kiryat Mada 5
Har Hotzvim
Jerusalem
91326 Israel
Telephone: +972 (2) 537 4997
Facsimile: +972 (2) 671 8946
Attention: Bob Trachtenberg, Esq.
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
45th Floor
New York, NY 10178-0060
Telephone: (212) 309-6000
Facsimile: (212) 309-6273
Attention: Robert G. Robison, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 14. Successors.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 8
hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 7, and to their respective successors
and assigns, and no other person will have any right or obligation hereunder.
The term "successors" shall not include any purchaser of the Shares as such from
any of the Underwriters merely by reason of such purchase.
Section 15. Partial Unenforceability.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
Section 16. Governing Law Provisions.
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in such state.
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(b) Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby (a "Related Proceedings") may be instituted in the federal courts of the
-------------------
United States of America located in the City and County of New York or the
courts of the State of New York in each case located in the City and County of
New York (collectively, the "Specified Courts"), and each party irrevocably
----------------
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
-------
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in
- --------
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party's address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
Section 17. General Provisions.
This Agreement constitutes the entire agreement of the parties and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein (express
or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. Section headings herein are for the convenience
of the parties only and shall not affect the construction or interpretation of
this Agreement.
Section 18. Blue Sky Compliance.
Each Underwriter severally covenants and agrees with the Company not
to distribute the Prospectus or offer the Shares in any jurisdiction in which,
subject to the Company's compliance with Section 3(c) hereof, such distribution
or offer would conflict with applicable law. Each Underwriter further severally
covenants and agrees not to request that the Company offer Shares to any person
to whom, subject to the Company's compliance with Section 3(c) hereof, such
offer would conflict with applicable law.
[The remainder of this page has been intentionally left blank.]
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
KERYX BIOPHARMACEUTICALS, INC.
By:/s/ Morris Laster
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Morris Laster, M.D.
Chief Executive Officer
The foregoing Underwriting Agreement is hereby confirmed and accepted by the
Representatives as of the date first above written.
On their behalf and on behalf of each of the
several U.S. Underwriters named in Schedule A
hereto.
BY: ROTH CAPITAL PARTNERS, INC. On its own behalf:
By: /s/ Lisa Walters-Hoffert BY: WESTLB PANMURE LIMITED
------------------------
Lisa Walters-Hoffert
Managing Director
By: /s/ C.I. Collins
----------------
C.I. Collins
BY: GRUNTAL & CO., L.L.C. Managing Director
By: /s/ Roger C. Kahn By: /s/ J. Ronald Openshaw
----------------- ----------------------
Roger C. Kahn J. Ronald Openshaw
Senior Managing Director Executive Director
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