1
EXHIBIT 1
1,000,000 Shares
EntreMed, Inc.
Common Stock
Underwriting Agreement
dated June 13, 2000
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TABLE OF CONTENTS
Page
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SECTION 1. Representations and Warranties of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Compliance with Registration Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Offering Materials Furnished to Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) Distribution of Offering Material By the Company. . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) The Underwriting Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(e) Authorization of the Common Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(f) No Applicable Registration or Other Similar Rights. . . . . . . . . . . . . . . . . . . . . . . . 3
(g) No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(h) Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(i) Preparation of the Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(j) Incorporation and Good Standing of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . 4
(k) Capitalization and Other Capital Stock Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 4
(l) Stock Exchange Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(m) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required. . . . 4
(n) No Material Actions or Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(o) Intellectual Property Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(p) All Necessary Permits, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(q) Title to Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(r) Tax Law Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(s) Company Not an "Investment Company". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(t) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(u) No Price Stabilization or Manipulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(v) Related Party Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(w) No Unlawful Contributions or Other Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(x) Company's Accounting System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(y) Compliance with Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(z) Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(aa) Exchange Act Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2. Purchase, Sale And Delivery Of The Common Shares. . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) The Common Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) The Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) [Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Public Offering of the Common Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Payment for the Common Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) Delivery of the Common Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) Delivery of Prospectus to the Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. Additional Covenants of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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(a) Underwriter's Review of Proposed Amendments and Supplements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Securities Act Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Amendments and Supplements to the Prospectus and Other Securities Act Matters. . . . . . . . . . . . . . . . . . . 9
(d) Copies of any Amendments and Supplements to the Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Blue Sky Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(g) Transfer Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(h) Earnings Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(i) Periodic Reporting Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(j) Agreement Not To Offer or Sell Additional Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(k) Future Reports to the Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(l) Exchange Act Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4. Payment Of Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5. Conditions Of The Obligations Of The Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Accountants' Comfort Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Compliance with Registration Requirements; No Stop Order; No Objection from NASD. . . . . . . . . . . . . . . . . 11
(c) Opinion of Counsel for the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Opinion of Counsel for the Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) Officers' Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Bring-down Comfort Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(g) Lock-Up Agreement from Certain Securityholders of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(h) Additional Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6. Reimbursement Of Underwriter's Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7. Effectiveness Of This Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 8. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Indemnification of the Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Indemnification of the Company, its Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Notifications and Other Indemnification Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Settlements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9. Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 10. [Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 11. Termination Of This Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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SECTION 12. Representations And Indemnities To Survive Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 13. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 14. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 15. Partial Unenforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 16. Governing Law Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 17. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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Underwriting Agreement
June 13, 2000
BANC OF AMERICA SECURITIES LLC
600 Montgomery Street
San Francisco, California 94111
Ladies and Gentlemen:
Introductory. EntreMed, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Banc of America Securities LLC (the "Underwriter"
or "BAS") an aggregate of 1,000,000 shares (the "Common Shares") of its Common
Stock, par value $0.01 per share (the "Common Stock").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-94665), which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration
statement, as 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 of 1933 and the rules and regulations
promulgated thereunder (collectively, the "Securities Act"), including all
documents incorporated or deemed to be incorporated by reference therein and
any information deemed to be a part thereof at the time of effectiveness
pursuant to Rule 430A or Rule 434 under the Securities Act or the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder
(collectively, the "Exchange Act"), is called the "Registration Statement".
Any registration statement filed by the Company pursuant to Rule 462(b) under
the Securities Act is called the "Rule 462(b) Registration Statement", and from
and after the date and time of filing of the Rule 462(b) Registration Statement
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriter to
confirm sales of the Common Shares, is called the "Prospectus." All references
in this Agreement to the Registration Statement, the Rule 462(b) Registration
Statement, a preliminary prospectus, the Prospectus or the Term Sheet, 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").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include
the filing of any document under the Exchange Act which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be.
The Company hereby confirms its agreements with the Underwriter as
follows:
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Section 1. Representations and Warranties of the Company.
The Company hereby represents, warrants and covenants to the
Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has
responded to all requests, if any, 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 best knowledge of the Company, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to EDGAR, was identical to the copy thereof delivered to
the Underwriter for use in connection with the offer and sale of the Common
Shares (except as may be otherwise permitted by Regulation S-T under the
Securities Act). Each of the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto, at the time it
became effective and at all subsequent times, complied and will comply in all
material respects with the Securities Act and did not and 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. The Prospectus, as amended or supplemented, as of its date and at
all subsequent times, 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, or the Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity with information
relating to the Underwriter furnished to the Company in writing by the
Underwriter expressly for use (A) in the table in the first paragraph and the
second paragraph under the caption "Plan of Distribution" in the prospectus
supplement and (B) in the seventh, eighth, ninth and eleventh paragraphs under
the caption "Plan of Distribution" in the prospectus supplement concerning
stabilization and passive market making by the Underwriter. There are no
contracts 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.
(b) Offering Materials Furnished to Underwriter. The Company has
delivered to the Underwriter one copy of the manually signed signature page to
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 preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Underwriter has
reasonably requested.
(c) Distribution of Offering Material By the Company. The Company
has not distributed and will not distribute, prior to the completion of the
Underwriter's distribution of the Common Shares, any offering material in
connection with the offering and sale of the Common Shares other than a
preliminary prospectus, the Prospectus or the Registration Statement.
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(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 Common Shares. The Common Shares to be
purchased by the Underwriter from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) No Applicable Registration or Other Similar Rights. 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 offering contemplated by this Agreement, except for such rights as have
been duly waived or which individually or in the aggregate would result in a
Material Adverse Change.
(g) No Material Adverse Change. Except as otherwise disclosed in
the Prospectus, subsequent to the respective dates as of which information is
given in the Prospectus: (i) there has been no material adverse change, or, to
the best knowledge of the Company, any development that could reasonably be
expected to result in a material adverse change, in the financial condition,
business, or results of operations, whether or not arising from transactions in
the ordinary course of business, of the Company (any such change is called a
"Material Adverse Change"); (ii) the Company has not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary
course of business nor entered into any material transaction or agreement not
in the ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company on any class of capital stock or repurchase or
redemption by the Company of any class of capital stock.
(h) Independent Accountants. Ernst & Young LLP, who have
expressed their opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) filed with the
Commission as a part of the Registration Statement and included in the
Prospectus, are, to the best knowledge of the Company, independent public or
certified public, accountants as required by the Securities Act.
(i) Preparation of the Financial Statements. The financial
statements included in the Registration Statement and the Prospectus present
fairly the consolidated financial position of the Company as of and at the
dates indicated and the results of their operations and cash flows for the
periods specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles as applied in the United States
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 to be included in the Registration
Statement. The financial data set forth in the Prospectus under the caption
"Capitalization" fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement.
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(j) Incorporation and Good Standing of the Company. The Company
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in
the Prospectus and to enter into and perform its obligations under this
Agreement. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions where the
failure to so qualify or to be in good standing would not, individually or in
the aggregate, result in a Material Adverse Change. The Company does not own
or control, directly or indirectly, any subsidiary that would be considered a
"significant subsidiary" within the meaning of Rule 1-02(w) of Regulation S-X.
(k) 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" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options or warrants described in the
Prospectus). The Common Stock (including the Common Shares) conforms in all
material respects to the description thereof contained in the Prospectus. All
of the issued and outstanding shares of Common Stock 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
shares of Common Stock 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. 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 other than those accurately
contained in the Prospectus. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, set forth in the Prospectus accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(l) Stock Exchange Listing. The Common Stock (including, upon
issuance, the Common Shares) is registered pursuant to Section 12(g) of the
Exchange Act and is authorized for quotation on the Nasdaq National Market, and
the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq National Market, nor has the Company
received any notification that the Commission or the National Association of
Securities Dealers, Inc. (the "NASD") is contemplating terminating such
registration or listing.
(m) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. The Company is not in violation of its
charter or by-laws or is in default (or, with the giving of notice or lapse of
time, would be in default) ("Default") under any indenture, mortgage, loan or
credit agreement, note, contract, franchise, lease or other instrument to which
the Company is a party or by which it may be bound, or to which any of the
property or assets of the Company is subject (each, an "Existing Instrument"),
except for such violations and Defaults as would not, individually or in the
aggregate, result in a Material Adverse Change. The Company's execution,
delivery and performance of this Agreement and consummation of the transactions
contemplated hereby and by the Prospectus (i) have been duly authorized by all
necessary corporate action and will not result in any violation of the
provisions of the charter or by-laws of the Company, (ii) will not conflict
with or constitute a breach of, or Default under, or result in the creation or
imposition of any lien, charge or
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encumbrance upon any property or assets of the Company pursuant to, or require
the consent of any other party to, any Existing Instrument, except for such
conflicts, breaches, Defaults, liens, charges or encumbrances as would not,
individually or in the aggregate, result in a Material Adverse Change and (iii)
will not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company. No consent,
approval, authorization or other order of, or registration or filing with, any
court or other governmental or regulatory authority or agency, is required for
the Company's execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby and by the Prospectus,
except such as have been obtained or made by the Company and are in full force
and effect under the Securities Act, applicable state securities or blue sky
laws and from the NASD.
(n) No Material Actions or Proceedings. Except as otherwise
disclosed or contemplated in the Prospectus, there are no legal or governmental
actions, suits or proceedings pending or, to the best of the Company's
knowledge, threatened (i) against or affecting the Company, (ii) which has as
the subject thereof any officer or director of, or property owned or leased by,
the Company or (iii) relating to environmental or discrimination matters, where
in any such case (A) there is a reasonable possibility that such action, suit
or proceeding might be determined adversely to the Company and (B) any such
action, suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement. No material
labor dispute with the employees of the Company or with the employees of any
principal supplier of the Company, exists or, to the best of the Company's
knowledge, is threatened or imminent.
(o) Intellectual Property Rights. Except as otherwise disclosed
in the Prospectus, the Company owns or possesses sufficient trademarks, trade
names, patent rights, copyrights, licenses, approvals, trade secrets and other
similar rights (collectively, "Intellectual Property Rights") reasonably
necessary to conduct its business as now conducted except to the extent that
the failure to own, be licensed or otherwise possess adequate rights to such
Intellectual Property would not reasonably be expected to result in a Material
Adverse Change; and the expected expiration of any of such Intellectual
Property Rights would not result in a Material Adverse Change. The Company has
not received any notice of infringement or conflict with asserted Intellectual
Property Rights of others, which infringement or conflict, if the subject of an
unfavorable decision, would result in a Material Adverse Change.
(p) All Necessary Permits, etc. Except as otherwise disclosed or
contemplated in the Prospectus, the Company possesses such valid and current
certificates, authorizations or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct its
business except to the extent that the failure to possess such certificates,
authorizations or permits would not reasonably be expected to result in a
Material Adverse Change and the Company has not received any notice of
proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
result in a Material Adverse Change.
(q) Title to Properties. The Company has good title to all the
properties and assets owned by it free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects, except such
as are stated in the financial statements referred to in Section 1(i) above (or
included in the Prospectus), or as do not materially and adversely affect the
value of such property and
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do not materially interfere with the use made or proposed to be made of such
property by the Company. The real property, improvements, equipment and
personal property held under lease by the Company are held under valid and
enforceable leases, with such exceptions as are not material and do not
materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by the Company.
(r) Tax Law Compliance. The Company has filed all necessary
federal, state and foreign income and franchise tax returns and has paid all
taxes required to be paid by it and, if due and payable, any related or similar
assessment, fine or penalty levied against it except where such failure to file
required tax returns or pay such taxes, assessments, fines or penalties would
not reasonably be expected to result in a Material Adverse Change. The Company
has made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(i) above in respect of all material
federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company has not been finally determined.
(s) Company Not an "Investment Company". The Company is not, and
after receipt of payment for the Common Shares will not be, an "investment
company" within the meaning of Investment Company Act of 1940, as amended.
(t) Insurance. The Company carries, or is covered by, insurance
in such amounts and covering such risks as it reasonably believes is adequate
for the conduct of its business and the value of it properties.
(u) 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 Stock to facilitate the sale or resale
of the Common Shares.
(v) Related Party Transactions. There are no business
relationships or related-party transactions involving the Company or any other
person required to be described in the Prospectus which have not been described
or incorporated therein by reference.
(w) No Unlawful Contributions or Other Payments. Neither the
Company nor, to the best of the Company's knowledge, any employee or agent of
the Company, 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.
(x) Company's Accounting System. The Company 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 as applied in the United States 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 existing assets at
reasonable intervals and appropriate action is taken with respect to any
material differences.
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(y) Compliance with Environmental Laws. The Company (i) is in
compliance with any and all applicable federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, "Environmental Laws"), (ii) has received all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its businesses and (iii) is in compliance with
all terms and conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Change.
(z) Year 2000. All disclosure regarding year 2000 compliance that
is required to be described under the 1933 Act and 1933 Regulations (including
disclosures required by Staff Legal Bulletin No. 5) has been included in the
Prospectus. The Company does not reasonably expect to incur significant
operating expenses or costs to ensure that its information systems will be year
2000 compliant, other than as disclosed in the Prospectus.
(aa) Exchange Act Compliance. The documents incorporated or deemed
to be incorporated by reference in the Prospectus, at the time they were or
hereafter are filed with the Commission, confirmed and will conform in all
material respects to the requirements of the Exchange Act, and, when read
together with the other information in the Prospectus, at the time the
Registration Statement and any amendments thereto become effective and at the
Closing Date, will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
Any certificate signed by a duly authorized officer of the Company and
delivered to the Underwriter or to counsel for the Underwriter shall be deemed
to be a representation and warranty by the Company to the Underwriter as to the
matters set forth therein.
Section 2. Purchase, Sale and Delivery of the Common Shares.
(a) The Common Shares. The Company agrees to issue and sell to
the Underwriter the Common Shares upon the terms but 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, the Underwriter agrees to purchase from the Company the
Common Shares. The purchase price per Common Share to be paid by the
Underwriter to the Company shall be $20.68 per share.
(b) The Closing Date. Delivery of certificates for the Common
Shares to be purchased by the Underwriter and payment therefor shall be made at
the offices of BAS, 9 West 57th Street, New York, New York 10019 (or such
other place as may be agreed to by the Company and the Underwriter) at 10:00
a.m. New York City time, on June 19, 2000 or such other time and date not later
than 2:30 p.m. New York City time, on July 3, 2000 as the Underwriter shall
designate by notice to the Company (the time and date of such closing is called
the "Closing Date").
(c) [Omitted]
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(d) Public Offering of the Common Shares. The Underwriter hereby
advises the Company that it intends to offer for sale to the public, as
described in the Prospectus, of the Common Shares as soon after this Agreement
has been executed and the Registration Statement has been declared effective as
the Underwriter, in its sole judgment, has determined is advisable and
practicable.
(e) Payment for the Common Shares. Payment for the Common Shares
shall be made at the Closing Date by wire transfer of immediately available
funds to the order of the Company.
(f) Delivery of the Common Shares. The Company shall deliver, or
cause to be delivered, to the Underwriter for the accounts of the Underwriter
certificates for the Common Shares at the Closing Date, against the irrevocable
release of a wire transfer of immediately available funds for the amount of the
purchase price therefor. The certificates for the Common Shares shall be in
definitive form and registered in such names and denominations as the
Underwriter shall have requested at least two full business days prior to the
Closing Date and shall be made available for inspection on the business day
preceding the Closing Date at a location in New York City as the Underwriter
may designate. 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 Underwriter.
(g) Delivery of Prospectus to the Underwriter. Not later than
12:00 p.m. on the second business day following the date the Common Shares are
first released by the Underwriter for sale to the public, the Company shall
deliver or cause to be delivered, copies of the Prospectus in such quantities
and at such places as the Underwriter shall reasonably request.
Section 3. Additional Covenants of the Company.
The Company further covenants and agrees with the Underwriter as
follows:
(a) Underwriter's Review of Proposed Amendments and Supplements.
During such period beginning on the date hereof and ending on the later of the
Closing Date or such date, as in the opinion of counsel for the Underwriter,
the Prospectus is no longer required by law to be delivered in connection with
sales by an Underwriter or dealer (the "Prospectus Delivery Period"), prior to
amending or supplementing the Registration Statement (including any
registration statement filed under Rule 462(b) under the Securities Act) or the
Prospectus (including any amendment or supplement through incorporation by
reference of any report filed under the Exchange Act), the Company shall
furnish to the Underwriter for review a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed amendment or
supplement to which the Underwriter reasonably objects.
(b) Securities Act Compliance. After the date of this Agreement,
the Company shall promptly advise the Underwriter in writing (i) of the receipt
of any comments of, or requests for additional or supplemental information
from, the Commission, (ii) of the time and date of any filing of any
post-effective amendment to the Registration Statement or any amendment or
supplement to any preliminary prospectus or the Prospectus, (iii) of the time
and date that any post-effective amendment to the Registration Statement
becomes effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of any order preventing or suspending the
use of any preliminary prospectus or the
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Prospectus, or of any proceedings to remove, suspend or terminate from listing
or quotation the Common Stock from any securities exchange upon which it is
listed for trading or included or designated for quotation, or of the
threatening or initiation of any proceedings for any of such purposes. If the
Commission shall enter any such stop order at any time, the Company will use
its best efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply in all material
respects with the provisions of Rules 424(b), 430A and 434, as applicable,
under the Securities Act and will use its reasonable efforts to confirm that
any filings made by the Company under such Rule 424(b) were received in a
timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other
Securities Act Matters. If, during the Prospectus Delivery Period, any event
shall occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light
of the circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if in the opinion of counsel for the Underwriter it is otherwise
necessary to amend or supplement the Prospectus to comply with law, the Company
agrees to promptly prepare (subject to Section 3(a) hereof), file with the
Commission and furnish at its own expense to the Underwriter and to dealers,
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
(d) Copies of any Amendments and Supplements to the Prospectus.
The Company agrees to furnish the Underwriter, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any amendments
and supplements (including any documents incorporated or deemed incorporated by
reference therein) thereto as the Underwriter may reasonably request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Underwriter and counsel for the Underwriter to qualify or register the Common
Shares for sale under (or obtain exemptions from the application of) the state
securities or blue sky laws or Canadian provincial Securities laws of those
jurisdictions designated by the Underwriter, shall comply in all material
respects with such laws and shall continue such qualifications, registrations
and exemptions in effect so long as required for the distribution of the Common
Shares. The Company shall not be required to qualify as a foreign corporation
or to take any action that would subject it to general service of process in
any such jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise the
Underwriter promptly of the suspension of the qualification or registration of
(or any such exemption relating to) the Common Shares for offering, sale or
trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company shall use its best
efforts to obtain the withdrawal thereof at the earliest possible moment.
(f) Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Common Shares sold by it substantially in the manner
described under the caption "Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Stock.
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(h) Earnings Statement. As soon as practicable, the Company will
make generally available to its security holders and to the Underwriter an
earnings statement (which need not be audited) covering the twelve-month period
ending June 30, 2001 that satisfies the provisions of Section 11(a) of the
Securities Act.
(i) Periodic Reporting Obligations. During the Prospectus
Delivery Period the Company shall file, on a timely basis, with the Commission
and the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act.
(j) Agreement Not To Offer or Sell Additional Securities. During
the period of 90 days following the date of the Prospectus, the Company will
not, without the prior written consent of the Underwriter (which consent may be
withheld at the sole discretion of the Underwriter), directly or indirectly,
sell, offer, contract or grant any option to sell, pledge, transfer or
establish an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Exchange Act, or otherwise dispose of or transfer, or announce the
offering of, or file any registration statement under the Securities Act in
respect of, any shares of Common Stock, options or warrants to acquire shares
of the Common Stock or securities exchangeable or exercisable for or
convertible into shares of Common Stock (other than as contemplated by this
Agreement with respect to the Common Shares); provided, however, that the
Company may issue shares of its Common Stock or options to purchase its Common
Stock, or Common Stock upon exercise of options or warrants, pursuant to any
stock option, stock bonus or other stock plan or arrangement described in the
Prospectus.
(k) Future Reports to the Underwriter. During the period of three
years hereafter the Company will furnish to BAS at 9 West 57th Street, New
York, NY 10019 Attention: Paul Donofrio, (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.
(l) Exchange Act Compliance. During the Prospectus Delivery
Period, the Company will file all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Act.
The Underwriter, may, in its sole discretion, waive in writing the
performance by the Company of any one or more of the foregoing covenants or
extend the time for their performance.
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Section 4. 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
Stock, (iii) all necessary issue, transfer and other stamp taxes in connection
with the issuance and sale of the Common Shares to the Underwriter, (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 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, attorneys' fees and expenses incurred by the
Company or the Underwriter (including the reasonable fees and expenses of
counsel for the Underwriter not to exceed $5,000 in the aggregate) in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for
offer and sale under the state securities or blue sky laws or the provincial
securities laws of Canada, and, if requested by the Underwriter, preparing and
printing a "Blue Sky Survey" or memorandum, and any supplements thereto,
advising the Underwriter of such qualifications, registrations and exemptions,
(vii) the fees and expenses associated with including the Common Stock on the
Nasdaq National Market, and (viii) all other fees, costs and expenses referred
to in Item 14 of Part II of the Registration Statement. Except as provided in
this Section 4, Section 6, Section 8 and Section 9 hereof, the Underwriter
shall pay its own expenses, including the fees and disbursements of its
counsel.
Section 5. Conditions of the Obligations of the Underwriter.
The obligations of the Underwriter to purchase and pay for the Common Shares as
provided herein on the Closing Date, shall be subject to 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 Closing Date as though then made
to the timely performance by the Company of its covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the
Underwriter shall have received from Ernst & Young LLP, independent public or
certified public accountants for the Company, a letter dated the date hereof
addressed to the Underwriter, in form and substance reasonably satisfactory to
the Underwriter, containing statements and information of the type ordinarily
included in accountant's "comfort letters" to underwriters, delivered according
to Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaudited financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the Closing Date:
(i) the Company shall have filed the Prospectus
with the Commission (including the information required by
Rule 430A under the Securities Act) in the manner and within
the time period required by Rule 424(b) under the Securities
Act; or the Company shall have filed a post-effective
amendment to the Registration Statement containing the
information required by such Rule 430A, and such
post-effective amendment shall have become effective; or, if
the Company elected to rely
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upon Rule 434 under the Securities Act and obtained the
Underwriter's consent thereto, the Company shall have filed a
Term Sheet with the Commission in the manner and within the
time period required by such Rule 424(b); and
(ii) no stop order suspending the effectiveness of
the Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment to the Registration
Statement, shall be in effect and no proceedings for such
purpose shall have been instituted or to the Company's
knowledge threatened by the Commission.
(c) Opinion of Counsel for the Company. On the Closing Date the
Underwriter shall have received the favorable opinion of Arnold & Porter,
counsel for the Company, dated as of such Closing Date, the form of which is
attached as Exhibit A (and the Underwriter shall have received an additional
two conformed copies of such counsel's legal opinion.).
(d) Opinion of Counsel for the Underwriter. On the Closing Date
the Underwriter shall have received the favorable opinion of Cahill Gordon &
Reindel, counsel for the Underwriter, dated as of the Closing Date, with
respect to the matters set forth in paragraphs (iv) (as to the Common Stock
only), (v), (vi), (vii) and (viii) (other than with respect to documents
incorporated by reference) and the next-to-last paragraph of Exhibit A .
(e) Officers' Certificate. On the Closing Date the Underwriter
shall have received a written certificate executed by the Chairman of the
Board, Chief Executive Officer or President of the Company and the Chief
Financial Officer or Chief Accounting Officer of the Company, dated as of the
Closing Date, to the effect set forth in subsections (b)(ii) of this Section 5,
and further to the effect that:
(i) for the period from and after the date of
this Agreement and prior to such Closing Date, there has not
occurred any Material Adverse Change;
(ii) the representations, warranties and covenants
of the Company set forth in Section 1 of this Agreement are
true and correct with the same force and effect as though
expressly made on and as of such Closing Date; and
(iii) the Company has complied in all material
respects with all the agreements hereunder and satisfied all
the conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date.
(f) Bring-down Comfort Letter. On the Closing Date the
Underwriter shall have received from Ernst & Young LLP, independent public or
certified public accountants for the Company, a letter dated such date, in form
and substance reasonably satisfactory to the Underwriter, to the effect that
they reaffirm the statements made in the letter furnished by them pursuant to
subsection (a) of this Section 5, except that the specified date referred to
therein for the carrying out of procedures shall be no more than three business
days prior to the Closing Date (and the Underwriter shall have received an
additional two conformed copies of such accountants' letter).
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(g) Lock-Up Agreement from Certain Securityholders of the Company.
On the date hereof, the Company shall have furnished to the Underwriter
agreements in the form of Exhibit B hereto from the Company, the directors and
officers of the Company, as agreed to by the Company and the Underwriter' and
such agreement shall be in full force and effect on the Closing Date.
(h) Additional Documents. On or before the Closing Date, the
Underwriter and counsel for the Underwriter shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Common
Shares as contemplated herein, or in order to evidence the accuracy of any of
the representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Underwriter by notice to the Company at any time on or prior to the Closing
Date, which termination shall be without liability on the part of any party to
any other party, except that Section 4, Section 6, Section 8 and Section 9
shall at all times be effective and shall survive such termination.
Section 6. Reimbursement of Underwriter's Expenses. If this
Agreement is terminated by the Underwriter pursuant to Section 5, Section 10 or
Section 11, or if the sale to the Underwriter of the Common Shares on the
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Underwriter upon demand
for all out-of-pocket expenses that shall have been reasonably incurred by the
Underwriter in connection with the proposed purchase and the offering and sale
of the Common Shares, including but not limited to fees and disbursements of
counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
Section 7. Effectiveness of this Agreement.
This Agreement shall not become effective until the execution of this
Agreement by the parties hereto.
Prior to such effectiveness, this Agreement may be terminated by any
party by notice to each of the other parties hereto, and any such termination
shall be without liability on the part of (a) the Company to the Underwriter,
(b) of any Underwriter to the Company, or (c) of any party hereto to any other
party except that the provisions of Section 8 and Section 9 shall at all times
be effective and shall survive such termination.
Section 8. Indemnification.
(a) Indemnification of the Underwriter. The Company agrees to
indemnify and hold harmless the 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 or other federal
or state 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), insofar as such loss, claim, damage, liability
or
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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 or Rule 434 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 act or failure to act or any alleged act or
failure to act by the Underwriter in connection with, or relating in any manner
to, the Common Stock 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) or (ii) above;
provided that the Company shall not be liable under this clause (v) to the
extent that a court of competent jurisdiction shall have determined by a final
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 the
Underwriter through its bad faith or willful misconduct; and to reimburse the
Underwriter and each such controlling person for any and all reasonable
expenses (including the fees and disbursements of counsel chosen by the
Underwriter) as such expenses are reasonably incurred by the 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 Underwriter
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 the Underwriter from whom the
person asserting any loss, claim, damage, liability or expense purchased Common
Shares, or any person controlling the Underwriter, if copies of the Prospectus
were timely delivered to the Underwriter pursuant to Section 2 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 the Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Common
Shares to such person, 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 8(a) shall be in
addition to any liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers.
The Underwriter agrees 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 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
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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 Underwriter 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. The Company hereby acknowledges
that the only information that the Underwriter has 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 (A) in the table in the first paragraph and the second paragraph under
the caption "Plan of Distribution" in the prospectus supplement and (B) in the
seventh, eighth, ninth and eleventh paragraphs under the caption "Plan of
Distribution" in the prospectus supplement concerning stabilization and passive
market making by the Underwriter; and the Underwriter confirms that such
statements are correct. The indemnity agreement set forth in this Section 8(b)
shall be in addition to any liabilities that the Underwriter may otherwise
have.
(c) Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section 8 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 8,
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 except as provided under the indemnity agreement contained in this
Section 8 or to the extent it is not prejudiced as a proximate result of such
failure. 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 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 upon the advice of counsel
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. 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 8 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
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the expenses of more than one separate counsel (together with local counsel),
approved by the indemnifying party (the Underwriter in the case of Section 8(b)
and Section 9), representing the indemnified parties who are parties to such
action) or (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, in
each of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party 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 8(c) 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 90 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 includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding.
Section 9. Contribution.
If the indemnification provided for in Section 8 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriter, on the
other hand, from the offering of the Common Shares pursuant to this Agreement
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company, on the one hand, and the Underwriter, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one
hand, and the Underwriter, on the other hand, in connection with the offering
of the Common Shares pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Common Shares pursuant to this Agreement (before deducting expenses) received
by the Company, and the total underwriting discount received by the
Underwriter, in each case as set forth on the front cover page of the
Prospectus (or, if Rule 434 under the Securities Act is used, the corresponding
location on the Term Sheet) bear to the aggregate initial public offering price
of the Common Shares as set forth on such cover. The relative fault of the
Company, on the one hand, and the Underwriter, on the other hand, shall be
determined by reference to, among other things, whether
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any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact or any such inaccurate or alleged
inaccurate representation or warranty relates to information supplied by the
Company, on the one hand, or the Underwriter, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply
if a claim for contribution is to be made under this Section 9; provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under Section 8(c) for purposes of
indemnification.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, the Underwriter
shall not be required to contribute any amount in excess of the underwriting
commissions received by such Underwriter in connection with the Common Shares
underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each officer and employee of the Underwriter and each person, if any, who
controls the Underwriter within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company with
the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the Company.
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Section 10. [Omitted]
Section 11. Termination of this Agreement. Prior to the Closing
Date this Agreement may be terminated by the Underwriter by notice given to the
Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq National Market, or trading in securities generally on the Nasdaq Stock
Market 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 or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York, Delaware or California 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 or international financial markets, or any substantial change or
development involving a prospective substantial change in United States' or
international political, financial or economic conditions, as in the reasonable
judgment of the Underwriter is material and adverse and makes it impracticable
to market the Common Shares in the manner and on the terms described in the
Prospectus or to enforce contracts for the sale of securities; (iv) in the
reasonable judgment of the Underwriter 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
reasonable judgment of the Underwriter may interfere materially with the
conduct of the business and operations of the Company regardless of whether or
not such loss shall have been insured. Any termination pursuant to this
Section 11 shall be without liability on the part of (a) the Company to any
Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Underwriter pursuant to Sections 4 and 6 hereof, (b) the
Underwriter to the Company, or (c) of any party hereto to any other party
except that the provisions of Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
Section 12. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the Underwriter 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 the Underwriter or the
Company or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and
payment for the Common 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 or telecopied and confirmed to the
parties hereto as follows:
If to the Underwriter:
Banc of America Securities LLC
600 Montgomery Street
San Francisco, California 94111
Facsimile: 415-913-5558
Attention: Richard A. Smith
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with a copy to:
Banc of America Securities LLC
9 West 57th Street
New York, NY 10019
Facsimile: (212) 583-8567
Attention: Isaac Osaki, Esq.
If to the Company:
EntreMed, Inc.
9640 Medical Center Drive
Rockville, Maryland 20850
Facsimile: (301) 217-9594
Attention: John W. Holaday, Ph.D.
with a copy to:
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
Facsimile: (202) 942-5999
Attention: Robert B. Ott, Esq.
Any party hereto may change the address for receipt of communications
by giving written notice to the others.
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Section 14. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and to the benefit of the employees,
officers and directors and controlling persons referred to in Section 8 and
Section 9, and in each case their respective successors, and personal
representatives, and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of the Common
Shares as such from the Underwriter 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. (a) Governing Law Provisions. 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.
Section 17. General Provisions. This Agreement constitutes the
entire agreement of the parties to this Agreement 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 constitute 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. The Table of Contents and the Section headings
herein are for the convenience of the parties only and shall not affect the
construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the
parties hereto further acknowledges that the provisions of Sections 8 and 9
hereto fairly allocate the risks in light of the ability of the parties to
investigate the Company, its affairs and its business in order to assure that
adequate disclosure has been made in the Registration Statement, any
preliminary prospectus and the Prospectus (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.
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If the foregoing is in accordance with your understanding of our
agreement, kindly 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,
ENTREMED, INC.
By: /s/ JOHN W. HOLADAY, PH.D.
--------------------------
Chairman, Chief Executive
Officer and President
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Underwriter in San Francisco, California as of the date first above
written.
BANC OF AMERICA SECURITIES LLC
By: /s/ JEFF. B. CHILD
------------------
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EXHIBIT A
Opinion of counsel for the Company to be delivered pursuant to Section
5(c) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any supplements
thereto at the Closing Date.
(i) The Company is validly existing as a
corporation in good standing under the laws of the State of
Delaware.
(ii) The Company has corporate power and authority
to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and
perform its obligations under the Underwriting Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing under
the laws of the State of Maryland.
(iv) The authorized, issued and outstanding
capital stock of the Company (including the Common Stock)
conform, in all material respects, to the descriptions thereof
set forth or incorporated by reference in the Prospectus. The
form of certificate used to evidence the Common Stock is in
due and proper form and complies in all material prospects
with all applicable requirements of the charter and by-laws of
the Company and the General Corporation Law of the State of
Delaware.
(v) The Underwriting 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 thereunder
may be limited by applicable law and except as the enforcement
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally or by general
equitable principles.
(vi) The Common Shares to be purchased by the
Underwriter from the Company have been duly authorized for
issuance and sale pursuant to the Underwriting Agreement and,
when issued and delivered by the Company pursuant to the
Underwriting Agreement against payment of the consideration
set forth therein, will be validly issued, fully paid and
nonassessable and the issuance of the Common Shares will not
be subject to any preemptive or similar rights (i) by
operation of the charter or by-laws of the Company or the
General Corporation Law of the State of Delaware or (ii) to
the best knowledge of such counsel, otherwise.
(vii) Each of the Registration Statement and the
Rule 462(b) Registration Statement, if any, has been declared
effective by the Commission under the Securities Act. To the
best knowledge of such counsel, no stop order suspending the
effectiveness of either of the Registration Statement or the
Rule 462(b) Registration Statement, if any, has been issued
under the Securities Act and no proceedings for
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such purpose have been instituted or are pending or are
contemplated or threatened by the Commission. Any required
filing of the Prospectus and any supplement thereto pursuant
to Rule 424(b) under the Securities Act has been made in the
manner and within the time period required by such Rule
424(b).
(viii) The Registration Statement, including any
Rule 462(b) Registration Statement, the Prospectus including
any document incorporated by reference therein, and each
amendment or supplement to the Registration Statement and the
Prospectus including any document incorporated by reference
therein, as of their respective effective or issue dates
(other than the financial statements and supporting schedules
included or incorporated by reference therein or in exhibits
to or excluded from the Registration Statement, as to which no
opinion need be rendered) comply as to form in all material
respects with the applicable requirements of the Securities
Act and the Exchange Act.
(ix) The Common Shares have been approved for
quotation on the Nasdaq National Market.
(x) The statements in the Prospectus under "Risk
Factors--Our potential products are subject to government
regulatory requirements and a lengthy approval process" and
Item 15 of the Registration Statement, insofar as such
statements constitute a summary of applicable law and
regulatory process, fairly summarize the information contained
therein.
(xi) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for the issue and sale
of the Common Shares or the consummation of the other
transactions contemplated by the Underwriting Agreement,
except such consents, approvals, authorizations, orders,
registrations or qualifications as have been obtained or made
under the Securities Act, or as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Common Shares by the Underwriter.
(xii) The execution and delivery of the
Underwriting Agreement by the Company and the performance by
the Company of its obligations thereunder (other than
performance by the Company of its obligations under the
indemnification section of the Underwriting Agreement, as to
which no opinion need be rendered) (i) have been duly
authorized by all necessary corporate action on the part of
the Company; (ii) will not result in any violation of the
provisions of the charter or by-laws of the Company; (iii)
will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default
under, any agreement or instrument filed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1999, or to any statements, reports or other
information filed with the Commission thereafter to which the
Company is a party or by which the Company is bound or to
which any of the property or assets of the Company is subject,
except for such breaches or violations that would not,
individually or in the aggregate, result in a Material Adverse
Change; or (iv) to the best knowledge of such counsel, will
not
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result in any violation of any law, administrative regulation
or administrative or court decree applicable to the Company
except for such violations that would not, individually or in
the aggregate, result in a Material Adverse Change.
(xiii) The Company is not, and after receipt of
payment for the Common Shares will not be, an "investment
company" within the meaning of Investment Company Act.
(xiv) Except as disclosed in the Prospectus or
incorporated therein by reference, to the best knowledge of
such counsel, 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 offering contemplated by the Underwriting
Agreement, except for such rights as have been duly waived or
that would not result in a Material Adverse Change.
(xv) Each document filed pursuant to the Exchange
Act (other than the financial statements and supporting
schedules included therein, as to which no opinion need be
rendered) and incorporated or deemed to be incorporated by
reference in the Prospectus complied when so filed as to form
in all material respects with the Exchange Act.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Underwriter at which the contents
of the Registration Statement and the Prospectus, and any supplements or
amendments thereto, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as specified above), and
any supplements or amendments thereto, on the basis of the foregoing (i)
nothing has come to their attention which has caused them to believe that
either the Registration Statement or any amendments thereto, at the time the
Registration Statement or such amendments became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date or at the Closing Date, contained an untrue
statement of a material fact or omitted 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 (it being understood that such counsel
need express no belief as to the financial statements or schedules or other
financial or statistical data derived therefrom, included or incorporated by
reference in the Registration Statement or the Prospectus or any amendments or
supplements thereto); (ii) there are no legal proceedings pending or threatened
against the Company that are required to be disclosed in the Registration
Statement or prospectus, other than those disclosed or incorporated by
reference therein; and (iii) there are no contracts or documents of a character
required to be described in the Registration Statement or Prospectus or to be
filed as exhibits to the Registration Statement that are not described or
referred to therein or so filed.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware, the General Corporation Law of the
State of New York or the federal law of the United States, to the
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extent they deem proper and specified in such opinion, upon the opinion (which
shall be dated the Closing Date, shall be reasonably satisfactory in form and
substance to the Underwriter, shall expressly state that the Underwriter may
rely on such opinion as if it were addressed to them and shall be furnished to
the Underwriter) of other counsel of good standing whom they believe to be
reliable and who are reasonably satisfactory to counsel for the Underwriter;
provided, however, that such counsel shall further state that they believe that
they and the Underwriter are justified in relying upon such opinion of other
counsel, and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
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EXHIBIT B
[Date]
Banc of America Securities LLC
600 Montgomery Street
San Francisco, California 94111
RE: EntreMed, Inc. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of Common Stock of the Company ("Common Stock") or securities convertible into
or exchangeable or exercisable for Common Stock. The Company proposes to carry
out a public offering of Common Stock (the "Offering") for which you will act as
the underwriter. The undersigned recognizes that the Offering will be of
benefit to the undersigned and will benefit the Company by, among other things,
raising additional capital for its operations. The undersigned acknowledges
that you are relying on the representations and agreements of the undersigned
contained in this letter in carrying out the Offering and in entering into
underwriting arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not, without the prior written consent of Banc of America
Securities LLC (which consent may be withheld in its sole discretion), directly
or indirectly, sell, offer, contract or grant any option to sell (including
without limitation any short sale), pledge, transfer, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, or otherwise dispose of any shares of Common Stock,
options or warrants to acquire shares of Common Stock, or securities
exchangeable or exercisable for or convertible into shares of Common Stock
currently or hereafter owned either of record or beneficially (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the
undersigned, or publicly announce the undersigned's intention to do any of the
foregoing, for a period commencing on the date hereof and continuing through
the close of trading on the date 90 days after the date of the Prospectus. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of shares
of Common Stock or securities convertible into or exchangeable or exercisable
for Common Stock held by the undersigned except in compliance with the
foregoing restrictions.
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Securities Act of any
Common Stock owned either of record or beneficially by the undersigned,
including any rights to receive notice of the Offering.
31
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
- -----------------------------------------
Printed Name of Holder
By:
--------------------------------------
Signature
- -----------------------------------------
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
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