5,000,000 SHARES BIODEL INC. COMMON STOCK, $0.01 PAR VALUE PER SHARE UNDERWRITING AGREEMENT
Exhibit 1.1
5,000,000 SHARES
COMMON STOCK, $0.01 PAR VALUE PER SHARE
_________ __, 2007
_________ __, 2007
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
As Representative of the Several Underwriters
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Introductory. Biodel Inc. a Delaware corporation (the “Company”), proposes to issue and
sell to the several underwriters named in Schedule A (the “Underwriters”) an aggregate of 5,000,000
shares (the “Firm Shares”) of its Common Stock, par value $0.01 per share (the “Common Stock”). In
addition, the Company has granted to the Underwriters an option to purchase up to an additional
750,000 shares (the “Optional Shares”) of Common Stock, as provided in Section 2. The Firm Shares
and, if and to the extent such option is exercised, the Optional Shares are collectively called the
“Shares”. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated (“▇▇▇▇▇▇ ▇▇▇▇▇▇▇”), has agreed to act as
representative of the several Underwriters (in such capacity, the “Representative”) in connection
with the offering and sale of the Shares.
To the extent there are no additional Underwriters listed on Schedule A other than you, the
terms Representative and Underwriters as used herein shall mean you, as Underwriters. The terms
Representative and Underwriters shall mean either the singular or plural as the context requires.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has agreed to reserve a portion of the Shares to be purchased by it under this
Agreement for sale to the Company’s directors, officers, employees and business associates and
other parties related to the Company (collectively, “Participants”), as set forth in the Prospectus
(as defined below) under the heading “Underwriters” (the “Directed Share Program”). The Shares to
be sold by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its affiliates pursuant to the Directed Share Program are referred to
hereinafter as the “Directed Shares”. Any Directed Shares not orally confirmed for purchase by any
Participant by the end of the business day on which this Agreement is executed will be offered to
the public by the Underwriters as set forth in the Prospectus.
The Company hereby confirms its agreements with the Underwriters as follows:
Section 1. Representations and Warranties of the Company.
The Company hereby represents and warrants to, and covenants with, each Underwriter as
follows:
(a) The Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-1 (File No. 333-140504),
which contains a form of prospectus to be used in connection with the public offering and sale
of the 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 any required information deemed to be a part
thereof at the time of effectiveness pursuant to Rule 430A under the Securities Act, is called the
“Registration Statement”. Any registration statement filed by the Company 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. Any preliminary prospectus included in the
Registration Statement is hereinafter called a “preliminary prospectus.” The term “Prospectus”
shall mean the final prospectus relating to the Shares that is first filed pursuant to Rule 424(b)
after the date and time that this Agreement is executed and delivered by the parties hereto (the
“Execution Time”) or, if no filing pursuant to Rule 424(b) is required, shall mean the form of
final prospectus relating to the Shares included in the Registration Statement at the effective
date. All references in this Agreement to the Registration Statement, the Rule 462(b) Registration
Statement, a preliminary prospectus, the Prospectus, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System (“▇▇▇▇▇”).
(b) Compliance with Registration Requirements. The Registration Statement has been declared
effective by the Commission under the Securities Act. The Company has complied with all requests
of the Commission for additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement is in effect, the Commission has not issued any order
or notice preventing or suspending the use of the Registration Statement, any preliminary
prospectus or the Prospectus and no proceedings for such purpose have been instituted or are
pending or, to the 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 the rules thereunder. Each of the Registration Statement and any
post-effective amendment thereto, at the time it became effective and at the date hereof, 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 in order to make the statements therein not misleading. The Prospectus
(including any Prospectus wrapper), as amended or supplemented, as of its date, at the date hereof,
at the time of any filing pursuant to Rule 424(b), at the Closing Date (as defined herein) and at
any Subsequent Closing Date (as defined herein), 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 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 any Underwriter furnished to the Company in writing by the
Representative expressly for use therein, it being understood and agreed that the only such
information furnished by the Representative consists of the information described as such in
Section 8 hereof. There is no contract or other document
2
required to be described in the Prospectus or to be filed as an exhibit to the Registration
Statement that has not been described or filed as required.
(c) Disclosure Package. The term “Disclosure Package” shall mean (i) the preliminary
prospectus, if any, as amended or supplemented, (ii) the issuer free writing prospectuses as
defined in Rule 433 of the Securities Act (each, an “Issuer Free Writing Prospectus”), if any,
identified in Schedule B hereto, (iii) any other free writing prospectus that the parties hereto
shall hereafter expressly agree in writing to treat as part of the Disclosure Package and (iv) a
schedule indicating the number of Shares being sold and the price at which the Shares will be sold
to the public. As of ___:00 [a/p]m (Eastern time) on the date of execution and delivery of this
Agreement (the “Applicable Time”), the Disclosure Package did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading. The preceding
sentence does not apply to statements in or omissions from the Disclosure Package based upon and in
conformity with written information furnished to the Company by any Underwriter through the
Representative specifically for use therein, it being understood and agreed that the only such
information furnished by or on behalf of any Underwriter consists of the information described as
such in Section 8 hereof.
(d) Company Not Ineligible Issuer. (i) At the time of filing the Registration Statement and
(ii) as of the date of the execution and delivery of this Agreement (with such date being used as
the determination date for purposes of this clause (ii)), the Company was not and is not an
Ineligible Issuer (as defined in Rule 405 of the Securities Act).
(e) Issuer Free Writing Prospectuses. Each Issuer Free Writing Prospectus, as of its issue
date and at all subsequent times through the completion of the offering of Shares under this
Agreement or until any earlier date that the Company notified or notifies the Representative as
described in the next sentence, did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in the Registration
Statement, including any prospectus that is or becomes part of the Registration Statement. If at
any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event
or development as a result of which such Issuer Free Writing Prospectus conflicted or would
conflict with the information contained in the Registration Statement, the Company has promptly
notified or will promptly notify the Representative and has promptly amended or supplemented or
will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to
eliminate or correct such conflict. The foregoing two sentences do not apply to statements in or
omissions from any Issuer Free Writing Prospectus based upon and in conformity with written
information furnished to the Company by any Underwriter through the Representative specifically for
use therein, it being understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in Section 8 hereof.
(f) Accuracy of Statements in Prospectus. The statements in the Disclosure Package and the
Prospectus under the headings “Risk Factors — Risks Related to Our Intellectual Property,” “Risk
Factors — Risks Related to Regulatory Approval of Our Product Candidates,” “Business — Government
Regulation,” “Business — Intellectual Property and Proprietary Technology,” “Description of Capital
Stock,” “Shares Eligible for Future Sale,” “Material U.S. Federal Tax Considerations For Holders of
Common Stock” and “Underwriters” insofar as
3
such statements summarize legal matters, agreements, documents or proceedings discussed therein,
are accurate and fair summaries of such legal matters, agreements, documents or proceedings.
(g) Distribution of Offering Material By the Company. The Company has not distributed and
will not distribute, prior to the later of the last Subsequent Closing Date (as defined below) and
the completion of the Underwriters’ distribution of the Shares, any offering material in connection
with the offering and sale of the Shares other than a preliminary prospectus, the Prospectus, any
Issuer Free Writing Prospectus reviewed and consented to by the Representative or included in
Schedule B hereto or the Registration Statement.
(h) The Underwriting Agreement. This Agreement has been duly authorized, executed and
delivered by the Company.
(i) Authorization of the Shares. The Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to this Agreement and, when issued
and delivered by the Company to the Underwriters pursuant to this Agreement on the Closing Date or
any Subsequent Closing Date, will be validly issued, fully paid and nonassessable.
(j) No Transfer Taxes. There are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision thereof, required to be paid in
connection with the execution and delivery of this Agreement or the issuance by the Company or sale
by the Company of the Shares.
(k) 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.
(l) No Material Adverse Change. Except as otherwise disclosed in the Disclosure Package and
the Prospectus, subsequent to the respective dates as of which information is given in the
Disclosure Package: (i) there has been no material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the condition, financial or
otherwise, or in the earnings, business, properties, operations or prospects, 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, nor entered into any material transaction or agreement;
and (iii) there has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of capital stock or any repurchase or redemption by the Company of any class
of capital stock.
(m) Independent Accountants. BDO ▇▇▇▇▇▇▇, 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
Disclosure Package and the Prospectus, are independent public accountants with
4
respect to the
Company as required by the Securities Act and the applicable published rules and regulations
thereunder.
(n) Preparation of the Financial Statements. The financial statements filed with the
Commission as a part of the Registration Statement and included in the Disclosure Package and the
Prospectus present fairly the financial position of the Company as of and at the dates indicated
and the results of its operations and cash flows for the periods specified. Such financial
statements comply as to form with the applicable accounting requirements of the Securities Act and
have been prepared in conformity with generally accepted accounting principles 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 preliminary prospectus and the
Prospectus under the captions “Prospectus Summary—Summary Selected Financial Data”, “Selected
Financial Data” and “Capitalization” fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained in the Registration Statement.
(o) Incorporation and Good Standing of the Company. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the State of Delaware
and has corporate power and authority to own or lease, as the case may be, and operate its
properties and to conduct its business as described in the Disclosure Package and 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 Connecticut, the only
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 effect, on the condition, financial or otherwise, or on the earnings, business, properties,
operations or prospects, whether or not arising from transactions in the ordinary course of
business, of the Company (a “Material Adverse Effect”). The Company does not own of record or
beneficially, directly or indirectly, (i) any shares of outstanding capital stock or securities
convertible into capital stock of any other corporation, or (ii) any equity, voting or
participating interest in any limited liability company, partnership, joint venture or other
non-corporate business enterprises.
(p) Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Disclosure Package and the Prospectus under the
caption “Capitalization” (other than for subsequent issuances, if any, pursuant to the Company’s
2004 Stock Incentive Plan described in the Disclosure Package and the Prospectus or upon exercise
of outstanding options or warrants described in the Disclosure Package and the Prospectus, as the
case may be). The Common Stock (including the Shares) conforms in all material respects to the
description thereof contained in the Disclosure Package and 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
5
purchase, or equity or debt securities convertible into or exchangeable
or exercisable for, any capital stock of the Company other than those accurately described in the
Disclosure Package and the Prospectus. The description of the Company’s 2004 Stock Incentive Plan
and the
options granted thereunder, set forth in the Disclosure Package and the Prospectus accurately
and fairly presents the information required to be shown with respect to such plan.
(q) Listing. The Shares have been approved for listing on the Nasdaq Global Market, Inc.,
subject only to official notice of issuance.
(r) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required. The Company is not (i) in violation or in default (or, with the giving of notice or
lapse of time, would be in default) (“Default”) under its charter or by-laws, (ii) in Default under
any indenture, mortgage, loan or credit agreement, deed of trust, note, contract, franchise, lease
or other agreement, obligation, condition, covenant or 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”) or (iii) in violation of any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or any of its properties, as
applicable, except with respect to clauses (ii) and (iii) only, for such Defaults or violations as
would not, individually or in the aggregate, have a Material Adverse Effect. The Company’s
execution, delivery and performance of this Agreement and consummation of the transactions
contemplated hereby, by the Disclosure Package and by the Prospectus (i) have been duly authorized
by all necessary corporate action and will not result in any Default under the charter or by-laws
of the Company, (ii) will not conflict with or constitute a breach of, or Default or a Debt
Repayment Triggering Event (as defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company pursuant to, or require the
consent of any other party to, any Existing Instrument, and (iii) will not result in any violation
of any statute, law, rule, regulation, judgment, order or decree applicable to the Company of any
court, regulatory body, administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its properties. 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, by the Disclosure Package
and by the Prospectus, except (A) 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 National Association of Securities Dealers, Inc. (the “NASD”) and (B) such as have been
obtained under the laws and regulations of jurisdictions outside the United States in which
Directed Shares are offered. As used herein, a “Debt Repayment Triggering Event” means any event
or condition which gives, or with the giving of notice or lapse of time would give, the holder of
any note, debenture or other evidence of indebtedness (or any person acting on such holder’s
behalf) the right to require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries.
(s) No Material Actions or Proceedings. Except as otherwise disclosed in the Disclosure
Package and 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
6
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, or any officer or director of, or property owned
or leased by, the Company and (B) any such action, suit or proceeding, if so determined adversely,
would reasonably be expected to have a Material Adverse Effect or adversely affect the consummation
of the transactions contemplated by this Agreement.
(t) Labor Matters. No labor problem or dispute with the employees of the Company exists or,
to the best of the Company’s knowledge, is threatened or imminent, and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of its principal suppliers or
contractors, that could have a Material Adverse Effect.
(u) Intellectual Property Rights. The Company owns, possesses, licenses or has other rights
to use, on reasonable terms, all patents, patent applications, trade and service marks, trade and
service ▇▇▇▇ registrations, trade names, copyrights, licenses, inventions, trade secrets,
technology, know-how and other intellectual property (collectively, the “Intellectual Property”)
necessary for the conduct of the Company’s business as now conducted or as proposed in the
Disclosure Package and the Prospectus to be conducted. Except as set forth in the Disclosure
Package and the Prospectus, (a) no party has been granted an exclusive license to use any portion
of such Intellectual Property owned by the Company; (b) there is no material infringement by third
parties of any such Intellectual Property owned by or exclusively licensed to the Company; (c)
there is no pending or threatened action, suit, proceeding or claim by others challenging the
Company’s rights in or to any material Intellectual Property, and the Company is unaware of any
facts which would form a reasonable basis for any such claim; (d) there is no pending or threatened
action, suit, proceeding or claim by others challenging the validity or scope of any such
Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis
for any such claim; and (e) there is no pending or threatened action, suit, proceeding or claim by
others that the Company’s business as now conducted infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and the Company is
unaware of any other fact which would form a reasonable basis for any such claim.
(v) Patent Applications. The Company has duly and properly filed or caused to be filed with
the U.S. Patent and Trademark Office (the “PTO”) and applicable foreign and international patent
authorities all patent applications owned by the Company (the “Company Patent Applications”). To
the knowledge of the Company, the Company has complied with the PTO’s duty of candor and disclosure
for the Company Patent Applications and has made no material misrepresentation in the Company
Patent Applications. To the Company’s knowledge, except as disclosed in the Disclosure Package and
the Prospectus, the Company Patent Applications disclose patentable subject matters, and the
Company has not been notified of any inventorship challenges nor has any interference been declared
or provoked nor is any material fact known by the Company that would preclude the issuance of
patents with respect to the Company Patent Applications or would render such patents invalid or
unenforceable. To the Company’s knowledge, except as disclosed in the Disclosure Package and the
Prospectus, no third party possesses rights to the Company’s Intellectual Property, if exercised,
could enable
7
such party to develop products competitive to those the Company intends to develop as
described in each of the Disclosure Package and the Prospectus.
(w) All Necessary Permits, etc. Except as disclosed in the Disclosure Package and the
Prospectus, the Company possesses such valid and current licenses, certificates, authorizations or
permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary
to conduct its business, including, without limitation, all such certificates, authorizations and
permits required by the United States Food and Drug Administration (the “FDA”) or any other state,
federal or foreign agencies or bodies engaged in the regulation of pharmaceuticals or biohazardous
materials, and the Company has not received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such license, certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding,
could have a Material Adverse Effect.
(x) Tests and Preclinical and Clinical Trials. The studies, tests and preclinical and
clinical trials conducted by or on behalf of the Company that are described in the Disclosure
Package and the Prospectus were and, if still pending, are being, conducted in all material
respects in accordance with the protocols submitted to the FDA or any foreign government exercising
comparable authority, procedures and controls pursuant to, where applicable, accepted professional
and scientific standards, and all applicable laws and regulations; the descriptions of the studies,
tests and preclinical and clinical trials conducted by or on behalf of the Company, and the results
thereof, contained in the Disclosure Package and the Prospectus are accurate and complete in all
material respects; the Company is not aware of any other studies, or tests or preclinical and
clinical trials, the results of which reasonably call into question the results described or
referred to in the Disclosure Package and the Prospectus; and the Company has not received any
notices or correspondence from the FDA, any foreign, state or local governmental body exercising
comparable authority or any Institutional Review Board requiring the termination, suspension,
material modification or clinical hold of any studies, tests or preclinical or clinical trials
conducted by or on behalf of the Company, which termination, suspension, modification or clinical
hold would reasonably be expected to have a Material Adverse Effect.
(y) Title to Properties. The Company has good and marketable title to all the properties and
assets reflected as owned in the financial statements referred to in Section 1(m) above (or
elsewhere in the Disclosure Package and the Prospectus), in each case free and clear of any
security interests, mortgages, liens, encumbrances, equities, claims and other defects, except such
as do not materially and adversely affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the Company. 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.
(z) Tax Law Compliance. The Company has filed all necessary federal, state, local and foreign
income and franchise tax returns in a timely manner and has paid all taxes shown thereon and, if
due and payable, any related or similar assessment, fine or penalty levied against it, except for
any taxes, assessments, fines or penalties as may be being contested in good faith and by
appropriate proceedings. The Company has made appropriate provisions in the
8
applicable financial
statements referred to in Section 1(m) above in respect of all federal, state, local and foreign
income and franchise taxes for all current or prior periods as to which the tax liability of the
Company has not been finally determined.
(aa) Company Not an “Investment Company”. The Company has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
The Company is not, and after receipt of payment for the Shares and the application of the proceeds
thereof as contemplated under the caption “Use of Proceeds” in the preliminary prospectus and the
Prospectus will not be, an “investment company” within the meaning of the Investment Company Act
and will conduct its business in a manner so that it will not become subject to the Investment
Company Act.
(bb) Insurance. The Company is insured by recognized, financially sound and reputable
institutions with policies in such amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for its business including, but not limited to, policies
covering real and personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and earthquakes. All policies of insurance and fidelity or surety
bonds insuring the Company or its business, assets, employees, officers and directors are in full
force and effect; the Company is in compliance with the terms of such policies and instruments in
all material respects; and there are no claims by the Company under any such policy or instrument
as to which any insurance company is denying liability or defending under a reservation of rights
clause; and the Company has not been refused any insurance coverage sought or applied for. The
Company has no reason to believe that it will not be able (i) to renew its existing insurance
coverage as and when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now conducted and at a
cost that would not have a Material Adverse Effect.
(cc) No Price Stabilization or Manipulation. The Company has not taken and will not take,
directly or indirectly, any action designed to or that might be reasonably expected to cause or
result in stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares.
(dd) 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 preliminary
prospectus or the Prospectus that have not been described as required.
(ee) No Material Weakness in Internal Controls. Except as disclosed in the Disclosure Package
and the Prospectus and as of the Applicable Time, there were no material weakness in the Company’s
internal control over financial reporting.
(ff) No Unlawful Contributions or Other Payments. Neither the Company nor, to the knowledge
of the Company, any director, officer, agent, employee or affiliate of the Company is aware of or
has taken any action, directly or indirectly, that would result in a violation by such Persons of
the FCPA, including, without limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization
of the payment of any money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any “foreign official” (as such term is defined
9
in the FCPA) or any
foreign political party or official thereof or any candidate for foreign political office, in
contravention of the FCPA, and the Company and, to the knowledge of the Company, its affiliates
have conducted their businesses in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith.
“FCPA” means Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder.
(gg) Money Laundering Laws. No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.
“Money Laundering Laws” means, collectively, the financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines issued, administered or enforced by any
governmental agency.
(hh) Compliance with Environmental Laws. Except as may otherwise be disclosed in the
Disclosure Package and the Prospectus, (i) the Company is not in violation of any federal, state,
local or foreign law, regulation, order, permit or other requirement relating to pollution or
protection of human health or the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including without limitation,
laws and regulations relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, “Materials of Environmental Concern”), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling
of Materials of Environment Concern (collectively, “Environmental Laws”), which violation includes,
but is not limited to, noncompliance with any permits or other governmental authorizations required
for the operation of the business of the Company under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company received any written
communication, whether from a governmental authority, citizens group, employee or otherwise, that
alleges that the Company is in violation of any Environmental Law, except as would not,
individually or in the aggregate, have a Material Adverse Effect; (ii) there is no claim, action or
cause of action filed with a court or governmental authority, no investigation with respect to
which the Company has received written notice, and no written notice by any person or entity
alleging potential liability for investigatory costs, cleanup costs, governmental responses costs,
natural resources damages, property damages, personal injuries, attorneys’ fees or penalties
arising out of, based on or resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location owned, leased or operated by the Company, now or
in the past (collectively, “Environmental Claims”), pending or, to the Company’s knowledge,
threatened against the Company or any person or entity whose liability for any Environmental Claim
the Company has retained or assumed either contractually or by operation of law, except as would
not, individually or in the aggregate, have a Material Adverse Effect; (iii) to the Company’s
knowledge, there are no past, present or anticipated future actions, activities, circumstances,
conditions, events or
10
incidents, including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that reasonably could result in a
violation of any Environmental Law, require expenditures to be incurred pursuant to Environmental
Law, or form
the basis of a potential Environmental Claim against the Company or against any person or
entity whose liability for any Environmental Claim the Company has retained or assumed either
contractually or by operation of law, except as would not, individually or in the aggregate, have a
Material Adverse Effect; and (iv) the Company is not subject to any pending or threatened
proceeding under Environmental Law to which a governmental authority is a party and which is
reasonably likely to result in monetary sanctions of $100,000 or more.
(ii) Costs of Environmental Compliance. The Company has concluded that the costs and
liabilities associated with the effect of Environmental Laws on the business, operations and
properties of the Company would not, individually or in the aggregate, have a Material Adverse
Effect.
(jj) Employee Benefit Plans. Except for (i) the Company’s 401(k) Plan, Flexible Spending
Account Plan, and Premium Only Plan, all administered by Paychex, Inc., (ii) the Company’s Freedom
Plan Select and Premium Dental Plan administered by Oxford Health Plans® A United Healthcare
Company and (iii) the Company’s 2004 Stock Incentive Plan, the Company does not have any employee
benefit plans.
(kk) Brokers. There is no broker, finder or other party that is entitled to receive from the
Company any brokerage or finder’s fee or other fee or commission as a result of any transactions
contemplated by this Agreement.
(ll) No Outstanding Loans or Other Indebtedness. There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers or directors of the
Company or any of the members of any of them, except as disclosed in the Disclosure Package and the
Prospectus.
(mm) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Compliance. There is no failure on the part of the Company and, to the
best of the Company’s knowledge, any of the Company’s directors or officers, in their capacities as
such, to comply with any applicable provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and
regulations promulgated in connection therewith (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”) in any material respect,
including Section 402 related to loans and Sections 302 and 906 related to certifications.
(nn) Lending Relationship. Except as may disclosed in the Disclosure Package and the
Prospectus, the Company, to the best of its knowledge (i) does not have any material lending or
other relationship with any bank or lending affiliate of any Underwriter and (ii) does not intend
to use any of the proceeds from the sale of the Shares hereunder to repay any outstanding debt owed
to any affiliate of any Underwriter.
(oo) Statistical and Market Related Data. Nothing has come to the attention of the Company
that has caused the Company to believe that the statistical and market-related data
11
included in the
Disclosure Package and the Prospectus is not based on or derived from sources that are reliable and
accurate in all material respects.
(pp) Directed Share Program. The Registration Statement, the Prospectus, the Disclosure
Package and any preliminary prospectus comply, and any amendments or
supplements thereto will comply, with any applicable laws or regulations of foreign
jurisdictions in which the Prospectus, the Disclosure Package or any preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection with the Directed Share
Program. No consent, approval, authorization or order of, or qualification with, any governmental
body or agency, other than those obtained, is required in connection with the offering of the
Directed Shares in any jurisdiction where the Directed Shares are being offered. The Company has
not offered, or caused ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to offer, Shares to any person pursuant to the Directed Share
Program with the specific intent to unlawfully influence (i) a customer or supplier of the Company
to alter the customer’s or supplier’s level or type of business with the Company, or (ii) a trade
journalist or publication to write or publish favorable information about the Company or its
products.
Any certificate signed by an officer of the Company and delivered to the Representative or to
counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to
each Underwriter as to the matters set forth therein.
Section 2. Purchase, Sale and Delivery of the Shares.
(a) The Firm Shares. The Company agrees to issue and sell to the several Underwriters the
Firm Shares upon the terms 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
Underwriters agree, severally and not jointly, to purchase from the Company the respective number
of Firm Shares set forth opposite their names on Schedule A. The purchase price per Firm Share to
be paid by the several Underwriters to the Company shall be $[___] per share.
(b) The Closing Date. Delivery of certificates for the Firm Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and
▇▇▇▇ LLP, 39▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or such other place as may be agreed to by the
Company and the Representative) at 9:00 a.m. New York time, on [___], 2007, or such other time and
date not later than 1:30 p.m. New York time, on [___], 2007 as the Representative shall designate
by notice to the Company (the time and date of such closing are called the “Closing Date”).
(c) The Optional Shares; the Subsequent Closing Date. In addition, on the basis of the
representations, warranties and agreements herein contained, and upon the terms but subject to the
conditions herein set forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 750,000 Optional Shares from the Company
at the purchase price per share to be paid by the Underwriters for the Firm Shares. The option
granted hereunder may be exercised at any time and from time to time upon notice by the
Representative to the Company, which notice may be given at any time within 30 days from the date
of this Agreement. Such notice shall set forth (i) the aggregate number of Optional
12
Shares as to
which the Underwriters are exercising the option, (ii) the names and denominations in which the
certificates for the Optional Shares are to be registered and (iii) the time, date and place at
which such certificates will be delivered (which time and date may be simultaneous with, but not
earlier than, the Closing Date; and in such case the term “Closing Date” shall refer to the time
and date of delivery of certificates for the Firm Shares and the Optional Shares).
Each time and date of delivery, if subsequent to the Closing Date, is called a “Subsequent
Closing Date” and shall be determined by the Representative and shall not be earlier than three nor
later than five full business days after delivery of such notice of exercise. If any Optional
Shares are to be purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Optional Shares (subject to such adjustments to eliminate fractional shares as the
Representative may determine) that bears the same proportion to the total number of Optional Shares
to be purchased as the number of Firm Shares set forth on Schedule A opposite the name of such
Underwriter bears to the total number of Firm Shares.
(d) Public Offering of the Shares. The Representative hereby advises the Company that the
Underwriters intend to offer for sale to the public, as described in the Prospectus, their
respective portions of the Shares as soon after this Agreement has been executed and the
Registration Statement has been declared effective as the Representative, in their sole judgment,
have determined is advisable and practicable.
(e) Payment for the Shares. Payment for the Shares shall be made at the Closing Date (and,
if applicable, at any Subsequent Closing Date) by wire transfer of immediately available funds to
the order of the Company.
It is understood that the Representative has been authorized, for their own account and the
accounts of the several Underwriters, to accept delivery of and receipt for, and make payment of
the purchase price for, the Firm Shares and any Optional Shares the Underwriters have agreed to
purchase. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, individually and not as the Representative of the Underwriters, may (but
shall not be obligated to) make payment for any Shares to be purchased by any Underwriter whose
funds shall not have been received by the Representative by the Closing Date or any Subsequent
Closing Date, as the case may be, for the account of such Underwriter, but any such payment shall
not relieve such Underwriter from any of its obligations under this Agreement.
(f) Delivery of the Shares. Delivery of the Firm Shares and the Optional Shares shall be
made through the facilities of The Depository Trust Company unless the Representative shall
otherwise instruct. Time shall be of the essence, and delivery at the time and place specified in
this Agreement is a further condition to the obligations of the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than 10:00 a.m. on the second
business day following the date the Shares are first released by the Underwriters 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 Representative shall request.
Section 3. Covenants of the Company.
13
Covenants of the Company. The Company covenants and agrees with each Underwriter as follows:
(a) Representative’s Review of Proposed Amendments and Supplements. During the period
beginning on the Applicable Time and ending on the later of the Closing Date or such date, as in
the opinion of counsel for the Underwriters, the Prospectus is no longer required by law to be
delivered in connection with sales by an Underwriter or dealer, including in
circumstances where such requirement may be satisfied pursuant to Rule 172 (the “Prospectus
Delivery Period”), prior to amending or supplementing the Registration Statement, the Disclosure
Package or the Prospectus, subject to Section 3(e), the Company shall furnish to the Representative
for review a copy of each such proposed amendment or supplement, and the Company shall not file or
use any such proposed amendment or supplement to which the Representative reasonably objects.
(b) Securities Act Compliance. After the date of this Agreement, the Company shall promptly
advise the Representative in writing (i) when the Registration Statement, if not effective at the
Execution Time, shall have become effective, (ii) of the receipt of any comments of, or requests
for additional or supplemental information from, the Commission, (iii) 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, (iv) of the time and date that any post-effective
amendment to the Registration Statement becomes effective and (v) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or of any order or
notice preventing or suspending the use of the Registration Statement, any preliminary prospectus
or the 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. The Company shall use its best efforts to prevent the issuance of any such stop order or
notice of prevention or suspension of such use. If the Commission shall enter any such stop order
or issue any such notice at any time, the Company will use its best efforts to obtain the lifting
or reversal of such order or notice at the earliest possible moment, or, subject to Section 3(a),
will file an amendment to the Registration Statement or will file a new registration statement and
use its best efforts to have such amendment or new registration statement declared effective as
soon as practicable. Additionally, the Company agrees that it shall comply with the provisions of
Rules 424(b) and 430A, as applicable, under the Securities Act, including with respect to the
timely filing of documents thereunder, 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) 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 in the manner and within the time periods required by the Exchange Act.
(d) Amendments and Supplements to the Registration Statement, Disclosure Package and
Prospectus and Other Securities Act Matters. If, during the Prospectus Delivery Period, any event
or development shall occur or condition exist as a result of which the Disclosure Package or the
Prospectus as then amended or supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements therein
14
in the light of
the circumstances under which they were made or then prevailing, as the case may be, not
misleading, or if it shall be necessary to amend or supplement the Disclosure Package or the
Prospectus in order to make the statements therein, in the light of the circumstances under which
they were made or then prevailing, as the case may be, not misleading, or if in the opinion of the
Representative it is otherwise necessary or advisable to amend or supplement the Registration
Statement, the Disclosure Package or the Prospectus, or to file a new registration statement
containing the Prospectus, in order to comply with law, including in connection with
the delivery of the Prospectus, the Company agrees to (i) notify the Representative of any
such event or condition and (ii) promptly prepare (subject to Section 3(a) and 3(e) hereof), file
with the Commission (and use its best efforts to have any amendment to the Registration Statement
or any new registration statement to be declared effective) and furnish at its own expense to the
Underwriters and to dealers, amendments or supplements to the Registration Statement, the
Disclosure Package or the Prospectus, or any new registration statement, necessary in order to make
the statements in the Disclosure Package or the Prospectus as so amended or supplemented, in the
light of the circumstances under which they were made or then prevailing, as the case may be, not
misleading or so that the Registration Statement, the Disclosure Package or the Prospectus, as
amended or supplemented, will comply with law.
(e) Permitted Free Writing Prospectuses. The Company represents that it has not made, and
agrees that, unless it obtains the prior written consent of the Representative, it will not make,
any offer relating to the Shares that constitutes or would constitute an Issuer Free Writing
Prospectus or that otherwise constitutes or would constitute a “free writing prospectus” (as
defined in Rule 405 of the Securities Act) or a portion thereof required to be filed by the Company
with the Commission or retained by the Company under Rule 433 of the Securities Act; provided that
the prior written consent of the Representative hereto shall be deemed to have been given in
respect of the Free Writing Prospectuses included in Schedule B hereto. Any such free writing
prospectus consented to by the Representative is hereinafter referred to as a “Permitted Free
Writing Prospectus”. The Company agrees that (i) it has treated and will treat, as the case may
be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) has
complied and will comply, as the case may be, with the requirements of Rules 164 and 433 of the
Securities Act applicable to any Permitted Free Writing Prospectus, including in respect of timely
filing with the Commission, legending and record keeping.
(f) Copies of any Amendments and Supplements to the Prospectus. The Company agrees to
furnish the Representative, without charge, during the Prospectus Delivery Period, as many copies
of the Prospectus and any amendments and supplements thereto and the Disclosure Package as the
Representative may request.
(g) Copies of the Registration Statement and the Prospectus. The Company will furnish to the
Representative and counsel for the Underwriters signed copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by an Underwriter or dealer
may be required by the Act, as many copies of each preliminary prospectus, the Prospectus and any
supplement thereto and the Disclosure Package as the Representative may reasonably request.
(h) Blue Sky Compliance. The Company shall cooperate with the Representative and counsel for
the Underwriters to qualify or register the Shares for sale under (or obtain
15
exemptions from the
application of) the state securities or blue sky laws or Canadian provincial Securities laws or
applicable foreign laws of those jurisdictions designated by the Representative, shall comply with
such laws and shall continue such qualifications, registrations and exemptions in effect so long as
required for the distribution of the 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, other than those arising out of the
offering or sale by the Company of the Shares in any jurisdiction where it is not now so
subject. The Company will advise the Representative promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the 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.
(i) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Shares
sold by it in the manner described under the caption “Use of Proceeds” in the Disclosure Package
and the Prospectus.
(j) Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and
transfer agent for the Common Stock.
(k) Earnings Statement. As soon as practicable, the Company will make generally available to
its security holders and to the Representative an earnings statement (which need not be audited)
covering the twelve-month period ending [ ], 2008, that satisfies the provisions
of Section 11(a) of the Securities Act and Rule 158 under the Securities Act.
(l) Periodic Reporting Obligations. During the Prospectus Delivery Period the Company shall
file, on a timely basis, with the Commission and the Nasdaq Global Market, Inc. all reports and
documents required to be filed under the Exchange Act. Additionally, the Company shall report the
use of proceeds from the issuance of the Shares as may be required under Rule 463 under the
Securities Act.
(m) Directed Share Program. The Company will comply with all applicable securities and other
laws, rules and regulations in each jurisdiction in which the Directed Shares are offered in
connection with the Directed Share Program.
(n) Listing. The Company will use its best efforts to list, subject to notice of issuance,
the Shares on the Nasdaq Global Market, Inc.
(o) Agreement Not to Offer or Sell Additional Shares. During the period commencing on the
date hereof and ending on the 180th day following the date of the Prospectus, the Company will not,
without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (which consent may be withheld at the sole
discretion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇), directly or indirectly, sell, offer, contract or grant any option to
sell, pledge, transfer or establish an open “put equivalent position” or liquidate or decrease a
“call equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise
dispose of or transfer (or enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition of), or announce the offering of, or file
16
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
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, pursuant to any stock option,
stock bonus or other stock plan or arrangement described in the Prospectus or file a registration
statement under the Securities Act in respect of any shares
of Common Stock issuable upon exercise of options, but only if the holders of such shares,
options, or shares issued upon exercise of such options, agree in writing not to sell, offer,
dispose of or otherwise transfer any such shares or options during such 180-day period without the
prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (which consent may be withheld at the sole discretion of
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇). Notwithstanding the foregoing, if (x) during the last 17 days of the 180-day
restricted period the Company issues an earnings release or material news or a material event
relating to the Company occurs, or (y) prior to the expiration of the 180-day restricted period,
the Company announces that it will release earnings results during the 16-day period beginning on
the last day of the 180-day period, the restrictions imposed in this clause shall continue to apply
until the expiration of the 18-day period beginning on the date of the issuance of the earnings
release or the occurrence of the material news or material event. The Company will provide the
Representative and any co-managers and each individual subject to the restricted period pursuant to
the lockup letters described in Section 5(h) with prior notice of any such announcement that gives
rise to an extension of the restricted period.
(p) Compliance with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company will comply with all applicable
securities and other laws, rules and regulations, including, without limitation, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act, and use its best efforts to cause the Company’s directors and officers, in their capacities as
such, to comply with such laws, rules and regulations, including, without limitation, the
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, except where the failure to comply with such law, rule or
regulation will not have a material adverse effect on the Company.
(q) Future Reports to Stockholders. To furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet and statements of
income, stockholders’ equity and cash flows of the Company certified by independent public
accountants) and, as soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration
Statement), to make available to its stockholders summary financial information of the Company for
such quarter in reasonable detail.
(r) Future Reports to the Representative. During the period of five years hereafter the
Company will furnish to the Representative at 15▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: Equity
Syndicate Department (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;
17
and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders of its capital
stock.
(s) Investment Limitation. The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would require the Company
to register as an investment company under the Investment Company Act.
(t) No Manipulation of Price. The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be expected to
constitute, under the Exchange Act or otherwise, the stabilization or manipulation of the price of
any securities of the Company to facilitate the sale or resale of the Shares.
(u) Existing Lock-Up Agreement. The Company will enforce all existing agreements between the
Company and any of its security holders that prohibit the sale, transfer, assignment, pledge or
hypothecation of any of the Company’s securities in connection with the Company’s initial public
offering. In addition, the Company will direct the transfer agent to place stop transfer
restrictions upon any such securities of the Company that are bound by such existing “lock-up”
agreements for the duration of the periods contemplated in such agreements.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, on behalf of the several Underwriters, 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. Notwithstanding the foregoing, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, for the benefit of each
of the other Underwriters, agrees not to consent to any action proposed to be taken by the Company
or any other holder of the Company’s securities that would otherwise be prohibited by, or to waive
compliance by the Company or any such other security holder with the provisions of, Section 3(o)
above or any lock-up agreement delivered pursuant to Section 5(h) below without giving each of the
other Underwriters at least 17 days prior notice (or such shorter notice as each of the other
Underwriters may deem acceptable to permit compliance with applicable provisions of NASD Conduct
Rule 2711(f) restricting publication and distribution of research and public appearances by
research analysts before and after the expiration, waiver or termination of a lock-up agreement).
(v) Internal Controls and Procedures. When and if the Company becomes subject to the
requirements of the Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder (collectively, the “Exchange Act”), the Company will maintain (i) effective internal
control over financial reporting as defined in Rule 13a-15 under the Exchange Act, and (ii) a
system of internal accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management’s general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset accountability; (C) access to
assets is permitted only in accordance with management’s general or specific authorization; and (D)
the recorded accountability for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(w) Disclosure Controls. From the Applicable Time, the Company will (i) maintain an effective
system of “disclosure controls and procedures” (as defined in Rule 13a-15 of the
18
Exchange Act) that
is designed to ensure that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Commission’s rules and forms, including controls and procedures
designed to ensure that such information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding required disclosure and (ii) carry
out evaluations of the effectiveness of its disclosure controls and procedures as required by Rule
13a-15 of the Exchange Act.
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 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 Shares to the
Underwriters, (iv) all fees and expenses of the Company’s counsel, independent public or certified
public accountants and other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of experts), each Issuer Free
Writing Prospectus, each preliminary prospectus and the Prospectus, and all amendments and
supplements thereto, and this Agreement, (vi) all filing fees, reasonable attorneys’ fees and
expenses incurred by the Company or the Underwriters in connection with qualifying or registering
(or obtaining exemptions from the qualification or registration of) all or any part of the Shares
for offer and sale under the state securities or blue sky laws or the provincial securities laws of
Canada, and, if requested by the Representative, preparing and printing a “Blue Sky Survey” or
memorandum, and any supplements thereto, advising the Underwriters of such qualifications,
registrations and exemptions, (vii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD’s review and approval of the
Underwriters’ participation in the offering and distribution of the Shares, (viii) the fees and
expenses associated with listing of the Shares on the Nasdaq Global Market, Inc., (ix) all
reasonable transportation and other expenses incurred in connection with presentations to
prospective purchasers of the Shares, except that the Company and the Underwriters will each pay
50% of the cost of privately chartered airplanes used for such purposes, (x) all other fees, costs
and expenses referred to in Item 13 of Part II of the Registration Statement and (xi) all costs and
expenses of the Underwriters, including the reasonable fees and disbursements of counsel for the
Underwriters and any stamp duties, similar taxes or duties or other taxes incurred by the
Underwriters, in connection with the Directed Share Program. Except as provided in this Section 4,
Section 6, Section 8 and Section 9 hereof, the Underwriters shall pay their own expenses, including
the fees and disbursements of their counsel.
Section 5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Shares as provided herein on the Closing Date
and, with respect to the Optional Shares, any Subsequent 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 and, with respect to
the Optional Shares, as of any Subsequent Closing Date as though then made, to the accuracy of the
statements of the Company made in any certificates pursuant to the provisions hereof, to the
19
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 Representative shall have received
from BDO ▇▇▇▇▇▇▇, LLP, independent public accountants for the Company, a letter dated the date
hereof addressed to the Underwriters, the form of which is attached as Exhibit A.
(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 and, with
respect to the Optional Shares, any Subsequent 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;
(ii) all material required to be filed by the Company pursuant to Rule 433(d) under
the Securities Act shall have been filed with the Commission within the applicable time
periods prescribed for such filings under such Rule 433;
(iii) no stop order suspending the effectiveness of the 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 threatened by the Commission; and
(iv) the NASD shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For the period from and after the
date of this Agreement and prior to the Closing Date and, with respect to the Optional Shares, any
Subsequent Closing Date:
(i) in the judgment of the Representative there shall not have occurred any Material
Adverse Change;
(ii) there shall not have been any change specified in the letter or letters referred
to in paragraph (a) of this Section 5 which is, in the sole judgment of the Representative,
so material and adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Shares as contemplated by the Registration Statement and the
Prospectus; and
(iii) there shall not have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating accorded any
securities of the Company or any of its subsidiaries by any “nationally recognized
20
statistical rating organization” as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act.
(d) Opinion of Counsel for the Company. On the Closing Date and any Subsequent Closing Date,
the Representative shall have received the favorable opinion of (i) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, counsel
for the Company, dated as of such Closing Date, the form of which is attached as Exhibit B,
(ii) Pabst Patent Group LLP, intellectual property counsel for the Company, dated as of such
Closing Date, the form of which is attached as Exhibit C and (iii)
▇▇▇▇▇▇▇ LLP, regulatory counsel for the Company, dated as of such Closing Date, the form of
which is attached as Exhibit D.
(e) Opinion of Counsel for the Underwriters. On the Closing Date and any Subsequent Closing
Date, the Representative shall have received the favorable opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
and ▇▇▇▇ LLP, counsel for the Underwriters, dated as of such Closing Date, in form and substance
satisfactory to, and addressed to, the Representative, with respect to the issuance and sale of the
Shares, the Registration Statement, the Prospectus (together with any supplement thereto), the
Disclosure Package and other related matters as the Representative may reasonably require, and the
Company shall have furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(f) Officers’ Certificate. On the Closing Date and any Subsequent Closing Date, the
Representative 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 such Closing Date, to the effect that the signers of
such certificate have carefully examined the Registration Statement, the Prospectus and any
amendment or supplement thereto, any Issuer Free Writing Prospectus and any amendment or supplement
thereto and this Agreement, to the effect set forth in subsections (b) and (c)(iii) 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 on and as of the Closing Date with the same force
and effect as though expressly made on and as of such Closing Date; and
(iii) the Company has complied 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.
(g) Bring-down Comfort Letter. On the Closing Date and any Subsequent Closing Date, the
Representative shall have received from BDO ▇▇▇▇▇▇▇, LLP, independent public accountants for the
Company, a letter dated such date, in form and substance satisfactory to the Representative, 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 or
Subsequent Closing Date, as the case may be.
21
(h) Lock-Up Agreement from Certain Securityholders of the Company. On or prior to the date
hereof, the Company shall have furnished to the Representative an agreement in the form of
Exhibit E hereto from each director and officer and substantially all of the other
beneficial owners of Common Stock (as defined and determined according to Rule 13d-3 under the
Exchange Act, except that a one hundred eighty day period shall be used rather than a sixty day
period set forth therein), and such agreement shall be in full force and effect on the Closing Date
and any Subsequent Closing Date.
(i) Listing of Shares. The Shares shall have been authorized for listing on the Nasdaq Global
Market, Inc., and satisfactory evidence of such actions shall have been provided to the
Representative.
(j) Additional Documents. On or before the Closing Date and any Subsequent Closing Date, the
Representative and counsel for the Underwriters 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 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 Representative by notice to the Company at any
time on or prior to the Closing Date and, with respect to the Optional Shares, at any time prior to
the applicable Subsequent 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 Underwriters’ Expenses. If this Agreement is terminated
by the Representative pursuant to Section 5, Section 7 or Section 11, or if the sale to the
Underwriters of the 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 Representative and the other Underwriters (or
such Underwriters as have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred by the
Representative and the Underwriters in connection with the proposed purchase and the offering and
sale of the Shares, including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges.
Section 7. Effectiveness of this Agreement. This Agreement shall not become
effective until the later of (i) the execution of this Agreement by the parties hereto and (ii)
notification by the Commission to the Company and the Representative of the effectiveness of the
Registration Statement under the Securities Act.
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 any Underwriter, except that the Company shall be obligated to reimburse
22
the
expenses of the Representative and the Underwriters pursuant to Sections 4 and 6 hereof or (b) of
any Underwriter to the Company.
Section 8. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter, each person, if any,
who controls any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the meaning of Rule
405 under the Securities Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by any untrue statement
or alleged untrue statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus, the Disclosure Package, any Issuer Free Writing
Prospectus, any Company information that the Company has filed, or is required to file, pursuant to
Rule 433(d) under the Securities Act, or the Prospectus or any amendment or supplement thereto, or
caused by any omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and each person, if any,
who controls the Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such
Underwriter, but only with reference to information relating to such Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use in the Registration Statement
or amendment thereof, any preliminary prospectus, the Disclosure Package, any Issuer Free Writing
Prospectus or the Prospectus or any amendment or supplement thereto.
(c) In case any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or (b),
such person (the “Indemnified Party”) shall promptly notify the person against whom such indemnity
may be sought (the “Indemnifying Party”) in writing and the Indemnifying Party, upon request of the
Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing interests between them.
It is understood that the Indemnifying Party shall not, in respect of the legal expenses of any
Indemnified Party in connection with any proceeding or
23
related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to
any local counsel) for all such Indemnified Parties and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in
the case of parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify the
Indemnified Party from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an
Indemnified Party shall have requested an Indemnifying Party to reimburse the Indemnified
Party for fees and expenses of counsel as contemplated by the second and third sentences of this
Section 8(c), the Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Party of the aforesaid request and (ii) such Indemnifying
Party shall not have reimbursed the Indemnified Party in accordance with such request prior to the
date of such settlement. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or 8(b) is unavailable to
an Indemnified Party or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Party under such paragraph, in lieu of indemnifying
such Indemnified Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided
by clause 8(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative
fault of the Company on the one hand and of the Underwriters on the other hand in connection with
the statements or omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other hand in connection with the offering of the Shares
shall be deemed to be in the same respective proportions as the net proceeds from the offering of
the Shares (before deducting expenses) received by the Company and the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the table on the cover
of the Prospectus, bear to the aggregate initial public offering price of the Shares. The relative
fault of the Company on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Underwriters’ respective
obligations to contribute pursuant to this Section 8 are several in proportion to the respective
number of Shares they have purchased hereunder, and not joint.
24
(e) The Company and the Underwriters agree that it would not be just or equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in Section 8(d). The amount paid
or payable by an Indemnified Party as a result of the losses, claims, damages and liabilities
referred to in Section 8(d) shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section
8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to
any Indemnified Party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8 and the
representations, warranties and other statements of the Company contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter, any person controlling any
Underwriter or any affiliate of any Underwriter or by or on behalf of the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of and payment for any of the
Shares.
Section 9. Directed Share Program Indemnification.
(a) The Company agrees to indemnify and hold harmless ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, each person, if any, who
controls ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act and each affiliate of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ within the meaning of Rule 405 of the
Securities Act (“▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities”) from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) (i) caused by any untrue
statement or alleged untrue statement of a material fact contained in any material prepared by or
with the consent of the Company for distribution to Participants in connection with the Directed
Share Program or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading; (ii)
caused by the failure of any Participant to pay for and accept delivery of Directed Shares that the
Participant agreed to purchase; or (iii) related to, arising out of, or in connection with the
Directed Share Program, other than losses, claims, damages or liabilities (or expenses relating
thereto) that are finally judicially determined to have resulted from the bad faith or gross
negligence of one or more ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities.
(b) In case any proceeding (including any governmental investigation) shall be instituted
involving any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity in respect of which indemnity may be sought pursuant to Section
9(a), the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity seeing indemnity, shall promptly notify the
25
Company in writing and
the Company, upon request of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity, shall retain counsel reasonably
satisfactory to the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity to represent the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity and any others the
Company may designate in such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of
such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity unless (i) the Company shall have agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include
both the Company and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity and
representation of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Company shall not, in respect of the legal
expenses of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in
addition to any local counsel) for all ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities. Any such separate firm for the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. The Company 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 Company agrees to
indemnify the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time a ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Entity shall have requested the Company to reimburse it for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the Company agrees that it shall
be liable for any settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by the Company of the aforesaid request
and (ii) the Company shall not have reimbursed the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity in accordance with such
request prior to the date of such settlement. The Company shall not, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, effect any settlement of any pending or threatened proceeding in respect
of which any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity is or could have been a party and indemnity could have been
sought hereunder by such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity, unless such settlement includes an unconditional
release of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities from all liability on claims that are the subject matter of
such proceeding.
(c) To the extent the indemnification provided for in Section 9(a) is unavailable to a ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entity or insufficient in respect of any losses, claims, damages or liabilities referred to
therein, then the Company in lieu of indemnifying the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity thereunder, shall
contribute to the amount paid or payable by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities on the other hand
from the offering of the Directed Shares or (ii) if the allocation provided by clause 9(c)(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 9(c)(i) above but also the relative fault of the Company on
the one hand and of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities on the other hand in connection with any statements
or omissions that resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company on the one hand
and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities on the other hand in connection with the offering of the Directed
Shares shall be deemed to be in the same respective proportions as the net proceeds from the
offering of the Directed Shares (before deducting expenses) and the total underwriting discounts
and commissions received by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities for the Directed Shares, bear to the
aggregate Public Offering Price of
26
the Directed Shares. If the loss, claim, damage or liability is
caused by an untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact, the relative fault of the Company on the one hand and the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entities on the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement or the omission or alleged omission relates to information
supplied by the Company or by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.
(d) The Company and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities agree that it would not be just or equitable
if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred to in Section 9(c).
The amount paid or payable by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding subsection shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses reasonably
incurred by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, no ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity shall
be required to contribute any amount in excess of the amount by which the total price at which the
Directed Shares distributed to the public were offered to the public exceeds the amount of any
damages that such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity has otherwise been required to pay. The remedies provided
for in this Section 9 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Party at law or in equity.
(e) The indemnity and contribution provisions contained in this Section 9 shall remain
operative and in full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity or the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of and payment for any of the
Directed Shares.
Section 10. Default of One or More of the Several Underwriters. If, on the Closing
Date or a Subsequent Closing Date, as the case may be, any one or more of the several Underwriters
shall fail or refuse to purchase Shares that it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase does not exceed 10% of the aggregate number of the Shares to be
purchased on such date, the other Underwriters shall be obligated, severally, in the proportions
that the number of Firm Shares set forth opposite their respective names on Schedule A bears to the
aggregate number of Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as may be specified by the Representative with the
consent of the non-defaulting Underwriters, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such date. If, on the
Closing Date or a Subsequent Closing Date, as the case may be, any one or more of the Underwriters
shall fail or refuse to purchase Shares and the aggregate number of Shares with respect to which
such default occurs exceeds 10% of the aggregate number of Shares to be purchased on such date, and
arrangements satisfactory to the Representative and the Company for the purchase of such Shares are
not made within 48 hours after such default, this Agreement shall terminate without liability of
any party to any other party except that the
27
provisions of Section 4, Section 8 and Section 9 shall
at all times be effective and shall survive such termination. In any such case either the
Representative or the Company shall have the right to postpone the Closing Date or a Subsequent
Closing Date, as the case may be, but in no event for longer than seven days in order that the
required changes, if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
As used in this Agreement, the term “Underwriter” shall be deemed to include any person
substituted for a defaulting Underwriter under this Section 10. Any action taken under this
Section 10 shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
Section 11. Termination of this Agreement. Prior to the Closing Date this Agreement
may be terminated by the Representative 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 Global Market, Inc., or trading in securities generally on the New York
Stock Exchange or the Nasdaq Global Market, Inc. 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 federal or
New York authorities or a material disruption in commercial banking or securities settlement or
clearance services in the United States has occurred; or (iii) there shall have occurred any
outbreak or escalation of national or international hostilities or declaration of a national
emergency or war by the United States 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 judgment of the Representative is material and adverse and makes it
impracticable or inadvisable to market the Shares in the manner and on the terms described in the
Prospectus or to enforce contracts for the sale of securities. 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 Representative and the
Underwriters pursuant to Sections 4 and 6 hereof or (b) any Underwriter to the Company.
Section 12. No Advisory or Fiduciary Responsibility. The Company acknowledges and
agrees that: (i) the purchase and sale of the Securities pursuant to this Agreement, including the
determination of the public offering price of the Securities and any related discounts and
commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and
the several Underwriters, on the other hand, and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the transactions
contemplated by this Agreement; (ii) in connection with each transaction contemplated hereby and
the process leading to such transaction each Underwriter is and has been acting solely as a
principal and is not the financial advisor, agent or fiduciary of the Company or its affiliates,
stockholders, creditors or employees or any other party; (iii) no Underwriter has assumed or will
assume an advisory, agency or fiduciary responsibility in favor of the Company with respect to any
of the transactions contemplated hereby or the process leading thereto (irrespective of whether
such Underwriter has advised or is currently advising the Company on other matters) and no
Underwriter has any obligation to the Company with respect to the offering contemplated hereby
except the obligations expressly set forth in this Agreement; (iv) the several Underwriters and
their respective affiliates may be engaged in a broad range of transactions that involve
28
interests
that differ from those of the Company and that the several Underwriters have no obligation to
disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v)
the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to
the offering contemplated hereby and the Company has consulted its own legal, accounting,
regulatory and tax advisors to the extent it deemed appropriate.
This Agreement supersedes all prior agreements and understandings (whether written or oral)
between the Company and the several Underwriters, or any of them, with respect to the
subject matter hereof. The Company hereby waives and releases, to the fullest extent
permitted by law, any claims that the Company may have against the several Underwriters with
respect to any breach or alleged breach of agency or fiduciary duty.
Section 13. Research Analyst Independence. The Company acknowledges that the
Underwriters’ research analysts and research departments are required to be independent from their
respective investment banking divisions and are subject to certain regulations and internal
policies, and that such Underwriters’ research analysts may hold views and make statements or
investment recommendations and/or publish research reports with respect to the Company and/or the
offering that differ from the views of their respective investment banking divisions. The Company
hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may
have against the Underwriters with respect to any conflict of interest that may arise from the fact
that the views expressed by their independent research analysts and research departments may be
different from or inconsistent with the views or advice communicated to the Company by such
Underwriters’ investment banking divisions. The Company acknowledges that each of the Underwriters
is a full service securities firm and as such from time to time, subject to applicable securities
laws, may effect transactions for its own account or the account of its customers and hold long or
short positions in debt or equity securities of the companies that may be the subject of the
transactions contemplated by this Agreement.
Section 14. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the Company, of its
officers and of the several Underwriters set forth in or made pursuant to this Agreement (i) will
remain operative and in full force and effect, regardless of any (A) investigation, or statement as
to the results thereof, made by or on behalf of any Underwriter, the officers or employees of any
Underwriter, or any person controlling the Underwriter, the Company, the officers or employees of
the Company, or any person controlling the Company, as the case may be or (B) acceptance of the
Shares and payment for them hereunder and (ii) will survive delivery of and payment for the Shares
sold hereunder and any termination of this Agreement.
Section 15. Notices. All communications hereunder shall be in writing and shall be
mailed or hand delivered to the parties hereto as follows:
If to the Representative:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Equity Syndicate Department
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Equity Syndicate Department
29
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
If to the Company:
Biodel Inc.
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D.
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D.
Any party hereto may change the address for receipt of communications by giving written notice
to the others.
Section 16. Successors and Assigns. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters pursuant to Section 10
hereof, and to the benefit of (i) the Company, its directors, any person who controls the Company
within the meaning of the Securities Act or the Exchange Act and any officer of the Company who
signs the Registration Statement, (ii) the Underwriters, the officers, directors, employees and
agents of the Underwriters, and each person, if any, who controls any Underwriter within the
meaning of the Securities Act or the Exchange Act, and (iii) the respective successors and assigns
of any of the above, all as and to the extent provided in this Agreement, and no other person
shall acquire or have any right under or by virtue of this Agreement. The term “successors and
assigns” shall not include a purchaser of any of the Shares from any of the several Underwriters
merely because of such purchase.
Section 17. 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 18. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK FOR CONTRACTS MADE
AND TO BE PERFORMED IN THE STATE OF NEW YORK.
Section 19. Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”)
may be instituted in the federal courts of the United States of America located in the City and
County of New York, Borough of Manhattan, or the courts of the State of New York in each case
located in the City and County of New York, Borough of Manhattan (collectively, the “Specified
Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court (a “Related
30
Judgment”), as
to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding.
Service of any process, summons, notice or document by mail to such party’s address set forth
above shall be effective service of process for any suit, action or other proceeding brought in any
such court. The parties irrevocably and unconditionally waive any objection to the laying of venue
of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that
any such suit, action or other proceeding brought in any such court has been brought in an
inconvenient forum.
Section 20. 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 be an original, with
the same effect as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. 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.
31
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, BIODEL INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representative as
of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Acting severally on behalf of themselves
and the several Underwriters named in
the attached Schedule A.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By: |
||||
| Name: | ||||
| Title: |
SCHEDULE A
| Number of Firm | ||||
| Shares to be | ||||
| Underwriters | Purchased | |||
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated |
[___] | |||
Banc of America Securities LLC |
[___] | |||
Leerink ▇▇▇▇▇ & Co., Inc. |
[___] | |||
Natexis Bleichroeder Inc. |
[___] | |||
Total |
5,000,000 | |||
1
SCHEDULE B
Schedule of Free Writing Prospectuses included in the Disclosure Package
1