3,500,000 Shares ARDEA BIOSCIENCES, INC. Common Stock ($0.001 par value per Share) UNDERWRITING AGREEMENT
Exhibit 1.1
3,500,000 Shares
ARDEA BIOSCIENCES, INC.
Common Stock
($0.001 par value per Share)
April 6, 2010
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
As Representative of the several Underwriters
c/o JEFFERIES & COMPANY, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the several Underwriters
c/o JEFFERIES & COMPANY, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Introductory. Ardea Biosciences, Inc., a Delaware corporation (the “Company”), proposes to
issue and sell to the several Underwriters named on Schedule A hereto (the “Underwriters”)
an aggregate of 3,500,000 shares of its common stock, par value $0.001 per share (the “Shares”).
The 3,500,000 Shares to be sold by the Company are collectively called the “Firm Shares.” In
addition, the Company has granted to the Underwriters an option to purchase up to an additional
525,000 Shares. The additional 525,000 Shares to be sold by the Company pursuant to such option
are collectively called the “Optional Shares.” The Firm Shares and, if and to the extent such
option is exercised, the Optional Shares are collectively called the “Offered Shares.” Jefferies &
Company, Inc. (“Jefferies”) has agreed to act as representative of the several Underwriters (in
such capacity, the “Representative”) in connection with the offering and sale of the Offered
Shares.
The Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a shelf registration statement on Form S-3 (File No. 333-159279), and has prepared a
base prospectus (the “Base Prospectus”) to be used in connection with the public offering and sale
of the Offered 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, as amended, and the rules and regulations promulgated
thereunder (collectively, the “Securities Act”), including all documents incorporated or deemed to
be incorporated by reference therein and any information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430B under the Securities Act or the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (collectively, the “Exchange
Act”), is called the “Registration Statement.” Any registration statement filed by the Company
pursuant to Rule 462(b) under the Securities Act is called the “Rule 462(b) Registration
Statement,” and from and after the date and time of filing of the Rule 462(b) Registration
Statement the term “Registration Statement” shall include the Rule 462(b) Registration Statement.
As used herein, the term “Prospectus” shall mean the final prospectus supplement to the Base
Prospectus that describes the Offered Shares and the offering thereof (the “Final Prospectus
Supplement”), together with the Base Prospectus, in the form
first used by the Underwriter to confirm sales of the Offered Shares or in the form first made
available to the Underwriter by the Company to meet requests of purchasers pursuant to Rule 173
under the Securities Act. As used herein, “Applicable Time” is 8:16 a.m. New York time, on April
6, 2010. As used herein, “free writing prospectus” has the meaning set forth in Rule 405 under
the Securities Act, and “Time of Sale Prospectus” means the Base Prospectus, as amended or
supplemented immediately prior to the Applicable Time, together with the free writing prospectuses,
if any, identified in Schedule B hereto, each “road show” (as defined in Rule 433 under the
Securities Act), if any, related to the offering of the Shares contemplated hereby that is a
“written communication” (as defined in Rule 405 under the Securities Act), and the pricing
information set forth in Schedule C hereto. As used herein, the terms “Registration
Statement,” “Rule 462(b) Registration Statement,” “Base Prospectus,” “Time of Sale Prospectus” and
“Prospectus” shall include the documents incorporated and deemed to be incorporated by reference
therein as of the date thereof. All references in this Agreement to financial statements and
schedules and other information which are “contained,” “included” or “stated” in the Registration
Statement, the Rule 462(b) Registration Statement, the Base Prospectus, the Time of Sale Prospectus
or the Prospectus (and all other references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as the case may be; and
all references in this Agreement to amendments or supplements to the Registration Statement, the
Rule 462(b) Registration Statement, the Base Prospectus, the Time of Sale Prospectus or the
Prospectus, as the case may be, and all references in this Agreement to amendments or supplements
to the Registration Statement, the Rule 462(b) Registration Statement, the Base Prospectus, the
Time of Sale Prospectus or the Prospectus shall be deemed to mean and include the filing of any
document under the Exchange Act which is or is deemed to be incorporated by reference in the
Registration Statement, the Rule 462(b) Registration Statement, the Base Prospectus, the Time of
Sale Prospectus or the Prospectus, as the case may be. All references in this Agreement to the
Registration Statement, the 462(b) Registration Statement, the Base Prospectus or 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 (“▇▇▇▇▇”).
In the event that the Company has only one subsidiary, then all references herein to
“subsidiaries” of the Company shall be deemed to refer to such single subsidiary, mutatis
mutandis.
The Company hereby confirms its agreements with the Underwriters as follows:
Section 1. Representations and Warranties of the Company. The Company hereby represents, warrants and covenants to each Underwriter, as of the
date of this Agreement, as of the First Closing Date (as hereinafter defined) and as of each
Option Closing Date (as hereafter defined), if any, and covenants with each Underwriter, as
follows:
(a) Compliance with Registration Requirements. The Registration Statement and any Rule 462(b) Registration Statement have been
declared effective by the Commission under the Securities Act. The Company has complied, to
the Commission’s satisfaction, with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement is in
effect and no proceedings for such purpose have been instituted or are pending or, to the
Company’s knowledge, are contemplated or threatened by the Commission.
The Base Prospectus and the Prospectus when filed complied or will comply in all
material respects with the Securities Act and, if filed by electronic transmission pursuant to
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▇▇▇▇▇ (except as may be permitted by Regulation S-T under the Securities Act), was identical to
the copy thereof delivered to the Underwriters for use in connection with the offer and sale of
the Offered Shares. Each of the Registration Statement, any Rule 462(b) Registration Statement
and any post-effective amendment thereto, at the time it became effective and at all subsequent
times during the period beginning on the date hereof and ending on the later of the Option
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 (assuming the absence of Rule 172 under the
Securities Act), in connection with sales by the Underwriters or a dealer (the “Prospectus
Delivery Period”), complied and will comply in all material respects with the Securities Act
and did not and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading. As of the Applicable Time, the Time of Sale Prospectus (including any prospectus
wrapper) did not, and at the time of each sale of the Offered Shares and at the First Closing
Date (as defined in Section 2), the Time of Sale Prospectus, as then amended or supplemented by
the Company, if applicable, will not, contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Prospectus (including any
Prospectus wrapper), as amended or supplemented, as of its date and at all subsequent times
during the Prospectus Delivery Period, 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 three immediately preceding sentences do not
apply to statements in or omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or the Base Prospectus, the
Prospectus or the Time of Sale 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 to the Company consists
of the information described in Section 9(b) below. There are no contracts or other documents
required to be described in the Time of Sale Prospectus or the Prospectus or to be filed as
exhibits to the Registration Statement which have not been described or filed as required.
The Company is not an “ineligible issuer” in connection with the offering of the Offered
Shares pursuant to Rules 164, 405 and 433 under the Securities Act. Any free writing
prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities
Act has been, or will be, filed with the Commission in accordance with the requirements of the
Securities Act. Each free writing prospectus that the Company has filed, or is required to
file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or behalf of or
used or referred to by the Company complies or will comply in all material respects with the
requirements of Rule 433 under the Securities Act including timely filing with the Commission
or retention where required and legending, and each such free writing prospectus, as of its
issue date and at all subsequent times through the completion of the public offer and sale of
the Offered Shares did not, does not and will not include any information that conflicted,
conflicts with or will conflict with the information contained in the Registration Statement,
the Base Prospectus or the Prospectus, including any document
incorporated by reference therein. Except for the free writing prospectuses, if any,
identified in Schedule B hereto, and electronic road shows, if any, furnished to you
before first use, the Company has not prepared, used or referred to, and will not, without your
prior consent, prepare, use or refer to, any free writing prospectus.
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(b) Offering Materials Furnished to Underwriters. The Company has delivered to the Representative two signed copies of the Registration
Statement, any amendments thereto and any Rule 462(b) Registration Statement (including
exhibits thereto) and of each consent and certificate of experts filed as a part thereof.
(c) Distribution of Offering Material By the Company. The Company has not distributed and will not distribute, prior to the later of (i) the
expiration or termination of the option granted to several Underwriters in Section 2 and (ii)
the completion of the Underwriters’ distribution of the Offered Shares, any offering material
in connection with the offering and sale of the Offered Shares other than the Base Prospectus,
the Time of Sale Prospectus, the Prospectus, any free writing prospectus reviewed and consented
to by the Representative, or the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by, and is a valid and
binding agreement of, the Company, enforceable against the Company in accordance with its
terms, except as rights to indemnification hereunder may be limited by applicable law and
except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and remedies of creditors
or by general equitable principles.
(e) Authorization of the Offered Shares. The Offered Shares have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this Agreement, will be
validly issued, fully paid and nonassessable, and the issuance and sale of the Offered Shares
is not subject to any preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase the Offered Shares.
(f) No Applicable Registration or Other Similar Rights. There are no persons with registration or other similar rights to have any equity or
debt securities registered for sale under the Registration Statement or included in the
offering contemplated by this Agreement, except for such rights as have been duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed in the Time of Sale Prospectus, subsequent to the
respective dates as of which information is given in the Time of Sale Prospectus: (i) there
has been no material adverse change, or any development that could reasonably be expected to
result in a material adverse change, in the condition, financial or
otherwise, or in the earnings, business, operations or prospects, whether or not arising
from transactions in the ordinary course of business, of the Company and its subsidiaries,
considered as one entity (any such change is called a “Material Adverse Change”); (ii) the
Company and its subsidiaries, considered as one entity, have not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary course of business
nor entered into any material transaction or agreement not in the ordinary course of business;
and (iii) there has been no dividend or distribution of any kind declared, paid or made by the
Company or, except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of
its subsidiaries of any class of capital stock.
(h) Independent Accountants. Stonefield ▇▇▇▇▇▇▇▇▇, Inc., who have expressed their opinion with respect to the
financial statements (which term as used in this Agreement includes the related notes thereto)
and supporting schedules filed with the Commission as a
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part of the Registration Statement and
incorporated by reference in the Base Prospectus, the Prospectus and Time of Sale Prospectus
(each, an “Applicable Prospectus” and collectively, the “Applicable Prospectuses”), are (i)
independent public or certified public accountants as required by the Securities Act and the
Exchange Act, (ii) in compliance with the applicable requirements relating to the qualification
of accountants under Rule 2-01 of Regulation S-X and (iii) a registered public accounting firm
as defined by the Public Company Accounting Oversight Board (the “PCAOB”) whose registration
has not been suspended or revoked and, to the Company’s knowledge, who has not requested such
registration to be withdrawn.
(i) Preparation of the Financial Statements. The financial statements filed with the Commission as a part of the Registration
Statement and included in the Base Prospectus, the Time of Sale Prospectus and the Prospectus
present fairly the consolidated financial position of the Company and its subsidiaries as of
and at the dates indicated and the results of their operations and cash flows for the periods
specified. The supporting schedules included in the Registration Statement present fairly the
information required to be stated therein. Such financial statements and supporting schedules
have been prepared in conformity with generally accepted accounting principles as applied in
the United States applied on a consistent basis throughout the periods involved, except as may
be expressly stated in the related notes thereto. No other financial statements or supporting
schedules are required to be included in the Registration Statement or any Applicable
Prospectus. The financial data set forth or incorporated by reference in each Applicable
Prospectus fairly present the information set forth therein on a basis consistent with that of
the audited financial statements contained in the Registration Statement and each Applicable
Prospectus. To the Company’s knowledge, no person who has been suspended or barred from being
associated with a registered public accounting firm, or who has failed to comply with any
sanction pursuant to Rule 5300 promulgated by the PCAOB, has participated in or otherwise aided
the preparation of, or audited, the financial statements, supporting schedules or other
financial data filed with the Commission as a part of the Registration Statement and included
in any Applicable Prospectus.
(j) Company’s Accounting System. The Company and each of its subsidiaries make and keep accurate books and records and
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting principles
as applied in the United States and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company is not
aware of any material weakness in the Company’s internal control over financial reporting
(whether or not remediated) and since December 31, 2009, there has been no change in the
Company’s internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial
reporting.
(k) Incorporation and Good Standing of the Company and its Subsidiaries. Each of the Company and its subsidiaries has been duly incorporated or organized, as
the case may be, and is validly existing as a corporation, partnership or limited liability
company, as applicable, in good standing under the laws of the jurisdiction of its
incorporation or organization and has the power and authority (corporate or other) to own,
lease and operate its properties and to conduct its business as described in each Applicable
Prospectus and, in
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the case of the Company, to enter into and perform its obligations under
this Agreement, except where the failure to be in good standing would not reasonably be
expected to result in a Material Adverse Change. Each of the Company and each subsidiary is
duly qualified as a foreign corporation, partnership or limited liability company, as
applicable, to transact business and is in good standing in the State of California and each
other jurisdiction in which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the failure to be so qualified
or in good standing would not reasonably be expected to result in a Material Adverse Change.
All of the issued and outstanding capital stock or other equity or ownership interests of each
subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and
are owned by the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or adverse claim. The Company does not own or
control, directly or indirectly, any corporation, association or other entity other than (i)
the subsidiaries listed in Exhibit 21 to the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2009 and (ii) such other entities omitted from Exhibit 21 which,
when such omitted entities are considered in the aggregate as a single subsidiary, would not
constitute a “significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X.
(l) Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding capital stock of the Company is as set forth in
each Applicable Prospectus (other than for subsequent issuances, if any, pursuant to employee
benefit plans described in the Time of Sale Prospectus or upon the exercise of outstanding
options or warrants described in each Applicable Prospectus). The Shares (including the
Offered Shares) conform in all material respects to the description thereof contained in the
Time of Sale Prospectus. All of the issued and outstanding Shares have been duly authorized
and validly issued, are fully paid and nonassessable and have been issued in compliance with
federal and state securities laws. None of the outstanding Shares was issued in violation of
any preemptive rights, rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company. There are no authorized or outstanding options, warrants,
preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable or exercisable
for, any capital stock of the Company or any of its subsidiaries other than those accurately
described in each Applicable Prospectus. The description of the Company’s stock option, stock
bonus and other stock plans or arrangements, and the options or other rights granted
thereunder, set forth in each Applicable Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements, options and rights.
All grants of options to acquire Shares (each, a “Company Stock Option”) were validly issued
and approved by the Board of Directors of the Company, a committee thereof or an individual
with authority duly delegated by the Board of Directors of the Company or a committee thereof.
Grants of Company Stock Options were (i) made in material compliance with all applicable laws
and (ii) as a whole, made in material compliance with the terms of the plans under which such
Company Stock Options were issued. There is no and has been no policy or practice of the
Company to coordinate the grant of Company Stock Options with the release or other public
announcement of material information regarding the Company or its results of operations or
prospects. Except as described in the Time of Sale Prospectus and the Prospectus, the Company
has not sold or issued any Shares during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act other than Shares issued pursuant to employee benefit plans, qualified stock
options plans or other employee compensation plans or pursuant to outstanding options, rights
or warrants.
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(m) Stock Exchange Listing. The Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed
on the Nasdaq Global Market, and the Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Shares under the Exchange Act or delisting
the Shares from the Nasdaq Global Market, nor has the Company received any notification that
the Commission or the Nasdaq Global Market is contemplating terminating such registration or
listing.
(n) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required. Neither the Company nor any of its subsidiaries is in violation of its charter or
by-laws, partnership agreement or operating agreement or similar organizational document, as
applicable, or is in default (or, with the giving of notice or lapse of time, would be in
default) (“Default”) under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound (including, without limitation, any credit
agreement, indenture, pledge agreement, security agreement or other instrument or agreement
evidencing, guaranteeing, securing or relating to indebtedness of the Company or any of its
subsidiaries ), or to which any of the property or assets of the Company or any of its
subsidiaries is subject (each, an “Existing Instrument”), except for such Defaults as would not
reasonably be expected to, individually or in the aggregate, result in a Material Adverse
Change. The Company’s execution, delivery and performance of this Agreement, consummation of
the transactions contemplated hereby and by each Applicable Prospectus and the issuance and
sale of the Offered Shares (i) have been duly authorized by all necessary corporate action and
will not result in any violation of the provisions of the charter or by-laws, partnership
agreement or operating agreement or similar organizational document of the Company or any
subsidiary, as applicable, (ii) will not conflict with or constitute a breach of, or Default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant
to, or require the consent of any other party to, any Existing Instrument, except for such
breaches, Defaults or results, or failure to obtain such consent, as would not reasonably be
expected, individually or in the aggregate, to result in a Material Adverse Change and (iii)
will not result in any violation of any law, administrative regulation or administrative or
court decree applicable to the Company or any subsidiary, except for such violations as would
not reasonably be expected, individually or in the aggregate, to result in a Material Adverse
Change. No consent, approval, authorization or other order of, or registration or filing with,
any court or other governmental or regulatory authority or agency, is required for the
Company’s execution, delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by each Applicable Prospectus, except such as have been
obtained or made or will be made by the Company under the Securities Act, or that may be
required under applicable state securities or blue sky laws and from the Financial Industry
Regulatory Authority (“FINRA”).
(o) No Material Actions or Proceedings. There are no legal or governmental actions, suits or proceedings pending or, to the
Company’s knowledge, threatened (i) against or affecting the Company or any of its
subsidiaries, (ii) which have as the subject thereof any officer or director of, or property
owned or leased by, the Company or any of its subsidiaries or (iii) relating to environmental
or discrimination matters, where in any such case (A) to the Company’s knowledge, there is a
substantial likelihood that such action, suit or proceeding will be determined adversely to the
Company, such subsidiary or such officer or director, (B) any such action, suit or proceeding,
if so determined adversely, would reasonably be expected to result in a Material Adverse Change
or adversely affect the consummation of the transactions contemplated by this Agreement or (C)
any such action, suit or proceeding is or
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would be material in the context of the sale of
Shares. No material labor dispute with the employees of the Company or any of its
subsidiaries, or to the Company’s knowledge, with the employees of any principal supplier,
manufacturer, customer or contractor of the Company, exists or, to the Company’s knowledge, is
threatened or imminent.
(p) Intellectual Property Rights. The Company and its subsidiaries own, possess or can acquire on reasonable terms
sufficient trademarks, trade names, patent rights, copyrights, domain names, licenses,
approvals, trade secrets and other similar rights (collectively, “Intellectual Property
Rights”) reasonably necessary to conduct their businesses as now conducted; except to the
extent failure to own, possess or acquire such Intellectual Property Rights would not result in
a Material Adverse Change. Neither the Company nor any of its subsidiaries has received, or
has any reason to believe that it will receive, any notice of infringement or conflict with
asserted Intellectual Property Rights of others. Except as would not be reasonably likely to
result, individually or in the aggregate, in a Material Adverse Change (A) to the Company’s
knowledge, there is no infringement, misappropriation or violation by third parties of any of
the Intellectual Property Rights owned by the Company; (B) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the
rights of the Company and its subsidiaries in or to any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable basis for any such claim,
that would, individually or in the aggregate, together with any other claims in this subsection
(p) result in a Material Adverse Change; (C) the Intellectual Property Rights owned by the
Company and its subsidiaries and, to the Company’s
knowledge, the Intellectual Property Rights licensed to the Company and its subsidiaries
have not been adjudged by a court of competent jurisdiction invalid or unenforceable, in whole
or in part, and there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any such Intellectual
Property Rights, and the Company is unaware of any facts which would form a reasonable basis
for any such claim that would, individually or in the aggregate, together with any other claims
in this subsection (p) result in a Material Adverse Change; (D) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or
its subsidiaries infringe, misappropriate or otherwise violate any Intellectual Property Rights
or other proprietary rights of others, the Company and its subsidiaries have not received any
written notice of such claim and the Company is unaware of any other facts which would form a
reasonable basis for any such claim that would reasonably be expected, individually or in the
aggregate, together with any other claims in this subsection (p) to result in a Material
Adverse Change; and (E) to the Company’s knowledge, no employee of the Company or a subsidiary
of the Company is in or has ever been in violation in any material respect of any term of any
employment contract, patent disclosure agreement, invention assignment agreement,
non-competition agreement, non-solicitation agreement, nondisclosure agreement or any
restrictive covenant to or with a former employer where the basis of such violation relates to
such employee’s employment with the Company or a subsidiary of the Company, or actions
undertaken by the employee while employed with the Company or a subsidiary of the Company and
would reasonably be expected to result, individually or in the aggregate, in a Material Adverse
Change. To the Company’s knowledge, all material technical information developed by and
belonging to the Company and its subsidiaries for which they have not sought, and do not intend
to seek, to patent or otherwise protect pursuant to applicable intellectual property laws has
been kept confidential or disclosed only under obligations of confidentiality. The Company is
not a party to or bound by any options, licenses or agreements with respect to the Intellectual
Property Rights of any other person or entity that are required to be set forth in the
Prospectus and are not described therein. The Time of Sale Prospectus contains in all material
respects
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the same description of the matters set forth in the preceding sentence contained in
the Prospectus. None of the technology employed by the Company or any of its subsidiaries has
been obtained or is being used by the Company or any of its subsidiaries in violation of any
contractual obligation binding on the Company or any of its subsidiaries or, to the Company’s
knowledge, any of its or its subsidiaries’ officers, directors or employees or otherwise in
violation of the rights of any persons, except in each case for such violations that would not
reasonably be expected to result in a Material Adverse Change.
(q) All Necessary Permits, etc. The Company and each subsidiary possess such valid and current certificates,
authorizations or permits issued by the appropriate state, federal or foreign regulatory
agencies or bodies necessary to conduct their respective businesses, and neither the Company
nor any subsidiary has received, or has any reason to believe that it will receive, any notice
of proceedings relating to the revocation or modification of, or non-compliance with, any such
certificate, authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected to result in a Material
Adverse Change.
(r) Title to Properties. The Company and each of its subsidiaries has good and marketable title to all of the
real and personal property and other assets reflected as owned in the financial statements
referred to in Section 1(i) above (or elsewhere in any Applicable Prospectus), in each case
free and clear of any security interests, mortgages, liens, encumbrances, equities, adverse
claims and other defects, except such as do not materially and adversely affect the value of
such property and do not materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary. To the Company’s knowledge, the real property,
improvements, equipment and personal property held under lease by the Company or any subsidiary
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 or such subsidiary.
(s) Tax Law Compliance. The Company and its consolidated subsidiaries have filed all necessary federal, state
and foreign income and franchise tax returns or have properly requested extensions thereof and
have paid all taxes required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them except as may be being contested
in good faith and by appropriate proceedings. The Company has made adequate charges, accruals
and reserves in the applicable financial statements referred to in Section 1(i) above in
respect of all federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its consolidated subsidiaries has not been
finally determined.
(t) 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 will not be, either after receipt of payment for the Offered
Shares or after the application of the proceeds therefrom as described under “Use of Proceeds”
in each Applicable Prospectus, an “investment company” within the meaning of Investment Company
Act and will conduct its business in a manner so that it will not become subject to the
Investment Company Act.
(u) Insurance. Each of the Company and its subsidiaries are 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 their
9
businesses including, but
not limited to, policies covering real and personal property owned or leased by the Company and
its subsidiaries against theft, damage, destruction and acts of vandalism and policies covering
the Company and its subsidiaries for product liability claims and clinical trial liability
claims. The Company has no reason to believe that it or any subsidiary will not be able (i) to
renew its existing insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in a Material Adverse Change.
The Company has not been denied any insurance coverage material to the Company which it has
sought or for which it has applied.
(v) No Price Stabilization or Manipulation; Compliance with Regulation M. The Company has not taken, directly or indirectly, any action designed to or that might
be reasonably expected to cause or result in stabilization or manipulation of the price of the
Shares or any other “reference security” (as defined in Rule 100 of Regulation M under the 1934
Act (“Regulation M”)) whether to facilitate the sale or resale of the Offered Shares or
otherwise, and has taken no action which would directly or indirectly violate Regulation M.
The Company acknowledges that the Underwriters may engage in passive market making transactions
in the Offered Shares on the Nasdaq Global Market in accordance with Regulation M.
(w) Related Party Transactions. There are no business relationships or related-party transactions involving the Company
or any of its subsidiaries or any other person required to be described in each Applicable
Prospectus which have not been described as required. The Time of Sale Prospectus contains in
all material respects the same description of the matters set forth in the preceding sentence
contained in the Prospectus.
(x) S-3 Eligibility. At the time the Registration Statement was originally declared effective and at the
time the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 was filed
with the Commission, the Company met the then applicable requirements for use of Form S-3 under
the Securities Act. The company is eligible to offer and sell securities under the
Registration Statement (including the offer and sale of the Offered Shares) without reliance on
General Instruction I.B.6 of Form S-3.
(y) Exchange Act Compliance. The documents incorporated or deemed to be incorporated by reference in the Prospectus,
at the time they were or hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the Exchange Act, and, when read together with
the other information in the Prospectus, at the time the Registration Statement and any
amendments thereto become effective and at the First Closing Date and the applicable Option
Closing Date, as the case may be, will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(z) FINRA Matters. All of the information provided to the Underwriters or to counsel for the Underwriters
by the Company, its officers and directors and the holders of any securities (debt or equity)
or options to acquire any securities of the Company in connection with letters, filings or
other supplemental information provided to FINRA pursuant to FINRA Rule 5110 or NASD Conduct
Rule 2720 is true, complete and correct.
(aa) Parties to Lock-Up Agreements. Each of the Company’s directors and executive officers listed in Exhibit A has
executed and delivered to Jefferies a lock-up agreement in the
10
form of Exhibit B
hereto. Exhibit A hereto contains a true, complete and correct list of all directors
and executive
officers of the Company. If any additional persons shall become directors or executive
officers of the Company prior to the end of the Company Lock-up Period (as defined below), the
Company shall cause each such person, prior to or contemporaneously with their appointment or
election as a director or executive officer of the Company, to execute and deliver to Jefferies
an agreement in the form attached hereto as Exhibit B.
(bb) Statistical and Market-Related Data. The statistical, demographic and market-related data included in the Registration Statement
and each Applicable Prospectus are based on or derived from sources that the Company believes
to be reliable and accurate or represent the Company’s good faith estimates that are made on
the basis of data derived from such sources.
(cc) No Unlawful Contributions or Other Payments. Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge, any
employee or agent of the Company or any subsidiary, has made any contribution or other payment
to any official of, or candidate for, any federal, state or foreign office in violation of any
law or of the character required to be disclosed in the Registration Statement and each
Applicable Prospectus.
(dd) Disclosure Controls and Procedures; Deficiencies in or Changes to Internal Control
Over Financial Reporting. The Company has established and maintains disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), which (i) are designed to ensure that
material information relating to the Company, including its consolidated subsidiaries, is made
known to the Company’s principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared; (ii) have been evaluated by management of
the Company for effectiveness as of the end of the Company’s most recent fiscal quarter; and
(iii) the Company’s principal executive officer and principal financial officer concluded to be
effective at the reasonable assurance level. Based on the most recent evaluation of its
internal control over financial reporting, the Company is not aware of (i) any significant
deficiencies or material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Company’s ability to
record, process, summarize and report financial information or (ii) any fraud, whether or not
material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting. The Company is not aware of any change in
its internal control over financial reporting that has occurred during its most recent fiscal
quarter that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
(ee) Compliance with Environmental Laws. Except as described in each Applicable Prospectus and except as would not reasonably be
expected to, singly or in the aggregate, result in a Material Adverse Change, (i) neither the
Company nor any of its subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without limitation,
laws and regulations relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products
(collectively, “Hazardous Materials”) or to the
11
manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials (collectively,
“Environmental Laws”), (ii) the Company and its subsidiaries have all permits, authorizations
and approvals required under any applicable Environmental Laws and are each in compliance with
their requirements, (iii) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law against the Company
or any of its subsidiaries, and (iv) there are no events or circumstances that might reasonably
be expected to form the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws.
(ff) ERISA Compliance. The Company and its subsidiaries and any “employee benefit plan” (as defined under the
Employee Retirement Income Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established or maintained by the Company,
its subsidiaries or their “ERISA Affiliates” (as defined below) are in compliance in all
material respects with ERISA. “ERISA Affiliate” means, with respect to the Company or a
subsidiary, any member of any group of organizations described in Sections 414(b),(c),(m) or
(o) of the Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the “Code”) of which the Company or such subsidiary is a member.
No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to any “employee benefit plan” established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates. No “employee benefit plan” established or
maintained by the Company, its subsidiaries or any of their ERISA Affiliates, if such “employee
benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as
defined under ERISA). Neither the Company, its subsidiaries nor any of their ERISA Affiliates
has incurred or reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections
412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan” established or maintained
by the Company, its subsidiaries or any of their ERISA Affiliates that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by
action or failure to act, which would reasonably be expected to result in the loss of such
qualification.
(gg) Brokers. Except as contemplated by this Agreement, 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.
(hh) No Outstanding Loans or Other Extensions of Credit. Since the adoption of Section 13(k) of the Exchange Act, neither the Company nor any of
its subsidiaries has extended or maintained credit, arranged for the extension of credit, or
renewed any extension of credit, in the form of a personal loan, to or for any director or
executive officer (or equivalent thereof) of the Company and/or such subsidiary except for such
extensions of credit as are expressly permitted by Section 13(k) of the Exchange Act.
(ii) Compliance with Laws. The Company has not been advised, and has no reason to believe, that it and each of its
subsidiaries are not conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, except where failure to be
so in compliance would not result in a Material Adverse Change. The Company has not received
any FDA Form 483, notice of adverse finding, warning letter,
12
untitled letter or other
correspondence or notice from the U.S. Food and Drug Administration or any other governmental
authority alleging or asserting noncompliance with any laws applicable to the Company.
(jj) Clinical Trials. The studies, tests and preclinical and clinical trials conducted by or on behalf of the
Company and its subsidiaries were and, if still pending, are being conducted in compliance with
experimental protocols, procedures and controls pursuant to accepted professional scientific
standards and all applicable laws and authorizations, including, without limitation, the
Federal Food, Drug and Cosmetic Act and the rules and regulations promulgated thereunder,
except where the failure to be in compliance has not resulted and would not reasonably be
expected to result in a Material Adverse Change; the descriptions of the results of such
studies, tests and trials contained in any Applicable Prospectus are accurate and complete in
all material respects and fairly present the data derived from such studies, tests and trials;
except to the extent disclosed in any Applicable Prospectus, the Company is not aware of any
studies, tests or trials, the results of which the Company believes reasonably call into
question the study, test, or trial results described or referred to in any Applicable
Prospectus when viewed in the context in which such results are described and the clinical
state of development; and the Company and its subsidiaries have not received any notices or
correspondence from any applicable governmental authority requiring the termination, suspension
or material modification of any studies, tests or preclinical or clinical trials conducted by
or on behalf of the Company or its subsidiaries.
(kk) Dividend Restrictions. No subsidiary of the Company is prohibited or restricted, directly or indirectly, from
paying dividends to the Company, or from making any other distribution with respect to such
subsidiary’s equity securities or from repaying to the Company or any other subsidiary of the
Company any amounts that may from time to time become due under any loans or advances to such
subsidiary from the Company or from transferring any property or assets to the Company or to
any other subsidiary.
(ll) Foreign Corrupt Practices Act. Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge, any
director, officer, agent, employee, affiliate or other person acting on behalf of
the Company or any of its subsidiaries is aware of or has taken any action, directly or
indirectly, that has resulted or would result in a violation of the Foreign Corrupt Practices
Act of 1977, as amended, and the rules and regulations thereunder (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 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 its subsidiaries and, to the Company’s
knowledge, the Company’s affiliates have conducted their respective 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.
(mm) Money Laundering Laws. The operations of the Company and its subsidiaries are, and have been conducted at all
times, in compliance with applicable 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 applicable rules, regulations or guidelines, issued, administered or enforced by any
governmental agency
13
(collectively, the “Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company, threatened.
(nn) OFAC. Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge, any
director, officer, agent, employee, affiliate or person acting on behalf of the Company or any
of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of this offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other person or entity, for
the purpose of financing the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
(oo) FINRA Filing Exemption. To enable the Underwriters to rely on FINRA Rule
5110(b)(7)(C)(i), (i) the Company was subject to the requirements of Section 12 or 15(d) of the
Exchange Act and filed all the material required to be filed pursuant to Sections 13, 14 or
15(d) for a period of at least thirty-six calendar months immediately preceding the date of
this Agreement; (ii) the Company filed in a timely manner all reports required to be filed
pursuant to Section 13, 14 or 15(d) of the Exchange Act during the twelve calendar months and
any portion of a month immediately preceding the date of this Agreement; (iii) the last
reported sale price of the Company’s common stock on the Nasdaq Global Market on April 1, 2010
was $20.50; (iv) as of such date, there were greater than 4,878,048 shares of the Company’s
common stock outstanding and held by non-affiliates of the Company; and (v) the Company has
annual trading volume of 3 million shares or more.
Any certificate contemplated hereby and signed by any officer of the Company or any of its
subsidiaries and delivered to the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
The Company acknowledges that the Underwriter and, for purposes of the opinions to be
delivered pursuant to Section 6 hereof, counsel to the Company and counsel to the Underwriters,
will rely upon the accuracy and truthfulness of the foregoing representations and hereby
consents to such reliance.
Section 2. Purchase, Sale and Delivery of the Offered Shares.
(a) The Firm Shares. Upon the terms herein set forth, the Company agrees to issue and sell to the several
Underwriters an aggregate of 3,500,000 Firm Shares. 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 $19.15 per share.
(b) The First 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 Jefferies, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ (or such other place as may be agreed to by the Company and the Representative) at 9:00
a.m. New York time, on April 9, 2010, or such other time and date not later than 1:30 p.m. New
York time, on April 19, 2010 as the
14
Representative shall designate by notice to the Company
(the time and date of such closing are called the “First Closing Date”).
(c) The Optional Shares; Option 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 525,000 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 is for use by
the Underwriters solely in covering any over-allotments in connection with the sale and
distribution of the Firm Shares. The option granted hereunder may be exercised at any time and
from time to time in whole or in part 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 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 First Closing Date; and in the event that such time and date are simultaneous with
the First Closing Date, the term “First Closing Date”
shall refer to the time and date of delivery of certificates for the Firm Shares and such
Optional Shares). Any such time and date of delivery, if subsequent to the First Closing Date,
is called an “Option 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. The Representative may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company.
(d) Public Offering of the Offered Shares. The Representative hereby advises the Company that the Underwriters intend to offer for
sale to the public, initially on the terms set forth in the Time of Sale Prospectus and the
Prospectus, the Offered Shares as soon after this Agreement has been executed as the
Representative, in its sole judgment, has determined is advisable and practicable.
(e) Payment for the Offered Shares. Payment for the Offered Shares shall be made at the First Closing Date (and, if
applicable, at each Option 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 its 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. Jefferies, individually and not as the Representative of the Underwriters, may
(but shall not be obligated to) make payment for any Offered Shares to be purchased by any
Underwriter whose funds shall not have been received by the Representative by the First Closing
Date or the applicable Option 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 Offered Shares. The Company shall deliver, or cause to be delivered, to the Representative for the
accounts of the several Underwriters certificates for the Firm Shares at the First Closing
Date, against the irrevocable release of a wire transfer of immediately available funds for the
amount of the purchase price therefor. The Company shall also deliver, or cause to be
delivered, to the Representative for the accounts of the several Underwriters, certificates for
the Optional Shares the Underwriters have agreed to
15
purchase at the First Closing Date or the
applicable Option Closing Date, as the case may be, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price therefor. If the
Representative so elects, delivery of the Offered Shares may be made by credit to the accounts
designated by the Representative though The Depository Trust Company’s full fast transfer or
DWAC programs. If the Representative so elects, the certificates for the Offered Shares shall
be in definitive form and registered in such names and denominations as the Representative
shall have requested at least two full business days prior to the First Closing Date (or the
applicable Option Closing Date, as the case may be) and shall be made available for inspection
on the business day preceding the First Closing Date (or the applicable Option Closing Date, as
the case may be) at a location in New York City as the Representative may designate. Time
shall be of the essence, and delivery at the
time and place specified in this Agreement is a further condition to the obligations of
the Underwriters.
Section 3. Additional Covenants of the Company. The Company further covenants and agrees with each Underwriter as follows:
(a) Delivery of Registration Statement, Time of Sale Prospectus and Prospectus. The Company shall furnish to you, without charge, two signed copies of the Registration
Statement, any amendments thereto and any Rule 462(b) Registration Statement (including
exhibits thereto) and shall furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of this Agreement and
during the period mentioned in Section 3(e) or 3(f) below, as many copies of the Time of Sale
Prospectus, the Prospectus and any supplements and amendments thereto or to the Registration
Statement as you may reasonably request.
(b) Representative’s Review of Proposed Amendments and Supplements. During the Prospectus Delivery Period, prior to amending or supplementing the
Registration Statement (including any registration statement filed under Rule 462(b) under the
Securities Act), the Base Prospectus, the Time of Sale Prospectus or the Prospectus (including
any amendment or supplement through incorporation of any report filed under the Exchange Act),
the Company: (i) shall furnish to the Representative for review, a reasonable amount of time
prior to the proposed time of filing or use thereof, a copy of each such proposed amendment or
supplement, (ii) shall not file or use any such proposed amendment or supplement without the
Representative’s consent, and (iii) shall file with the Commission within the applicable period
specified in Rule 424(b) under the Securities Act, any prospectus required to be filed pursuant
to such Rule.
(c) Free Writing Prospectuses. The Company shall furnish to the Representative for review, a reasonable amount of time
prior to the proposed time of filing or use thereof, a copy of each proposed free writing
prospectus or any amendment or supplement thereto to be prepared by or on behalf of, used by,
or referred to by the Company and the Company shall not file, use or refer to any proposed free
writing prospectus or any amendment or supplement thereto without the Representative’s consent.
The Company shall furnish to each Underwriter, without charge, as many copies of any free
writing prospectus prepared by or on behalf of, or used by the Company, as such Underwriters
may reasonably request. If during the Prospectus Delivery Period there occurred or occurs an
event or development as a result of which any free writing prospectus prepared by or on behalf
of, used by, or referred to by the Company conflicted or would conflict with the information
contained in the Registration Statement or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact necessary in order to make the
statements therein, in the
16
light of the circumstances prevailing at that subsequent time, not
misleading, the Company shall promptly amend or supplement such free writing prospectus to
eliminate or correct such conflict or so that the statements in such free writing prospectus as
so amended or
supplemented will not include an 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 prevailing at such subsequent time, not misleading, as the case may be; provided,
however, that prior to amending or supplementing any such free writing prospectus, the Company
shall furnish to the Representative for review, a reasonable amount of time prior to the
proposed time of filing or use thereof, a copy of such proposed amended or supplemented free
writing prospectus and the Company shall not file, use or refer to any such amended or
supplemented free writing prospectus without the Representative’s consent.
(d) Filing of Underwriter Free Writing Prospectuses. The Company shall not take any action that would result in an Underwriter or the
Company being required to file with the Commission pursuant to Rule 433(d) under the Securities
Act a free writing prospectus prepared by or on behalf of the Underwriters that the
Underwriters otherwise would not have been required to file thereunder.
(e) Amendments and Supplements to Time of Sale Prospectus. If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a
time when the Prospectus is not yet available to prospective purchasers and any event shall
occur or condition exist as a result of which it is necessary to amend or supplement the Time
of Sale Prospectus so that the Time of Sale Prospectus does not include an 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 when delivered to a prospective purchaser, not
misleading, or if any event shall occur or condition exist as a result of which the Time of
Sale Prospectus conflicts with the information contained in the Registration Statement, or if,
in the opinion of the Company, counsel for the Company, the Representative or counsel for the
Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus to comply with
applicable law, including the Securities Act, the Company shall (subject to Sections 3(b) and
3(c)) promptly prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to any dealer upon request, amendments or supplements to the Time of Sale
Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented
will not include an 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 when
delivered to a prospective purchaser, not misleading or so that the Time of Sale Prospectus, as
amended or supplemented, will no longer conflict with the Registration Statement, or so that
the Time of Sale Prospectus, as amended or supplemented, will comply with applicable law,
including the Securities Act.
(f) Securities Act Compliance. After the date of this Agreement, the Company shall promptly advise the Representative
in writing (i) of the receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement, any Rule 462(b) Registration Statement or any
amendment or supplement to the Base Prospectus, the Time of Sale Prospectus, any free writing
prospectus or the Prospectus, (iii) of the time and date that any post-effective amendment to
the Registration Statement or any Rule 462(b) Registration Statement becomes effective and (iv)
of the issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment
thereto, any Rule 462(b) Registration Statement or any amendment or supplement to the Base
Prospectus, the Time of Sale Prospectus or the Prospectus or of any
17
order preventing or
suspending the use of the Base Prospectus, the Time of Sale Prospectus, any free writing
prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate from
listing or quotation the Shares from any securities exchange upon which they are listed for
trading or included or designated for quotation, or of the threatening or initiation of any
proceedings for any of such purposes. If the Commission shall enter any such stop order at any
time, the Company will use its best efforts to obtain the lifting of such order at the earliest
possible moment. Additionally, the Company agrees that it shall comply with the provisions of
Rule 424(b) or Rule 433, as applicable, under the Securities Act and will use its reasonable
efforts to confirm that any filings made by the Company under such Rule 424(b) or Rule 433 were
received in a timely manner by the Commission.
(g) Amendments and Supplements to the Prospectus and Other Securities Act Matters. If any event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Prospectus so that the Prospectus does not include an 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 when the Prospectus is delivered to a purchaser, not
misleading, or if in the opinion of the Company, counsel for the Company, the Representative or
counsel for the Underwriters, it is otherwise necessary to amend or supplement the Prospectus
to comply with applicable law, including the Securities Act, the Company agrees (subject to
Section 3(b) and 3(c)) to promptly prepare, file with the Commission and furnish, at its own
expense, to the Underwriters and to any dealer upon request, amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or supplemented will not
include an 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 when the Prospectus is
delivered to a purchaser, not misleading or so that the Prospectus, as amended or supplemented,
will comply with applicable law including the Securities Act. Neither the Representative’s
consent to, or delivery of, any such amendment or supplement shall constitute a waiver of any
of the Company’s obligations under Sections 3(b) or (c).
(h) Blue Sky Compliance. The Company shall cooperate with the Representative and counsel for the Underwriters to
qualify or register the Offered Shares for sale under (or obtain exemptions from the
application of) the state securities or blue sky laws or Canadian provincial securities laws of
those jurisdictions designated by the 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 Offered Shares; provided that the Company shall not be required to
qualify as a foreign corporation or to take any action that would subject it to general service
of process in any such jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise the Representative
promptly of the suspension of the qualification or registration of (or any such exemption
relating to) the Offered 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 Offered Shares sold by it
in the manner described under the caption “Use of Proceeds” in each Applicable Prospectus.
18
(j) Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and transfer agent
for the Shares.
(k) Earnings Statement. As soon as practicable, but in any event not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of the Company during which the most
recent effective date of the Registration Statement occurs (or 90 days after the end of such
12-month period if such 12-month period coincides with the Company’s fiscal year), the Company
will make generally available to its security holders and to the Representative an earnings
statement (which need not be audited) covering such 12-month period which shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(l) Exchange Act Compliance. The Company shall 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.
(m) Listing. The Company will use its best efforts to list, subject to notice of issuance, the
Offered Shares on the Nasdaq Global Market and to maintain the listing of the Shares on the
Nasdaq Global Market.
(n) Company to Provide Copy of the Prospectus in Form That May be Downloaded from the
Internet. The Company shall cause to be prepared and delivered, at its expense, within one
business day from the effective date of this Agreement, to Jefferies an “electronic Prospectus”
to be used by the Underwriters in connection with the offering and sale of the Offered Shares.
As used herein, the term “electronic Prospectus” means a form of Time of Sale Prospectus, and
any amendment or supplement thereto, that meets each of the following conditions: (i) it shall
be encoded in an electronic format, satisfactory to Jefferies, that may be transmitted
electronically by Jefferies and the other Underwriters to offerees and purchasers of the
Offered Shares; (ii) it shall disclose the same information as the paper Time of Sale
Prospectus, except to the extent that graphic and image material cannot be disseminated
electronically, in which case such graphic and image material shall be replaced in the
electronic Prospectus with a fair and accurate narrative description or tabular representation
of such material, as appropriate; and (iii) it shall be in or convertible into a paper format
or an electronic format, satisfactory to Jefferies, that will allow investors to store and have
continuously ready access to the Time of Sale Prospectus at any future time, without charge
to investors (other than any fee charged for subscription to the Internet as a whole and
for on-line time). The Company hereby confirms that it has included or will include in the
Prospectus filed pursuant to ▇▇▇▇▇ or otherwise with the Commission and in the Registration
Statement at the time it was declared effective an undertaking that, upon receipt of a request
by an investor or his or her representative, the Company shall transmit or cause to be
transmitted promptly, without charge, a paper copy of the Time of Sale Prospectus.
(o) Agreement Not to Offer or Sell Additional Shares. During the period commencing on and including the date hereof and ending on and including
the 90th day following the date of the Prospectus (as the same may be extended as described
below, the “Lock-up Period”), the Company will not, without the prior written consent of
Jefferies (which consent may be withheld at the sole discretion of Jefferies), directly or
indirectly, sell (including, without limitation, any short sale), offer, contract or grant any
option to sell, pledge, transfer or establish an open “put equivalent position” within the
meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer, or
announce the offering of, or file any registration statement under the Securities Act in
respect of, any Shares, options, rights or
19
warrants to acquire Shares or securities
exchangeable or exercisable for or convertible into Shares (other than as contemplated by this
Agreement with respect to the Offered Shares) or publicly announce the intention to do any of
the foregoing; provided, however, that the Company may issue (i) securities or Shares pursuant
to transactions relating to any director or employee stock option plan, stock ownership plan or
dividend reinvestment plan of the Company in effect at the date of the Prospectus and described
in the Prospectus (including the issuance of securities thereunder and the issuance of Shares
upon the exercise of options issued pursuant thereto), (ii) Shares pursuant to the conversion
of securities or the exercise of warrants outstanding at the date of the Prospectus and
described in the Prospectus, or (iii) Shares to one or more counterparties in connection with
the consummation of a strategic partnership, joint venture, collaboration, merger or the
acquisition or license of any business products or technology; provided that, with respect to
this subsection (iii), (1) the sum of the aggregate number of Shares so issued shall not exceed
5% of the total outstanding Shares immediately following the completion of this offering of
Shares and (2) prior to the issuance of such Shares each recipient of such Shares agrees in
writing not to sell, offer, dispose of or otherwise transfer any such Shares during such
Lock-up Period without the prior written consent of Jefferies (which consent may be withheld at
the sole discretion of Jefferies). Notwithstanding the foregoing, if (A) during the last 17
days of the Lock-up Period, the Company issues an earnings release or material news or a
material event relating to the Company occurs or (B) prior to the expiration of the Lock-up
Period, the Company announces that it will release earnings results during the 16-day period
beginning on the last day of the Lock-up Period, then in each case the Lock-up Period will be
extended 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, as applicable,
unless Jefferies waives, in writing, such extension (which waiver may be withheld at the sole
discretion of Jefferies), except that such extension will not apply if, (i) the Shares are
“actively traded securities” (as defined in Regulation M), (ii) the Company meets the
applicable requirements of paragraph (a)(1) of Rule 139 under the Securities Act in the manner
contemplated by NASD Conduct Rule 2711(f)(4), and (iii) the provisions of NASD Conduct Rule
2711(f)(4) do not restrict the publishing or distribution of any research reports relating to
the Company published or distributed by any of the Underwriters during the 15 days before or
after the last day of the Lock-up Period (before giving effect to such extension). The Company
will provide the
Representative with prior notice of any such announcement that gives rise to an extension
of the Lock-up Period.
(p) Future Reports to the Representative. During the period of five years hereafter the Company will furnish or make available to
Jefferies at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ Attention: Capital Markets: (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, FINRA or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company furnished or made available generally to
holders of its capital stock; provided that the requirements of this subsection (p) shall be
satisfied to the extent the reports, communications, financial statements or other documents
referenced herein are available on ▇▇▇▇▇.
20
(q) Investment Limitation. The Company shall not invest, or otherwise use the proceeds received by the Company
from its sale of the Offered Shares in such a manner as would require the Company or any of its
subsidiaries to register as an investment company under the Investment Company Act.
(r) No Stabilization or Manipulation; Compliance with Regulation M. The Company will not take, directly or indirectly, any action designed to or that might
be reasonably expected to cause or result in stabilization or manipulation of the price of the
Shares or any other reference security, whether to facilitate the sale or resale of the Offered
Shares or otherwise, and the Company will, and shall cause each of its affiliates to, comply
with all applicable provisions of Regulation M. If the limitations of Rule 102 of Regulation M
(“Rule 102”) do not apply with respect to the Offered Shares or any other reference security
pursuant to any exception set forth in Section (d) of Rule 102, then promptly upon notice from
the Representative (or, if later, at the time stated in the notice), the Company will, and
shall cause each of its affiliates to, comply with Rule 102 as though such exception were not
available but the other provisions of Rule 102 (as interpreted by the Commission) did apply.
(s) Existing Lock-Up Agreements. During the Lock-up Period, 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 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, including, without limitation, “lock-up” agreements entered into by the
Company’s officers and directors pursuant to Section 6(h).
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 offering of the Offered
Shares hereunder, including without limitation (i) all expenses incident to the issuance and
delivery of the Offered Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Shares, (iii) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Offered 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), the Time of Sale Prospectus, the Prospectus, any free writing
prospectus prepared by or on behalf of, used by, or referred to by the Company, and the Base
Prospectus, and all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, 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 Offered 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 a “Canadian wrapper”, and any
supplements thereto, advising the Underwriters of such qualifications, registrations,
determinations and exemptions; provided such fees and disbursements related to
distribution in Canada do not exceed $10,000 in the aggregate, (vii) the filing fees incident
to, and the reasonable fees and expenses of counsel for the Underwriters in connection with,
FINRA’s review, if any, and approval of the Underwriters’ participation in the offering and
distribution of the Offered Shares; provided such fees and disbursements do not exceed $10,000
in the aggregate, (viii) the costs and
21
expenses of the Company relating to investor
presentations on any “road show” undertaken in connection with the marketing of the offering of
the Shares, including, without limitation, expenses associated with the preparation or
dissemination of any electronic road show, expenses associated with the production of road show
slides and graphics, fees and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, and travel and lodging expenses of
the representatives, employees and officers of the Company and of the Representative and any
such consultants, (ix) the fees and expenses associated with listing the Offered Shares on the
Nasdaq Global Market, and (ix) all other fees, costs and expenses of the nature referred to in
Item 14 of Part II of the Registration Statement. Except as provided in this Section 4,
Section 7, Section 9 and Section 10 hereof, the Underwriters shall pay their own expenses,
including the fees and disbursements of their counsel.
Section 5. Covenant of the Underwriters. Each Underwriter, severally and not jointly, covenants with the Company not to take any
action that would result in the Company being required to file with the Commission pursuant to
Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of such
Underwriter that otherwise would not be required to be filed by the Company thereunder, but for
the action of the Underwriters.
Section 6. Conditions of the Obligations of the Underwriters. The obligations of the several Underwriters to purchase and pay for the Offered Shares
as provided herein on the First Closing Date and, with respect to the Optional Shares, each
Option 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 First
Closing Date as though then made and, with respect to the Optional Shares, as of each Option
Closing Date as though then made, to the timely performance by the Company of its covenants and
other obligations hereunder, and to each of the following additional conditions:
(a) Accountants’ Comfort Letter. On the date hereof, the Representative shall have received from Stonefield ▇▇▇▇▇▇▇▇▇,
Inc., independent public or certified public accountants for the Company, (i) a letter dated
the date hereof addressed to the Underwriters, in form and substance satisfactory to the
Representative, containing statements and information of the type ordinarily included in
accountant’s “comfort letters” to underwriters, delivered according to Statement of Auditing
Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited
financial statements and certain financial information contained in the Registration Statement
and the Base Prospectus, and, with respect to each letter dated the date hereof only, the
Prospectus, and the Representative shall have received an additional conformed copy of such
accountants’ letter for each of the other several Underwriters, and (ii) confirming that they
are (A) independent public or certified public accountants as required by the Securities Act
and the Exchange Act and (B) in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X.
(b) Compliance with Registration Requirements; No Stop Order; No Objection from FINRA. For the period from and after effectiveness of this Agreement and prior to the First
Closing Date and, with respect to the Optional Shares, each Option Closing Date:
(i) the Company shall have filed the Prospectus with the Commission (including the
information previously omitted from the Registration Statement pursuant to Rule 430B 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
22
amendment to the
Registration Statement containing the information previously omitted pursuant to such Rule
430B, and such post-effective amendment shall have become effective;
(ii) no stop order suspending the effectiveness of the Registration Statement, any
Rule 462(b) Registration Statement, or any post-effective amendment to the Registration
Statement, shall be in effect and no proceedings for such purpose shall have been
instituted or threatened by the Commission; and
(iii) FINRA shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(c) No Material Adverse Change. For the period from and after the date of this Agreement and through and including the
First Closing Date and, with respect to the Optional Shares, each Option Closing Date, in the
judgment of the Representative, there shall not have occurred any Material Adverse Change.
(d) Opinion of Counsel for the Company. On each of the First Closing Date and each Option Closing Date the Representative shall
have received the opinion and negative assurance letter of ▇▇▇▇▇▇ Godward Kronish LLP, counsel
for the Company, dated as of such Closing Date, the form of which are attached as Exhibits
C-1 and C-2.
(e) Opinion of Intellectual Property Counsel for the Company. On each of the First
Closing Date and each Option Closing Date the Representative shall have received the opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., intellectual property counsel for the Company, dated as
of such Closing Date, with respect to certain intellectual property matters, the form of which
is attached as Exhibit D.
(f) Opinion of Counsel for the Underwriters. On each of the First Closing Date and each Option Closing Date the Representative shall
have received the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, in form and
substance satisfactory to the Representative, dated as of such Closing Date.
(g) Officers’ Certificate. On each of the First Closing Date and each Option Closing Date the Representative shall
have received a written certificate executed by the Chief Executive Officer or President of the
Company and the Chief Financial Officer of the Company, dated as of such Closing Date, to the
effect set forth in subsection (b)(ii) of this Section 6, and further to the effect that:
(i) for the period from and including the date of this Agreement through and including
such Closing Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company set forth in Section
1 of this Agreement are true and correct with the same force and effect as though expressly
made on and as of such Closing Date; and
(iii) the Company has complied 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.
23
(h) Bring-down Comfort Letter. On each of the First Closing Date and each Option Closing Date the Representative shall
have received from Stonefield ▇▇▇▇▇▇▇▇▇, Inc, independent public or certified 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 6, except that the specified
date referred to therein for the carrying out of procedures shall be no more than five
business days prior to the First Closing Date or the applicable Option Closing Date, as the
case may be, and the Representative shall have received an additional conformed copy of such
accountants’ letter for each of the other several Underwriters.
(i) Lock-Up Agreements. On or prior to the date hereof, the Company shall have furnished to the Representative
an agreement in the form of Exhibit B hereto from the persons listed on Exhibit
A hereto, and such agreement shall be in full force and effect on each of the First Closing
Date and each Option Closing Date.
(j) Additional Documents. On or before each of the First Closing Date and each Option Closing Date, the
Representative and counsel for the Underwriters shall have received such information, documents
and opinions as they may reasonably request for the purposes of enabling them to pass upon the
issuance and sale of the Offered 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; and all proceedings taken by the Company in
connection with the issuance and sale of the Offered Shares as contemplated herein and in
connection with the other transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Representative and counsel for the Underwriters.
If any condition specified in this Section 6 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 First Closing Date and, with respect to the Optional Shares, at any
time on or prior to the applicable Option 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 7. Reimbursement of Underwriters’ Expenses. If this Agreement is terminated by the Representative pursuant to Section 6 prior to
the First Closing Date, as a result of the failure of any of the conditions of subsections (a),
(b), (c), (d), (e), (g), (h) or (i) of Section 6 to be satisfied when and as required to be
satisfied, or Section 12 prior to the First Closing Date, or if the sale to the Underwriter of
the Offered Shares on the First 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 Offered Shares, including but not limited to fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
Section 8. Effectiveness of this Agreement. This Agreement shall become effective upon the execution of this Agreement by the
parties hereto.
24
Section 9. Indemnification.
(a) Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless each Underwriter, its officers and
employees, and each person, if any, who controls any Underwriter within the meaning of the
Securities Act or the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such officer, employee or controlling person may become
subject, under the Securities Act, the Exchange Act, other federal or state statutory law or
regulation, or the laws or regulations of foreign jurisdictions where Offered Shares have been
offered or sold or at common law or otherwise (including in settlement of any litigation, if
such settlement is effected in accordance with Section 9(d) below), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430B under the Securities Act, or the
omission or alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Base Prospectus, the Time of Sale
Prospectus, any free writing prospectus that the Company has used, referred to or filed, or is
required to file, pursuant to Rule 433(d) of the Securities Act or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and to reimburse such Underwriter and each such officer,
employee and controlling person for any and all expenses (including the fees and disbursements
of counsel chosen by Jefferies) as such expenses are reasonably incurred by such Underwriter or
such officer, employee or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability, expense or action;
provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, arising out of or based
upon any untrue statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the Company by the
Representative expressly for use in the Registration Statement, the Base Prospectus, the Time
of Sale Prospectus, any such free writing prospectus or the Prospectus (or any amendment or
supplement thereto), it being understood and agreed that the only such information furnished by
the Representative r to the Company consists of the information described in subsection (b)
below. The indemnity agreement set forth in this Section 9(a) shall be in addition to any
liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the
Company, each of its directors and officers, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act, against any loss, claim, damage,
liability or expense, as incurred, to which the Company, or any such director, officer or
controlling person may become subject, under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Base Prospectus, the Time of Sale Prospectus, any free writing
prospectus that the Company has used, referred to or filed, or is required to file, pursuant to
Rule 433(d) of the Securities Act or the Prospectus
25
(or such amendment or supplement thereto),
or arises out of or is based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration Statement, the
Base Prospectus, the Time of Sale Prospectus, such free writing prospectus that the Company has
used, referred to or filed, or is required to file, pursuant to Rule 433(d) of the Securities
Act, the Prospectus
(or such amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by the Representative expressly
for use therein; and to reimburse the Company, or any such director, officer or controlling
person for any legal and other expense as such expenses are reasonably incurred by the Company,
or any such director, officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage, liability, expense or
action. The Company hereby acknowledges that the only information that the Representative and
the Underwriters have furnished to the Company expressly for use in the Registration Statement,
the Base Prospectus, the Time of Sale Prospectus, any free writing prospectus that the Company
has filed, or is required to file, pursuant to Rule 433(d) of the Securities Act or the
Prospectus (or any amendment or supplement thereto) are the statements set forth in the first
two sentences and the last sentence of the first paragraph under the section entitled
“Commissions and Expenses” and the second, third, fourth and fifth paragraphs under the section
entitled “Price Stabilization, Short Positions and Penalty Bids”, each under the caption
“Underwriting” in the Company’s final prospectus supplement dated April 6, 2010 relating to the
offering of the Offered Shares. The indemnity agreement set forth in this Section 9(b) shall be
in addition to any liabilities that each Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after receipt by an indemnified party under this Section 9 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section 9, notify the indemnifying party in
writing of the commencement thereof, but the failure to so notify the indemnifying party shall
not relieve the indemnifying party from any liability that it may have to any indemnified party
for contribution or otherwise under the indemnity agreement contained in this Section 9 except
to the extent such indemnifying party has been materially prejudiced by such failure. In case
any such action is brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled
to participate in, and, to the extent that it shall elect, jointly with all other indemnifying
parties similarly notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants
in any such action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise between the
positions of the indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have the right
to select separate counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying party’s election so
to assume the defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this Section 9 for any
legal or other expenses subsequently incurred by such indemnified party in connection with the
defense thereof
26
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the fees and expenses of more than one separate
counsel (together with local counsel), representing the indemnified parties who are parties to
such action), which counsel (together with any local counsel) for the indemnified parties shall
be selected by Jefferies (in the case of counsel for the indemnified parties referred to in
Section 9(a) above) or by the Company (in the case of counsel for the indemnified parties
referred to in Section 9(b) above)) (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action or (iii) the indemnifying party has
authorized in writing the employment of counsel for the indemnified party at the expense of the
indemnifying party, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party and shall be paid as they are incurred.
(d) Settlements. The indemnifying party under this Section 9 shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by Section 9(c) hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such action, suit
or proceeding.
Section 10. Contribution. If the indemnification provided for in Section 9 is for any reason held to be
unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified
party, as incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Underwriters, on the other hand,
from the offering of the Offered Shares pursuant to this Agreement or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Underwriters, on the other
hand, in connection with the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company, on the one hand, and the Underwriters, on the other
hand, in connection with the offering of the Offered Shares pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from the offering of
the Offered Shares pursuant to this Agreement (before deducting expenses) received by the
Company, and the total underwriting discounts and commissions received by the
27
Underwriters, in
each case as set forth on the front cover page of the Prospectus bear to the aggregate initial
public offering price of the Offered Shares as set forth on such cover. 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 any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or the Underwriters, on the other hand, and the
parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 9(c), any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or claim. The
provisions set forth in Section 9(c) with respect to notice of commencement of any action shall
apply if a claim for contribution is to be made under this Section 10; provided, however, that
no additional notice shall be required with respect to any action for which notice has been
given under Section 9(c) for purposes of indemnification.
The Company and the Underwriter agrees that it would not be just and equitable if
contribution pursuant to this Section 10 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in this Section 10.
Notwithstanding the provisions of this Section 10, no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions received by such
Underwriter in connection with the Offered Shares underwritten by it and distributed to the
public. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to
this Section 10 are several, and not joint, in proportion to their respective underwriting
commitments as set forth opposite their respective names on Schedule A. For purposes
of this Section 10, each officer and employee of an Underwriter and each person, if any, who
controls an Underwriter within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as such Underwriter, and each director of the Company, and each
person, if any, who controls the Company with the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Company.
Section 11. Default of One or More of the Several Underwriters. If, on the First Closing Date or the
applicable Option Closing Date, as the case may be, any one or more of the several Underwriters
shall fail or refuse to purchase Offered Shares that it or they have agreed to purchase
hereunder on such date, and the aggregate number of Offered Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Offered Shares required to be purchased on such date by the
Underwriters, the Representative may make arrangements satisfactory to the Company for the
purchase of such Offered Shares by other persons, including any of the Underwriters, but if no
such arrangements are made by such Closing Date, the other Underwriters shall be obligated,
severally and not jointly, 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,
28
or in such other proportions
as may be specified by the Representative with the consent of the non-defaulting Underwriters,
to purchase the Offered Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date. If, on the First Closing Date or the applicable
Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or
refuse to purchase Offered Shares and the aggregate number of Offered Shares with respect to
which such default occurs exceeds 10% of the aggregate number of Offered Shares required to be
purchased on such date by the Underwriters, and arrangements satisfactory to the Representative
and the Company for the purchase of such Offered Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any non-defaulting party to any
other party (provided that if such default occurs with respect to Optional Shares after the
First Closing Date, this Agreement will not terminate as to the Firm Shares or any Optional
Shares purchased prior to such termination) except that the provisions of Section 4, Section 9
and Section 10 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 First
Closing Date or the applicable Option 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” includes any person substituted for an Underwriter
under this Section 11. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
Section 12. Termination of this Agreement. Prior to the purchase of the Firm Shares by the Underwriters on the First 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
materially limited by the Commission or by the Nasdaq Global Market, or trading in securities
generally on either the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or materially limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or FINRA; (ii) a general banking
moratorium shall have been declared by any of federal, New York, Delaware or California
authorities; (iii) there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United States or
international financial markets, or any substantial change or development involving a
prospective substantial change in United States’ or international political, financial or
economic conditions, as in the judgment of the Representative is material and adverse and makes
it impracticable to market the Offered Shares in the manner and on the terms described in the
Time of Sale Prospectus or the Prospectus or to enforce contracts for
the sale of securities; or (iv) in the judgment of the Representative there shall have
occurred any Material Adverse Change. Any termination pursuant to this Section 12 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 7 hereof, (b) any Underwriter to the Company, or (c) of any party
hereto to any other party except that the provisions of Section 9 and Section 10 shall at all
times be effective and shall survive such termination.
Section 13. No Advisory or Fiduciary Relationship. The Company acknowledges and agrees
that (a) the purchase and sale of the Offered Shares pursuant to this Agreement, including the
determination of the public offering price of the Offered Shares 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, (b) in connection
29
with the offering
contemplated hereby and the process leading to such transaction each Underwriter is and has
been acting solely as a principal and is not the agent or fiduciary of the Company, or its
stockholders, creditors, employees or any other party, (c) no Underwriter has assumed or will
assume an advisory or fiduciary responsibility in favor of the Company with respect to the
offering 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, (d) the Underwriters and their
respective affiliates may be engaged in a broad range of transactions that involve interests
that differ from those of the Company, and (e) 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.
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 will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of its or their
partners, officers or directors or any controlling person, as the case may be, and, anything
herein to the contrary notwithstanding, will survive delivery of and payment for the Offered
Shares sold hereunder and any termination of this Agreement.
Section 15. Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered or
telecopied and confirmed to the parties hereto as follows:
If to the Representative:
▇▇▇▇▇▇▇▇▇ & Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
If to the Company:
Ardea Biosciences, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
Any party hereto may change the address for receipt of communications by giving written notice
to the others.
Section 16. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto,
including any substitute Underwriters pursuant to Section 11 hereof, and to the benefit of the
employees, officers and directors and controlling persons referred to in Section 9 and Section
10, and in each case their respective successors, and no other person will have any right or
obligation hereunder. The term “successors” shall not include any purchaser of the Offered
Shares as such from any of the Underwriters merely by reason of such purchase.
30
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 in accordance with the internal laws
of the State of New York applicable to agreements made and to be performed in such state. 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 Borough of Manhattan in the City of New
York or the courts of the State of New York in each case located in the Borough of Manhattan in
the City of New York (collectively, the “Specified Courts”), and each party irrevocably submits
to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement
of a judgment of any such court (a “Related Judgment”), as to which such jurisdiction is
non-exclusive) of such courts in any such suit, action or proceeding. Service of any process,
summons, notice or document by mail to such party’s address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such court. The
parties irrevocably and unconditionally waive any objection to the laying of venue of any suit,
action or other proceeding in the Specified Courts and irrevocably and unconditionally waive
and agree not to plead or claim in any such court that any such suit, action or other
proceeding brought in any such court has been brought in an inconvenient forum.
With respect to any Related Proceeding, each party irrevocably waives, to the fullest
extent permitted by applicable law, all immunity (whether on the basis of sovereignty or
otherwise) from jurisdiction, service of process, attachment (both before and after
judgment) and execution to which it might otherwise be entitled in the Specified Courts,
and with respect to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim or cause to be
pleaded any such immunity at or in respect of any such Related Proceeding or Related Judgment,
including, without limitation, any immunity pursuant to the United States Foreign Sovereign
Immunities Act of 1976, as amended.
Section 19. 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 Table of Contents and the Section headings herein are for the
convenience of the parties only and shall not affect the construction or interpretation of this
Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof,
including, without limitation, the indemnification provisions of Section 9 and the contribution
provisions of Section 10, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 9 and 10
31
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, the Base Prospectus, the Time of Sale Prospectus, each free writing prospectus and
the Prospectus (and any amendments and supplements thereto), as required by the Securities Act
and the Exchange Act.
[Remainder of this page intentionally left blank]
32
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, | ||||||
| ARDEA BIOSCIENCES, INC. | ||||||
| By: Name: |
/s/ ▇▇▇▇▇ ▇. Quart
|
|||||
| Title: | President and CEO | |||||
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representative in
New York, New York as of the date first above written.
JEFFERIES & COMPANY, INC.
Acting as Representative of the
several Underwriters named in
the attached Schedule A.
Acting as Representative of the
several Underwriters named in
the attached Schedule A.
By: JEFFERIES & COMPANY, INC.
By: Name: |
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
|
|||
Title:
|
Senior Vice President |
33
SCHEDULE A
| Number of | ||||
| Firm Shares | ||||
| Underwriters | to be Purchased | |||
Jefferies & Company, Inc. |
2,450,000 | |||
▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc. |
1,050,000 | |||
SCHEDULE B
Schedule of Free Writing Prospectuses included in the Time of Sale Prospectus
None.
SCHEDULE C
Schedule of Pricing Information Included in the Time of Sale Prospectus
Price per share to the public: $20.00
Number of shares being sold: 3,500,000
Number of shares potentially issuable pursuant to the overallotment option: 525,000
Number of shares being sold: 3,500,000
Number of shares potentially issuable pursuant to the overallotment option: 525,000
EXHIBIT A
LIST OF PERSONS EXECUTING LOCK-UPS
Executive Officers and Directors
▇▇▇▇▇ ▇. Quart, Pharm. D.
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D.
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D.
▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D.
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D.
▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
▇▇▇▇▇ ▇. ▇▇▇▇
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
April ___, 2010
Jefferies & Company, Inc.
As Representative of the Several Underwriters
c/o Jefferies & Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
As Representative of the Several Underwriters
c/o Jefferies & Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
| RE: | Ardea Biosciences, Inc. (the “Company”) |
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of common stock, par value
$0.001 per share, of the Company (“Shares”) or securities convertible into or exchangeable or
exercisable for Shares. The Company proposes to carry out a public offering of Shares (the
“Offering”) for which you will act as the representative of the several underwriters (the
“Underwriters”). The undersigned recognizes that the Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising additional capital for its
operations. The undersigned acknowledges that you and any other underwriter are relying on the
representations and agreements of the undersigned contained in this letter agreement in carrying
out the Offering and in entering into underwriting arrangements with the Company with respect to
the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the undersigned will not,
(and will cause any spouse or immediate family of the spouse or the undersigned living in the
undersigned’s household not to), without the prior written consent of Jefferies & Company, Inc.
(which consent may be withheld in its sole discretion), directly or indirectly, sell, offer,
contract or grant any option to sell (including without limitation any short sale), pledge,
transfer, establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise dispose of any
Shares, options or warrants to acquire Shares, or securities exchangeable or exercisable for or
convertible into Shares currently or hereafter owned either of record or beneficially (as defined
in Rule 13d-3 under the Exchange Act) by the undersigned (or such spouse or family member), or
publicly announce an intention to do any of the foregoing, for a period commencing on the date
hereof and continuing through the close of trading on the date 90 days after the date of the
Prospectus (as defined in the Underwriting Agreement relating to the Offering to which the Company
is a party)(the “Lock-up Period”); provided, that if (i) during the last 17 days of the Lock-up
Period, the Company issues an earnings release or material news or a material event relating to the
Company occurs or (ii) prior to the expiration of the Lock-up Period, the Company announces that it
will release earnings results during the 16-day period beginning on the last day of the Lock-up
Period, then in each case the Lock-up Period will be extended 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, as applicable, unless Jefferies & Company, Inc. waives, in
writing, such extension, except that such extension will not apply if (a) the Shares are “actively
traded securities” (as defined in Regulation M of the Exchange Act), (b) the Company meets the
applicable requirements of paragraph (a)(1) of Rule 139 under the Securities Act of 1933, as
amended (the “Securities Act”), in the manner contemplated by NASD Conduct Rule 2711(f)(4), and (c)
the provisions of NASD Conduct Rule 2711(f)(4) do not restrict the publishing or distribution of
any research reports relating to the Company published or distributed by any of the Underwriters
during the 15 days before or after the last day of the Lock-up Period (before giving effect to
such extension). The foregoing restrictions shall not apply to (1) in the case of a natural
person, the transfer of any or all of the Shares owned by the undersigned, either during his or her
lifetime or on death, by gift, will or intestate succession to the immediate family of the
undersigned or to a trust the beneficiaries of which are exclusively the undersigned and/or a
member or members of his or her immediate family, (2) in the case of a non-natural person,
distributions of any or all of the Shares held by the undersigned to general or limited partners or
stockholders or members of the undersigned, (3) the transfer or sale of any Shares or other
securities pursuant to any contract, instruction or plan meeting the requirements of Rule 10b5-1
under the Exchange Act that has been entered into by the undersigned prior to the date of the
Prospectus, and (4) any transactions with the Company or in which the undersigned exercises
investment discretion as a fiduciary for any other legal person; provided, however, that in the
case of any transfer or distribution pursuant to clauses (1) or (2) above, it shall be a condition
to such transfer or distribution that the donee, beneficiary, distributee or transferee executes
and delivers to Jefferies & Company, Inc. an agreement stating that he, she or it is receiving and
holding the Shares subject to the provisions of this letter agreement, and there shall be no
further transfer or distribution of such Shares, except in accordance with this letter agreement;
provided, further, that in the case of any distribution pursuant to clause (2) above, it shall be a
condition to such distribution that no filing by any party under the Exchange Act shall be required
or shall be voluntarily made in connection with such distribution (other than a filing made after
the expiration of the Lock-up Period (as such may have been extended pursuant to the terms of this
letter agreement)). For the purposes of this paragraph, “immediate family” shall mean the spouse,
domestic partner, lineal descendant (including adopted children), father, mother, brother or sister
of the transferor. In addition, notwithstanding the lock-up restrictions described herein, the
undersigned may at any time after the date hereof (A) exercise any options or warrants to purchase
Shares (including by cashless exercise to the extent permitted by the instruments representing such
options or warrants); provided, however, that in any such case the Shares issued upon exercise
shall remain subject to the provisions of this letter agreement, or (B) enter into a trading plan
(a “New Plan”) meeting the requirements of Rule 10b5-1 under the Exchange Act relating to the sale
of Shares, if then permitted by the Company and applicable law; provided that the Shares subject to
such New Plan may not be sold during the Lock-Up Period. The undersigned hereby acknowledges and
agrees that written notice of any extension of the Lock-up Period pursuant to this letter agreement
will be delivered by Jefferies & Company, Inc. to the Company and that any such notice properly
delivered will be deemed to have been given to, and received by, the undersigned.
The undersigned also agrees and consents to the entry of stop transfer instructions with the
Company’s transfer agent and registrar against the transfer of Shares or securities convertible
into or exchangeable or exercisable for Shares held by the undersigned except in compliance with
the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration rights relating to
registration under the Securities Act of any Shares owned either of record or beneficially by the
undersigned, including any rights to receive notice of the Offering.
It is understood that, if (i) the Company notifies Jefferies & Company, Inc. in writing that it
does not intend to proceed with the Offering, (ii) if the Underwriting Agreement relating to the
Offering is not executed by May 31, 2010, or (iii) if the Underwriting Agreement (other than the
provisions thereof which survive termination) shall terminate or be terminated for any reason prior
to payment for and delivery of the Shares to be sold thereunder, this letter agreement shall
immediately be terminated and the undersigned shall automatically be released from all of his, her
or its obligations under this letter agreement.
The undersigned hereby represents and warrants that the undersigned has full power and authority to
enter into this letter agreement. This letter agreement is irrevocable and all authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and
any obligations of the
undersigned shall be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
This letter agreement shall be governed by and construed in accordance with the laws of the State
of New York, without regard to the conflict of laws principles thereof.
[Remainder of page intentionally left blank]
| Very truly yours, | ||||
| If not signing in an individual capacity: | ||||