EACH CONSISTING OF ONE (1) SHARE OF COMMON STOCK AND THREE TENTHS (0.3) OF A WARRANT TO PURCHASE COMMON STOCK UNDERWRITING AGREEMENT
Exhibit
1.1
6,500,000
UNITS
EACH
CONSISTING OF ONE (1) SHARE OF COMMON STOCK AND
THREE
TENTHS (0.3) OF A WARRANT TO PURCHASE COMMON STOCK
April 21,
2010
MAXIM
GROUP LLC
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
As
Representative of the Underwriters
named
on Schedule A hereto
Ladies
and Gentlemen:
Nile
Therapeutics, Inc., a Delaware corporation (the “Company”), proposes
to issue and sell to the underwriters listed on Schedule A hereto (the “Underwriters”), for
whom Maxim Group LLC is acting as representative (the “Representative”),
pursuant to this Underwriting Agreement (this “Agreement”) an
aggregate of 6,500,000 units (the “Firm Units”), with
each unit consisting of: (i) one (1) share of common stock, par
value $0.001 per share, of the Company (the “Common Stock”), or
6,500,000 shares in the aggregate, and (ii) three tenths (0.30) of
a warrant to purchase one (1) share of Common Stock, or 1,950,000 warrants
in the aggregate (the “Warrants”). The
Warrants are being issued pursuant to and shall have the rights and privileges
set forth in that certain Warrant Agreement, dated as of the date hereof,
between the Company and American Stock Transfer & Trust Company (the “Warrant
Agreement”).
In
addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters an option to purchase from the Company up
to an additional 975,000 Units (the “Option
Units”). The Firm Units and the Option Units are hereinafter
collectively referred to as the “Units.” The
Units, the Common Stock and the Warrants are described in the Prospectus which
is referred to below. The offering of the Units to the public as
described herein is referred to as the “Offering.”
In
addition, the Company shall, at the Closing (as defined herein) issue to the
Representative a warrant, in a form agreed upon by the Representative and the
Company (the “Representative’s Warrant”), to
purchase up to 390,000 shares of Common Stock (which is 6.0% of the number
of shares of Common Stock underlying the Firm Units) at an exercise price of
$0.94 per share. The Representative’s Warrant shall be exercisable
during the five (5) year period beginning from commencement of sales
pursuant to the final Prospectus Supplement (as defined below). Such
Warrant shall provide for one demand registration at the Company’s expense and
an additional demand registration at the warrant holder’s expense, each
exercisable for a period of five (5) years beginning on the date of
commencement of sales pursuant to the final Prospectus Supplement, and, further,
for unlimited piggyback registration rights for a period of seven
(7) years from such date. The Warrant shall be subject to the
lock-up provisions of FINRA Rule 5110(g).
Maxim
Group LLC
April 21,
2010
Page 2 of
37
The
Company has prepared and filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the “Act”), with the
Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (File No. 333-165167) under the Act (the
“registration
statement”), including a prospectus, which registration statement
incorporates by reference documents which the Company has filed, or will file,
in accordance with the provisions of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (collectively, the “Exchange
Act”). Such registration statement has become effective under
the Act.
Except
where the context otherwise requires, the term “Registration
Statement,” as used herein, means the registration statement, as amended
at the time of such registration statement’s effectiveness (the “Effective Time”),
including (i) all documents filed as a part thereof or incorporated or
deemed to be incorporated by reference therein (except to the extent the same
are superseded by the information contained in the Preliminary Prospectus
Supplement or the Prospectus Supplement (each as defined herein) or in any
document subsequently filed with the Commission or otherwise made publicly
available) and (ii) any information contained or incorporated by reference
in a prospectus filed with the Commission pursuant to Rule 424(b) under the
Act, to the extent such information is deemed, pursuant to Rule 430A,
Rule 430B or Rule 430C under the Act, to be part of the registration
statement at the Effective Time.
Except
where the context otherwise requires, “Base Prospectus,” as used
herein, means the base prospectus included as part of the Registration
Statement, in the form in which it has most recently been filed with the
Commission prior to the date of this Agreement. Except where the
context otherwise requires, “Prospectus
Supplement,” as used herein, means the preliminary prospectus
supplements, dated April 6, 2010 and April 12, 2010, respectively
(collectively, the “Preliminary Prospectus
Supplement”), and the final prospectus supplement, relating to the Units,
to be filed by the Company with the Commission pursuant to Rule 424(b)
under the Act on or before the second business day after the date hereof (or
such earlier time as may be required under the Act), in the form furnished by
the Company to the Representative for use by the Underwriters and by dealers in
connection with the offering of the Units. Except where the context
otherwise requires, “Prospectus,” as used
herein, means the Base Prospectus as supplemented by the Prospectus
Supplement.
“Permitted Free Writing
Prospectuses,” as used herein, means the documents listed on Schedule I attached
hereto. The Underwriters have not offered or sold and will not offer
or sell, without the Company’s consent, any Units by means of any “free writing
prospectus” (as defined in Rule 405 under the Act) that is required to be
filed by the Underwriters with the Commission pursuant to Rule 433 under
the Act, other than a Permitted Free Writing Prospectus.
“Disclosure Package,”
as used herein, means, as of the Applicable Time, the Base Prospectus, together
with any Preliminary Prospectus Supplement, the Permitted Free Writing
Prospectuses, if any, and the information set forth on Schedule II attached
hereto, taken as a whole.
Maxim
Group LLC
April 21,
2010
Page 3 of
37
“Applicable Time,”
means 5:30 p.m. (Eastern time) on the date of this Agreement. Any
reference herein to the Registration Statement, the Base Prospectus, the
Prospectus Supplement, the Prospectus or any Permitted Free Writing Prospectus
shall be deemed to refer to and include the documents, if any, incorporated by
reference, or deemed to be incorporated by reference, therein (each an “Incorporated
Document” and collectively, the “Incorporated Documents”), including,
unless the context otherwise requires, the documents, if any, filed as exhibits
to such Incorporated Documents (except, in each case, to the extent any
Incorporated Document is superseded by the information contained in the
Preliminary Prospectus Supplement or the Prospectus Supplement or in any
Incorporated Document filed with the Commission or otherwise made publicly
available). Any reference herein to the terms “amend,” “amendment” or
“supplement” with respect to the Registration Statement, the Base Prospectus,
the Prospectus Supplement, the Prospectus or any Permitted Free Writing
Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act on or after the initial effective date of the
Registration Statement, or the date of the Base Prospectus, the Prospectus
Supplement, the Prospectus or such Permitted Free Writing Prospectus, as the
case may be, and deemed to be incorporated therein by reference.
As used
in this Agreement, “business day” shall mean a day on which the Nasdaq Stock
Market is open for trading. The terms “herein,” “hereof,” “hereto,”
“hereinafter” and similar terms, as used in this Agreement, shall in each case
refer to this Agreement as a whole and not to any particular section, paragraph,
sentence or other subdivision of this Agreement. The term “or,” as
used herein, is not exclusive.
The
Company and the Representative agree as follows:
1. Sale and
Purchase.
(a) On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company agrees to
issue and sell the Firm Units to the Underwriters, and the Underwriters agree to
purchase from the Company the Firm Units. The pricing terms of the
purchase of the Units by the Underwriters and the pricing and other terms of the
offering of the Units to the public (the “Offering”) are as set
forth on Schedule
II hereto.
(b) The
shares of Common Stock contained in the Units (the “Unit Shares”) and the
Warrants will separate immediately following issuance of the
Units. There will be no market for the Units. The Units,
Unit Shares, Warrants, the shares of Common Stock underlying the Warrants (the
“Warrant
Shares”), the Representative’s Warrant and the shares of Common Stock
underlying the Representative’s Warrant are collectively referred to herein as
the “Securities.”
Maxim
Group LLC
April 21,
2010
Page 4 of
37
(c) In
addition, the Company hereby grants to the Representative the option to
purchase, and upon the basis of the warranties and representations and subject
to the terms and conditions herein set forth, upon the exercise of such option
by the Representative in its discretion, the Representative shall have the right
to purchase from the Company, all or a portion of the Option Units as may be
necessary solely to cover over-allotments, if any, made in connection with the
offering of the Firm Units, at the same purchase price per share to be paid by
the Underwriters to the Company for the Firm Units. This option may
be exercised by the Representative at any time and from time to time on or
before the forty-fifth (45th) day
following the date hereof, by written notice to the Company. Such
notice shall set forth the aggregate number of Option Units as to which the
option is being exercised, and the date and time when the Option Units are to be
delivered (such date and time being herein referred to as the “Additional Time of
Purchase”); provided, however, that the
Additional Time of Purchase shall not be earlier than the Time of Purchase (as
defined below) nor earlier than the second business day after the date on which
the option shall have been exercised nor later than the tenth business day after
the date on which the option shall have been exercised.
(d) In
addition to selling the Units to the Underwriters at the price set forth in
Schedule II
hereto and the issuance to the Representative of the Representative’s Warrant,
in consideration of the services to be provided for hereunder, the Company shall
pay to the Representative or its respective designees, at the Closing, a
non-accountable expense allowance equal to one percent (1.0%) of the gross
proceeds of the Offering (exclusive of proceeds from the sale of Option Units),
less $25,000 previously paid.
(e) Commencing
on the date of commencement of sales pursuant to the final Prospectus Supplement
(and expressly conditioned upon the occurrence of the closing of the Offering
and in no event if the Offering is terminated), the Company grants to the
Representative a six (6) month right of first refusal to act, at a minimum, as a
co-manager and/or co-placement agent with at least 20.0% of the economics for
any and all future public and private equity offerings as well as any debt
offerings of the Company (or any successor to or any subsidiary of the Company)
during such six (6)-month period. The Company shall give prompt
written notice of the right of first refusal to the Representative, and the
Representative shall be entitled to a 30 day right of first refusal, beginning
on the day the Representative receives such written notice from the Company of
any subsequent offering, to act as agent or manager for such private placement
or public offering. If such right of first refusal is exercised by
the Representative, the terms of any such engagement of the Representative will
be separately agreed upon between the Company and the Representative and will be
no less favorable to the Company than the engagement the Company negotiated with
any applicable third party.
(f) The
Representative reserves the right to reduce any item of its compensation or
adjust the terms thereof as specified herein in the event that a
determination shall be made by the Financial Industry Regulatory Authority, Inc.
(“FINRA”) to
the effect that the Underwriters’ aggregate compensation is in excess of FINRA
rules or that the terms thereof require adjustment.
Maxim
Group LLC
April 21,
2010
Page 5 of
37
2. Payment and
Delivery.
(a) Payment
of the purchase price for the Firm Units shall be made to the Company by Federal
Funds wire transfer against delivery of the certificates for the Firm Units to
the Underwriters through the facilities of The Depository Trust Company (“DTC”) for the account
of the Representative (or such accounts for the Underwriters as may be
designated by the Representative). Such payment and delivery shall be
made at 10:00 A.M., New York time, on April 27, 2010 (the “Closing Date”)
(unless another time shall be agreed to by the Representative and the
Company). The time at which such payment and delivery are to be made
is hereinafter sometimes called the “Time of
Purchase.” Electronic transfer of the Firm Units shall be made
as directed by the Representative at the Time of Purchase in such names and in
such denominations as the Representative shall specify.
(b) Payment
of the purchase price for the Option Units shall be made at the Additional Time
of Purchase in the same manner and at the same office as the payment for the
Firm Units. Electronic transfer of the Firm Units shall be made as
directed by the Representative at the Time of Purchase in such names and in such
denominations as the Representative shall specify. The Time of
Purchase and the Additional Time of Purchase are sometimes referred to herein as
the “Closing
Dates.”
(c) Deliveries
of the documents described in Section 6 hereof with
respect to the purchase of the Units shall be made at the offices of Ellenoff
▇▇▇▇▇▇▇▇ & Schole LLP, counsel for the Representative, located at ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 A.M., New York time, on the date of the closing
of the purchase of the Units, or may be undertaken remotely by electronic
delivery of documents.
3. Representations and
Warranties of the Company. The Company represents and warrants
to and agrees with each Underwriter that:
(a) Registration Statement and
Prospectus. (i) The Registration Statement has
heretofore become effective under the Act; no stop order of the Commission
preventing or suspending the use of the Base Prospectus, the Prospectus
Supplement, the Prospectus or any Permitted Free Writing Prospectus, or the
effectiveness of the Registration Statement, has been issued, and no proceedings
for such purpose have been instituted or, to the Company’s knowledge, are
contemplated by the Commission;
(ii) (A)
The Registration Statement complied as of the time it was filed with the
Commission and as of the Effective Time, and, as amended or supplemented, will
comply, at the Time of Purchase and at the Additional Time of Purchase, as the
case may be, and at all times during which a prospectus is required by the Act
to be delivered (whether physically or through compliance with Rule 172
under the Act or any similar rule) in connection with any sale of Units, in all
material respects, with the requirements of the Act; the conditions to the use
of Form S-3 in connection with the offering and sale of the Units as
contemplated hereby have been satisfied; the Registration Statement meets, and
the offering and sale of the Units as contemplated hereby complies with, the
requirements of Rule 415 under the Act (including, without limitation,
Rule 415(a)(5) under the Act); the Registration Statement did not, at the
time it was filed and at the Effective Time, and will not, as amended or
supplemented, at the Time of Purchase and the Additional Time of Purchase, as
the case may be, 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 not misleading;
Maxim
Group LLC
April 21,
2010
Page 6 of
37
(B) the
Base Prospectus complied as of its date and the date it was filed with the
Commission, complies as of the date hereof, and will comply, at the Time of
Purchase and at the Additional Time of Purchase, as the case may be, and at all
times during which a prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any similar
rule) in connection with any sale of Units, in all material respects, with the
requirements of the Act and each Prospectus Supplement will comply, as of its
date, the date it is filed with the Commission, the Applicable Time, the Time of
Purchase and the Additional Time of Purchase, as the case may be, and at all
times during which a prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any similar
rule) in connection with any sale of Units, in all material respects, with the
requirements of the Act (in the case of the Prospectus, including, without
limitation, Section 10(a) of the Act);
(C) the
Disclosure Package did not, as of the Applicable Time, and will not as of the
Time of Purchase and the Additional Time of Purchase, as the case may be,
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 under which they were made, not misleading;
(D) at
no time during the period that begins on the earlier of the date of the
Prospectus Supplement and the date the Prospectus Supplement is filed with the
Commission and ends at the later of the Time of Purchase, the Additional Time of
Purchase and the end of the period during which a prospectus is required by the
Act to be delivered (whether physically or through compliance with Rule 172
under the Act or any similar rule) in connection with any sale of Units, did or
will any Prospectus Supplement or the Prospectus, as then amended or
supplemented, 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 under which they were made, not misleading; and
(E) each
Permitted Free Writing Prospectus as of its issue date and at all subsequent
times through the Time of Purchase and at the Additional Time of Purchase, as
the case may be, does not conflict with the information contained in the
Registration Statement, the Disclosure Package or Prospectus;
provided, however, that the
Company makes no representation or warranty in this Section 3(a) with
respect to any statement contained in the Registration Statement, the Disclosure
Package or the Prospectus in reliance upon and in conformity with information
concerning the Underwriters or any Underwriter and furnished in writing by the
Representative or any Underwriter to the Company expressly for use in the
Registration Statement, the Disclosure Package or the Prospectus, it being
understood and agreed that the only such information furnished by the
Underwriters consists of the information described as such in Section 8(g) hereof;
each Incorporated Document, at the time such document was filed with the
Commission, complied, in all material respects, with the requirements of the
Exchange Act and, at the time such document was filed with the Commission, did
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 under which they were made, not misleading.
Maxim
Group LLC
April 21,
2010
Page 7 of
37
(b) Distributed Materials; Not an
Ineligible Issuer. Prior to the execution of this Agreement,
the Company has not, directly or indirectly, offered or sold any Units by means
of any “prospectus” (within the meaning of the Act) or used any “prospectus”
(within the meaning of the Act) in connection with the offer or sale of the
Units, in each case other than the Base Prospectus, the Preliminary Prospectus
Supplement and the Permitted Free Writing Prospectuses, if any; the Company has
not, directly or indirectly, prepared, used or referred to any Permitted Free
Writing Prospectus except in compliance with Rule 163 or with Rules 164 and
433 under the Act; assuming that such Permitted Free Writing Prospectus is so
sent or given after the Registration Statement was filed with the Commission
(and after such Permitted Free Writing Prospectus was, if required pursuant to
Rule 433(d) under the Act, filed with the Commission), the sending or
giving, by any Underwriter, of any Permitted Free Writing Prospectus will
satisfy the provisions of Rule 164 and Rule 433 (without reliance on
subsections (b), (c) and (d) of Rule 164); neither the Company nor any
Underwriter are disqualified, by reason of subsection (f) or (g) of
Rule 164 under the Act, from using, in connection with the offer and sale
of the Units, “free writing prospectuses” (as defined in Rule 405 under the
Act) pursuant to Rules 164 and 433 under the Act; the Company is not an
“ineligible issuer” (as defined in Rule 405 under the Act) as of the
eligibility determination date for purposes of Rules 164 and 433 under the Act
with respect to the offering of the Units contemplated by the Registration
Statement, the Disclosure Package and the Prospectus; and the Company is subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act and is
currently eligible to use Form S-3 pursuant to General Instruction I.B.6. of
Form S-3.
(c) Capitalization. As
of the date of this Agreement, the Company has an authorized and outstanding
capitalization as set forth in the Disclosure Package and the Prospectus, and,
as of the Time of Purchase, the Company shall have an authorized and outstanding
capitalization as set forth in the Disclosure Package and the Prospectus
(subject, in each case, to the issuance of shares of Common Stock upon exercise
of stock options and warrants disclosed as outstanding in the Disclosure Package
and the Prospectus and the grant of options under existing stock option plans
described in the Disclosure Package and the Prospectus); and all of the issued
and outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable, have been issued in
compliance with all applicable securities laws and were not issued in violation
of any preemptive right, resale right, right of first refusal or similar
right. The Unit Shares, Warrants and Warrant Shares have been
admitted and authorized for trading on the NASDAQ Capital Market, subject to
official notice of issuance.
Maxim
Group LLC
April 21,
2010
Page 8 of
37
(d) Due
Incorporation. The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own, lease and operate
its properties and conduct its business as described in the Registration
Statement, the Disclosure Package and the Prospectus, to execute and deliver
each of this Agreement, the Warrant Agreement and the Representative’s Warrant
and each document, certificate and instrument called for hereunder and
thereunder (the “Transaction
Documents”) and to issue, sell and deliver the Securities as contemplated
herein.
(e) Foreign
Qualifications. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified and in good
standing would not, individually or in the aggregate, (i) reasonably be
expected to have a material adverse effect on the business, properties,
prospects (as such prospects are set forth in the Registration Statement, the
Disclosure Package and the Prospectus), financial condition or results of
operations of the Company, (ii) prevent or materially interfere with
consummation of the transactions contemplated hereby or (iii) result in the
delisting of shares of Common Stock from the NASDAQ Capital Market (the
occurrence of any such effect or any such prevention or interference or any such
result described in the foregoing clauses (i), (ii) and (iii) being
herein referred to as a “Material Adverse
Effect”).
(f) Subsidiaries. The
Company has no subsidiaries (as defined under the Act). Except as
disclosed in the Registration Statement, the Disclosure Package and the
Prospectus, the Company does not own, directly or indirectly, any shares of
stock or any other equity interests or long-term debt securities of any
corporation, firm, partnership, joint venture, association or other entity;
complete and correct copies of the charter and the bylaws of the Company and all
amendments thereto have been made available to the Representative, and no
changes therein will be made on or after the date hereof through and including
the Time of Purchase and the Additional Time of Purchase, as the case may be;
the Company has no “significant subsidiary,” as that term is defined in
Rule 1-02(w) of Regulation S-X under the Act.
(g) Authorization,
Issuance. The Company has the corporate power and authority to
enter into each Transaction Document and to authorize, issue and sell each of
the Securities as contemplated by this Agreement and under the terms of the
Transaction Documents. All corporate action required to be taken by
the Company for the authorization, issuance and sale of the Securities has been
duly and validly taken. The Securities have been duly and validly
authorized and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued, fully paid and non-assessable and,
except as set forth in the Registration Statement, the Disclosure Package and
the Prospectus, free of statutory and contractual preemptive rights, resale
rights, rights of first refusal and similar rights. The shares of
Common Stock which are a part of the Securities, when issued and delivered
against payment therefor as provided for in the Transaction Documents, will be
free (except as provided for in the Representative’s Warrant) of any restriction
upon the transfer or voting thereof pursuant to the Delaware General Corporation
Law or the Company’s charter or bylaws or any agreement or other instrument to
which the Company is a party.
Maxim Group LLC
April 21,
2010
Page 9 of
37
(h) Description of Capital
Stock. The capital stock of the Company, including the Common
Stock and Warrants included as part of the Units, conforms in all material
respects to each description thereof contained or incorporated by reference in
the Registration Statement, the Disclosure Package and the
Prospectus.
(i) Due
Authorization. Each Transaction Document has been duly
authorized, executed and delivered by the Company and constitutes (or will, when
delivered, constitute) the valid, legal and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity hereunder may be limited by federal or state securities laws and
except (i) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally, (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(j) No Violation. The
Company is not in breach or violation of or in default under (nor has any event
occurred which would constitute any event which, with notice, lapse of time or
both, would result in any breach or violation of or constitute a default under
or give rise to any right of termination, cancellation or acceleration under)
(A) its charter or bylaws, or (B) any indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to which it is a party
or by which it or any of its properties may be bound or affected, or (C) any
federal, state, local or foreign law, regulation or rule, or (D) any rule
or regulation of any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, the rules and regulations
of the NASDAQ Capital Market), or (E) any decree, judgment or order
applicable to it or any of its properties; except, in the cases of clause (B),
(C), (D) and (E), where such occurrence would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(k) No Conflict. The
execution, delivery and performance of the Transaction Documents, the issuance
and sale of the Securities and the consummation of the transactions contemplated
hereby and thereby will not conflict with, result in any breach or violation of
or constitute a default under (nor constitute any event which, with notice,
lapse of time or both, would result in any breach or violation of or constitute
a default under or give rise to any right of termination, cancellation or
acceleration under) (or result in the creation or imposition of a lien, charge
or encumbrance on any property or assets of the Company pursuant to)
(A) the charter or bylaws of the Company, or (B) any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or instrument
to which the Company is a party or by which any of them or any of their
respective properties may be bound or affected, or (C) any federal, state,
local or foreign law, regulation or rule (including, without limitation, those
promulgated by the Food and Drug Administration of the U.S. Department of Health
and Human Services (the “FDA”) or by any
foreign, federal, state or local regulatory authority performing functions
similar to those performed by the FDA), or (D) any rule or regulation of
any self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, the rules and regulations of the NASDAQ Capital
Market), or (E) any decree, judgment or order applicable to the Company or
any of their respective properties; except, in the cases of clause (B), (C), (D)
and (E), where such occurrence would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Maxim
Group LLC
April 21,
2010
Page 10 of
37
(l) No Consents
Required. No approval, authorization, consent or order of or
filing with any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency (including, without limitation,
those promulgated by the FDA or by any foreign, federal, state or local
regulatory authority performing functions similar to those performed by the
FDA), or of or with any self-regulatory organization or other non-governmental
regulatory authority, or approval of the shareholders of the Company, is
required in connection with the issuance and sale of the Units or the
consummation by the Company of the transactions contemplated the Transaction
Documents, other than (i) registration of the Securities under the Act,
which has been effected, (ii) any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the Securities
are being offered by the Underwriters, (iii) the listing of the Unit Shares and
the Warrants on the NASDAQ Capital Market or (iv) under the Conduct Rules
of FINRA.
(m) No Rights. Except
as described in the Registration Statement (excluding the exhibits thereto), the
Disclosure Package and the Prospectus, (i) no person has the right,
contractual or otherwise, to cause the Company to issue or sell to it any shares
of Common Stock or shares of any other capital stock or other equity interests
of the Company, (ii) no person has any preemptive rights, resale rights,
rights of first refusal or other rights to purchase any shares of Common Stock
or shares of any other capital stock of or other equity interests in the
Company, (iii) no person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the offer and sale of the
Units, and (iv) no person has the right, contractual or otherwise, to cause the
Company to register under the Act any shares of Common Stock or shares of any
other capital stock of, or other equity interests or securities in, the Company,
or to include any such shares or interests or securities in the Registration
Statement or the offering contemplated thereby.
(n) Permits. The
Company has all necessary licenses, authorizations, consents and approvals and
has made all necessary filings required under any applicable law, regulation or
rule, and has obtained all necessary licenses, authorizations, consents and
approvals from other persons, in order to conduct their respective businesses
(including, without limitation, those from the FDA and any other foreign,
federal, state or local government or regulatory authorities performing
functions similar to those performed by the FDA), except where the failure to
have or obtain such licenses, authorizations, consents and approvals would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; the Company is not in violation of, or in default under, and has
not received notice of any proceedings relating to revocation or modification
of, any such license, authorization, consent or approval or any federal, state,
local or foreign law, regulation or rule or any decree, order or judgment
applicable to the Company, except where such violation, default, revocation or
modification would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
Maxim
Group LLC
April 21,
2010
Page 11 of
37
(o) Legal
Proceedings. There are no actions, suits, claims,
investigations or proceedings pending or, to the Company’s knowledge, threatened
or contemplated to which the Company or, to the Company’s knowledge, any of its
respective directors or officers is or would be a party or of which any of its
respective properties is or would be subject at law or in equity, before or by
any federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency, or before or by any self-regulatory
organization or other non-governmental regulatory authority (including, without
limitation, the NASDAQ Capital Market), except any such action, suit, claim,
investigation or proceeding which, if resolved adversely to the Company, would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(p) Independent
Accountants. ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, whose report on the financial
statements of the Company is included or incorporated by reference in the
Registration Statement and the Prospectus, is an independent registered public
accountant with respect to the Company as required by the Act and by the rules
of the Public Company Accounting Oversight Board and to the best of the
Company’s knowledge is registered as such.
(q) Financial
Statements. The financial statements included or incorporated
by reference in the Registration Statement, the Disclosure Package and the
Prospectus, together with the related notes and schedules, present fairly in all
material respects the financial position of the Company as of the dates
indicated thereon and the results of operations, cash flows and changes in
stockholders’ equity of the Company for the periods specified thereon have been
prepared in compliance with the requirements of the Act and Exchange Act and in
conformity with U.S. generally accepted accounting principles applied on a
consistent basis during the periods involved, except as may be expressly stated
in the related notes thereto; the other financial and statistical data contained
or incorporated by reference in the Registration Statement, the Disclosure
Package and the Prospectus, are accurately and fairly presented in all material
respects and have been prepared on a basis consistent with the financial
statements and books and records of the Company; there are no financial
statements (historical or pro forma) that are required to be included or
incorporated by reference in the Registration Statement or the Prospectus that
are not included or incorporated by reference as required; the Company does not
have any material liabilities or obligations, direct or contingent (including
any off-balance sheet obligations), not described in the Registration Statement
(excluding the exhibits thereto), the Disclosure Package and the Prospectus; and
all disclosures contained or incorporated by reference in the Registration
Statement, the Disclosure Package and the Prospectus regarding “non-GAAP
financial measures” (as such term is defined by the rules and regulations of the
Commission) comply with Regulation G of the Exchange Act and Item 10 of
Regulation S-K under the Act, to the extent applicable.
Maxim
Group LLC
April 21,
2010
Page 12 of
37
(r) Absence of Material
Changes. Subsequent to the respective dates as of which
information is given in the Registration Statement, the Disclosure Package and
the Prospectus, in each case excluding any amendments or supplements to the
foregoing made after the execution of this Agreement or relating to the
transactions contemplated by this Agreement, there has not been (i) any
event or occurrence that has resulted in a material adverse change in the
business, properties, prospects (as such prospects are set forth in the
Registration Statement, the Disclosure Package and the Prospectus), management,
financial condition or results of operations of the Company, (ii) any
transaction which is material to the Company, (iii) any obligation or
liability, direct or contingent (including any off-balance sheet obligations),
incurred by the Company which is material to the Company, (iv) any change
in the capital stock of the Company, except for the issuance of stock pursuant
to the exercise of stock options or warrants outstanding, or pursuant to the
incentive plans of the Company in effect, in each case, as of the dates as of
which information is given in the Registration Statement, the Disclosure Package
and the Prospectus, or outstanding indebtedness of the Company, or (v) any
dividend or distribution of any kind declared, paid or made on the capital stock
of the Company.
(s) Lock-Ups. The
Company has obtained for the benefit of the Representative the agreement, in the
form set forth as Exhibit A hereto, of
certain of its shareholders and each of its directors and “officers” (within the
meaning of Rule 16a-1(f) under the Exchange Act) listed on Schedule III hereto
(each a “Lock-Up
Agreement” and collectively, the “Lock-Up
Agreements”).
(t) Not an Investment
Company. The Company is not, and at no time during which a
prospectus is required by the Act to be delivered (whether physically or through
compliance with Rule 172 under the Act or any similar rule) in connection
with any sale of Units will be, and, after giving effect to the offering and
sale of the Units and the application of the proceeds thereof, will be, an
“investment company” or an entity “controlled” by an “investment company,” as
such terms are defined in the Investment Company Act of 1940, as amended (the
“Investment Company
Act”).
(u) Not a Holding
Company. The Company is not and, after giving effect to the
offering and sale of the Units, nor will it be a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of a “holding
company” or of a “subsidiary company,” as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
(v) Good Title to
Property. The Company has good and marketable title to all
property (real and personal) described in the Registration Statement, the
Disclosure Package and the Prospectus as being owned by it, free and clear of
all liens, claims, security interests or other encumbrances, except such as are
described in the Registration Statement, the Disclosure Package and the
Prospectus or such as do not materially affect the value of such property and do
not materially interfere with the use made and proposed to be made of such
property by the Company; all the property described in the Registration
Statement, the Disclosure Package and the Prospectus as being held under lease
by the Company is held thereby under valid, subsisting and enforceable
leases.
Maxim
Group LLC
April 21,
2010
Page 13 of
37
(w) Material
Contracts. Each material contract, agreement and license
listed as an exhibit to, described in or incorporated by reference in the
Registration Statement, the Disclosure Package and the Prospectus to which the
Company is bound is legal, valid, binding, enforceable and in full force and
effect against the Company, and to the Company’s knowledge, each other party
thereto, except to the extent such enforceability is subject to (i) laws of
general application relating to bankruptcy, insolvency, moratorium and the
relief of debtors and (ii) the availability of specific performance, injunctive
relief and other equitable remedies. Neither the Company, nor to the
Company’s knowledge, any other party is in material breach or default with
respect to any such contract, agreement and license. To the Company’s
knowledge, no event has occurred which with notice or lapse of time would
constitute a material breach or default, or permit termination, modification, or
acceleration, under any such contract, agreement or license. No party
has repudiated any material provision of any such contract, agreement or
license.
(x) Intellectual
Property. The Company owns, or has obtained valid and
enforceable licenses for, or other rights to use, the inventions, patent
applications, patents, trademarks (both registered and unregistered), trade
names, service names, copyrights, trade secrets and other proprietary
information described in the Registration Statement, the Disclosure Package and
the Prospectus as being owned or licensed by it or which are necessary for the
conduct of its businesses as currently conducted or as proposed to be conducted,
except where the failure to own, license or have such rights would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (collectively, “Intellectual
Property”); there are no third parties who have, to the Company’s
knowledge, rights to any Intellectual Property, except for, and to the extent
of, the ownership rights of the owners of the Intellectual Property which is
licensed to the Company and the license rights of any third parties to which the
Intellectual Property is licensed; to the Company’s knowledge, there is no
infringement by third parties of any Intellectual Property; there is no pending
or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging the Company’s rights in or to any Intellectual Property,
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, and the Company is unaware of any facts which
could form a reasonable basis for any such action, suit, proceeding or claim;
there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the validity, enforceability or scope
of any Intellectual Property, and the Company is unaware of any facts which
could form a reasonable basis for any such action, suit, proceeding or claim;
there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others that the Company infringes or otherwise violates,
any patent, trademark, trade name, service name, copyright, trade secret or
other proprietary rights of others, and except as described in or incorporated
by reference in the Registration Statement, the Disclosure Package and the
Prospectus, the Company is unaware of any facts which could form a reasonable
basis for any such action, suit, proceeding or claim; the Company has complied
in all material respects with the terms of each material agreement pursuant to
which Intellectual Property has been licensed to the Company, and all such
agreements are in full force and effect; to the knowledge of the Company, there
is no patent or patent application that contains claims that interfere with the
issued or pending claims of any of the Intellectual Property or that challenges
the validity, enforceability or scope of any of the Intellectual Property; to
the knowledge of the Company, there is no prior art that may render any patent
application within the Intellectual Property unpatentable that has not been
disclosed to the U.S. Patent and Trademark Office; and the Company has fully
performed under each Intellectual Property license or agreement to which the
Company is a party, including, without limitation, the Company’s license
agreements with the Mayo Foundation for Medical Education and Research, a
Minnesota charitable corporation (the “Mayo
Agreements”). The Company has not taken, or failed to take,
any action act which would constitute a breach or default under the Mayo
Agreements.
Maxim
Group LLC
April 21,
2010
Page 14 of
37
(y) Labor Matters. The
Company is not engaged in any unfair labor practice; except for matters which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (i) there is (A) no unfair labor practice
complaint pending or, to the Company’s knowledge, threatened against the Company
before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is pending
or, to the Company’s knowledge, threatened, (B) no strike, labor dispute,
slowdown or stoppage pending or, to the Company’s knowledge, threatened against
the Company and (C) no union representation dispute currently existing
concerning the employees of the Company, (ii) to the Company’s knowledge,
no union organizing activities are currently taking place concerning the
employees of the Company and (iii) there has been no violation of any
federal, state, local or foreign law relating to discrimination in the hiring,
promotion or pay of employees, any applicable wage or hour laws, any provision
of the Worker Adjustment and Retraining Notification Act of 1988, as amended
(“WARN Act”) or
the WARN Act’s state, foreign or local equivalent, or any provision of the
Employee Retirement Income Security Act of 1974 (“ERISA”) or the rules
and regulations promulgated thereunder concerning the employees of the Company;
the Company is in compliance with all presently applicable provisions of ERISA,
except where such non-compliance would not reasonably be expected to result in a
Material Adverse Effect; no “reportable event” (as defined in ERISA) has
occurred with respect to any “pension plan” (as defined in ERISA) to which the
Company contributes or which the Company maintains; the Company has not incurred
and does not expect to incur liability under (i) Title IV of ERISA with respect
to termination of, or withdrawal from, any “pension plan” or (ii) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the “Code”); and each
“pension plan” for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(z) Compliance with Environmental
Laws. Except as disclosed in the Disclosure Package and the
Prospectus, the Company and its properties, assets and operations are in
compliance with, and the Company holds all permits, authorizations and approvals
required under, Environmental Laws (as defined below), except to the extent that
failure to so comply or to hold such permits, authorizations or approvals would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; there are no past, present or, to the Company’s knowledge,
reasonably anticipated future events, conditions, circumstances, activities,
practices, actions, omissions or plans that could reasonably be expected to give
rise to any material costs or liabilities to the Company under, or to materially
interfere with or prevent compliance by the Company with, Environmental Laws;
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect and except as otherwise disclosed in the
Disclosure Package and the Prospectus, the Company (i) is not the subject
of any investigation, (ii) has not received any notice or claim,
(iii) is not a party to or affected by any pending or, to the Company’s
knowledge, threatened action, suit or proceeding, (iv) is not bound by any
judgment, decree or order and (v) has not entered into any agreement, in
each case relating to any alleged violation of any Environmental Law or any
actual or alleged release or threatened release or cleanup at any location of
any Hazardous Materials (as defined below) (as used herein, “Environmental Law”
means any federal, state, local or foreign law, statute, ordinance, rule,
regulation, order, decree, judgment, injunction, permit, license, authorization
or other binding requirement, or common law, relating to health, safety or the
protection, cleanup or restoration of the environment or natural resources,
including those relating to the distribution, processing, generation, treatment,
storage, disposal, transportation, other handling or release or threatened
release of Hazardous Materials, and “Hazardous Materials”
means any material (including, without limitation, pollutants, contaminants,
hazardous or toxic substances or wastes) that is regulated by or may give rise
to liability under any Environmental Law).
Maxim
Group LLC
April 21,
2010
Page 15 of
37
(aa) Taxes. All tax
returns required to be filed by the Company have been timely filed (or are
subject to requested extension which has not yet expired), and all taxes and
other assessments of a similar nature (whether imposed directly or through
withholding) including any interest, additions to tax or penalties applicable
thereto due or claimed to be due from such entities have been timely paid, other
than those being contested in good faith and for which adequate reserves have
been provided; all tax liabilities have been adequately provided for in the
financial statements of the Company, and the Company does not know of any actual
or proposed additional material tax assessments.
(bb) Insurance. The
Company maintains insurance covering its properties, operations, personnel and
businesses as is reasonable and prudent for companies engaged in similar
activities and as required by its material contracts including, without
limitation, the Mayo Agreements; such insurance insures against such losses and
risks to an extent that is adequate in accordance with customary industry
practice to protect the Company and its business; all such insurance is fully in
force on the date hereof and will be fully in force at the Time of Purchase and
at the Additional Time of Purchase, as the case may be; the Company has no
reason to believe that it will not be able to renew any such insurance as and
when such insurance expires.
(cc) Termination of
Contracts. Except as described in or incorporated by reference
in the Registration Statement, the Disclosure Package and the Prospectus, the
Company has not sent or received any communication regarding termination of, or
intent not to renew, any of the material contracts or agreements to which the
Company is a party referred to or described in the Disclosure Package or the
Prospectus, or referred to or described in, or filed as an exhibit to, the
Registration Statement or any Incorporated Document, and no such termination or
non-renewal has been threatened by the Company or, to the Company’s knowledge,
any other party to any such contract or agreement, except for such terminations
or non-renewals which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Maxim
Group LLC
April 21,
2010
Page 16 of
37
(dd) Accounting
Controls. The Company maintains 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 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.
(ee) Disclosure Controls; ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. The Company has established and maintains and evaluates
“disclosure controls and procedures” (as such term is defined in
Rule 13a-15 and 15d-15 under the Exchange Act) and “internal control over
financial reporting” (as such term is defined in Rule 13a-15 and 15d-15
under the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company, is made known to the
Company’s Chief Executive Officer and its Chief Financial Officer by others
within those entities, and such disclosure controls and procedures are effective
to perform the functions for which they were established; to the Company’s
knowledge, the Company’s independent auditors and the Audit Committee of the
Board of Directors of the Company have been advised of: (i) all significant
deficiencies, if any, in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize and
report financial data; and (ii) all fraud, if any, whether or not material,
that involves management or other employees who have a role in the Company’s
internal controls; all material weaknesses, if any, in internal controls have
been identified to the Company’s independent auditors; since the date of the
most recent evaluation of such disclosure controls and procedures and internal
controls, there have been no significant changes in internal controls or in
other factors that could significantly affect internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses; the principal executive officers (or their equivalents) and
principal financial officers (or their equivalents) of the Company have made all
certifications required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”)
and any related rules and regulations promulgated by the Commission, and the
statements contained in each such certification are complete and correct in all
material respects; the Company and, to the Company’s knowledge, the Company’s
directors and officers are each in compliance in all material respects with all
applicable effective provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and
regulations of the Commission and the NASDAQ Capital Market promulgated
thereunder.
(ff) Forward-Looking
Statements. Each “forward-looking statement” (within the
meaning of Section 27A of the Act or Section 21E of the Exchange Act) contained
or incorporated by reference in the Registration Statement, the Disclosure
Package and the Prospectus has been made with a reasonable basis and in good
faith.
Maxim
Group LLC
April 21,
2010
Page 17 of
37
(gg) Statistical and Market-Related
Data. All statistical or market-related data included or incorporated by
reference in the Registration Statement, the Disclosure Package and the
Prospectus are based on or derived from sources that the Company reasonably
believes to be reliable and accurate, and the Company has obtained the written
consent to the use of such data from such sources to the extent
required.
(hh) Corrupt
Practices. Neither the Company nor, to the Company’s
knowledge, any director, officer, agent, employee or affiliate of the Company is
aware of or has taken any action, directly or indirectly, that would result in a
violation by such persons of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder; and the Company and, to the
Company’s knowledge, its affiliates have instituted and maintain policies and
procedures reasonably designed to ensure continued compliance
therewith.
(ii) Money Laundering
Laws. The operations of the Company are and have been
conducted at all times in compliance in all material respects 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 jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (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 or non-governmental
authority involving the Company with respect to the Money Laundering Laws is
pending or, to the Company’s knowledge, threatened.
(jj) OFAC. Neither the
Company nor, to the Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company 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 the offering of the
Units contemplated hereby, or lend, contribute or otherwise make available such
proceeds to any 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.
(kk) Preemptive
Rights. The issuance and sale of the Units as contemplated
hereby will not cause any holder of any shares of capital stock, securities
convertible into or exchangeable or exercisable for capital stock or options,
warrants or other rights to purchase capital stock or any other securities of
the Company to have any right to acquire any shares of preferred stock of the
Company.
(ll) Nasdaq; Exchange Act
Registration. The Common Stock is registered pursuant to
Section 12(b) of the Exchange Act, the Common Stock is listed on the NASDAQ
Capital Market, and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from the NASDAQ Capital Market, nor
has the Company received any notification that the Commission or the NASDAQ
Capital Market is contemplating terminating such registration or
listing. The Warrants and the Warrant Shares have been approved for
listing on the NASDAQ Capital Market, subject to notice of
issuance.
Maxim
Group LLC
April 21,
2010
Page 18 of
37
(mm) Brokers
Fees. Except as provided for in this Agreement, the Company
has not incurred any liability for any finder’s or broker’s fee or agent’s
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby or by the Registration
Statement, the Disclosure Package and the Prospectus.
(nn) No Price
Stabilization. Neither the Company nor, to the Company’s
knowledge, any of its directors, officers or any of their affiliates or
controlling persons has taken, directly or indirectly, any action designed, or
which has constituted or might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Units.
(oo) Corporate
Records. The minute books of the Company, representing all
existing records of all meetings and actions of the board of directors
(including, Audit, Compensation and Nominating and Corporate Governance
Committees) and stockholders of the Company (collectively, the “Corporate Records”),
through the date of the latest meeting and action have been made available to
the Representative and counsel for the Representative. All such
Corporate Records are complete and accurately reflect, in all material respects,
all transactions referred to in such Corporate Records. There are no
material transactions, agreements or other actions that have been consummated by
the Company that are not properly approved and/or recorded in the Corporate
Records of the Company.
(pp) Federal Reserve
Board. The Company does not own any “margin securities” as
that term is defined in Regulation U of the Board of Governors of the Federal
Reserve System (the “Federal Reserve
Board”), and none of the proceeds of the sale of the Units will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the Units to be considered a “purpose credit”
within the meanings of Regulation T, U or X of the Federal Reserve
Board.
(qq) Rating
Organization. As of the date of this Agreement there were, and
as of the Time of Purchase and the Additional Time of Purchase, as the case may
be, there will be no securities of or guaranteed by the Company that are rated
by a “nationally recognized statistical rating organization,” as that term is
defined in Rule 436(g)(2) promulgated under the Act.
(rr) FINRA
Affiliations. To the Company’s knowledge, other than with
respect to Riverbank Capital Securities, Inc., there are no affiliations or
associations between (i) any member of FINRA and (ii) the Company or
any of the Company’s officers, directors or 5% or greater security holders of
the Company or any beneficial owner of the Company’s unregistered equity
securities that were acquired at any time on or after the 180th day immediately
preceding the date the Registration Statement was initially filed with the
Commission, except as disclosed in the Registration Statement, the Disclosure
Package and the Prospectus.
Maxim
Group LLC
April 21,
2010
Page 19 of
37
(ss) No Undisclosed
Relationships. No relationship, direct or indirect, exists
between or among the Company on the one hand and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand which is
required to be described in the Registration Statement, the Disclosure Package
and the Prospectus which has not been so described therein. There are
no outstanding loans, advances (except normal advances for business expenses in
the ordinary course of business) or guarantees of indebtedness by the Company to
or for the benefit of any of the officers or directors of the Company or any
member of their respective immediate families, except as disclosed in the
Disclosure Package and the Prospectus. The Company has not, in violation of the
Sarbanes Oxley Act, directly or indirectly, extended or maintained credit,
arranged for the extension of credit, or renewed an extension of credit, in the
form of a personal loan to or for any director or executive officer of the
Company.
(tt) Clinical
Studies.
(i) All
preclinical and clinical studies conducted by or on behalf of the Company that
are material to the Company are or have been adequately described in the
Registration Statement, the Disclosure Package and the Prospectus in all
material respects. To the Company’s knowledge, after reasonable
inquiry, the clinical and preclinical studies conducted by or on behalf of the
Company that are described in the Registration Statement, the Disclosure Package
and the Prospectus or the results of which are referred to in the Registration
Statement, the Disclosure Package and the Prospectus were and, if still ongoing,
are being conducted in material compliance with all laws and regulations
applicable thereto in the jurisdictions in which they are being conducted and
with all laws and regulations applicable to preclinical and clinical studies
from which data will be submitted to support marketing approval. The
descriptions in the Registration Statement, the Disclosure Package and the
Prospectus of the results of such studies are accurate and complete in all
material respects and fairly present the data derived from such studies, and the
Company has no knowledge of any large well-controlled clinical study the
aggregate results of which are inconsistent with or otherwise call into question
the results of any clinical study conducted by or on behalf of the Company that
are described in the Registration Statement, the Disclosure Package and the
Prospectus or the results of which are referred to in the Registration
Statement, the Disclosure Package and the Prospectus. Except as disclosed in the
Registration Statement, the Disclosure Package and the Prospectus, the Company
has not received any written notices or statements from the FDA, the European
Medicines Agency (“EMEA”) or any other
governmental agency or authority imposing, requiring, requesting or suggesting a
clinical hold, termination, suspension or material modification for or of any
clinical or preclinical studies that are described in the Registration
Statement, the Disclosure Package and the Prospectus or the results of which are
referred to in the Registration Statement, the Disclosure Package and the
Prospectus.
(ii) Except
as disclosed in the Registration Statement, the Disclosure Package and the
Prospectus, the Company has not received any written notices or statements from
the FDA, the EMEA or any other governmental agency, and otherwise has no
knowledge or reason to believe, that (1) any investigational new drug
application for potential product of the Company is or has been rejected or
determined to be non-approvable or conditionally approvable; and (2) any
license, approval, permit or authorization to conduct any clinical trial of any
potential product of the Company has been, will be or may be suspended, revoked,
modified or limited.
Maxim
Group LLC
April 21,
2010
Page 20 of
37
(uu) Exchange Act Requirements.
The Company has filed in a timely manner all reports required to be filed
pursuant to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during the
preceding 12 months (except to the extent that Section 15(d) requires reports to
be filed pursuant to Sections 13(d) and 13(g) of the Exchange Act, which shall
be governed by the next clause of this sentence); and the Company has filed in a
timely manner all reports required to be filed pursuant to Sections 13(d) and
13(g) of the Exchange Act since September 17, 2007, except where the failure to
timely file could not reasonably be expected individually or in the aggregate to
have a Material Adverse Effect.
(vv) In
addition, any certificate signed by any officer of the Company and delivered to
the Representative
or counsel for the Representative in connection with the offering of the Units
contemplated hereby shall be deemed to be a representation and warranty by the
Company, as to matters covered thereby, to the Underwriters.
(ww) As
used in this Agreement, the term “to the Company’s
knowledge” (or similar language) shall mean the knowledge of the officers
and directors of the Company as of the date hereof, with the assumption that
such officers and directors shall have made reasonable and diligent inquiry of
the matters presented (with reference to what is customary and prudent for the
applicable individuals in connection with the discharge by the applicable
individuals of their duties as officers or directors of the
Company).
4. Certain Covenants of the
Company. The Company covenants and agrees with the
Underwriters as follows:
(a) Reporting Obligations; Exchange Act
Compliance. The Company will (i) file each Prospectus
Supplement with the Commission within the time periods specified by Rule 424(b)
and Rules 430A, 430B and 430C, as applicable under the Act, (ii) file any “free
writing prospectus” to the extent required by Rule 433 under the Act, if
applicable (“Free
Writing Prospectus”), (iii) file promptly all reports required to be
filed by the Company with the Commission pursuant to Section 13(a), 13(c) or
15(d) of the Exchange Act subsequent to the date of the Prospectus and during
such period as the Prospectus would be required by law to be delivered (whether
physically or through compliance with Rule 172 under the Act or any similar
rule) (the “Prospectus
Delivery Period”), and (iv) furnish copies of each Free Writing
Prospectus, if any, (to the extent not previously delivered) to the
Representative prior to 11:00 a.m. Eastern time, on the second business day next
succeeding the date of this Agreement in such quantities as the Underwriters
shall reasonably request.
(b) Abbreviated Registration
Statement. If the Company elects to rely upon Rule 462(b)
under the Act, the Company shall file a registration statement under Rule 462(b)
with the Commission in compliance with Rule 462(b) by 8:00 a.m., Eastern time,
on the business day next succeeding the date of this Agreement, and the Company
shall at the time of filing either pay to the Commission the filing fee for such
Rule 462(b) registration statement or give irrevocable instructions for the
payment of such fee pursuant to the Act.
Maxim
Group LLC
April 21,
2010
Page 21 of
37
(c) Amendments or
Supplements. The Company will not, during the Prospectus Delivery Period in
connection with the offering contemplated by this Agreement, file any amendment
or supplement to the Registration Statement or the Prospectus unless a copy
thereof shall first have been submitted to the Representative within a
reasonable period of time prior to the filing thereof and the Representative
shall not have reasonably objected thereto in good faith.
(d) Free Writing
Prospectuses. The Company will (i) not make and has not made
any offer relating to the Units that would constitute an “issuer free writing
prospectus” (as defined in Rule 433) or that would otherwise constitute a “free
writing prospectus” (as defined in Rule 405 under the Act) required to be filed
by the Company with the Commission under Rule 433 under the Act other than a
Permitted Free Writing Prospectus; provided that the prior
written consent of the Representative hereto shall be deemed to have been given
in respect of the Permitted Free Writing Prospectus(es) included in Schedule I hereto;
(ii) treat each Permitted Free Writing Prospectus as an “issuer free writing
prospectus”; (iii) comply with the requirements of Rules 164 and 433 under the
Act applicable to any “issuer free writing prospectus”, including the
requirements relating to timely filing with the Commission, legending and record
keeping and (iv) not take any action that would result in any Underwriter or the
Company being required to file with the Commission pursuant to Rule 433(d) under
the Act a free writing prospectus prepared by or on behalf of such Underwriter
that such Underwriter otherwise would not have been required to file thereunder.
The Company will use its commercially reasonable efforts to satisfy the
conditions in Rule 433 under the Act to avoid a requirement to file with the
Commission any electronic road show.
(e) Electronic Prospectus. The
Company shall cause to be prepared and delivered to the Representative, at its
expense, within one (1) business day from the effective date of this Agreement,
an electronic prospectus to be used by the
Underwriters in connection with the Offering. As used herein, the
term “Electronic
Prospectus” means a form of final prospectus supplement, and any
amendment or supplement thereto, that meets each of the following conditions:
(i) it shall be encoded in an electronic format, reasonably satisfactory to the
Representative, that may be transmitted electronically by the other Underwriters
to offerees and purchasers of the Units for at least the period during
which a Prospectus relating to the Units is required to be delivered under the
Act; (ii) it shall disclose the same information as the paper prospectus and
prospectus filed pursuant to ▇▇▇▇▇, 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, reasonably satisfactory to the Representative, that will
allow recipients thereof to store and have continuously ready access to the
prospectus at any future time, without charge to such recipients (other than any
fee charged for subscription to the Internet as a whole and for on-line
time).
Maxim
Group LLC
April 21,
2010
Page 22 of
37
(f) Notice to
Representative. The Company will notify the Representative
promptly, and will, if requested, confirm such notification in writing: (i) the
receipt of any comments of, or requests for additional information from, the
Commission; (ii) the time and date of any filing of any post-effective amendment
to the Registration Statement or any amendment or supplement to the Disclosure
Package or the Prospectus; (iii) the time and date when any post-effective
amendment to the Registration Statement becomes effective, but only during the
Prospectus Delivery Period; (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, or any
post-effective amendment thereto, or any order preventing or suspending the use
of any Prospectus Supplement, the Disclosure Package or the
Prospectus, or the initiation of any proceedings for that purpose or the threat
thereof, but only during the Prospectus Delivery Period; (v) of receipt by the
Company of any notification with respect to any suspension or the approval of
the Unit Shares or the Warrants from the Nasdaq Stock Market, or the initiation
or threatening of any proceeding for such purpose. The Company will
use its commercially reasonable best efforts to prevent the issuance or
invocation of any such stop order or suspension by the Commission and, if any
such stop order or suspension is so issued or invoked, to obtain as soon as
possible the withdrawal or removal thereof.
(g) Filing of Amendments or
Supplements. If, during the Prospectus Delivery Period, any event shall
occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus (or, if the Prospectus is not yet available to
prospective purchasers, the Disclosure Package) in order to make the statements
therein, in the light of the circumstances when the Prospectus (or, if the
Prospectus is not yet available to prospective purchasers, the Disclosure
Package) is delivered to an investor, not misleading, or if, in the opinion of
counsel for the Representative, it is necessary to amend or supplement the
Prospectus (or, if the Prospectus is not yet available to prospective
purchasers, the Disclosure Package) to comply with applicable law, the Company
shall forthwith prepare, file with the Commission and furnish, at its own
expense, to the Underwriters, either amendments or supplements to the Prospectus
(or, if the Prospectus is not yet available to prospective purchasers, the
Disclosure Package) so that the statements in the Prospectus (or, if the
Prospectus is not yet available to prospective purchasers, the Disclosure
Package) as so amended or supplemented will not, in the light of the
circumstances when the Prospectus (or, if the Prospectus is not yet available to
prospective purchasers, the Disclosure Package) is delivered to an investor in
the offering contemplated hereby, be misleading or so that the Prospectus (or,
if the Prospectus is not yet available to prospective purchasers, the Disclosure
Package), as amended or supplemented, will comply with law. If at any time
following issuance of a Permitted Free Writing Prospectus there occurred or
occurs an event or development as a result of which such Permitted Free Writing
Prospectus conflicted or would conflict with the information contained in the
Registration Statement, the Disclosure Package or the Prospectus relating to the
Units 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 light of the circumstances prevailing at that
subsequent time, not misleading, the Company promptly will notify the
Representative and will promptly amend or supplement, at its own expense, such
Permitted Free Writing Prospectus to eliminate or correct such conflict, untrue
statement or omission.
Maxim
Group LLC
April 21,
2010
Page 23 of
37
(h) Delivery of
Copies. The Company will deliver promptly to the Underwriters
and counsel to the Representative such number of the following documents as the
Underwriters shall reasonably request: (i) conformed copies of the
Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits), (ii) copies of the
Preliminary Prospectus Supplement and any Permitted Free Writing Prospectus,
(iii) during the Prospectus Delivery Period, copies of the Prospectus (and any
amendments or supplements thereto), (iii) any document incorporated by reference
in the Disclosure Package or the Prospectus (other than any such document that
is filed with the Commission electronically via ▇▇▇▇▇ or any successor system)
and (iv) all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Securities under the
Act.
(i) Earnings
Statement. As soon as practicable, but in any event not later
than 15 months after the end of the Company’s current fiscal quarter, the
Company will make generally available to holders of its securities and deliver
to the Representative, an earnings statement of the Company (which need not be
audited) that will satisfy the provisions of Section 11(a) and Rule 158 of the
Securities Act.
(j) Use of
Proceeds. The Company will apply the net proceeds from the
sale of the Units in the manner set forth in the Disclosure Package and the
Prospectus under the heading “Use of Proceeds”.
(k) Public
Communications. Prior to the Closing Date and the closing of
the purchase of the Option Units, if any, the Company will not issue any press
release or other communication directly or indirectly or hold any press
conference with respect to the Company, its condition, financial or otherwise,
or the earnings, business, operations or prospects of the Company, or the
offering of the Units, without the prior written consent of the Representative,
which consent shall not be unreasonably withheld, conditioned or delayed, unless
in the reasonable judgment of the Company and its counsel, and after
notification to the Representative, such press release or communication is
required by law, in which case the Company shall use its commercially reasonable
best efforts to allow the Representative reasonable time to comment on such
release or other communication in advance of such issuance.
Maxim
Group LLC
April 21,
2010
Page 24 of
37
(l) Lock-Up
Period. Except as disclosed in the Disclosure Package, for a
period of 90 days after the date hereof (the “Lock-Up Period”), the Company
will not directly or indirectly, (1) offer to sell, hypothecate, pledge,
announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase (to the extent such option or contract to purchase is
exercisable within one year from the Closing Date), purchase any option or
contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Exchange Act, with respect to, any shares of
Common Stock, or any securities convertible into or exercisable or exchangeable
for shares of Common Stock; (2) file or cause to become effective a registration
statement under the Securities Act relating to the offer and sale of any shares
of Common Stock or securities convertible into or exercisable or exchangeable
for shares of Common Stock (other than any required post-effective amendments to
the Registration Statement) or (3) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clauses (1), (2) or
(3) above is to be settled by delivery of shares of Common Stock or such other
securities, in cash or otherwise, without the prior written consent of the
Representative (which consent may be withheld in its sole discretion), other
than (i) the Units and Warrants to be sold hereunder, the Warrant Shares and the
shares of Common Stock issuable upon exercise of the Representative’s Warrant;
(ii) the issuance of employee stock options or shares of restricted stock
pursuant to equity compensation plans described in the Disclosure Package and
the Prospectus; (iii) issuances of shares of Common Stock upon the exercise of
options or warrants disclosed as outstanding in the Disclosure Package and the
Prospectus or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of the date of this Agreement; (iv) the issuance by
the Company of any shares of Common Stock or securities convertible or
exchangeable into shares of Common Stock as consideration for mergers,
acquisitions, other business combinations, or strategic alliances, occurring
after the date of this Agreement; provided that each recipient
of shares pursuant to this clause (iv) agrees that all such shares remain
subject to restrictions substantially similar to those contained in this subsection 4(k); or
(v) the purchase or sale of the Company’s securities pursuant to a plan,
contract or instruction that satisfies all of the requirements of Rule
10b5-1(c)(1)(i)(B) that was in effect prior to the date
hereof. Notwithstanding the foregoing, if (1) during the last 17 days
of the Lock-Up Period, the Company releases earnings results or publicly
announces other material news or a material event relating to the Company occurs
or (2) 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 release of
the earnings results or the public announcement regarding the material news or
the occurrence of the material event, as applicable, unless the Representative
waives, in writing, such extension. The Company agrees not to
accelerate the vesting of any option or warrant or the lapse of any repurchase
right prior to the expiration of the Lock-Up Period.
(m) Stabilization. The
Company will not take directly or indirectly any action designed, or that might
reasonably be expected to cause or result in, or that will constitute,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Units.
(n) Transfer
Agent. The Company shall engage and maintain, at its expense,
a transfer agent and, if necessary under the jurisdiction of incorporation of
the Company, a registrar for the Securities.
Maxim
Group LLC
April 21,
2010
Page 25 of
37
(o) Investment Company
Act. The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Units in such a manner as
would require the Company to register as an investment company under the
Investment Company Act.
(p) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. For a period of 2 years from the date hereof, the Company
will comply with all effective and applicable provisions of the Sarbanes Oxley
Act.
(q) Periodic
Reports. For a period of 2 years from the date hereof, the
Company will file with the Commission such periodic and special reports as
required by the Act.
(r) NASDAQ Capital Market. The
Company will use its commercially reasonable best efforts to obtain approval
for, and maintain the listing of the Unit Shares and the Warrants on the NASDAQ
Capital Market for so long as the Common Stock is listed thereon.
(s) Stale Registration
Statement. If the third anniversary of the initial effective
date of the Registration Statement (within the meaning of Rule 415(a)(5)
under the Act) shall occur at any time during the period when a prospectus is
required by the Act to be delivered (whether physically or through compliance
with Rule 172 under the Act or any similar rule) in connection with any
sale of Units, to file with the Commission, prior to such third anniversary, a
new registration statement under the Act relating to the Units, which new
registration statement shall comply with the requirements of the Act (including,
without limitation, Rule 415(a)(6) under the Act) and shall be in a form
satisfactory to the Representative; the Company shall use its commercially
reasonable best efforts to cause such new registration statement to become
effective under the Act as soon as practicable, but in any event within 180 days
after such third anniversary and promptly notify the Representative of such
effectiveness; the Company shall take all other action necessary or appropriate
to permit the public offering and sale of the Units to continue as contemplated
in the Registration Statement, the Disclosure Package and the Prospectus; all
references herein to the Registration Statement shall be deemed to include each
such new registration statement, if any.
(t) Expenses. The
Company will pay all costs, expenses, fees and taxes in connection with
(i) the preparation and filing of the Registration Statement, the Base
Prospectus, each Prospectus Supplement, the Prospectus, each Permitted Free
Writing Prospectus and any amendments or supplements thereto, and the printing
and furnishing of copies of each thereof to the Underwriters and to dealers
(including costs of mailing and shipment), (ii) the registration, issue,
sale and delivery of the Securities, including any stock or transfer taxes and
stamp or similar duties payable upon the sale, issuance or delivery of the Units
to the Underwriters, (iii) the qualification of the Securities for
offering and sale under state or foreign laws and the determination of their
eligibility for investment under state or foreign law (including the legal fees
and filing fees and other disbursements of counsel for the Underwriters) and the
printing and furnishing of copies of any blue sky surveys or legal investment
surveys to the Underwriters and to dealers, (iv) any listing of the
Securities (as applicable) on any securities exchange or qualification of the
Securities (as applicable) for listing on the NASDAQ Capital Market,
(v) any COBRADesk filing fee incurred in connection with submitting the
terms of the public offering of the Units for review by FINRA, (vi) the
fees and disbursements of any transfer agent or registrar for the Securities,
(vii) the costs and expenses of the Company relating to presentations or
meetings undertaken in connection with the marketing of the offering and sale of
the Units to prospective investors and the Underwriters’ sales forces,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations, travel, lodging and other expenses
incurred by the officers of the Company, and 50% of the cost of any aircraft
chartered in connection with the road show (provided, that the prior approval of
the Company is obtained prior to the chartering of any such aircraft), (viii)
the fees and other disbursements described in Section 5 hereof and (x) the
performance of the Company’s other obligations hereunder.
Maxim
Group LLC
April 21,
2010
Page 26 of
37
5. Reimbursement of the
Representative’s Expenses Upon Termination. Promptly upon the
termination of this Agreement or upon Representative’s request if the Units are
not delivered for any reason (in either case, except in the case any default by
the Representative or any of the Underwriters to purchase and deliver the Firm
Units under this Agreement), the Company shall, in addition to paying any
expenses that it is otherwise required to pay, reimburse the Underwriters for up
to $10,000 of their actual accountable out-of-pocket expenses.
6. Conditions of the
Underwriters’ Obligations. The obligations of the Underwriters
hereunder are subject to the accuracy in all material respects of the
representations and warranties on the part of the Company on the date hereof, at
the Time of Purchase and at the Additional Time of Purchase, as the case may be,
the performance in all material respects by the Company of its obligations
hereunder and to the following additional conditions precedent:
(a) Company Counsel Legal
Opinion. The Company shall furnish to the Representative at
the Time of Purchase and at the Additional Time of Purchase, as the case may be:
(i) an opinion letter of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A., counsel for the Company,
in customary form and substance reasonably satisfactory to the Representative
and (ii) a letter of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, intellectual property counsel to the
Company, addressed to the Representative, in form and substance reasonably
satisfactory to the Representative, with respect to the statements in the
Disclosure Package regarding the Intellectual Property of the
Company.
(b) Comfort
Letter. The Representative shall have received from ▇▇▇▇▇
▇▇▇▇▇▇▇ LLP letters dated, respectively, the date of the Prospectus Supplement,
the Time of Purchase and the Additional Time of Purchase, as the case may be,
and addressed to the Representative in the forms reasonably satisfactory to the
Representative, which letters shall cover, without limitation, the various
financial disclosures contained in the Registration Statement, the Disclosure
Package and the Prospectus.
(c) Objection of
Representative. No prospectus or amendment or supplement to
the Registration Statement or the Prospectus shall have been filed to which the
Representative shall have reasonably objected in writing.
(d) Filings with the
Commission. The Prospectus Supplement shall have been filed
with the Commission pursuant to Rule 424(b) under the Act at or before 5:30
P.M., New York time, on the second full business day after the date of this
Agreement (or such earlier time as may be required under the Act).
Maxim
Group LLC
April 21,
2010
Page 27 of
37
(e) No Stop
Orders. Prior to and at the Time of Purchase and at the
Additional Time of Purchase, as the case may be, (i) no stop order with
respect to the effectiveness of the Registration Statement shall have been
issued under the Act or proceedings initiated under Section 8(d) or 8(e) of the
Act; (ii) the Registration Statement and all amendments thereto shall 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 not
misleading; (iii) neither the Prospectus nor amendment or supplement
thereto shall 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 under which they are made, not misleading; and
(iv) neither the Disclosure Package nor any amendment or supplement thereto
shall 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 under which they are made, not misleading.
(f) No Material Adverse
Change. (i) Prior to each of the Closings, as
applicable, there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise, or in
the earnings, business or operations of the Company from that set forth in the
Registration Statement, the Disclosure Package and the Prospectus that, in the
Representative’s reasonable judgment, is material and adverse and that makes it,
in the Representative’s reasonable judgment, impracticable to market the Units
on the terms and in the manner contemplated in the Registration Statement, the
Disclosure Package and the Prospectus.
(ii) There
shall not have occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange,
the NYSE Amex or the NASDAQ Capital Market or the establishing on such exchanges
by the SEC or by such exchanges of minimum or maximum prices that are not in
force and effect on the date hereof; (ii) a suspension or material
limitation in trading in the Company’s securities on the NASDAQ Capital Market
or the establishing on such market by the SEC or by such market of minimum or
maximum prices that are not in force and effect on the date hereof; (iii) a
general moratorium on commercial banking activities declared by either federal
or any state authorities; (iv) the outbreak or material escalation of
hostilities or acts of terrorism involving the United States or the declaration
by the United States of a national emergency or war, which in the
Representative’s sole judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Units in the manner contemplated
in the Registration Statement, the Disclosure Package and the Prospectus; or
(v) any calamity or crisis, change in national, international or world
affairs, act of God, change in the international or domestic markets, or change
in the existing financial, political or economic conditions in the United States
or elsewhere, that in the Representative’s reasonable judgment makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Firm Units or the Option Units, as applicable, in the manner contemplated
in the Registration Statement, the Disclosure Package and the
Prospectus.
Maxim
Group LLC
April 21,
2010
Page 28 of
37
(g) Officers’
Certificate. The Company shall have, at the Time of Purchase
and at the Additional Time of Purchase, as the case may be, delivered to the
Representative a certificate of its Chief Executive Officer and its Chief
Financial Officer, dated the Time of Purchase and the Additional Time of
Purchase, as the case may be, in the form attached as Exhibit B
hereto.
(h) Secretary’s
Certificate. The Company shall have, at the Time of Purchase
and at the Additional Time of Purchase, as the case may be, delivered to the
Representative a certificate of its Secretary, dated the Time of Purchase and
the Additional Time of Purchase, as the case may be, in the form attached as
Exhibit C
hereto.
(i) Lock-Up. The
Representative shall have received each of the signed Lock-Up Agreements
referred to in Section
3(s) hereof, and each such Lock-Up Agreement shall be in full force and
effect at the Time of Purchase and at the Additional Time of Purchase, as the
case may be.
(j) Company Corporate
Documents. The Company shall have, at the Time of Purchase and
at the Additional Time of Purchase, as the case may be, delivered to the
Representative a certificate evidencing the incorporation and good standing of
the Company in the state of Delaware issued by the Secretary of State of the
state of Delaware, dated as of a date within five calendar days of the Time of
Purchase and Additional Time of Purchase, as the case may be.
(k) Foreign
Qualifications. The Company shall have, at the Time of
Purchase and at the Additional Time of Purchase, as the case may be, delivered
to the Representative a certificate evidencing the Company’s qualification as a
foreign corporation in good standing issued by the Secretary of State (or
comparable office) of each jurisdiction in which the Company conducts business
and is required to so qualify, dated as of a date within five calendar days of
the Time of Purchase and Additional Time of Purchase, as the case may
be.
(l) Certified
Charter. The Company shall have delivered to the
Representative at the Time of Purchase and at the Additional Time of Purchase,
as the case may be, a certified copy of the Certificate of Incorporation of the
Company as certified by the Secretary of State of the state of Delaware within
five calendar days of the Time of Purchase and Additional Time of Purchase, as
the case may be.
(m) Additional
Documents. The Company shall have furnished to the
Representative such other documents and certificates as to the accuracy and
completeness of any statement in the Registration Statement, the Prospectus or
any Permitted Free Writing Prospectus as of the Time of Purchase and the
Additional Time of Purchase, as the case may be, as the Representative may
reasonably request.
Maxim
Group LLC
April 21,
2010
Page 29 of
37
(n) NASDAQ Capital Market
Listing. An application shall have been filed with the NASDAQ
Capital Market to list the Unit Shares, the Warrants and the Warrant Shares on
the NASDAQ Capital Market, and the Company shall not have received notification
from the NASDAQ Capital Market that the Unit Shares, the Warrants and the
Warrant Shares will not be approved for listing on the NASDAQ Capital
Market.
(o) No FINRA
Objection. FINRA shall not have raised any objection with
respect to the fairness or reasonableness of the underwriting, or other
arrangements of the transactions, contemplated hereby.
(p) Other Filings with the
Commission. The Company shall have prepared and filed with the
Commission a Current Report on Form 8-K with respect to the transactions
contemplated hereby, including as an exhibit thereto this Agreement and any
other documents relating thereto.
7. Effective Date of Agreement;
Termination.
(a) This
Agreement shall become effective when the parties hereto have executed and
delivered manually signed counterparts to this Agreement.
(b) The
obligations of the Representative hereunder shall be subject to termination in
the absolute discretion of the Representative, if (i) since the time of
execution of this Agreement or the earlier respective dates as of which
information is given in the Registration Statement, the Disclosure Package and
the Prospectus there has been any change or any development involving a
prospective change in the business, properties, management, financial condition
or results of operations of the Company, the effect of which change or
development is, in the sole judgment of the Representative, so material and
adverse as to make it impractical or inadvisable to proceed with the public
offering or the delivery of the Units on the terms and in the manner
contemplated in the Registration Statement, the Disclosure Package and the
Prospectus, or (ii) since the time of execution of this Agreement, there shall
have occurred: (A) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange, the NASDAQ Global Market or the NYSE
Amex; (B) a suspension or material limitation in trading in the Company’s
securities on the NASDAQ Capital Market; (C) a general moratorium on commercial
banking activities declared by either federal or New York State authorities or a
material disruption in commercial banking or securities settlement or clearance
services in the United States; (D) an outbreak or escalation of hostilities or
acts of terrorism involving the United States or a declaration by the United
States of a national emergency or war; or (E) any other calamity or crisis or
any change in financial, political or economic conditions in the United States
or elsewhere, if the effect of any such event specified in clause (D) or (E), in
the sole judgment of the Representative, makes it impractical or inadvisable to
proceed with the public offering or the delivery of the Units on the terms and
in the manner contemplated in the Registration Statement, the Disclosure Package
and the Prospectus.
(c) If
the Representative elects to terminate this Agreement as provided in this Section 7, the
Company shall be notified promptly in writing.
Maxim
Group LLC
April 21,
2010
Page 30 of
37
(d) If
the sale to the Underwriters of the Units, as contemplated by this Agreement, is
not carried out by the Underwriters for any reason permitted under this
Agreement, or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections
4(s), 5
and 8 hereof),
and the Underwriters shall be under no obligation or liability to the Company
under this Agreement (except to the extent provided in Section 8
hereof).
8. Indemnity and
Contribution.
(a) The
Company agrees to indemnify, defend and hold harmless the Underwriters, their
respective partners, directors and officers, any person who controls the
Underwriters within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, each such
Underwriter or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability or
claim 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
in the Registration Statement as amended by any post-effective amendment thereof
by the Company) or arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as any such loss,
damage, expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in, and in
conformity with information concerning such Underwriter furnished in writing by
the Representative or such Underwriter to the Company expressly for use in (it
being understood and agreed that the only such information furnished by an
Underwriter consists of the information described as such in Section 8(g)), the
Registration Statement or arises out of or is based upon any omission or alleged
omission to state a material fact in the Registration Statement in connection
with such information, which material fact was not contained in such information
and which material fact was required to be stated in such Registration Statement
or was necessary to make such information not misleading or (ii) any untrue
statement or alleged untrue statement of a material fact included in any
Prospectus (the term Prospectus for the purpose of this Section 8 being
deemed to include the Base Prospectus, each Prospectus Supplement, the
Prospectus and any amendments or supplements to the foregoing), in any Permitted
Free Writing Prospectus, in any “issuer information” (as defined in
Rule 433 under the Act) of the Company or in any Prospectus together with
any combination of one or more of the Permitted Free Writing Prospectuses, if
any, or arises out of or is based upon any omission or alleged omission 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, except, with
respect to such Prospectus or Permitted Free Writing Prospectus, insofar as any
such loss, damage, expense, liability or claim arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained
in, and in conformity with information concerning such Underwriter furnished in
writing by the Representative or such Underwriter to the Company expressly for
use in (it being understood and agreed that the only such information furnished
by an Underwriter consists of the information described as such in Section 8(g)), such
Prospectus or Permitted Free Writing Prospectus or arises out of or is based
upon any omission or alleged omission to state a material fact in such
Prospectus or Permitted Free Writing Prospectus in connection with such
information, which material fact was not contained in such information and which
material fact was necessary in order to make the statements in such information,
in the light of the circumstances under which they were made, not misleading,
(iii) any untrue statement or alleged untrue statement made by the Company in
Section 3
hereof or the failure by the Company to perform when and as required any
material agreement or covenant contained herein or (iv) any untrue statement or
alleged untrue statement of any material fact contained in any audio or visual
materials provided to potential investors by or with the approval of the Company
or based upon written information furnished by or on behalf of the Company with
its approval including, without limitation, slides, videos, films or tape
recordings used in any road show or investor presentations made to investors by
the Company (whether in person or electronically) or in connection with the
marketing of the Units.
Maxim
Group LLC
April 21,
2010
Page 31 of
37
(b) Each
Underwriter, severally and not jointly, agrees to indemnify, defend and hold
harmless the Company, its directors, officers, employees, agents and
representatives, and any person who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and the successors and
assigns of all of the foregoing persons, from and against any loss, damage,
expense, liability or claim (including the reasonable cost of investigation)
which, jointly or severally, the Company or any such person may incur under the
Act, the Exchange Act, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in,
and in conformity with information concerning such Underwriter furnished in
writing by the Representative or such Underwriter to the Company expressly for
use in (it being understood and agreed that the only such information furnished
by the Representative or such Underwriter consists of the information described
as such in Section
8(g)), the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Company), or arises out
of or is based upon any omission or alleged omission to state a material fact in
such Registration Statement in connection with such information, which material
fact was not contained in such information and which material fact was required
to be stated in such Registration Statement or was necessary to make such
information not misleading or (ii) any untrue statement or alleged untrue
statement of a material fact contained in, and in conformity with information
concerning such Underwriter furnished in writing by the Representative or such
Underwriter to the Company expressly for use in (it being understood and agreed
that the only such information furnished by the Underwriters consists of the
information described as such in Section 8(g)), a
Prospectus or a Permitted Free Writing Prospectus, or arises out of or is based
upon any omission or alleged omission to state a material fact in such
Prospectus or Permitted Free Writing Prospectus in connection with such
information, which material fact was not contained in such information and which
material fact was necessary in order to make the statements in such information,
in the light of the circumstances under which they were made, not
misleading.
Maxim
Group LLC
April 21,
2010
Page 32 of
37
(c) If
any action, suit or proceeding (each, a “Proceeding”) is
brought against a person (an “indemnified party”)
in respect of which indemnity may be sought against the Company or any
Underwriter (as applicable, the “indemnifying party”)
pursuant to subsection (a) or (b), respectively, of this Section 8, such
indemnified party shall promptly notify such indemnifying party in writing of
the institution of such Proceeding and such indemnifying party shall assume the
defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses;
provided, however, that the
omission to so notify such indemnifying party shall not relieve such
indemnifying party from any liability which such indemnifying party may have to
any indemnified party or otherwise. The indemnified party or parties
shall have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless the employment of such counsel shall have
been authorized in writing by the indemnifying party in connection with the
defense of such Proceeding or the indemnifying party shall not have, within a
reasonable period of time in light of the circumstances, employed counsel to
defend such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from, additional to or in conflict with those available to such
indemnifying party (in which case such indemnifying party shall not have the
right to direct the defense of such Proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by such indemnifying party and paid as incurred (it being understood, however,
that such indemnifying party shall not be liable for the expenses of more than
one separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). The
indemnifying party shall not be liable for any settlement of any Proceeding
effected without its written consent, such consent not to be unreasonably
withheld, but, if settled with its written consent, such indemnifying party
agrees to indemnify and hold harmless the indemnified party or parties from and
against any loss or liability by reason of such
settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
sentence of this Section 8(c), then
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 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have fully
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement and (iii) such indemnified party shall have given
the indemnifying party at least 30 days’ prior notice of its intention to
settle. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such Proceeding and does not include an admission of fault or culpability or a
failure to act by or on behalf of such indemnified party.
Maxim
Group LLC
April 21,
2010
Page 33 of
37
(d) If
the indemnification provided for in this Section 8 is
unavailable to an indemnified party under subsections (a) and (b) of this Section 8 or
insufficient to hold an indemnified party harmless in respect of any losses,
damages, expenses, liabilities or claims referred to therein, then each
applicable indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (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 Units 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 of the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, damages, expenses,
liabilities or claims, 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 shall be deemed to be in the same
respective proportions as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company, and the total underwriting discounts and commissions received by
the Underwriters, bear to the aggregate public offering price of the
Units. The relative fault of the Company on the one hand and of the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue statement or alleged untrue statement of a material
fact or omission or alleged omission relates to information supplied by the
Company or by the Underwriters (it being understood and agreed that the only
such information supplied by an Underwriter consists of the information
described as such in Section 8(g)) 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, damages, expenses, liabilities and
claims referred to in this Section 8(d) shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating, preparing to defend or defending
any Proceeding.
(e) The
Company and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in subsection (d)
above. Notwithstanding the provisions of this Section 8, each
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Units underwritten by such
Underwriter and distributed to the public were offered to the public exceeds the
amount of any damage which such Underwriter has otherwise been required to pay
by reason of such untrue statement or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) The
indemnity and contribution agreements contained in this Section 8 and the
covenants, warranties and representations of the Company contained in this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the Underwriters, their partners, directors or officers
or any person (including each partner, director or officer of such person) who
controls the Underwriters within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, or by or on behalf of the Company, its directors or
officers or any person who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, and shall survive any termination
of this Agreement or the issuance and delivery of the Units. The
Company and the Underwriters agree promptly to notify each other of the
commencement of any Proceeding against it and, in the case of the Company,
against any of the Company’s officers or directors in connection with the
issuance and sale of the Units, or in connection with the Registration
Statement, any Base Prospectus, the Prospectus or any Permitted Free Writing
Prospectus.
Maxim
Group LLC
April 21,
2010
Page 34 of
37
(g) The
Representative, on behalf of itself and each Underwriter, confirms, and the
Company acknowledges, that: (i) the names of the Underwriters appearing in the
Prospectus Supplement; (ii) the statements with respect to the public offering
of the Units by the Underwriters set forth in the fourth paragraph under the
subheading “Nature of Underwriting Commitment” of the section of the Prospectus
Supplement entitled “Underwriting”; (iii) the statements set forth under the
subheading “Stabilization” of the section of the Prospectus Supplement entitled
“Underwriting”; and (iv) the statements set forth under the subheading “Foreign
Regulatory Restrictions on Purchase of Units” of the section of the Prospectus
Supplement entitled “Underwriting” constitute the only information concerning
the Underwriters and furnished in writing or otherwise supplied by the
Underwriters to the Company expressly for use in the Registration Statement, the
Prospectus or such Permitted Free Writing Prospectus.
9. Notices. Except
as otherwise herein provided, all statements, requests, notices and agreements
shall be in writing or by facsimile transmission and, if to the Underwriters,
shall be sufficient in all respects if delivered or sent Maxim Group LLC, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Managing Director - Investment Banking (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇), with
a copy (for informational purposes only) to Ellenoff ▇▇▇▇▇▇▇▇ & Schole LLP,
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(fax no.: (▇▇▇) ▇▇▇-▇▇▇▇); and if to the Company, shall be sufficient in all
respects if delivered or sent to Nile Therapeutics, Inc., ▇ ▇▇▇▇ ▇▇▇ ▇▇▇. ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (fax no.: (▇▇▇)
▇▇▇-▇▇▇▇), with a copy (for informational purposes only) to ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, P.A., ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq. (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇).
10. Governing Law;
Construction. This Agreement and any claim, counterclaim or
dispute of any kind or nature whatsoever arising out of or in any way relating
to this Agreement (“Claim”), directly or
indirectly, shall be governed by, and construed in accordance with, the laws of
the State of New York. The section headings in this Agreement have
been inserted as a matter of convenience of reference and are not a part of this
Agreement.
11. Submission to
Jurisdiction. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company
consents to the jurisdiction of such courts and personal service with respect
thereto. The Company hereby consents to personal jurisdiction,
service and venue in any court in which any Claim arising out of or in any way
relating to this Agreement is brought by any third party against any Underwriter
or any indemnified party. The Company agrees that a final judgment in
any such action, proceeding or counterclaim brought in any such court shall be
conclusive and binding upon the Company and may be enforced in any other courts
to the jurisdiction of which the Company or is or may be subject, by suit upon
such judgment. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST
EXTENT PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND
CREDITORS) HEREBY WAIVES ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT, THE
BASE PROSPECTUS, THE PROSPECTUS SUPPLEMENT AND THE DISCLOSURE
PACKAGE.
Maxim
Group LLC
April 21,
2010
Page 35 of
37
12. Entire
Agreement. This Agreement, together with the schedule and
exhibits attached hereto and as the same may be amended from time to time in
accordance with the terms hereof, contains the entire agreement among the
parties hereto relating to the subject matter hereof and there are no other or
further agreements outstanding not specifically mentioned herein.
13. Severability. If
any term or provision of this Agreement or the performance thereof shall be
invalid or unenforceable to any extent, such invalidity or unenforceability
shall not affect or render invalid or unenforceable any other provision of this
Agreement and this Agreement shall be valid and enforced to the fullest extent
permitted by law.
14. Parties at
Interest. The Agreement herein set forth has been and is made
solely for the benefit of the Underwriters and the Company and to the extent
provided in Section
8 hereof the controlling persons, partners, directors and officers
referred to in such Section 8, and their
respective successors, assigns, heirs, personal representatives and executors
and administrators. No other person, partnership, association or
corporation (including a purchaser, as such purchaser, from the Underwriters)
shall acquire or have any right under or by virtue of this
Agreement.
15. No Fiduciary
Relationship. The Company hereby acknowledges that the
Underwriters are acting solely as underwriter in connection with the purchase
and sale of the Company’s securities. The Company further
acknowledges that the Underwriters are acting pursuant to a contractual
relationship created solely by this Agreement entered into on an arm’s length
basis, and in no event do the parties intend that the Underwriters act or be
responsible as a fiduciary to the Company, its management, shareholders or
creditors or any other person in connection with any activity that the
Underwriters may undertake or have undertaken in furtherance of the purchase and
sale of the Company’s securities, either before or after the date
hereof. The Underwriters hereby expressly disclaim any fiduciary or
similar obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions,
and the Company hereby confirms its understanding and agreement to that
effect. The Company and the Underwriters agree that they are each
responsible for making their own independent judgments with respect to any such
transactions and that any opinions or views expressed by the Underwriters to the
Company regarding such transactions, including, but not limited to, any opinions
or views with respect to the price or market for the Company’s securities, do
not constitute advice or recommendations to the Company. The Company
hereby waives and releases, to the fullest extent permitted by law, any claims
that the Company may have against the Underwriters with respect to any breach or
alleged breach of any fiduciary or similar duty to the Company in connection
with the transactions contemplated by this Agreement or any matters leading up
to such transactions.
Maxim
Group LLC
April 21,
2010
Page 36 of
37
16. Counterparts. This
Agreement may be signed by the parties in one or more counterparts which
together shall constitute one and the same agreement among the
parties. Delivery of a signed counterpart of this Agreement by
facsimile or e-mail/.pdf transmission shall constitute valid and sufficient
delivery thereof, and any counterpart so delivered shall be binding and valid as
if an original.
17. Successors and
Assigns. This Agreement shall be binding upon the Underwriters
and the Company and their successors and assigns and any successor or assign of
any substantial portion of the Company’s and any of the Underwriters’ respective
businesses and/or assets.
[Signature
Page Follows]
Maxim
Group LLC
April 21,
2010
Page 37 of
37
If the
foregoing correctly sets forth the understanding among the Company and the
Representative, please so indicate in the space provided below for that purpose,
whereupon this Agreement and the Representative’s acceptance shall constitute a
binding agreement among the Company and the Representative.
|
Very
truly yours,
|
|||
|
|
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
| Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Title: President and Chief Executive Officer | |||
Accepted
and agreed to as of the
date
first above written:
MAXIM GROUP
LLC, on behalf of itself
and as
representative of the several Underwriters
|
By:
|
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Name:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
|
Title:
Director of Investment Banking
|
SCHEDULE
A
Underwriters
|
Underwriter
|
Total
Number of Firm
Units
to be Purchased
|
Number
of Option Units to
be
Purchased if Option is
Fully
Exercised
|
|
Maxim
Group LLC
|
5,200,000
|
975,000
|
|
Ladenburg
▇▇▇▇▇▇▇▇ & Co. Inc.
|
1,300,000
|
0
|
|
TOTAL
|
6,500,000
|
975,000
|
SCHEDULE
I
PERMITTED
FREE WRITING PROSPECTUSES
None.
SCHEDULE
II
PRICING
AND WARRANT INFORMATION
Number of
Units to be Sold: 6,500,000
Public
Offering Price: $0.70 per Unit
Underwriting
Discount: $0.063 per Unit
Proceeds
to Company (before expenses): $0.637 per Unit
Warrant
Strike Price: $0.94 per share
Warrant
Expiration: April 21, 2015
Warrant
Call: Upon 30 days notice to the Warrantholders, the Company may redeem the
Warrants for $0.01 upon 30 days’ written notice at any time after the closing
price of the Common Stock has exceeded $3.00 for any 20 out of 30 consecutive
trading days.
SCHEDULE
III
LIST
OF OFFICERS, DIRECTORS AND STOCKHOLDERS
EXECUTING
LOCK-UP AGREEMENTS
▇▇▇▇▇▇ ▇.
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇, M.D.
▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, M.D.
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇.
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇, M.D.
▇▇▇▇ ▇.
▇▇▇▇▇▇, Ph.D.
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇.
▇▇▇▇▇
Wexford
Capital LP
EXHIBIT
A
FORM OF
LOCK-UP AGREEMENT
[_______],
2010
MAXIM
GROUP LLC
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
This
Lock-Up Agreement is being delivered to you in connection with the proposed
Underwriting Agreement (the “Underwriting
Agreement”) to be entered into by Nile Therapeutics, Inc., a Delaware
corporation (the “Company”), and Maxim
Group LLC, as representative of the several underwriters (the “Representative”),
with respect to the public offering (the “Offering”) of units
(the “Units”),
with each Unit consisting of [Ÿ] shares of common
stock, par value $0.001 per share, of the Company (the “Common Stock”), and
[Ÿ] warrant(s) to
purchase Common Stock (the “Warrants”).
In order
to induce you to enter into the Underwriting Agreement, the undersigned agrees
that, for a period (the “Lock-Up Period”)
beginning on the date hereof and ending on, and including, the date that is 90
days after the date of the final prospectus supplement relating to the Offering,
the undersigned will not, directly or indirectly, without the prior written
consent of the Representative, (i) sell, offer to sell, contract or agree
to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose
of or agree to dispose of, directly or indirectly, or file (or participate in
the filing of) a registration statement with the Securities and Exchange
Commission (the “Commission”) in
respect of, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission promulgated thereunder (the “Exchange Act”) with
respect to, any Common Stock, Units, Warrants or any other securities of the
Company that are substantially similar to Common Stock, or any securities
convertible into or exchangeable or exercisable for, or any warrants or other
rights to purchase, the foregoing, (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of Common Stock, Units, Warrants or any other
securities of the Company that are substantially similar to Common Stock, or any
securities convertible into or exchangeable or exercisable for, or any warrants
or other rights to purchase, the foregoing, whether any such transaction is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise or (iii) publicly announce an intention to effect any transaction
specified in clause (i) or (ii).
A-1
The
foregoing paragraph shall not apply to (a) the registration of the offer and
sale of the Units as contemplated by the Underwriting Agreement and the sale of
the Units to the Underwriters (as defined in the Underwriting Agreement) in the
Offering, (b) bona fide gifts, provided the recipient thereof agrees in writing
with the Representative to be bound by the terms of this Lock-Up Agreement, (c)
dispositions to any trust for the direct or indirect benefit of the undersigned
and/or the immediate family of the undersigned, provided that such trust agrees
in writing with the Representative to be bound by the terms of this Lock-Up
Agreement, (d) transfers of Common Stock or securities convertible into Common
Stock on death by will or intestacy, (e) sales or transfers of Common Stock
solely in connection with the “cashless” exercise of Company stock options
outstanding on the date hereof for the purpose of exercising such stock options
(provided that any remaining Common Stock received upon such exercise will be
subject to the restrictions provided for in this Lock-Up Agreement), (f) sales
or transfers of Common Stock or securities convertible into Common Stock
pursuant to a sales plan entered into prior to the date hereof pursuant to
Rule 10b5-1 under the Exchange Act, (g) sales or transfers of Common Stock
or securities convertible into Common Stock pursuant to any order of, or
settlement agreement not involving any public sale of such shares or securities,
approved by, any court of competent jurisdiction, provided the recipient
thereof agrees in writing with the Representative to be bound by the terms of
this Lock-Up Agreement, or (h) sales or transfers of Common Stock or securities
convertible into Common Stock (1) if the undersigned is a partnership or a
limited liability company, to a partner or member, as the case may be, of such
partnership or limited liability company so long as the transfer is not for
value, (2) if the undersigned is a corporation, to any wholly-owned subsidiary
of such corporation, or (3) if the undersigned is a venture capital fund,
private equity fund or other similar investment fund, to the undersigned’s
partners or other holders of equity interests in the undersigned pro
rata based upon their respective interests so long as the transfer is not
for value, provided that any such transferee referred to in this clause (h)
agrees in writing with the Representative to be bound by the terms of this
Lock-Up Agreement. In addition, the restrictions sets forth herein
shall not prevent the undersigned from entering into a sales plan pursuant to
Rule 10b5-1 under the Exchange Act after the date hereof, provided that
(i) a copy of such plan is provided to the Representative promptly upon
entering into the same and (ii) no sales or transfers may be made under
such plan until the Lock-Up Period ends or this Lock-Up Agreement is terminated
in accordance with its terms. For purposes of this paragraph,
“immediate family” shall mean the undersigned and the spouse, any lineal
descendent, father, mother, brother or sister of the undersigned.
In
addition, the undersigned hereby waives any rights the undersigned may have to
require registration of Common Stock in connection with the filing of a
registration statement relating to the Offering. The undersigned
further agrees that, for the Lock-Up Period, the undersigned will not, without
the prior written consent of the Representative, make any demand for, or
exercise any right with respect to, the registration of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
warrants or other rights to purchase Common Stock or any such
securities.
Notwithstanding
the above, if (a) during the period that begins on the date that is fifteen (15)
calendar days plus three (3) business days before the last day of the Lock-Up
Period and ends on the last day 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 sixteen (16) day
period beginning on the last day of the Lock-Up Period, then the restrictions
imposed by this Lock-Up Agreement shall continue to apply until the
expiration of the date that is fifteen (15) calendar days plus three (3)
business days after the date on which the issuance of the earnings release or
the material news or material event occurs; provided, however, that this
paragraph shall not apply if (i) the safe harbor provided by Rule 139
under the Act is available in the manner contemplated by Rule 2711(f)(4) of
the Financial Industry Regulatory Authority, Inc. (“FINRA”) and
(ii) within the 3 business days preceding the 15th
calendar day before the last day of the Lock-Up Period, the Company delivers (in
accordance with Section 9 of the Underwriting Agreement) to the Representative a
certificate, signed by the Chief Financial Officer or Chief Executive Officer of
the Company, certifying on behalf of the Company that the Company’s shares of
Common Stock are “actively traded securities,” within the meaning of Rule
5111(f)(4) of FINRA.
A-2
The
undersigned hereby confirms that the undersigned has not, directly or
indirectly, taken, and hereby covenants that the undersigned will not, directly
or indirectly, take, any action designed, or which has constituted or will
constitute or might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of shares of Common Stock.
If
(i) the Company notifies the undersigned in writing that it does not intend
to proceed with the Offering, (ii) the registration statement filed with
the Commission with respect to the Offering is withdrawn, (iii) the closing of
the Offering does not occur prior to thirty (30) days from the date of this
Lock-Up Agreement or (iv) for any reason the Underwriting Agreement shall
be terminated prior to the Time of Purchase (as defined in the Underwriting
Agreement), this Lock-Up Agreement shall be terminated and the undersigned shall
be released from its obligations hereunder.
|
|
|||
|
Very
truly yours,
|
|||
|
|
|||
| Name: | |||
| Title: | |||
A-3
EXHIBIT
B
FORM
OF OFFICERS’ CERTIFICATE
Each of
the undersigned, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and Chief Executive Officer of Nile
Therapeutics, Inc., a Delaware corporation (the “Company”), and ▇▇▇▇▇
▇▇▇▇▇, Chief Financial Officer of the Company, on behalf of the Company, does
hereby certify on behalf of the Company pursuant to Section 6(g) of that certain
Underwriting Agreement dated _____________2010 (the “Underwriting
Agreement”) between the Company and Maxim Group LLC that as of the date
hereof:
|
|
1.
|
He
has reviewed the Registration Statement, the Disclosure Package, the
Prospectus and each Permitted Free Writing
Prospectus.
|
|
|
2.
|
The
representations and warranties of the Company as set forth in the
Underwriting Agreement are true and correct in all material respects
(except for those representations and warranties qualified by materiality)
as of the hereof and as if made on the date
hereof.
|
|
|
3.
|
The
Company has performed in all material respects all of its obligations
under the Underwriting Agreement as are to be performed at or before the
date hereof.
|
|
|
4.
|
The
conditions set forth in paragraph (f) of Section 6 of the
Underwriting Agreement have been
met.
|
Capitalized
terms used herein without definition shall have the respective meanings ascribed
to them in the Underwriting Agreement.
In
Witness Whereof, the undersigned have hereunto set their hands on this ___ day
of _____, 2010.
|
Name:▇▇▇▇▇▇
▇. ▇▇▇▇▇
Title:President
and Chief Executive
Officer
|
|
Name:▇▇▇▇▇
▇▇▇▇▇
Title:Chief
Financial Officer
|
B-1
EXHIBIT
C
FORM
OF SECRETARY’S CERTIFICATE
I, ▇▇▇▇▇
▇▇▇▇▇, in my capacity as Chief Financial Officer of Nile Therapeutics, Inc., a
Delaware corporation (the “Company”), do hereby
certify on behalf of the Company that:
|
|
1.
|
Attached
hereto as Annex
A is a full, true and correct copy of the Certificate of
Incorporation of the Company and each amendment thereto since the date
thereof (the “Certificate”)
as in full force and effect on the date hereof. Except as
provided in the Certificate, no amendment to the Certificate has been
approved by the Board of Directors of the Company (the “Board”) or
stockholders of the Company to effect or authorize any further amendment
or modification thereto or in contemplation of the liquidation or
dissolution of the Company prior to the consummation of the transactions
contemplated by the Underwriting
Agreement.
|
|
|
2.
|
Attached
hereto as Annex B is
a full, true and correct copy of the By-laws of the Company as in full
force and effect on the date
hereof.
|
|
|
3.
|
Attached
hereto as Annexes C-1,
C-2 and
C-3 are
full, true and correct copies of resolutions duly adopted by (i) the
Board on _________ with respect to the filing of the Registration
Statement (as defined below), (ii) the Board on _________ with respect to
the transactions contemplated by the Underwriting Agreement; and (iii) the
Pricing Committee of the Board on _____________. Such
resolutions have not been amended, rescinded, or modified since their
adoption and remain in full force and effect as of the date hereof, and
are the only resolutions adopted by the Board or by any committee of or
designated by the Board or the Pricing Committee relating to the
authorization and ratification of all necessary corporate action, as the
case may be, taken and to be taken by the Company in connection with the
Registration Statement on Form S-3 (File No. 333-165167) (the “Registration
Statement”), the Underwriting Agreement dated ______________, 2010
(the “Underwriting
Agreement”), between the Company and Maxim Group LLC, and the
transactions contemplated by the Underwriting
Agreement.
|
|
|
4.
|
The
Underwriting Agreement, as executed and delivered by the Company, is
substantially in the form approved by the Board (or a duly authorized
committee of the Board) [at a duly held meeting][by unanimous written
consent].
|
|
|
5.
|
Each
person who, as a director or officer of the Company or as attorney-in-fact
of a director or officer of the Company, signed (i) the Registration
Statement, including any amendments thereto (the “Amendments”),
(ii) the Underwriting Agreement, or (iii) any other document
delivered in connection with the sale and offering of the Units (as
defined in the Underwriting Agreement) and the closing related thereto was
duly elected or appointed, qualified and acting as such director or
officer at the respective times of the signing and delivery thereof and
was duly authorized to sign such document on behalf of the Company, and
the signature of each such person appearing on each such document is the
genuine signature of such director or
officer.
|
C-1
|
|
6.
|
Ellenoff
▇▇▇▇▇▇▇▇ and Schole LLP and ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A. are entitled to
rely on this certificate in connection with the opinion each firm is
rendering pursuant to the Underwriting
Agreement.
|
IN WITNESS WHEREOF, I have signed this
certificate by and on behalf of the Company this the __ day of _________,
2010.
|
▇▇▇▇▇
▇▇▇▇▇
Chief
Financial Officer
|
I, ▇▇▇▇▇▇
▇. ▇▇▇▇▇, President and Chief Executive Officer of the Company, do hereby
certify that ▇▇▇▇▇ ▇▇▇▇▇ is the duly elected, qualified and acting Chief
Financial Officer, and the signature set forth above is his true and genuine
signature.
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇
President
and Chief Executive
Officer
|
C-2