8,358,000 Shares And Warrants to Purchase 2,925,300 Shares ANADYS PHARMACEUTICALS, INC. Common Stock PLACEMENT AGENT AGREEMENT
Exhibit 1.1
8,358,000 Shares
And
Warrants to Purchase 2,925,300 Shares
ANADYS PHARMACEUTICALS, INC.
Common Stock
June 3, 2009
Xxxxx and Company, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. Anadys Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
proposes to issue and sell to certain purchasers (each a “Purchaser” and collectively, the
“Purchasers”) up to an aggregate of 8,358,000 shares of common stock, $0.001 par value (the “Common
Stock”), of the Company and warrants (the “Warrants”) to purchase 2,925,300 shares of Common Stock
in Units (each a “Unit”) consisting of (i) one share of Common Stock and (ii) one Warrant to
purchase 0.35 of a share of Common Stock. The aggregate of 8,358,000 shares of Common Stock so
proposed to be sold is hereinafter referred to as the “Stock” and the number of shares of Common
Stock issuable upon exercise of the Warrants is hereinafter referred to as the “Warrant Stock.”
The Warrant Stock, together with the Stock and the Warrants, are referred to herein as the
“Securities.” The Company hereby confirms that Xxxxx and Company, LLC (“Cowen” or the “Placement
Agent”) acted as Placement Agent in the sale of the Units in accordance with the terms and
conditions of this Placement Agent Agreement (this “Agreement”).
2. Agreement to Act as Placement Agent; Placement of Securities. On the basis of the
representations, warranties and agreements of the Company contained herein, and subject to all the
terms and conditions of this Agreement:
(I) The Company hereby acknowledges that the Placement Agent acted and is acting as its
sole agent to solicit offers for the purchase of all or part of the Units from the Company in
connection with the proposed offering of the Units (the “Offering”). Until the Closing Date (as
defined in Section 4 hereof), the Company shall not, without the prior written consent of the
Placement Agent, solicit or accept offers to purchase the Stock or the Warrants otherwise than
through the Placement Agent.
(II) The Company hereby acknowledges that the Placement Agent, as agent of the Company,
used its best efforts to solicit offers to purchase the Units from the Company and the Placement
Agent, as agent of the Company, agrees to continue to use its best efforts to solicit offers to
purchase the Units, on the terms and subject to the conditions set forth in the Prospectus (as
defined below). The Placement Agent shall use commercially reasonable efforts to assist the
Company in obtaining performance by each Purchaser whose offer to purchase the Units has been
solicited by the Placement Agent and accepted by the Company, including the prompt execution by
such Purchaser of a subscription agreement to purchase the Units, but the Placement Agent shall
not, except as otherwise provided in this Agreement, be obligated to disclose the identity of
any potential purchaser or have any liability to the Company in the event any such purchase is
not consummated for any reason. Under no circumstances will the Placement Agent be obligated to
underwrite or purchase any Stock or Warrants for its own account and, in soliciting purchases of
Units, the Placement Agent acted solely as the Company’s agent and not as principal.
Notwithstanding the foregoing and except as otherwise provided in this Section 2(II), it is
understood and agreed that the Placement Agent (or its affiliates) may, solely at its discretion
and without any obligation to do so, purchase the Units as principal.
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(III) Subject to the provisions of this Section 2, offers for the purchase of Units were
and may be solicited by the Placement Agent as agent for the Company at such times and in such
amounts as the Placement Agent deemed or deems advisable. The Placement Agent shall communicate
to the Company, orally or in writing, each reasonable offer to purchase Units received by it as
agent of the Company. The Company shall have the sole right to accept offers to purchase the
Units and may reject any such offer, in whole or in part. The Placement Agent has the right, in
its discretion, reasonably exercised, without notice to the Company, to reject any offer to
purchase Units received by it, in whole or in part, and any such rejection shall not be deemed a
breach of this Agreement.
(IV) The Units are being sold to the Purchasers at a price of US$2.09375 per Unit. The
purchases of the Units by the Purchasers shall be evidenced by the execution of subscription
agreements by each of the Purchasers and the Company.
(V) As compensation for services rendered, on the Closing Date, (A) the Company shall pay
to the Placement Agent by wire transfer of immediately available funds to an account or accounts
designated by the Placement Agent, an aggregate amount equal to US$0.125625 per Unit.
(VI) No Units that the Company has agreed to sell pursuant to this Agreement shall be
deemed to have been purchased and paid for, or sold by the Company, until such Units shall have
been delivered to the Purchaser thereof against payment by such Purchaser. If the Company shall
default in its obligations to deliver Units to a Purchaser whose offer it has accepted, the
Company shall indemnify and hold the Placement Agent harmless against any loss, claim, damage or
expense arising from or as a result of such default by the Company in accordance with the
procedures set forth in Section 8 herein.
3. Representations and Warranties of the Company
(I) The Company represents and warrants to the Placement Agent and the Purchasers, as of
the date hereof, and agrees with the Placement Agent and the Purchasers, that:
(a) A registration statement of the Company on Form S-3 (File No. 333-158342) (including all
pre-effective amendments thereto, the “Initial Registration Statement”) in respect of the
Securities has been filed with the Securities and Exchange Commission (the “Commission”)
pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”).
The Company meets the requirements for use of Form S-3 under the Securities Act, and the
rules and regulations of the Commission thereunder (the “Rules and Regulations”). The
Initial Registration Statement and any post-effective amendment thereto, each in the form
heretofore delivered to the Placement Agent, and, excluding exhibits thereto, have been
declared effective by the Commission in such form and meet the requirements of the
Securities Act and the Rules and Regulations. Other than (i) a registration statement, if
any, increasing the size of the Offering filed pursuant to Rule 462(b) under the Securities
Act and the Rules and Regulations (a “Rule 462(b) Registration Statement”) and (ii) the
Prospectus (as defined below) contemplated by this Agreement to be filed pursuant to Rule
424(b) of the Rules and Regulations in accordance with Section 5 hereof and (iii) any Issuer
Free Writing Prospectus (as defined below), no other document with respect to the offer and
sale of the Units has heretofore been filed with the Commission. The aggregate market value
of the Company’s voting and non-voting common equity held by non-affiliates of the Company
was at least $75 million within 60 days prior to the date of filing of the Initial
Registration Statement. No stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose or pursuant to Section
8A of the Securities Act has been initiated or, to the knowledge of the Company, threatened
by the Commission. The prospectus filed as part of the registration statement in the form
in which it has most recently been filed with the Commission on or prior to the date of this
Agreement, is hereinafter called the “Base Prospectus” and any prospectus subject to
completion included in the Registration Statement or any preliminary prospectus (including
any preliminary prospectus supplement) relating to the Units filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations is hereinafter called a “Preliminary
Prospectus.” The various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, in each case including all exhibits thereto and including
(i) the information contained in the Prospectus filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations and deemed by virtue of Rules 430B and 430C under the
Securities Act to be part of the Initial Registration
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Statement at the time it became effective and (ii) the documents incorporated by reference
in the Rule 462(b) Registration Statement at the time the Rule 462(b) Registration Statement
became effective, are hereinafter collectively called the “Registration Statements.” The
base prospectus included in the Initial Registration Statement at the time of effectiveness
thereof, as supplemented by the final prospectus supplement dated the date hereof relating
to the offer and sale of the Units, in the form filed pursuant to and within the time limits
described in Rule 424(b) under the Rules and Regulations, is hereinafter called the
“Prospectus.”
Any reference herein to any Registration Statement, Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by reference therein.
Any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the date of such
Preliminary Prospectus or the Prospectus under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and incorporated by reference in such Preliminary Prospectus
or Prospectus, as the case may be. Any reference to any amendment to the Registration
Statements shall be deemed to refer to and include any annual report of the Company filed
pursuant to Section 13(a) or 15(d) of the Exchange Act after the date of this Agreement that
is incorporated by reference in the Registration Statements.
(b) As of the Applicable Time (as defined below) and as of the Closing Date, as the case may
be, neither (i) any General Use Free Writing Prospectus(es) (as defined below) issued at or
prior to the Applicable Time and the Pricing Prospectus (as defined below), considered
together (collectively, the “General Disclosure Package”), (ii) any individual Limited Use
Free Writing Prospectus (as defined below), nor (iii) the bona fide electronic road show (as
defined in Rule 433(h)(5) of the Rules and Regulations that has been made available without
restriction to any person), when considered together with the General Disclosure Package,
included or will include any untrue statement of a material fact or omitted or will 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; provided, however, that the
Company makes no representations or warranties as to information contained in or omitted
from the Pricing Prospectus, in reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement Agent’s Information as
defined in Section 17. As used in this paragraph (b) and elsewhere in this Agreement:
“Applicable Time” means 10:00 P.M., New York time, on the date of this Agreement or such other
time as agreed to by the Company and the Placement Agent.
“Pricing Prospectus” means the Base Prospectus, as amended and supplemented immediately prior
to the Applicable Time, including any document incorporated by reference therein and any prospectus
supplement deemed to be a part thereof, including the final prospectus supplement dated the date
hereof.
“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 of the Rules and Regulations relating to the Stock in the form filed or required to be
filed with the Commission or, if not required to be filed, in the form retained in the Company’s
records pursuant to Rule 433(g) of the Rules and Regulations.
“General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is
identified on Schedule A to this Agreement.
“Limited Use Free Writing Prospectuses” means any Issuer Free Writing Prospectus that is not a
General Use Free Writing Prospectus.
(c) No order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free
Writing Prospectus or the Prospectus relating to the Offering has been issued by the
Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities
Act has been instituted or, to the knowledge of the Company, threatened by the Commission,
and any Preliminary Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Securities Act and the Rules and Regulations, and did
not contain an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light of the
circumstances
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under which they were made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from any Preliminary
Prospectus, in reliance upon, and in conformity with, written information furnished to the
Company by the Placement Agent specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agent’s Information as defined in Section
17.
(d) At the respective times the Registration Statements and any amendments thereto became or
become effective, at the date of this Agreement and at the Closing Date, each Registration
Statement and any amendments thereto conformed and will conform in all material respects to
the requirements of the Securities Act and the Rules and Regulations and did not and will
not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, not misleading;
and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or
any amendment or supplement thereto was issued and at the Closing Date, conformed and will
conform in all material respects to the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however, that the
foregoing representations and warranties in this paragraph (d) shall not apply to
information contained in or omitted from the Registration Statements or the Prospectus, or
any amendment or supplement thereto, in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement Agent’s
Information (as defined in Section 17). The Prospectus contains all required information
under the Securities Act with respect to the Units and the distribution of the Units.
(e) Each Issuer Free Writing Prospectus, if any, as of its issue date and at all subsequent
times through the completion of the offer and sale of the Units or until any earlier date
that the Company notified or notifies the Placement Agent as described in Section 5, did
not, does not and will not include any information that conflicted, conflicts or will
conflict with the information contained in the Registration Statement, Pricing Prospectus or
the Prospectus, including any document incorporated by reference therein and any prospectus
supplement deemed to be a part thereof that has not been superseded or modified, or included
or would include an untrue statement of a material fact or omitted or would omit to state a
material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances prevailing at the subsequent time, not
misleading. The foregoing sentence does not apply to statements in or omissions from any
Issuer Free Writing Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement Agent’s Information (as
defined in Section 17).
(f) The documents incorporated by reference in the Prospectus, when they were filed with the
Commission, conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder
and none of such documents contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the statements
therein not misleading, in the light of the circumstances under which they were made; and
any further documents so filed and incorporated by reference in the Prospectus, when such
documents are filed with the Commission, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, in the light of the circumstances under which
they are made.
(g) The Company has not, directly or indirectly, distributed and will not distribute any
offering material in connection with the Offering and sale of the Units other than any
Preliminary Prospectus, the Prospectus and other materials, if any, permitted under the
Securities Act and consistent with Section 5 below. The Company will file with the
Commission all Issuer Free Writing Prospectuses (other than a “road show,” as described in
Rule 433(d)(8) of the Rules and Regulations) in the time and manner required under Rules
163(b)(2) and 433(d) of the Rules and Regulations.
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(h) At the time of filing the Initial Registration Statement, any 462(b) Registration
Statement and any post-effective amendments thereto, and at the date hereof, the Company was
not, and the Company currently is not, an “ineligible issuer,” as defined in Rule 405 of the
Rules and Regulations.
(i) The Company and each of its subsidiaries (as defined in Section 15) have been duly
incorporated and are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation, are duly qualified to do business and are
in good standing as foreign corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged, except where the failure
to so qualify or have such power or authority would not have, singularly or in the
aggregate, a material adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of the Company and its subsidiaries taken as a whole (a
“Material Adverse Effect”). The Company owns or controls, directly or indirectly, only the
following corporations, partnerships, limited liability partnerships, limited liability
companies, associations or other entities: Anadys Pharmaceuticals Europe GmbH and Anadys
Development Limited.
(j) This Agreement has been duly authorized, executed and delivered by the Company.
(k) The Company has the full right, power and authority to enter into the Escrow Agreement
(the “Escrow Agreement”) dated as of the date hereof by and among the Company, the Placement
Agent and the escrow agent named therein (the “Escrow Agent”), and to perform and to
discharge its obligations thereunder. The Escrow Agreement has been duly authorized,
executed and delivered by the Company, and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms, except that such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors’ rights generally.
(l) The Stock to be issued and sold by the Company to the Purchasers has been duly and
validly authorized and, when issued and delivered against payment therefor as provided
herein and in the Escrow Agreement, will be duly and validly issued, fully paid and
nonassessable and free of any preemptive or similar rights and will conform to the
description thereof contained in the General Disclosure Package and the Prospectus. The
Warrants have been duly authorized, and when executed and delivered by the Company, will
constitute valid and binding obligations of the Company enforceable in accordance with their
terms, except that such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect, affecting
creditors’ rights generally. The Warrant Stock has been duly authorized and reserved for
issuance pursuant to the terms of the Warrants, and when issued by the Company upon valid
exercise of the Warrants and payment of the exercise price, will be duly and validly issued,
fully paid and nonassessable and free of any preemptive or similar rights and will conform
to the description thereof contained in the General Disclosure Package and the Prospectus
(m) The Company has an authorized capitalization as set forth in the General Disclosure
Package and the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-assessable, have
been issued in compliance with federal and state securities laws, and conform to the
description thereof contained in the General Disclosure Package and the Prospectus. None of
the outstanding shares of Common Stock was issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or purchase securities of
the Company. As of the date set forth in the General Disclosure Package and the Prospectus,
there were no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries
other than those accurately described in the General Disclosure Package and the Prospectus.
Since such date, the Company has not issued any securities other than Common Stock issued
pursuant to the exercise of warrants or upon the exercise of stock options previously
outstanding under the Company’s stock option plans and the issuance of Common Stock pursuant
to employee stock purchase plans.
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(n) All the outstanding shares of capital stock of each subsidiary of the Company have been
duly authorized and validly issued, are fully paid and nonassessable and, except to the
extent set forth in the General Disclosure Package and the Prospectus, are owned by the
Company directly or indirectly through one or more wholly-owned subsidiaries, free and clear
of any claim, lien, encumbrance, security interest, restriction upon voting or transfer or
any other claim of any third party.
(o) The execution, delivery and performance of this Agreement, the Escrow Agreement and the
Warrants by the Company, the issue and sale of the Stock and issue of the Warrant Stock upon
exercise of the Warrants by the Company and the consummation of the transactions
contemplated hereby and thereby will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, (ii) result in any violation of the provisions of the charter or
by-laws of the Company or any of its subsidiaries or (iii) result in any violation of any
statute or any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their properties or
assets.
(p) Except for the registration of the Securities under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be required
under the Exchange Act, and applicable state securities laws, the Financial Industry
Regulatory Authority, Inc. (“FINRA”) and the Nasdaq Stock Market LLC (“Nasdaq”) in
connection with the purchase of the Units and exercise of the Warrants by the Purchasers, no
consent, approval, authorization or order of, or filing or registration with, any court or
governmental agency or body is required for the execution, delivery and performance of this
Agreement, the Escrow Agreement or the Warrants by the Company and the consummation of the
transactions contemplated hereby and thereby.
(q) Ernst & Young LLP, who have certified certain financial statements included or
incorporated by reference in the Registration Statements, the General Disclosure Package and
the Prospectus, and have audited the Company’s internal control over financial reporting and
management’s assessment thereof, is an independent registered public accounting firm within
the meaning of Article 2-01 of Regulation S-X and the Public Company Accounting Oversight
Board (United States) (the “PCAOB”).
(r) The financial statements, together with the related notes, included or incorporated by
reference in the General Disclosure Package, the Prospectus and in each Registration
Statement fairly present the financial position and the results of operations and changes in
financial position of the Company and its consolidated subsidiaries at the respective dates
or for the respective periods therein specified. Such statements and related notes have
been prepared in accordance with generally accepted accounting principles in the United
States applied on a consistent basis except as may be set forth in the Prospectus. The
financial statements, together with the related notes, included or incorporated by reference
in the General Disclosure Package and the Prospectus comply in all material respects with
the Securities Act and the Rules and Regulations thereunder. No other financial statements
or supporting schedules or exhibits are required by the Securities Act or the Rules and
Regulations thereunder to be included or incorporated by reference in the General Disclosure
Package, the Prospectus or the Registration Statements.
(s) Neither the Company nor any of its subsidiaries has sustained, since the date of the
latest audited financial statements included or incorporated by reference in the General
Disclosure Package and the Prospectus, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the General Disclosure Package and the Prospectus; and, since such
date, there has not been any change in the capital stock (other than Common Stock of the
Company issued pursuant to the exercise of warrants or upon the exercise of stock options
previously outstanding under the Company’s stock option plans and the issuance of Common
Stock pursuant to employee stock purchase plans) or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the business, general affairs, management,
financial position, stockholders’ equity or results of operations of
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the Company and its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the General Disclosure Package and the Prospectus.
(t) Except as set forth in the General Disclosure Package or the Prospectus, there is no
legal or governmental proceeding pending to which the Company or any of its subsidiaries is
a party or of which any property or assets of the Company or any of its subsidiaries is the
subject that is required to be described in the Registration Statements or the General
Disclosure Package and is not described therein, or that, singularly or in the aggregate, if
determined adversely to the Company or any of its subsidiaries, might have a Material
Adverse Effect or would prevent or adversely affect the ability of the Company to perform
its obligations under this Agreement or the Escrow Agreement; and to the best of the
Company’s knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(u) Neither the Company nor any of its subsidiaries (i) is in violation of its charter or
by-laws, (ii) is in default in any respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by which it is bound or
to which any of its property or assets is subject or (iii) is in violation in any respect of
any law, ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject except any violations or defaults that, in the cases of
clauses (ii) and (iii) of this section (u), singularly or in the aggregate, would not have a
Material Adverse Effect.
(v) The Company and each of its subsidiaries possess all licenses, certificates,
authorizations and permits issued by, and have made all declarations and filings with, the
appropriate state, federal or foreign regulatory agencies or bodies that are necessary or
desirable for the ownership of their respective properties or the conduct of their
respective businesses as described in the General Disclosure Package and the Prospectus
except where any failures to possess or make the same, singularly or in the aggregate, would
not have a Material Adverse Effect, and the Company has not received notification of any
revocation or modification of any such license, certificate, authorization or permit and has
no reason to believe that any such license, certificate, authorization or permit will not be
renewed.
(w) Neither the Company nor any of its subsidiaries is or, after giving effect to the
Offering of the Units and the application of the proceeds thereof as described in the
General Disclosure Package and the Prospectus, will become an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder.
(x) Neither the Company nor, to the knowledge of the Company, any of its officers, directors
or affiliates has taken or will take, directly or indirectly, any action designed or
intended to stabilize or manipulate the price of any security of the Company, or which
caused or resulted in, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security of the Company.
(y) The Company and its subsidiaries own or possess the right to use all patents,
trademarks, trademark registrations, service marks, service xxxx registrations, trade names,
copyrights, licenses, inventions, trade secrets and rights described in the General
Disclosure Package and the Prospectus as being owned by them for the conduct of their
respective businesses as now conducted and as currently proposed to be conducted, and the
Company is not aware of any claim to the contrary or any challenge by any other person to
the rights of the Company and its subsidiaries with respect to the foregoing. To the
Company’s knowledge, the Company’s business as now conducted and as proposed to be conducted
does not and will not infringe or conflict with any patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses or other intellectual property or franchise
right of any person except as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. Except as described in the General
Disclosure Package and the Prospectus, no claim has been made against the Company alleging
the infringement by the Company of any patent, trademark, service xxxx, trade name,
copyright, trade secret, license in or other intellectual property right or franchise right
of any person, except as would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
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(z) The Company and each of its subsidiaries have good and marketable title in fee simple
to, or have valid rights to lease or otherwise use, all items of real or personal property
that are material to the business of the Company and its subsidiaries taken as a whole, in
each case free and clear of all liens, encumbrances, claims and defects that may result in a
Material Adverse Effect.
(aa) No labor disturbance by the employees of the Company or any of its subsidiaries exists
or, to the best of the Company’s knowledge, is imminent that might be expected to have a
Material Adverse Effect. Except as set forth in the General Disclosure Package or the
Prospectus, the Company is not aware that any key employee or significant group of employees
of the Company or any subsidiary voluntarily plans to terminate employment with the Company
or any such subsidiary.
(bb) No “prohibited transaction” (as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986,
as amended from time to time (the “Code”)) or “accumulated funding deficiency” (as defined
in Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other
than events with respect to which the 30-day notice requirement under Section 4043 of ERISA
has been waived) has occurred with respect to any employee benefit plan of the Company or
any of its subsidiaries that could have a Material Adverse Effect; each such employee
benefit plan is in compliance in all material respects with applicable law, including ERISA
and the Code; the Company has not incurred and does not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from, any “pension
plan”; and each “pension plan” (as defined in ERISA) 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 could cause the loss of such qualification.
(cc) There has been no storage, generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic or other wastes or other
hazardous substances by, due to, or caused by the Company or any of its subsidiaries (or, to
the best of the Company’s knowledge, any other entity for whose acts or omissions the
Company or any of its subsidiaries is or may be liable) upon any of the property now or
previously owned or leased by the Company or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule, regulation, order, judgment,
decree or permit or which would, under any statute or any ordinance, rule (including rule of
common law), regulation, order, judgment, decree or permit, give rise to any liability,
except for any violation or liability that would not have, singularly or in the aggregate
with all such violations and liabilities, a Material Adverse Effect; there has been no
disposal, discharge, emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other hazardous
substances with respect to which the Company or any of its subsidiaries have knowledge,
except for any such disposal, discharge, emission, or other release of any kind that would
not have, singularly or in the aggregate with all such discharges and other releases, a
Material Adverse Effect.
(dd) The Company and its subsidiaries each (i) has filed all necessary federal, state and
foreign income and franchise tax returns, (ii) has paid all federal state, local and foreign
taxes due and payable for which it is liable, and (iii) does not have any tax deficiency or
claims outstanding or assessed or, to the best of the Company’s knowledge, proposed against
it that could reasonably be expected to have a Material Adverse Effect.
(ee) The Company and each of its subsidiaries carry, or are covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is customary for companies
engaged in similar businesses in similar industries.
(ff) The Company and each of its subsidiaries maintains a system of internal control over
financial reporting (as such term is defined in Rule 13a-15 of the General Rules and
Regulations under the Exchange Act (the “Exchange Act Rules”)) that complies with the
requirements of the Exchange Act and has been designed to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s general or specific
authorization; and
9
(iv) the recorded accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company
maintains effective internal control over financial reporting (as such term is defined in
Rule 13a-15 of the Exchange Act Rules). Except as described in the General Disclosure
Package, since the end of the Company’s most recent audited fiscal year, there has been (A)
no material weakness in the Company’s internal control over financial reporting (whether or
not remediated) and (B) no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting. The Company maintains disclosure controls and
procedures (as such is defined in Rule 13a-15 of the Exchange Act Rules) that comply with
the requirements of the Exchange Act; such disclosure controls and procedures have been
designed to ensure that information required to be disclosed by the Company and its
subsidiaries is accumulated and communicated to the Company’s management, including the
Company’s principal executive officer and principal financial officer by others within those
entities, such disclosure controls and procedures are effective in all material respects to
perform the functions for which they were established.
(gg) The minute books of the Company and each of its subsidiaries that would be a
“significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X have been made
available to the Placement Agent and counsel for the Placement Agent, and such books (i)
contain a complete summary of all meetings and actions of the board of directors (including
each board committee) and stockholders of the Company and each of such subsidiaries since
the time of its respective incorporation or organization through the date of the latest
meeting and action, and (ii) accurately in all material respects reflect all transactions
authorized in such minutes or written consents.
(hh) There is no franchise, lease, agreement or document required by the Securities Act or
by the Rules and Regulations to be described in the General Disclosure Package, the
Prospectus or any document incorporated therein, or to be filed as an exhibit to the
Registration Statements that is not described or filed therein as required; and all
descriptions of any such franchises, leases, agreements or documents contained in the
General Disclosure Package, the Prospectus or any document incorporated therein are accurate
and complete descriptions of such documents in all material respects. Other than as
described in the General Disclosure Package and the Prospectus, no such franchise, lease,
agreement or document has been suspended or terminated for convenience or default by the
Company or any of the other parties thereto, and the Company has not received notice or any
other knowledge of any such pending or threatened suspension or termination, except for such
pending or threatened suspensions or terminations that would not reasonably be expected to,
singularly or in the aggregate, have a Material Adverse Effect.
(ii) 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, that is required to be described in the General Disclosure Package and the
Prospectus and that is not so described.
(jj) No person or entity has the right to require registration of shares of Common Stock or
other securities of the Company or any of its subsidiaries because of the filing or
effectiveness of the Registration Statements or otherwise, except for persons and entities
who have expressly waived such right in writing or who have been given timely and proper
written notice and have failed to exercise such right within the time or times required
under the terms and conditions of such right.
(kk) Neither the Company nor any of its subsidiaries 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 Stock or the exercise
of the Warrants 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 Stock to be considered a “purpose credit” within the meanings
of Regulation T, U or X of the Federal Reserve Board.
(ll) Other than any agreements between the Company and the Placement Agent, neither the
Company nor any of its subsidiaries is a party to any agreement or understanding with any
person that would give rise to a valid claim against the Company or the Placement Agent for
a brokerage commission, finder’s fee or like
10
payment in connection with the offering and sale of the Units or any transaction
contemplated by this Agreement.
(mm) The Company, within 60 days of the date hereof and within 60 days of the filing of the
Initial Registration Statement, had a non-affiliate, public common equity float of at least
$100 million and annual trading volume of at least three million shares.
(nn) No forward-looking statement (within the meaning of Section 27A of the Securities Act
and Section 21E of the Exchange Act) contained in either the General Disclosure Package or
the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.
(oo) The Stock and the Warrant Stock has been duly authorized for quotation on the Nasdaq’s
Global Market (“Nasdaq”).
(pp) The Company is in compliance with all applicable provisions of the Xxxxxxxx-Xxxxx Act
of 2002 and all rules and regulations promulgated thereunder or implementing the provisions
thereof (the “Xxxxxxxx-Xxxxx Act”).
(qq) The Company is in compliance with all applicable corporate governance requirements set
forth in the Nasdaq Rules.
(rr) Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge, any
employee or agent of the Company or any subsidiary, has (i) used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns from
corporate funds, (iii) violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, or (iv) made any other unlawful payment.
(ss) There are no transactions, arrangements or other relationships between and/or among the
Company, any of its affiliates (as such term is defined in Rule 405 of the Securities Act)
and any unconsolidated entity, including, but not limited to, any structured finance,
special purpose or limited purpose entity, that could reasonably be expected to materially
affect the Company’s liquidity or the availability of or requirements for its capital
resources, which transaction, arrangement or other relationship is required to be described
in the General Disclosure Package, the Prospectus or any document incorporated therein and
that has not been described as required.
(tt) There are no outstanding loans, advances (except normal advances for business expense
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, except as disclosed in the
General Disclosure Package and the Prospectus.
(uu) The operations of the Company and its subsidiaries are and have been conducted at all
times in compliance with applicable financial recordkeeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder (collectively, the
“Money Laundering Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending, or to the Company’s
knowledge, threatened.
(vv) Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge, any
director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is
currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department (“OFAC”); and, to the Company’s knowledge, the Company will
not directly or indirectly use the proceeds of the Offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner or other
person or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
11
4. Purchase, Sale and Delivery of the Stock. The Company, the Placement Agent,
and the Escrow Agent have entered into the Escrow Agreement, pursuant to which an escrow account
will be established, at the Company’s expense, for the benefit of the Purchasers (the “Escrow
Account”). Prior to the Closing Date (defined below), (i) unless otherwise agreed by the Company
and the Placement Agent, each of the Purchasers will deposit an amount equal to the price per Unit
as shown on the cover page of the Prospectus (as hereinafter defined) multiplied by the number of
shares of Units purchased by it in the Escrow Account, and (ii) the Escrow Agent will notify the
Company and the Placement Agent in writing whether the Purchasers have deposited in the Escrow
Account funds in the amount equal to the proceeds of the sale of all of the shares of Units offered
hereby (the “Requisite Funds”) into the Escrow Account. At 10:00 A.M., New York City time, on June
9, 2009, or at such other time on such other date as may be agreed upon by the Company and the
Placement Agent but in no event prior to the date on which the Escrow Agent shall have received all
of the Requisite Funds (such date is hereinafter referred to as the “Closing Date”), the Escrow
Agent will release the Requisite Funds from the Escrow Account for collection by the Company and
the Placement Agent as provided in the Escrow Agreement and the Company shall deliver the Stock and
the Warrants to the Purchasers, which delivery may be made through the facilities of the Depository
Trust Company. If any Purchaser is not depositing its purchase price for the Units into the Escrow
Account, the Company and the Placement Agent will arrange for such Purchaser(s) to wire the
purchase price to the account designated by the Company. The time of closing and delivery of the
documents required to be delivered to the Placement Agent pursuant to Sections 5 and 7 hereunder
shall be at 10:00 A.M., New York time, on the Closing Date at the office of Xxxxxxxx & Xxxxxxxx
LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000. Certificates evidencing the Stock and the
Warrants shall be in definitive form and shall be registered in such names and in such
denominations as the Purchasers shall request. For the purpose of expediting the checking and
packaging of certificates for the Stock and the Warrants, the Company agrees to make such
certificates available for inspection not later than 10:00 A.M., New York time, on the business day
preceding the Closing Date.
5. Further Agreements Of The Company The Company agrees with the Placement Agent
and the Purchasers:
(a) to prepare the Rule 462(b) Registration Statement, if necessary, in a form approved by
the Placement Agent and file such Rule 462(b) Registration Statement with the Commission by
10:00 P.M., New York time, on the date hereof, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the
Rules and Regulations; to prepare the Prospectus in a form approved by the Placement Agent
containing information previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rules 430A, 430B or 430C of the Rules and Regulations and to file
such Prospectus pursuant to Rule 424(b) of the Rules and Regulations not later than the
second business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A of the Rules and Regulations;
to notify the Placement Agent immediately of the Company’s intention to file or prepare any
supplement or amendment to any Registration Statement or to the Prospectus and to make no
amendment or supplement to the Registration Statements, the General Disclosure Package or to
the Prospectus to which the Placement Agent shall reasonably object by notice to the Company
after a reasonable period to review; to advise the Placement Agent, promptly after it
receives notice thereof, of the time when any amendment to any Registration Statement has
been filed or becomes effective or any supplement to the General Disclosure Package or the
Prospectus or any amended Prospectus has been filed and to furnish the Placement Agent with
copies thereof; to file promptly all material required to be filed by the Company with the
Commission pursuant to Rules 433(d) or 163(b)(2) of the Rules and Regulations, as the case
may be; to file promptly all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) of the
Rules and Regulations) is required in connection with the offering or sale of the Units; to
advise the Placement Agent, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, of the
suspension of the qualification of any of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or supplementing of the Registration
Statements, the General Disclosure Package or the Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus, any Issuer Free Writing
12
Prospectus or the Prospectus or suspending any such qualification, and promptly to use its
best efforts to obtain the withdrawal of such order.
(b) The Company represents and agrees that, unless it obtains the prior consent of the
Placement Agent, it has not made and will not, hereof, make any offer relating to the Stock
or the Warrants that would constitute a “free writing prospectus” as defined in Rule 405 of
the Rules and Regulations unless the prior written consent of the Placement Agent has been
received (each, a “Permitted Free Writing Prospectus”); provided that the prior written
consent of the Placement Agent hereto shall be deemed to have been given in respect of the
General Use Free Writing Prospectuses, if any. The Company represents that it has treated
and agrees that it will treat each Permitted Free Writing Prospectus as an Issuer Free
Writing Prospectus, comply with the requirements of Rules 164 and 433 of the Rules and
Regulations applicable to any Issuer Free Writing Prospectus, including the requirements
relating to timely filing with the Commission, legending and record keeping and will not
take any action that would result in the Placement Agent or the Company being required to
file with the Commission pursuant to Rule 433(d) of the Rules and Regulations a free writing
prospectus prepared by or on behalf of the Placement Agent that the Placement Agent
otherwise would not have been required to file thereunder.
(c) If at any time prior to the expiration of nine months after the date of the Prospectus,
solely when a prospectus relating to the Stock or the Warrants is required to be delivered
(or in lieu thereof, the notice referred to in Rule 173(a) of the Rules and Regulations),
any event occurs or condition exists as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in light of the circumstances under
which they were made when the Prospectus is delivered (or in lieu thereof, the notice
referred to in Rule 173(a) of the Rules and Regulations), not misleading, or if it is
necessary at any time to amend or supplement any Registration Statement or the Prospectus or
to file under the Exchange Act any document incorporated by reference in the Prospectus to
comply with the Securities Act or the Exchange Act, that the Company will promptly notify
the Placement Agent thereof and upon their request will prepare an appropriate amendment or
supplement or upon their request make an appropriate filing pursuant to Section 13 or 14 of
the Exchange Act in form and substance reasonably satisfactory to the Placement Agent which
will correct such statement or omission or effect such compliance and will use its best
efforts to have any amendment to any Registration Statement promptly declared effective.
The Company will furnish without charge to the Placement Agent and to any dealer in
securities as many copies as the Placement Agent may from time to time reasonably request of
such amendment or supplement. In case the Placement Agent is required to deliver a
prospectus (or in lieu thereof, the notice referred to in Rule 173(a) of the Rules and
Regulations) relating to the Stock or the Warrants nine months or more after the date of the
Prospectus, the Company upon the request of the Placement Agent will prepare promptly an
amended or supplemented Prospectus as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Securities Act and deliver to the Placement Agent as
many copies as the Placement Agent may request of such amended or supplemented Prospectus
complying with Section 10(a)(3) of the Securities Act.
(d) If the General Disclosure Package is being used to solicit offers to buy the Units at a
time when the Prospectus is not yet available to prospective purchasers and any event shall
occur as a result of which, in the judgment of the Company or in the reasonable opinion of
the Placement Agent, it becomes necessary to amend or supplement the General Disclosure
Package in order to make the statements therein, in the light of the circumstances then
prevailing, not misleading, or to make the statements therein not conflict with the
information contained or incorporated by reference in the Registration Statement then on
file and not superseded or modified, or if it is necessary at any time to amend or
supplement the General Disclosure Package to comply with any law, the Company promptly will
either (i) prepare, file with the Commission (if required) and furnish to the Placement
Agent and any dealers an appropriate amendment or supplement to the General Disclosure
Package or (ii) prepare and file with the Commission an appropriate filing under the
Exchange Act which shall be incorporated by reference in the General Disclosure Package so
that the General Disclosure Package as so amended or supplemented will not, in the light of
the circumstances then prevailing, be misleading or conflict with the Registration Statement
then on file, or so that the General Disclosure Package will comply with law.
13
(e) If at any time following issuance of an Issuer Free Writing Prospectus in connection
with the Offering there occurred or occurs an event or development as a result of which such
Issuer Free Writing Prospectus conflicted or will conflict with the information contained in
the Registration Statement, Pricing Prospectus or Prospectus, including any document
incorporated by reference therein and any prospectus supplement deemed to be a part thereof
and not superseded or modified or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the
circumstances prevailing at the subsequent time, not misleading, the Company has promptly
notified or will promptly notify the Placement Agent so that any use of the Issuer Free
Writing Prospectus may cease until it is amended or supplemented and has promptly amended or
will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus
to eliminate or correct such conflict, untrue statement or omission.
(f) To furnish promptly to Placement Agent and to counsel for the Placement Agent, upon
request, a signed copy of each of the Registration Statements as originally filed with the
Commission, and of each amendment thereto filed with the Commission, including all consents
and exhibits filed therewith. To deliver promptly to the Placement Agent such number of the
following documents as the Placement Agent shall reasonably request: (i) conformed copies
of the Registration Statements as originally filed with the Commission (in each case
excluding exhibits), (ii) any Preliminary Prospectus, (iii) any Issuer Free Writing
Prospectus, (iv) the Prospectus (the delivery of the documents referred to in clauses (i),
(ii), (iii) and (iv) of this paragraph (f) to be made not later than 10:00 A.M., New York
time, on the business day following the execution and delivery of this Agreement), (v)
conformed copies of any amendment to the Registration Statement (excluding exhibits), (vi)
any amendment or supplement to the General Disclosure Package or the Prospectus (the
delivery of the documents referred to in clauses (v) and (vi) of this paragraph (f) to be
made not later than 10:00 A.M., New York City time, on the business day following the date
of such amendment or supplement) and (vii) any document incorporated by reference in the
General Disclosure Package or the Prospectus (excluding exhibits thereto) (the delivery of
the documents referred to in clause (vii) of this paragraph (f) to be made not later than
10:00 A.M., New York City time, on the business day following the date of such document).
(g) To make generally available to its stockholders as soon as practicable, but in any event
not later than 16 months after the effective date of the Registration Statement, an earnings
statement (as defined in Rule 158(c) under the Securities Act) of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the Company, Rule 158).
(h) The Company will promptly take from time to time such actions as the Placement Agent may
reasonably request to qualify the Securities for Offering and sale under the securities or
Blue Sky laws of such jurisdictions as the Placement Agent may designate and to continue
such qualifications in effect for so long as required for the distribution of the
Securities; provided that the Company and its subsidiaries shall not be obligated to qualify
as foreign corporations in any jurisdiction in which they are not so qualified or to file a
general consent to service of process in any jurisdiction.
(i) Upon request, during the period of five years from the date hereof, the Company will
deliver to the Placement Agent, (i) as soon as they are available, copies of all reports or
other communications furnished to stockholders and (ii) as soon as they are available,
copies of any reports and financial statements furnished or filed with the Commission
pursuant to the Exchange Act or any national securities exchange or automatic quotation
system on which the Stock and the Warrant Stock is listed or quoted. However, so long as
the Company is subject to the reporting requirements of either Section 13 or Section 15(d)
of the Exchange Act and is timely filing reports with the Commission on its Electronic Data
Gathering, Analysis and Retrieval system (“XXXXX”), it is not required to furnish such
reports or statements to the Placement Agent.
(j) The Company will not directly or indirectly offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of any shares of Stock or securities convertible into
or exercisable or exchangeable for Stock for a period of 90 days from the date of this
Agreement (the “Lock Up Period”) without the prior written consent of Xxxxx other than the
Company’s sale of the Stock hereunder and the issuance of shares pursuant to (i) employee
benefit plans, stock option plans or other compensation plans as in existence on
14
the date hereof and as described in the General Disclosure Package or (ii) currently
outstanding options, warrants or rights; provided, however, that to the extent the Placement
Agent is at such time providing research coverage to the Company and subject to the
restrictions set forth in FINRA Rule 2711(f)(4), if (1) during the last 17 days of the
Lock-Up Period, the Company releases earnings results or 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 occurrence of the material news or material event, as applicable, unless
Xxxxx waive, in writing, such extension. The Company will cause each officer and director
listed in Schedule B to this Agreement to furnish to the Representatives, prior to
the Closing Date, a letter, substantially in the form of Exhibit A hereto.
(k) To supply the Placement Agent with copies of all correspondence to and from, and all
documents issued to and by, the Commission in connection with the registration of the
Securities under the Securities Act.
(l) Prior to the Closing Date, to furnish to the Placement Agent, promptly after they have
been prepared, copies of any unaudited interim consolidated financial statements of the
Company for any periods subsequent to the periods covered by the financial statements
appearing in the Registration Statements and the Prospectus.
(m) Prior to the Closing Date, not to 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 earnings, business affairs or business prospects
(except for routine oral marketing communications in the ordinary course of business and
consistent with the past practices of the Company and of which the Placement Agent is
notified in advance), without the prior written consent of the Placement Agent, unless in
the judgment of the Company and its counsel, and after notification to the Placement Agent,
such press release or communication is required by law.
(n) Until the Placement Agent shall have notified the Company of the completion of the
Offering, the Company will not, and will cause its affiliated purchasers (as defined in
Regulation M under the Exchange Act) not to, either alone or with one or more other persons,
bid for or purchase, for any account in which it or any of its affiliated purchasers has a
beneficial interest, any Common Stock, or attempt to induce any person to purchase any
Common Stock; and not to, and to cause its affiliated purchasers not to, make bids or
purchase for the purpose of creating actual, or apparent, active trading in or of raising
the price of the Common Stock.
(o) Not to take any action prior to the Closing Date that would require the Prospectus to be
amended or supplemented pursuant to Section 5(c).
(p) To at all times comply with all applicable provisions of the Xxxxxxxx-Xxxxx Act in
effect from time to time.
(q) To apply the net proceeds from the sale of the Stock and the Warrants as set forth in
the Prospectus under the heading “Use of Proceeds.”
6. Payment of Expenses. The Company agrees to pay, or reimburse if paid by the Placement
Agent, whether or not the transactions contemplated hereby are consummated or this Agreement is
terminated: (a) the costs incident to the authorization, issuance, sale, preparation and delivery
of the Units to the Purchasers and any taxes payable in that connection; (b) the costs incident to
the registration of the Securities under the Securities Act; (c) the costs incident to the
preparation, printing and distribution of the Registration Statements, the Base Prospectus, any
Preliminary Prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package, the
Prospectus, any amendments, supplements and exhibits thereto or any document incorporated by
reference therein and the costs of printing, reproducing and distributing this Agreement and any
closing documents by mail, telex or other means of communications; (d) the fees and expenses
(including related fees and expenses of counsel for the Placement Agent) incurred in connection
with securing any required review by FINRA of the terms of the sale of the Stock and the Warrants
and any filings made with FINRA, if applicable; (e) any applicable listing or other fees; (f) the
fees and
15
expenses (including related fees and expenses of counsel to the Placement Agent) of qualifying the
Securities under the securities laws of the several jurisdictions as provided in Section 5(h) and
of preparing, printing and distributing wrappers, blue sky memoranda and legal investment surveys;
(g) the cost of preparing and printing stock certificates; (h) all fees and expenses of the Escrow
Agent and of the registrar and transfer agent of the Stock and the Warrant Stock; (i) the fees,
disbursements and expenses of counsel to the Placement Agent; (j) the costs and expenses of the
Company relating to investor presentations on any “road show” undertaken in connection with the
marketing of the offering of the Stock, including, without limitation, expenses associated with the
preparation or dissemination of any electronic road show and expenses associated with the
production of road show slides and graphics, and (k) all other costs and expenses incident to the
offering of the Units or the performance of the obligations of the Company under this Agreement
(including, without limitation, the fees and expenses of the Company’s counsel and the Company’s
independent accountants); provided that notwithstanding the foregoing, the Company shall not be
obligated to pay any such fees, costs, expenses and disbursements to the Placement Agent and/or its
counsel in excess of $100,000 in the aggregate; provided further that, except to the extent
otherwise provided in this Section 6 and in Section 10, the Placement Agent shall pay its own costs
and expenses, including the fees and expenses of its counsel and the expenses of advertising any
offering of the Units made by the Placement Agent.
7. Conditions to the obligations of the Placement Agent and the Purchasers, and the Sale of the
Units. The respective obligations of the Placement Agent hereunder and the Purchasers to
acquire the Units are subject to the accuracy, when made and as of the Applicable Time and on the
Closing Date, of the representations and warranties of the Company contained herein, to the
accuracy of the statements of the Company made in any certificates pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Registration Statement is effective under the Securities Act, and no stop order
suspending the effectiveness of any Registration Statement or any part thereof, preventing
or suspending the use of any Base Prospectus, any Preliminary Prospectus, the Prospectus or
any Permitted Free Writing Prospectus or any part thereof shall have been issued and no
proceedings for that purpose or pursuant to Section 8A under the Securities Act shall have
been initiated or threatened by the Commission, and all requests for additional information
on the part of the Commission (to be included or incorporated by reference in the
Registration Statements or the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Placement Agent; and the Rule 462(b) Registration Statement,
if any, any Issuer Free Writing Prospectus (except for a “road show”) and the Prospectus
shall have been filed with, the Commission within the applicable time period prescribed for
such filing by, and in compliance with, the Rules and Regulations and in accordance with
Section 5(a), and the Rule 462(b) Registration Statement, if any, shall have become
effective immediately upon its filing with the Commission; and, if applicable, FINRA shall
have raised no objection to the fairness and reasonableness of the terms of this Agreement
or the transactions contemplated hereby.
(b) The Placement Agent shall not have discovered and disclosed to the Company on or prior
to the Closing Date that any Registration Statement or any amendment or supplement thereto
contains an untrue statement of a fact that, in the opinion of counsel for the Placement
Agent, is material or omits to state any fact that, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make the statements therein
not misleading, or that the General Disclosure Package, any Issuer Free Writing Prospectus
or the Prospectus or any amendment or supplement thereto contains an untrue statement of
fact which, in the opinion of such counsel, is material or omits to state any fact that, in
the opinion of such counsel, is material and is necessary in order to make the statements,
in the light of the circumstances in which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to the authorization, form
and validity of each of this Agreement, the Escrow Agreement, the Stock, the Warrants, the
Warrant Stock, the Registration Statements, the General Disclosure Package, each Issuer Free
Writing Prospectus and the Prospectus and all other legal matters relating to this Agreement
and the transactions contemplated hereby shall be reasonably satisfactory in all material
respects to counsel for the Placement Agent, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request to enable them to
pass upon such matters.
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(d) Xxxxxx Godward Kronish LLP shall have furnished to the Placement Agent such counsel’s
written opinion and negative assurance letter, as counsel to the Company, each addressed to
the Placement Agent and dated the Closing Date, in substantially the forms attached hereto
as Exhibit B.
(e) Xxxxxxxx Xxxx Lodge & Hutz LLP, special intellectual property counsel to the Company,
shall have furnished to the Placement Agent such counsel’s written opinion, addressed to the
Placement Agent and dated the Closing Date, in substantially the form attached hereto as
Exhibit C.
(f) The Placement Agent shall have received from Xxxxxxxx & Xxxxxxxx LLP, counsel for the
Placement Agent, such opinion or opinions, dated the Closing Date, with respect to such
matters as the Placement Agent may reasonably require, and the Company shall have furnished
to such counsel such documents as they reasonably request for enabling them to pass upon
such matters.
(g) At the time of the execution of this Agreement, the Placement Agent shall have received
from Ernst & Young LLP a letter, addressed to the Placement Agent, executed and dated such
date, in form and substance satisfactory to the Placement Agent (i) confirming that they are
an independent registered accounting firm with respect to the Company and its subsidiaries
within the meaning of the Securities Act and the Rules and Regulations and the PCAOB and
(ii) stating the conclusions and findings of such firm, of the type ordinarily included in
accountants’ “comfort letters” to underwriters, with respect to the financial statements and
certain financial information contained or incorporated by reference in the Registration
Statements, the General Disclosure Package and the Prospectus.
(h) On the effective date of any post-effective amendment to any Registration Statement and
on the Closing Date, the Placement Agent shall have received a letter (the “bring-down
letter”) from Ernst & Young LLP addressed to the Placement Agent and dated the Closing Date
confirming, as of the date of the bring-down letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified financial
information is given in the General Disclosure Package and the Prospectus, as the case may
be, as of a date not more than three (3) business days prior to the date of the bring-down
letter), the conclusions and findings of such firm, of the type ordinarily included in
accountants’ “comfort letters” to underwriters, with respect to the financial information
and other matters covered by its letter delivered to the Placement Agent concurrently with
the execution of this Agreement pursuant to paragraph (g) of this Section 7.
(i) The Company shall have furnished to the Placement Agent and the Purchasers a
certificate, dated the Closing Date, of its Chief Executive Officer or President and its
Chief Financial Officer stating in their capacities as officers of the Company that (i) such
officers have carefully examined the Registration Statement, the General Disclosure Package,
any Permitted Free Writing Prospectus and the Prospectus and, in their opinion, (A) the
Registration Statement and each amendment thereto, at the Applicable Time and as of the date
of this Agreement, did not include any untrue statement of a material fact and did not omit
to state a material fact required to be stated therein or necessary to make the statements
therein not misleading, and (B) the General Disclosure Package, as of the Applicable Time,
and the Prospectus and each amendment or supplement thereto, as of the respective date
thereof and as of the Closing Date, did not include any untrue statement of a material fact
and did not omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances in which they were made, not misleading, (ii) since the
effective date of the Initial Registration Statement, no event has occurred that should have
been set forth in a supplement or amendment to the Registration Statement, the General
Disclosure Package or the Prospectus, that was not so set forth, (iii) to the best of their
knowledge after reasonable investigation, as of the Closing Date, the representations and
warranties of the Company in this Agreement are true and correct and the Company has
complied with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, and (iv) there has not been, subsequent
to the date of the most recent audited financial statements included or incorporated by
reference in the General Disclosure Package, any material adverse change in the financial
position or results of operations of the Company and its subsidiaries taken as a whole, or
any change or development that, singularly or in the aggregate, would reasonably be expected
to involve a material adverse change in or affecting the condition (financial or otherwise),
results of operations, business or prospects of the Company and its subsidiaries taken as a
whole, except as set forth in the Prospectus.
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(j) Since the date of the latest audited financial statements included in the General
Disclosure Package or incorporated by reference in the General Disclosure Package as of the
date hereof, (i) neither the Company nor any of its subsidiaries shall have sustained any
loss or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in the General Disclosure Package, and
(ii) there shall not have been any change in the capital stock (other than issuance of
options in the ordinary course of business and pursuant to the Company’s stock option plans
described in the General Disclosure Package and the Prospectus or Common Stock issued
pursuant to the exercise of warrants or upon the exercise of stock options previously
outstanding under the Company’s stock option plans and the issuance of Common Stock pursuant
to employee stock purchase plans) or long-term debt of the Company or any of its
subsidiaries, or any change, or any development involving a prospective change, in or
affecting the business, general affairs, management, financial position, stockholders’
equity or results of operations of the Company and its subsidiaries, otherwise than as set
forth in the General Disclosure Package, the effect of which, in any such case described in
clause (i) or (ii) of this paragraph (j), is, in the judgment of the Placement Agent, so
material and adverse as to make it impracticable or inadvisable to proceed with the sale or
delivery of the Units on the terms and in the manner contemplated in the General Disclosure
Package.
(k) No action shall have been taken and no law, statute, rule, regulation or order shall
have been enacted, adopted or issued by any governmental agency or body that would prevent
the issuance or sale of the Stock or that would materially and adversely affect the business
or operations of the Company; and no injunction, restraining order or order of any other
nature by any federal or state court of competent jurisdiction shall have been issued which
would prevent the issuance or sale of the Stock, the Warrants or the Warrant Stock or
materially and adversely affect or potentially materially and adversely affect the business
or operations of the Company.
(l) Subsequent to the execution and delivery of this Agreement there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock Exchange,
Nasdaq Global Market or the NYSE Amex LLC or in the over-the-counter market, or trading in
any securities of the Company on any exchange or in the over-the-counter market, shall have
been suspended or materially limited, or minimum or maximum prices or maximum range for
prices shall have been established on any such exchange or such market by the Commission, by
such exchange or market or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state
authorities or a material disruption has occurred in commercial banking or securities
settlement or clearance services in the United States, (iii) the United States shall have
become engaged in hostilities, or the subject of an act of terrorism, or there shall have
been an outbreak of or escalation in hostilities involving the United States, or there shall
have been a declaration of a national emergency or war by the United States or (iv) there
shall have occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the judgment of the Placement Agent,
impracticable or inadvisable to proceed with the sale or delivery of the Units on the terms
and in the manner contemplated in the General Disclosure Package and the Prospectus.
(m) Nasdaq shall have approved the Stock and the Warrant Stock for listing therein, subject
only to official notice of issuance.
(n) The Placement Agent shall have received the written agreements, substantially in the
form of Exhibit A hereto, of the officers and directors of the Company listed in
Schedule B to this Agreement.
(o) The Company shall have entered into the Escrow Agreement and such agreement shall be in
full force and effect.
(p) The Company shall have prepared and filed with the Commission a Current Report on Form
8-K with respect to the Offering, which shall include as an exhibit thereto this Agreement.
(q) On or prior to the Closing Date, the Company shall have furnished to the Placement Agent
such further certificates and documents as the Placement Agent may reasonably request.
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All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Placement Agent.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless the Placement Agent, its directors,
officers, managers, members, employees, representatives and agents and each person, if any,
who controls the Placement Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively the “Placement Agent Indemnified Parties,” and
each a “Placement Agent Indemnified Party”) against any loss, claim, damage, expense or
liability whatsoever (or any action, investigation or proceeding in respect thereof), joint
or several, to which such Placement Agent Indemnified Party may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, expense, liability,
action, investigation or proceeding arises out of or is based upon (A) any untrue statement
or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any
Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the
Prospectus, or in any amendment or supplement thereto or document incorporated by reference
therein, or (B) the omission or alleged omission to state in any Preliminary Prospectus, any
Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the
Prospectus, or in any amendment or supplement thereto or document incorporated by reference
therein, a material fact required to be stated therein or necessary to make the statements
therein in light of (other than in the case of any Registration Statement) the circumstances
under which they are made not misleading, or (C) any breach of the representations and
warranties of the Company contained herein or the failure of the Company to perform its
obligations hereunder or pursuant to any law, or (D) any act or failure to act, or any
alleged act or failure to act, by the Placement Agent in connection with, or relating in any
manner to, the Units or the offering contemplated hereby, and that is included as part of or
referred to in any loss, claim, damage, expense, liability, action, investigation or
proceeding arising out of or based upon matters covered by subclause (A), (B) or (C) above
of this Section 8(a) (provided that the Company shall not be liable in the case of any
matter covered by this subclause (D) to the extent that it is determined in a final judgment
by a court of competent jurisdiction that such loss, claim, damage, expense or liability
resulted primarily from any such act or failure to act undertaken or omitted to be taken by
the Placement Agent through its gross negligence or willful misconduct), and shall reimburse
each Placement Agent Indemnified Party promptly upon demand for any legal fees or other
expenses reasonably incurred by that Placement Agent Indemnified Party in connection with
investigating, or preparing to defend, or defending against, or appearing as a third party
witness in respect of, or otherwise incurred in connection with, any such loss, claim,
damage, expense, liability, action, investigation or proceeding, as such fees and expenses
are incurred; provided, however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, expense or liability arises out of or is based
upon an untrue statement or alleged untrue statement in, or omission or alleged omission
from any Preliminary Prospectus, any Registration Statement or the Prospectus, or any such
amendment or supplement thereto, or any Issuer Free Writing Prospectus made in reliance upon
and in conformity with written information furnished to the Company by the Placement Agent
specifically for use therein, which information the parties hereto agree is limited to the
Placement Agent’s Information (as defined in Section 17).
The indemnity agreement in this Section 8(a) is not exclusive and is in addition to any
liability that the Company might otherwise have, and shall not limit any rights or remedies
that may otherwise be available under this Agreement at law or in equity to any Placement
Agent Indemnified Party.
(b) The Placement Agent shall indemnify and hold harmless the Company and its directors, its
officers who signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act (collectively the “Company Indemnified Parties” and each a “Company Indemnified Party”)
against any loss, claim, damage, expense or liability whatsoever (or any action,
investigation or proceeding in respect thereof), joint or several, to which such Company
Indemnified Party may become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, expense, liability, action, investigation or proceeding arises out of
or is based upon (i) any untrue statement or alleged untrue statement of a material fact
contained in any
19
Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed
or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, any
Registration Statement or the Prospectus, or in any amendment or supplement thereto, or (ii)
the omission or alleged omission to state in any Preliminary Prospectus, any Issuer Free
Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule
433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto, a material fact required to be stated therein or necessary
to make the statements therein in light of (other than in the case of any Registration
Statement) the circumstances under which they are made not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information furnished to
the Company by the Placement Agent specifically for use therein, which information the
parties hereto agree is limited to the Placement Agent’s Information as defined in Section
17, and shall reimburse the Company Indemnified Parties for any legal or other expenses
reasonably incurred by such party in connection with investigating or preparing to defend or
defending against or appearing as third party witness in connection with any such loss,
claim, damage, liability, action, investigation or proceeding, as such fees and expenses are
incurred. This indemnity agreement is not exclusive and will be in addition to any
liability which the Placement Agent might otherwise have and shall not limit any rights or
remedies which may otherwise be available under this Agreement, at law or in equity to the
Company Indemnified Parties.
(c) Promptly after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, the indemnified party shall, if a claim in respect thereof is to
be made against an indemnifying party under this Section 8, notify such indemnifying party
in writing of the commencement of that action; provided, however, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may have under this
Section 8 except to the extent it has been materially prejudiced by such failure; and,
provided, further, that the failure to notify an indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise than under this
Section 8. If any such action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other similarly
notified indemnifying party, to assume the defense of such action with counsel reasonably
satisfactory to the indemnified party (which counsel shall not, except with the written
consent of the indemnified party, be counsel to the indemnifying party). After notice from
the indemnifying party to the indemnified party of its election to assume the defense of
such action, except as provided herein, the indemnifying party shall not be liable to the
indemnified party under Section 8 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense of such action other than reasonable
costs of investigation; provided, however, that any indemnified party shall have the right
to employ separate counsel in any such action and to participate in the defense of such
action but the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be at the expense of such indemnified party unless (i) the employment
thereof has been specifically authorized in writing by the Company in the case of a claim
for indemnification under Section 8(a) or Xxxxx in the case of a claim for indemnification
under Section 8(b), (ii) such indemnified party shall have been advised by its counsel that
there may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party or (iii) the indemnifying party has
failed to assume the defense of such action and employ counsel reasonably satisfactory to
the indemnified party within a reasonable period of time after notice of the commencement of
the action or the indemnifying party does not diligently defend the action after assumption
of the defense, in which case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the defense of (or, in the case of
a failure to diligently defend the action after assumption of the defense, to continue to
defend) such action on behalf of such indemnified party and the indemnifying party shall be
responsible for legal or other expenses subsequently incurred by such indemnified party in
connection with the defense of such action; provided, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one separate firm
of attorneys at any time for all such indemnified parties (in addition to any local
counsel), which firm shall be designated in writing by Xxxxx if the indemnified parties
under this Section 8 consist of any Placement Agent Indemnified Party or by the Company if
the indemnified parties under this Section 8 consist of any Company Indemnified Parties.
Subject to this Section 8, the amount payable by an indemnifying party
20
under Section 8 shall include, but not be limited to, (x) reasonable legal fees and expenses
of counsel to the indemnified party and any other expenses in investigating, or preparing to
defend or defending against, or appearing as a third party witness in respect of, or
otherwise incurred in connection with, any action, investigation, proceeding or claim, and
(y) all amounts paid in settlement of any of the foregoing. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of judgment with respect to any pending or threatened action or any
claim whatsoever, in respect of which indemnification or contribution could be sought under
this Section 8 (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party in form and substance reasonably satisfactory to such
indemnified party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to act by or on
behalf of any indemnified party. Subject to the provisions of the following sentence, no
indemnifying party shall be liable for settlement of any pending or threatened action or any
claim whatsoever that is effected without its written consent (which consent shall not be
unreasonably withheld or delayed), but if settled with its written consent, if its consent
has been unreasonably withheld or delayed or if there be a judgment for the plaintiff in any
such matter, the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or judgment. In
addition, if at any time an indemnified party shall have requested that an indemnifying
party reimburse the indemnified party for reasonable fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the nature
contemplated by Section 8(a) effected without its written consent if (i) such settlement is
entered into more than forty-five (45) days after receipt by such indemnifying party of the
request for reimbursement, (ii) such indemnifying party shall have received notice of the
terms of such settlement at least thirty (30) days prior to such settlement being entered
into and (iii) such indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(d) If the indemnification provided for in this Section 8 is unavailable or insufficient to
hold harmless an indemnified party under Section 8(a) or 8(b), then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount paid,
payable or otherwise incurred by such indemnified party as a result of such loss, claim,
damage, expense or liability (or any action, investigation or proceeding in respect
thereof), as incurred, (i) in such proportion as shall be appropriate to reflect the
relative benefits received by the Company on the one hand and the Placement Agent on the
other hand from the offering of the Units, or (ii) if the allocation provided by clause (i)
of this Section 8(d) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) of this
Section 8(d) but also the relative fault of the Company on the one hand and the Placement
Agent on the other with respect to the statements, omissions, acts or failures to act which
resulted in such loss, claim, damage, expense or liability (or any action, investigation or
proceeding in respect thereof) as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Placement Agent on the
other with respect to the Offering shall be deemed to be in the same proportion as the total
net proceeds from the Offering of the Units purchased by the Purchasers (before deducting
expenses) received by the Company bear to the total fees received by the Placement Agent
with respect to the Units purchased pursuant to this Agreement, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault of the Company on the one
hand and the Placement Agent on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the Company on
the one hand or the Placement Agent on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent such untrue
statement, omission, act or failure to act; provided that the parties hereto agree that the
written information furnished to the Company by the Placement Agent for use in any
Preliminary Prospectus, any Registration Statement or the Prospectus, or in any amendment or
supplement thereto, consists solely of the Placement Agent’s Information as defined in
Section 17.
(e) The Company and the Placement Agent agree that it would not be just and equitable if
contributions pursuant to Section 8(d) above were to be determined by pro rata allocation or
by any other method of allocation which does not take into account the equitable
considerations referred to Section 8(d) above. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage, expense, liability, action, investigation or
proceeding referred to in Section 8(d) above shall be deemed to include,
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subject to the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating, preparing to defend or defending
against or appearing as a third party witness in respect of, or otherwise incurred in
connection with, any such loss, claim, damage, expense, liability, action, investigation or
proceeding. Notwithstanding the provisions of this Section 8(e), the Placement Agent shall
not be required to contribute any amount in excess of the total compensation received by the
Placement Agent in accordance with Section 2(V) less the amount of any damages which the
Placement Agent has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement, omission or alleged omission, act or alleged act or failure to act
or alleged failure to act. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
9. Termination. The obligations of the Placement Agent hereunder and the Purchasers to
purchase the Units may be terminated by the Placement Agent, in its absolute discretion by notice
given to the Company prior to delivery of and payment for the Units if, prior to that time, any of
the events described in Sections 7(j) or 7(l) have occurred or if the Purchasers shall decline to
purchase the Units for any reason permitted under this Agreement or pursuant to their purchase
obligations.
10. Reimbursement of Placement Agent’s Expenses. Notwithstanding anything to the contrary
in this Agreement, if (a) this Agreement shall have been terminated pursuant to Section 9, (b) the
Company shall fail to tender the Units for delivery to the Purchasers for any reason not permitted
under this Agreement, (c) the Purchasers shall decline to purchase the Units for any reason
permitted under this Agreement or pursuant to their purchase obligations or (d) the sale of the
Units is not consummated because any condition to the obligations of the Placement Agent or the
Purchasers set forth herein is not satisfied or because of the refusal, inability or failure on the
part of the Company to perform any agreement herein or to satisfy any condition or to comply with
the provisions hereof, then in addition to the payment of amounts in accordance with Section 6, the
Company shall reimburse the Placement Agent for the fees and expenses of Placement Agent’s counsel
and for such out-of-pocket expenses as shall have been reasonably incurred by it in connection with
this Agreement and the proposed purchase of the Units, including, without limitation, travel and
lodging expenses of the Placement Agent, and upon demand the Company shall pay the full amount
thereof to the Placement Agent; provided that any such reimbursement shall be subject to the
$100,000 aggregate limit set forth in Section 6.
11. Absence of Fiduciary Relationship. The Company acknowledges and agrees that:
(a) the Placement Agent’s responsibility to the Company is solely contractual in nature, the
Placement Agent has been retained solely to act as placement agent in connection with the
sale of the Stock and the Warrants and no fiduciary, advisory or agency relationship between
the Company and the Placement Agent has been created in respect of any of the transactions
contemplated by this Agreement, irrespective of whether the Placement Agent has advised or
is advising the Company on other matters;
(b) the price of the Units set forth in this Agreement was established by the Company
following discussions with the Placement Agent and arms-length negotiations with the
Purchasers, and the Company is capable of evaluating and understanding, and understands and
accepts, the terms, risks and conditions of the transactions contemplated by this Agreement;
(c) it has been advised that the Placement Agent and its affiliates are engaged in a broad
range of transactions which may involve interests that differ from those of the Company and
that the Placement Agent has no obligation to disclose such interests and transactions to
the Company by virtue of any fiduciary, advisory or agency relationship; and
(d) it waives, to the fullest extent permitted by law, any claims it may have against the
Placement Agent for breach of fiduciary duty or alleged breach of fiduciary duty and agrees
that the Placement Agent shall have no liability (whether direct or indirect) to the Company
in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim
on behalf of or in right of the Company, including stockholders, employees or creditors of
the Company.
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12. Successors; Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Placement Agent, the Company and their respective
successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, other than those persons mentioned in the preceding sentence or
otherwise explicitly mentioned in this Agreement, any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and exclusive benefit
of such persons and for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company contained in this Agreement shall
also be for the benefit of the Placement Agent Indemnified Parties, and the indemnities of the
Placement Agent shall be for the benefit of the Company Indemnified Parties. It is understood that
Placement Agent’s responsibility to the Company is solely contractual in nature and the Placement
Agent does not owe the Company, or any other party, any fiduciary duty as a result of this
Agreement. No Purchaser shall be deemed to be a successor or assign by reason merely of such
purchase.
13. Survival of Indemnities, Representations, Warranties, etc. The respective
indemnities, covenants, agreements, representations, warranties and other statements of the Company
and the Placement Agent, as set forth in this Agreement or made by them respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any investigation made by or
on behalf of the Placement Agent, the Company, the Purchasers or any person controlling any of them
and shall survive delivery of and payment for the Units. Notwithstanding any termination of this
Agreement, including without limitation any termination pursuant to Section 9, the indemnities,
contribution, covenants, agreements, representations, warranties and other statements forth in
Sections 3, 6, 8, and 10 and Sections 11 through 20, inclusive, of this Agreement shall not
terminate and shall remain in full force and effect at all times.
14. Notices. All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Placement Agent, shall be delivered or sent by mail, telex, facsimile
transmission or email to Xxxxx and Company, LLC, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX
00000, Attention: Xxxxxxxx Xxxxx, Managing Director and Head of Capital Markets, Fax:
000-000-0000 with a copy to the General Counsel, Fax: 000-000-0000; and
(b) if to the Company shall be delivered or sent by mail, telex, facsimile transmission or
email to Anadys Pharmaceuticals, Inc., 0000 Xxxxxxxxxx Xxx, Xxx Xxxxx, XX 00000, Attention:
Xxxxxxx X. Xxxxxxx, Ph.D., President and Chief Executive Officer, Fax: (000) 000-0000, with
a copy to Xxxxxx Godward Kronish LLP, 0000 Xxxxxxxx Xxxx, Xxx Xxxxx, XX 00000, Attention:
Xxxxxx X. Xxxxxxxxxx, Esq.
Any such statements, requests, notices or agreements shall take effect at the time of receipt
thereof.
15. Definition of Certain Terms. For purposes of this Agreement, (a) “business day” means
any day on which the New York Stock Exchange, Inc. is open for trading and (b) “subsidiary” has the
meaning set forth in Rule 405 of the Rules and Regulations.
16. Governing Law, Jurisdiction. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, including without limitation Section 5-1401 of
the New York General Obligations. The Company irrevocably (a) submits to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York
for the purpose of any suit, action or other proceeding arising out of this Agreement or the
transactions contemplated by this Agreement, the Registration Statements and any Preliminary
Prospectus or the Prospectus, (b) agrees that all claims in respect of any such suit, action or
proceeding may be heard and determined by any such court, (c) waives to the fullest extent
permitted by applicable law, any immunity from the jurisdiction of any such court or from any legal
process, (d) agrees not to commence any such suit, action or proceeding other than in such courts,
and (e) waives, to the fullest extent permitted by applicable law, any claim that any such suit,
action or proceeding is brought in an inconvenient forum
17. Placement Agent’s Information. The parties hereto acknowledge and agree that, for all
purposes of this Agreement, the Placement Agent’s Information consists solely of the following
information in the Prospectus: (i) the penultimate paragraph on the front cover page concerning the
terms of the Offering, and (ii) the last sentence of the first paragraph and the sixth paragraph in
“Plan of Distribution” in the Prospectus Supplement.
23
18. Partial Unenforceability. The invalidity or unenforceability of any section,
paragraph, clause or provision of this Agreement shall not affect the validity or enforceability of
any other section, paragraph, clause or provision hereof. If any section, paragraph, clause or
provision of this Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
19. General. This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. In this Agreement, the
masculine, feminine and neuter genders and the singular and the plural include one another. The
section headings in this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be amended or modified,
and the observance of any term of this Agreement may be waived, only by a writing signed by the
Company and the Placement Agent.
20. Counterparts. This Agreement may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon the same
instrument and such signatures may be delivered by facsimile or by e-mail delivery of a “.pdf”
format data file.
24
If the foregoing is in accordance with your understanding of the agreement between the Company
and the Placement Agent, kindly indicate your acceptance in the space provided for that purpose
below.
| Very truly yours, |
||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Name: | Xxxxx X. Xxxxxx | |||
| Title: | Senior Vice President, Operations and Chief Financial Officer |
|||
| Accepted as of the date first above written: Xxxxx and Company, LLC |
|||||
| By: | /s/ Xxxxxxxx Xxxxx | ||||
| Name: | Xxxxxxxx Xxxxx | ||||
| Title: | Managing Director and Head of Capital Markets | ||||
25
SCHEDULE A
General Use Free Writing Prospectuses
None.
26
SCHEDULE B
List of Company officers and directors subject to lock-up
Xxxx X. Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxx X. Xxxxxx, M.D.
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxxxxxxxxx, Ph.D.
Xxxxxxxxx X. Xxxx, X.X.
Xxxxxx X. Xxxxxxx, Ph.D.
Xxxxx Xxxxxx
Xxxxxxx X. Xxxxxxx, Ph.D.
Xxxxxxxxx X. Xxxxxxxxxxxx, Ph.D.
Xxxx Xxxxxxxxxxx-Xxxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxx X. Xxxxxx, M.D.
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxxxxxxxxx, Ph.D.
Xxxxxxxxx X. Xxxx, X.X.
Xxxxxx X. Xxxxxxx, Ph.D.
Xxxxx Xxxxxx
Xxxxxxx X. Xxxxxxx, Ph.D.
Xxxxxxxxx X. Xxxxxxxxxxxx, Ph.D.
Xxxx Xxxxxxxxxxx-Xxxxxxxxx
Exhibit A
Form of Lock-Up Agreement
May 28, 2009
Xxxxx and Company, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Anadys Pharmaceuticals, Inc. — Registration Statement on Form S-3
Dear Sirs:
This Agreement is being delivered to you in connection with the proposed Placement Agent Agreement
(the “Placement Agent Agreement”) between Anadys Pharmaceuticals, Inc., a Delaware corporation (the
“Company”) and Xxxxx and Company, LLC (“Cowen” or the “Placement Agent”), relating to the proposed
public offering of shares of the common stock, par value $0.001 per share (the “Common Stock”), and
possibly warrants to acquire Common Stock, of the Company.
In order to induce you to enter into the Placement Agent Agreement, and in light of the benefits
that the offering of the Common Stock will confer upon the undersigned in his or her capacity as a
security holder and/or an officer, director or employee of the Company, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees
with the Placement Agent that, during the period beginning on and including the date of the
Placement Agent Agreement through and including the date that is the 90th day after the date of the
Placement Agent Agreement (the “Lock-Up Period”), the undersigned will not, without the prior
written consent of Cowen, directly or indirectly, (i) offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of, or announce the intention to otherwise dispose of, any
Common Stock (including, without limitation, Common Stock which may be deemed to be beneficially
owned by the undersigned in accordance with the rules and regulations promulgated under the
Securities Act of 1933, as the same may be amended or supplemented from time to time (such shares,
the “Beneficially Owned Shares”)) or securities convertible into or exercisable or exchangeable for
Common Stock; (ii) enter into any swap, hedge or similar agreement or arrangement that transfers in
whole or in part, the economic risk of ownership of the Beneficially Owned Shares or securities
convertible into or exercisable or exchangeable for Common Stock, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the
power of disposition, or (iii) engage in any short selling of the Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock. To the extent you are at such
time providing research coverage to the Company and subject to the restrictions set forth in FINRA
Rule 2711(f)(4), then if (i) the Company issues an earnings release or material news or a material
event relating to the Company occurs during the last 17 days of the Lock-Up Period, or (ii) prior
to the expiration of the Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the Lock-Up Period, then in each case
the Lock-Up Period shall be extended and the restrictions imposed by this Agreement shall continue
to apply until the expiration of the 18-day period beginning on the date of the issuance of the
earnings release or the occurrence of the material news or material event.
The restrictions set forth in the immediately preceding paragraph shall not apply to any transfers
made by the undersigned (i) as a bona fide gift to any member of the immediate family (as defined
below) of the undersigned or to a trust the beneficiaries of which are exclusively the undersigned
or members of the undersigned’s immediate family, (ii) by will or intestate succession upon the
death of the undersigned or (iii) as a bona fide gift to a charity or educational institution,
provided, however, that in the case of any transfer described in clauses (i) and (ii) above, it
shall be a condition to the transfer that (A) the transferee executes and delivers to Cowen, not
later than one business day prior to such transfer, a written agreement, in substantially the form
of this agreement (it being understood that any references to “immediate family” in the agreement
executed by such transferee shall expressly refer only to the immediate family of the undersigned
and not to the immediate family of the transferee) and otherwise satisfactory in form and substance
to Cowen, and (B) if the undersigned is required to file a report under Section 16(a) of the
Securities Exchange Act of 1934, as amended, reporting a reduction in beneficial ownership of
Common Stock or Beneficially Owned Shares or any securities convertible into or exercisable or
exchangeable for Common Stock or
Beneficially Owned Shares during the Lock-Up Period (as the same may be extended as described
above), the undersigned shall include a statement in such report to the effect that such transfer
is being made as a gift or by will or intestate succession. For purposes of this paragraph,
“immediate family” shall mean a spouse, child, grandchild or other lineal descendant (including by
adoption), father, mother, father-in-law, mother-in-law, brother or sister of the undersigned; and
“affiliate” shall have the meaning set forth in Rule 405 under the Securities Act of 1933, as
amended.
Any Common Stock or Beneficially Owned Shares acquired by the undersigned in the open market after
the date of this Agreement will not be subject to the restrictions set forth in this agreement.
After the date of this agreement, the undersigned may at any time enter into a written plan meeting
the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, relating to
the sale of Common Stock or Beneficially Owned Shares, if then permitted by the Company, provided
that the shares subject to such plan shall be subject to the restrictions set forth in this
agreement.
In order to enable this covenant to be enforced, the undersigned hereby consents to the placing of
legends or stop transfer instructions with the Company’s transfer agent with respect to any Common
Stock or securities convertible into or exercisable or exchangeable for Common Stock.
The undersigned further agrees that (i) it will not, during the Lock-Up Period (as the same may be
extended as described above), make any demand or request for or exercise any right with respect to
the registration under the Securities Act of 1933, as amended, of any Common Stock or other
Beneficially Owned Shares or any securities convertible into or exercisable or exchangeable for
Common Stock or other Beneficially Owned Shares, and (ii) the Company may, with respect to any
Common Stock or other Beneficially Owned Shares or any securities convertible into or exercisable
or exchangeable for Common Stock or other Beneficially Owned Shares owned or held (of record or
beneficially) by the undersigned, cause the transfer agent or other registrar to enter stop
transfer instructions and implement stop transfer procedures with respect to such securities during
the Lock-Up Period (as the same may be extended as described above).
The undersigned hereby represents and warrants that the undersigned has full power and authority to
enter into this agreement and that this agreement has been duly executed and delivered by the
undersigned and is a valid and binding agreement of the undersigned. This agreement and all
authority herein conferred are irrevocable and shall survive the death or incapacity of the
undersigned and shall be binding upon the undersigned and upon the heirs, personal representatives,
successors and assigns of the undersigned.
The undersigned acknowledges and agrees that whether or not any public offering of Common Stock
actually occurs depends on a number of factors, including market conditions. It is understood and
agreed that if (i) the Placement Agent Agreement is not executed by June 30, 2009, (ii) the Company
notifies you in writing that it does not intend to proceed with the offering of Common Stock, (iii)
the undersigned ceases to serve as an officer or director of the Company, or (iv) the Placement
Agent Agreement shall be terminated (other than the provisions that survive termination thereof)
prior to payment for and delivery of the securities to be sold pursuant thereto, the undersigned
shall be released from his or her obligations under the provisions of this agreement.
This agreement shall be governed by, and construed in accordance with, the laws of the State of New
York.
| Very truly
yours, |
||||||
| (Name of Stockholder — Please Print) | ||||||
| (Signature) | ||||||
| Address: | ||||||
