Aastrom Biosciences, Inc. 46,154,000 Shares of Common Stock Class A Warrants to Purchase 34,615,500 Shares of Common Stock Class B Warrants to Purchase 23,077,000 Shares of Common Stock UNDERWRITING AGREEMENT
Exhibit 1.1
EXECUTION COPY
Aastrom Biosciences, Inc.
46,154,000 Shares of Common Stock
Class A Warrants to Purchase 34,615,500 Shares of Common Stock
Class B Warrants to Purchase 23,077,000 Shares of Common Stock
January 15, 2010
Xxxxxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Aastrom Biosciences, Inc., a Michigan corporation (the “Company”), proposes, subject to the
terms and conditions contained herein, to issue and sell to you (the “Underwriter”) an aggregate of
(i) 46,154,000 shares (the “Firm Shares”) of common stock, no par value per share (the “Common
Stock”), (ii) Class A warrants to purchase 34,615,500 shares of Common Stock (the “Firm Class A
Warrants”) and (iii) Class B warrants to purchase 23,077,000 shares of Common Stock (the “Firm Class B
Warrants”, and together with the Firm Class A Warrants, the “Firm Warrants” and the Firm Warrants
collectively with the Firm Shares, the “Firm Securities”). In addition, the Company proposes to
grant to the Underwriter an option to purchase (i) up to an additional 6,923,100 shares of Common
Stock (the “Option Shares”) and/or (ii) Class A warrants to purchase up to an additional 5,192,325
shares of Common Stock (the “Option Class A Warrants”) and/or (iii) Class B warrants to purchase up
to an additional 3,461,550 shares of Common Stock (the “Option Class B Warrants” and together with the
Option Class A Warrants, the “Option Warrants” and the Option Warrants together with the Option
Shares, the “Option Securities”) from the Company for the purpose of covering over-allotments and
for market stabilization purposes in connection with the sale of the Firm Securities. The Firm
Warrants and Option Warrants are referred to herein as the “Warrants.” The Firm Securities and the
Option Securities are referred to herein as the “Securities.” The Securities are more fully
described in the Registration Statement (as hereinafter defined).
The offering and sale of the Securities (the “Offering”), including the shares of Common Stock
(the “Warrant Shares”) underlying the Warrants, are being made pursuant to (i) an effective
Registration Statement on Form S-3 (No. 333-155739) (including the Base Prospectus contained
therein dated February 19, 2009 (the “Base Prospectus”) that has been prepared and filed by the
Company with the Securities and Exchange Commission (the
“Commission”) in conformity with the requirements of the Securities Act of 1933, as amended
(the “Securities Act”) and the published rules and regulations thereunder (the “Rules”) adopted
by
the Commission relating to Common Stock and Warrants of the Company that may be sold from time to
time by the Company in accordance with Rule 415 of the Securities Act, and such amendments thereof
as may have been required to the date of this Agreement, (ii) a preliminary prospectus supplement
(the “Preliminary Prospectus”) included as a part of the Registration Statement or filed with the
Commission by the Company pursuant to Rule 424(a) of the Rules, (iii) if applicable, certain “free
writing prospectuses” (as that term is defined in Rule 405 under the Securities Act), that have
been or will be filed with the Commission and delivered to the purchasers of Securities on or prior
to the date hereof, and (iv) a prospectus supplement to be dated the date hereof, containing
certain supplemental information regarding the Securities and the Warrant Shares, the Company and
the terms of the offering that will be filed with the Commission (the “Prospectus Supplement”).
Copies of such Registration Statement, the related Base Prospectus, the Preliminary Prospectus, any
free writing prospectus and the Prospectus Supplement have heretofore been delivered by the Company
or are otherwise available to you.
The term “Registration Statement” as used in this Agreement means the registration statement,
including all exhibits, financial schedules and all documents and information deemed to be part of
the Registration Statement by incorporation by reference or otherwise, as amended from time to
time, including the information (if any) contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and deemed to be part thereof at the time of
effectiveness pursuant to Rule 430B of the Rules. If the Company has filed an abbreviated
registration statement to register additional Securities and the Warrant Shares pursuant to Rule
462(b) under the Rules (the “462(b) Registration Statement”), then any reference herein to the
Registration Statement shall also be deemed to include such 462(b) Registration Statement.
The term “Prospectus” means the Base Prospectus, and any amendments or further supplements to
such prospectus, and including, without limitation, the Prospectus Supplement filed pursuant to and
within the time limits described in Rule 424(b) with the Commission in connection with the proposed
sale of the Securities and the Warrant Shares contemplated by this Agreement through the date of
the Prospectus Supplement. The term “Effective Date” shall mean each date that the Registration
Statement and any post-effective amendment or amendments thereto became or become effective. Unless
otherwise stated herein, any reference herein to the Registration Statement, the General Disclosure
Package (as hereinafter defined), the Statutory Prospectus (as hereinafter defined) and the
Prospectus shall be deemed to refer to and include the documents incorporated by reference therein,
including pursuant to Item 12 of Form S-3 under the Securities Act, which were filed under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) on or before the date hereof or
are so filed hereafter. Any reference herein to the terms “amend,” “amendment” or “supplement” with
respect to the Registration Statement, the General Disclosure Package, the Statutory Prospectus or
the Prospectus shall be deemed to refer to and include any such document filed or to be filed under
the Exchange Act after the date of the Registration Statement, the General Disclosure Package, the
Statutory Prospectus or Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
The Company understands that the Underwriter proposes to make a public offering of the
Securities, as set forth in and pursuant to the Statutory Prospectus (as hereinafter defined) and
the Prospectus, as soon after the date of this Agreement as the Underwriter deems
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advisable. In
connection with its duties as underwriters, the Company hereby confirms that the Underwriter has
been authorized to distribute or cause to be distributed each Preliminary Prospectus, Issuer Free
Writing Prospectus (as hereinafter defined) and is authorized to distribute the Prospectus (as from
time to time amended or supplemented if the Company furnishes amendments or supplements thereto to
the Underwriter).
1. Sale, Purchase, Delivery and Payment for the Securities. On the basis of the
representations, warranties and agreements contained in, and subject to the terms and conditions
of, this Agreement:
(a) The Company agrees to issue and sell to the Underwriter, and the Underwriter agrees to
purchase from the Company, at a purchase price of
$0.2418 per unit (each unit composed of a share of
Common Stock, a Class A warrant and a Class B warrant), the Firm Securities.
(b) The Company hereby grants to the Underwriter an option to purchase all or any part of (i)
the Option Shares at a purchase price of
$0.211575 per Option Share, (ii) the Option Class A Warrants
at a purchase price of
$0.027900 per Option Class A Warrant and/or (iii) the Option Class B Warrants
at a purchase price of
$0.018600 per Option Class B Warrant. Such option may be exercised only one
time and only to cover over-allotments in the sales of the Firm Securities by the Underwriter and
may be exercised in whole or in part at any time on or before 12:00 noon, New York City time, two
business days before the Firm Securities Closing Date (as defined below), and at any time
thereafter within 30 days after the Firm Securities Closing Date, in each case upon written,
facsimile or telegraphic notice, or verbal or telephonic notice confirmed by written, facsimile or
telegraphic notice, by the Underwriter to the Company no later than 12:00 noon, New York City time,
two business days before the Firm Securities Closing Date or at least two business days before the
Option Securities Closing Date (as defined below), as the case may be, setting forth the number of
Option Shares, Option Class A Warrants and/or Option Class B Warrants to be purchased and the time
and date (if other than the Firm Securities Closing Date) of such purchase.
(c) Payment of the purchase price for, and delivery of certificates for, the Firm Securities
shall be made at the offices of Xxxxxxxxxxx & Co. Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m., New York City time, on the third business day following the date of this
Agreement or at such time on such other date, not later than ten (10) business days after the date
of this Agreement, as shall be agreed upon by the Company and the Underwriter (such time and date
of delivery and payment are called the “Firm Securities Closing Date”). In addition, in the event
that any or all of the Option Securities are purchased by the Underwriter, payment of the purchase
price, and delivery of the certificates, for such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the Underwriter and the
Company, on each date of delivery as specified in the notice from the Underwriter to the Company
(such time and date of delivery and payment are called the “Option Securities Closing Date”). The
Firm Securities Closing Date and any Option Securities Closing Date are called, individually, a
“Closing Date” and, together, the “Closing Dates.”
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(d) Payment shall be made to the Company by wire transfer of immediately available funds
payable in New York Clearing House (same day) funds drawn to the order of the Company, against
delivery of the respective certificates to the Underwriter.
(e) Certificates evidencing the Securities shall be registered in such names and shall be in
such denominations as the Underwriter shall request at least two full business days before the Firm
Securities Closing Date or, in the case of Option Securities, on the day of notice of exercise of
the option as described in Section 1(b) and shall be delivered by or on behalf of the
Company to the Underwriter through the facilities of the Depository Trust Company (“DTC”), as
requested by the Underwriter, for the account of such Underwriter. The Company will cause the
certificates representing the Securities to be made available for checking and packaging, at such
place as is designated by the Underwriter, on the full business day before the Firm Securities
Closing Date (or the Option Securities Closing Date in the case of the Option Securities).
2. Representations and Warranties of the Company. The Company represents and warrants
to the Underwriter as of the date hereof and as of the Closing Date, as follows:
(a) The Company meets the requirements for use of Form S-3 under the Securities Act and has
filed with the Commission the Registration Statement on such Form, including the Base Prospectus,
for registration under the Securities Act of the offering and sale of the Securities and the
Warrant Shares. When the Registration Statement or any amendment thereof or supplement thereto was
or is declared effective and as of the date of the most recent amendment to the Registration
Statement, it (i) complied or will comply, in all material respects, with the requirements of the
Securities Act and the Rules and the Exchange Act and the rules and regulations of the Commission
thereunder, and (ii) did not or will not, contain an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the statements therein
not misleading. When each of the Preliminary Prospectus and the Prospectus was or will be first
filed with the Commission (whether filed as part of the Registration Statement or any amendment
thereto or filed or to be filed pursuant to Rule 424 of the Rules) and when any amendment thereof
or supplement thereto (including the Prospectus Supplement) was or will be first filed with the
Commission, such Preliminary Prospectus and Prospectus, as amended or supplemented, will comply or
complied in all material respects with the applicable provisions of the Securities Act and the
Rules and did not as of the date thereof, does not as of the date hereof, or will not as of each
Closing Date, contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. If applicable, the Preliminary Prospectus and the Prospectus
delivered to the Underwriter for use in connection with this offering was or will be identical to
the electronically transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 2(a) shall apply to statements in, or omissions
from, the Registration Statement, the Preliminary Prospectus or the Prospectus made in reliance
upon, and in conformity with, information herein or otherwise furnished in writing by the
Underwriter specifically for use in the Registration Statement, the Preliminary Prospectus or the
Prospectus.
With respect to the preceding sentence, the Company acknowledges that the only information
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furnished in writing by the Underwriter for use in the Registration Statement, the Preliminary
Prospectus or the Prospectus is the statements contained in the
third, eighth and twelfth paragraphs under
the caption “Underwriting” in the Prospectus (the “Underwriter’s Information”).
(b) As of the Applicable Time (as hereinafter defined), neither (i) the Registration
Statement, the Base Prospectus, the Statutory Prospectus, the information included on Schedule
1 hereto and any information or documents deemed to be incorporated by reference to the
foregoing (collectively, the “General Disclosure Package”), nor (ii) any individual Issuer Free
Writing Prospectus (as hereinafter defined) when considered together with the General Disclosure
Package, included any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to statements in or omissions in the General Disclosure
Package made in reliance upon and in conformity with the Underwriter’s Information.
Each Issuer Free Writing Prospectus, including any electronic road show (including without
limitation any “bona fide electronic road show” as defined in Rule 433(h)(5) under the Securities
Act) (each, a “Road Show”) (i) is identified in Schedule 2 hereto and (ii) complied when
issued, and complies, in all material respects with the requirements of the Securities Act and the
Rules and the Exchange Act and the rules and regulations of the Commission thereunder.
As used in this Section and elsewhere in this Agreement:
“Applicable
Time” means 8:30 am (Eastern time) on the date of this Agreement.
“Issuer Free Writing Prospectus” means each “free writing prospectus” (as defined in
Rule 405 of the Rules) prepared by or on behalf of the Company or used or referred to by the
Company in connection with the offering of the Securities, including, without limitation,
each Road Show.
“Statutory Prospectus” as of any time means the Preliminary Prospectus relating to the
Securities that is included in the Registration Statement immediately prior to the
Applicable Time, including the Base Prospectus and any document incorporated by reference
therein and any prospectus supplement deemed to be a part thereof.
(c) The Registration Statement is effective under the Securities Act and no stop order
preventing or suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Preliminary Prospectus, the Prospectus or any “free writing prospectus”
(as defined in Rule 405 under the Rules) has been issued by the Commission and no proceedings for
that purpose have been instituted or, to the knowledge of the Company, are threatened under the
Securities Act. Any required filing of the Preliminary Prospectus, the Prospectus and any
supplement thereto pursuant to Rule 424(b) of the Rules has been or will be made in the manner and
within the time period required by such Rule 424(b). Any material
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required to be filed by the Company pursuant to Rule 433(d) or Rule 163(b)(2) of the Rules has
been or will be made in the manner and within the time period required by such Rules.
(d) The documents incorporated by reference in the Registration Statement, the Statutory
Prospectus and the Prospectus at the time they became effective or were filed with the Commission,
as the case may be, complied in all material respects with 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 an untrue statement of a material fact or omitted 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 under which they were made, not misleading, and any further
documents so filed and incorporated by reference in the Registration Statement, the Statutory
Prospectus and the Prospectus, when such documents become effective or are filed with the
Commission, as the case may be, 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 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 light of the
circumstances under which they are made, not misleading.
(e) Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the issuance and sale of the Securities or until any earlier date that
the Company notified or notifies the Underwriter as described in the next sentence, did not, does
not and will not include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, including any document incorporated by
reference therein and any prospectus supplement deemed to be a part thereof that has not been
superseded or modified, the General Disclosure Package or the Prospectus.
If at any time following issuance of an Issuer Free Writing Prospectus there occurred or
occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted
or would conflict with the information contained in the Registration Statement, the General
Disclosure Package or the Prospectus 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
Underwriter 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) The financial statements of the Company (including all notes and schedules thereto)
included or incorporated by reference in the Registration Statement, the General Disclosure Package
and the Prospectus present fairly in all material respects the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement of operations,
shareholders’ equity and cash flows of the Company and its consolidated subsidiaries for the
periods specified; and such financial statements and related schedules and notes thereto, and the
unaudited financial information filed with the Commission as part of the Registration Statement,
have been prepared in conformity with generally accepted accounting principles, consistently
applied throughout the periods involved. The summary and
6
selected financial data included in the Registration Statement, the General Disclosure Package
and the Prospectus present fairly in all material respects the information shown therein as at the
respective dates and for the respective periods specified and have been presented on a basis
consistent with the consolidated financial statements set forth in the Prospectus and other
financial information.
(g) PricewaterhouseCoopers LLP (the “Auditor”) whose report is filed with the Commission as a
part of the Registration Statement, is and, during the periods covered by its report, was an
independent public accountant as required by the Securities Act and the Rules.
(h) Each of the Company and its subsidiaries (including each corporation, partnership, joint
venture, association or other business organization) controlled directly or indirectly by the
Company (each, a “subsidiary”), is duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation or organization and each such entity has
all requisite entity power and authority to carry on its business as is currently being conducted
as described in the Registration Statement, the General Disclosure Package and the Prospectus, and
to own, lease and operate its properties. All of the issued shares of capital stock of, or other
ownership interests in, each subsidiary have been duly and validly authorized and issued and are
fully paid and non-assessable and are owned, directly or indirectly, by the Company, free and clear
of any lien, charge, mortgage, pledge, security interest, claim, limitation on voting rights,
equity, trust or other encumbrance, preferential arrangement, defect or restriction of any kind
whatsoever. Each of the Company and its subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature of the business
conducted by it or location of the assets or properties owned, leased or licensed by it requires
such qualification, except for such jurisdictions where the failure to so qualify individually or
in the aggregate would not have a material adverse effect on the assets, properties, condition,
financial or otherwise, or in the results of operations, business affairs or business prospects of
the Company and its subsidiaries considered as a whole (a “Material Adverse Effect”); and to the
Company’s knowledge, no proceeding has been instituted in any such jurisdiction revoking, limiting
or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification.
(i) The Registration Statement initially became effective within three years of the date
hereof. If, immediately prior to the third anniversary of the initial effective date of the
Registration Statement, any of the Securities remain unsold, the Company will, prior to that third
anniversary file, if it has not already done so, a new shelf registration statement relating to the
Securities and the Warrant Shares, in a form satisfactory to the Underwriter, will use its best
efforts to cause such registration statement to be declared effective within 180 days after that
third anniversary, and will take all other action necessary or appropriate to permit the public
offering and sale of the Securities and the Warrant Shares to continue as contemplated in the
expired Registration Statement. References herein to the registration statement relating to the
Securities and the Warrant Shares shall include such new shelf registration statement.
(j) Each of the Company and its subsidiaries has all requisite corporate power and authority,
and all necessary authorizations, approvals, consents, orders, licenses, certificates and permits
of and from all governmental or regulatory bodies or any other
7
person or entity (including those that may be required by any state, federal or foreign
agencies or bodies in the regulation of clinical trials and pharmaceuticals) (collectively, the
“Permits”) except where failure to have the same could not reasonably be expected to have a
Material Adverse Effect, to own, lease and license its assets and properties and conduct its
business, all of which are valid and in full force and effect. Each of the Company and its
subsidiaries has fulfilled and performed in all material respects all of its obligations with
respect to such Permits and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material impairment of the
rights of the Company thereunder. Except as may be required under the Securities Act and state
Blue Sky laws, no other Permits are required to enter into, deliver and perform this Agreement and
to issue and sell the Securities.
(k) At the earliest time after the filing of the Registration Statement that the Company or
another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the
Rules) of the Securities and at the date hereof, the Company was not and is not an “ineligible
issuer,” as defined in Rule 405 of the Rules, including (but not limited to) the Company or any
other subsidiary in the preceding three years not having been convicted of a felony or misdemeanor
or having been made the subject of a judicial or administrative decree or order as described in
Rule 405 of the Rules.
(l) Except as disclosed in the Registration Statement, the General Disclosure Package or the
Prospectus, each of the Company and its subsidiaries owns, or possesses legally enforceable rights
to use, all patents, patent rights, inventions, trademarks, trademark registrations, trade names,
service marks, service xxxx registrations, copyrights, copyright applications, licenses, know-how,
trade secrets and other similar rights and proprietary knowledge (collectively, “Intellectual
Property”) used, or proposed to be used, in the conduct of their respective businesses, as
presently conducted or as proposed to be conducted (collectively, “Company Intellectual Property”).
Except as described in the Registration Statement, the General Disclosure Package or the
Prospectus, (i) the business of the Company and its subsidiaries as now conducted and as proposed
to be conducted does not and will not infringe or conflict with any Intellectual Property or
franchise right of any person, and (ii) no claim has been made against the Company or any of its
subsidiaries alleging the infringement by the Company, any of its subsidiaries, any of their
respective licensees or other third parties of any Intellectual Property or franchise right of any
person, except for such as would not reasonably be expected to have a Material Adverse Effect. Each
employee of and consultant to the Company and its subsidiaries has entered into a confidentiality
and invention assignment agreement in favor of the Company or its applicable subsidiary as a
condition of the employment or retention of services of such employee or consultant, except where
failure to enter into such an agreement would not materially adversely effect the Company’s or its
subsidiaries’ rights with respect to the Company Intellectual Property. To the Company’s
knowledge, (i) there is no third party with any right to any Company Intellectual Property that
conflicts with the rights of the Company, its subsidiaries or their respective licensees thereto,
(ii) there is no infringement by any third parties of any Company Intellectual Property, and (iii)
there is no patent or patent application that contains claims that conflict with any Company
Intellectual Property that would, in each case, have a Material Adverse Effect. There is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or other claim by any
third parties (i) challenging the rights of the Company, any of its subsidiaries or their
respective licensees in or to, or the validity or scope of,
8
any Company Intellectual Property, or (ii) that the Company, any of its subsidiaries or any of
their respective licensees, infringes or otherwise violates, or would infringe or otherwise violate
upon commercialization of the Company’s products and product candidates, any Intellectual Property
of any third parties, and, to the knowledge of the Company, there are no facts that would form a
reasonable basis for any such claims.
(m) Neither the Company nor any of its subsidiaries owns any real property. Each of the
Company and its subsidiaries has good and marketable title to all personal property owned by it, in
each case free and clear of all liens, encumbrances, claims, security interests and defects, except
such as do not materially affect the value of such property and do not materially interfere with
the use made or proposed to be made of such property by the Company and its subsidiaries. All
property held under lease by the Company and its subsidiaries is held by them under valid, existing
and enforceable leases, free and clear of all liens, encumbrances, claims, security interests and
defects, except such as are not material and do not materially interfere with the use made or
proposed to be made of such property by the Company and its subsidiaries.
(n) Subsequent to the respective dates as of which information is given in the Registration
Statement, the General Disclosure Package and the Prospectus, (i) there has not been any event
which could reasonably be expected to have a Material Adverse Effect; (ii) none of the Company nor
any of its subsidiaries has sustained any loss or interference with its assets, businesses or
properties (whether owned or leased) from fire, explosion, earthquake, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree which would have a Material Adverse Effect; and (iii) since
the date of the latest balance sheet included or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus, neither the Company nor its
subsidiaries has (A) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except such liabilities or obligations incurred in the ordinary
course of business, (B) entered into any transaction not in the ordinary course of business or (C)
declared or paid any dividend or made any distribution on any shares of its stock or redeemed,
purchased or otherwise acquired or agreed to redeem, purchase or otherwise acquire any shares of
its capital stock.
(o) There is no document, contract or other agreement required to be described in the
Registration Statement, the General Disclosure Package or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as required by the Securities
Act or Rules. Each description of a contract, document or other agreement in the Registration
Statement, the General Disclosure Package or the Prospectus accurately reflects in all respects the
material terms of the underlying contract, document or other agreement. Each contract, document or
other agreement described in the Registration Statement, the General Disclosure Package or the
Prospectus or listed in the Exhibits to the Registration Statement or incorporated by reference is
in full force and effect and is valid and enforceable by and against the Company or its subsidiary,
as the case may be, in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles, and except where
the same is not reasonably likely to have a Material Adverse Effect. None of the Company nor any
of its subsidiaries (if a subsidiary is a party), nor
9
to the Company’s knowledge, any other party is in default in the observance or performance of
any term or obligation to be performed by it under any such agreement, and no event has occurred
which with notice or lapse of time or both would constitute such a default, in any such case which
default or event, individually or in the aggregate, would have a Material Adverse Effect. No
default exists, and no event has occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any term, covenant or condition, by
the Company or any of its subsidiaries (if a subsidiary is a party thereto) of any other agreement
or instrument to which the Company or any of its subsidiaries is a party or by which Company or its
properties or business or a subsidiary or its properties or business may be bound or affected which
default or event, individually or in the aggregate, would have a Material Adverse Effect.
(p) The statistical, scientific and market-related data included in the Registration
Statement, the General Disclosure Package or the Prospectus are based on or derived from sources
that the Company believes to be reliable and accurate.
(q) None of the Company nor any of its subsidiaries (i) is in violation of its certificate or
articles of incorporation, by-laws, certificate of formation, limited liability company agreement,
partnership agreement or other organizational documents, (ii) is in default under, and no event has
occurred which, with notice or lapse of time, or both, would constitute a default under, or result
in the creation or imposition of any lien, charge, mortgage, pledge, security interest, claim,
limitation on voting rights, equity, trust or other encumbrance, preferential arrangement, defect
or restriction of any kind whatsoever, upon, any property or assets of the Company or any
subsidiary pursuant to, any bond, debenture, note, 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 properties or assets is subject, or (iii) is in violation of any statute, law,
rule, regulation, ordinance, directive, judgment, decree or order of any judicial, regulatory or
other legal or governmental agency or body, foreign or domestic, except (in the case of clauses
(ii) and (iii) above) for violations or defaults that would not (individually or in the aggregate)
reasonably be expected to have a Material Adverse Effect.
(r) The Company has full legal right, corporate power and authority to enter into this
Agreement and perform the transactions contemplated hereby. This Agreement has been duly and
validly authorized, executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in accordance with its terms,
except as rights to indemnity under Section 5 of the Agreement may be limited by applicable
law and as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles. The Warrants have been duly and validly authorized, executed and
delivered by the Company and constitute a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and by general equitable principles. All
necessary corporate action has been duly and validly taken by the Company to authorize the
execution, delivery and performance of this Agreement and the Warrants and the issuance and sale of
the Securities and the Warrant Shares by the Company.
10
(s) Neither the execution, delivery and performance of this Agreement and the Warrants by the
Company nor the consummation of any of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the Securities and the Warrant Shares) will
give rise to a right to terminate or accelerate the due date of any payment due under, or conflict
with or result in the breach of any term or provision of, or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or require any
consent or waiver under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or its subsidiaries pursuant to the terms
of, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which either the Company or its subsidiaries or any of
their respective properties or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any of its subsidiaries or
violate any provision of the charter or by-laws of the Company or any of its subsidiaries except
for such consents or waivers which have already been obtained and are in full force and effect.
(t) The
Company has authorized and outstanding capital stock at January 8, 2010 as set
forth under the caption “The Offering” in the Prospectus, and since such date there has been no
change in the capital stock of the Company except for issuances pursuant to employee benefit plans
described in the Registration Statement, the General Disclosure Package or the Prospectus or upon
exercise of outstanding warrants described in the Registration Statement, General Disclosure
Package or the Prospectus. All of the issued and outstanding shares of Common Stock have been duly
and validly issued and are fully paid and nonassessable. There are no statutory preemptive or
other similar rights to subscribe for or to purchase or acquire any shares of Common Stock of the
Company or any of its subsidiaries or any such rights pursuant to its Certificate of Incorporation
or by-laws or any agreement or instrument to or by which the Company or any of its subsidiaries is
a party or bound. The Company has reserved and kept available for the exercise of the Warrants
such number of authorized but unissued shares as are sufficient to permit the exercise in full of
the Warrants. The Firm Shares and Option Shares, when delivered by the Company pursuant to this
Agreement, and the Warrant Shares, when issued upon exercise of the Warrants, will be duly and
validly issued, fully paid and nonassessable and none of them will be issued in violation of any
preemptive or other similar right. Except as disclosed in the Registration Statement, the General
Disclosure Package or the Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and there is no commitment, plan or arrangement to issue, any share of
stock of the Company or any of its subsidiaries or any security convertible into, or exercisable or
exchangeable for, such stock. The exercise price of each option to acquire Common Stock (each, a
“Company Stock Option”) is no less than the fair market value of a share of Common Stock as
determined on the date of grant of such Company Stock Option. All grants of Company Stock Options
were duly approved by the Company’s board of directors, made in accordance with the terms of the
Company’s applicable employee benefit plan and all applicable laws, recorded in the Company’s
financial statements in accordance with generally accepted accounting principles, and no such
grants involved any “back dating”, “forward dating,” “spring loading” or similar practices with
respect to the effective date of grant. The Common Stock and the Securities and the Warrant Shares
conform in all material respects to all statements in relation thereto contained in the
Registration Statement, the General Disclosure Package and the Prospectus. All outstanding shares
of capital stock of each of the Company’s subsidiaries have
11
been duly authorized and validly issued, and are fully paid and nonassessable and are owned
directly by the Company or by another wholly-owned subsidiary of the Company free and clear of any
security interests, liens, encumbrances, equities or claims, other than those described in the
Registration Statement, the General Disclosure Package or the Prospectus.
(u) No holder of any security of the Company has any right, which has not been waived, to have
any security owned by such holder included in the Registration Statement or to demand registration
of any security owned by such holder for a period of 90 days after the date of this Agreement.
(v) There are no legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any of its subsidiaries would reasonably
be expected, individually or in the aggregate, to have a Material Adverse Effect; and, to the
knowledge of the Company, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(w) None of the Company nor any of its subsidiaries is involved in any labor dispute nor, to
the knowledge of the Company, is any such dispute threatened, which dispute would have a Material
Adverse Effect. The Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or contractors which would have a Material Adverse
Effect. The Company is not aware of any threatened or pending litigation between the Company or its
subsidiaries and any of its executive officers which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect and has no reason to believe that such officers will not
remain in the employment of the Company.
(x) No transaction has occurred between or among the Company and any of its officers or
directors, shareholders or any affiliate or affiliates of any such officer or director or
shareholder that is required to be described in and is not described in the Registration Statement,
the General Disclosure Package and the Prospectus.
(y) The Company has not taken, nor will it take, directly or indirectly, any action designed
to or which might reasonably be expected to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation (as such terms are
used in Regulation M promulgated under the Exchange Act) of the price of the Common Stock or any
security of the Company to facilitate the sale or resale of any of the Securities.
(z) The Company and each of its subsidiaries has filed all Federal, state, local and foreign
tax returns which are required to be filed through the date hereof, which returns are true and
correct in all material respects or has received timely extensions thereof, and has paid all taxes
shown on such returns and all assessments received by it to the extent that the same are material
and have become due. There are no tax audits or investigations pending, which if adversely
determined would have a Material Adverse Effect; nor are there any material proposed additional tax
assessments against the Company or any of its subsidiaries.
12
(aa) The Company has duly authorized the Firm Shares, the Option Shares and the Warrant
Shares for listing on the Nasdaq Capital Market. The Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the Common Stock under the Exchange
Act or the listing of the Common Stock on the Nasdaq Capital Market, nor has the Company received
any notification that the Commission or the Nasdaq Capital Market is contemplating terminating such
registration or listing, except as otherwise disclosed in the Registration Statement, the General
Disclosure Package or the Prospectus.
(bb) Each subsidiary of the Company is not currently prohibited, directly or indirectly, under
any agreement or other instrument to which any such subsidiary is a party or is subject, from
paying any dividends to the Company, from making any other distribution on any subsidiary’s capital
stock, from repaying to the Company any loans or advances to any subsidiary from the Company or
from transferring any of such subsidiary’s properties or assets to the Company.
(cc) The books, records and accounts of the Company and its subsidiaries accurately and fairly
reflect, in all material respects, the transactions in, and dispositions of, the assets of, and the
results of operations of, the Company and its subsidiaries. The Company and each of its
subsidiaries maintains a system of internal accounting controls sufficient 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 accordance with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.
(dd) The Company has established and maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15 under the Exchange Act), which: (i) are designed to ensure that
material information relating to the Company is made known to the Company’s principal executive
officer and its principal financial officer by others within the Company, particularly during the
periods in which the periodic reports required under the Exchange Act are required to be prepared;
(ii) provide for the periodic evaluation of the effectiveness of such disclosure controls and
procedures at the end of the periods in which the periodic reports are required to be prepared; and
(iii) are effective in all material respects to perform the functions for which they were
established.
(ee) Based on the evaluation of its disclosure controls and procedures, the Company is not
aware of (i) any significant deficiency in the design or operation of internal controls which could
adversely affect the Company’s ability to record, process, summarize and report financial data or
any material weaknesses in internal controls; or (ii) any fraud, whether or not material, that
involves management or other employees who have a role in the Company’s internal controls.
(ff) Except as described in the Registration Statement, the General Disclosure Package and the
Prospectus and as pre-approved in accordance with the requirements
13
set forth in Section 10A of the Exchange Act, the Auditors have not been engaged by the
Company to perform any “prohibited activities” (as defined in Section 10A of the Exchange Act).
(gg) Except as described in the Registration Statement, the General Disclosure Package or the
Prospectus, there are no material off-balance sheet arrangements (as defined in Item 303 of
Regulation S-K) that have or are reasonably likely to have a material current or future effect on
the Company’s financial condition, revenues or expenses, changes in financial condition, results of
operations, liquidity, capital expenditures or capital resources.
(hh) The Company’s board of directors has validly appointed an audit committee whose
composition satisfies the requirements of Rule 5605(c)(2) of the Rules of the Nasdaq Stock Market
(the “Nasdaq Rules”) and the Company’s board of directors and/or the audit committee has adopted a
charter that satisfies the requirements of Rule 5605(c)(1) of the Nasdaq Rules. The audit
committee has reviewed the adequacy of its charter within the past twelve months.
(ii) There is and has been no failure on the part of the Company or any of its directors or
officers, in their capacities as such, to comply with any applicable provision of the
Xxxxxxxx-Xxxxx Act of 2002, any related rules and regulations promulgated by the Commission and
corporate governance requirements under the Nasdaq Rules, including, without limitation, Section
402 related to loans and Sections 302 and 906 related to certifications.
(jj) The Company and its subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are customary in the businesses
in which they are engaged or propose to engage after giving effect to the transactions described in
the Registration Statement, the General Disclosure Package and the Prospectus; all policies of
insurance and fidelity or surety bonds insuring the Company or any of its subsidiaries or the
Company’s or its subsidiaries’ respective businesses, assets, employees, officers and directors are
in full force and effect; the Company and each of its subsidiaries are in compliance with the terms
of such policies and instruments in all material respects; and neither the Company nor any
subsidiary of the Company has any reason to believe that it will not be able to renew its existing
insurance policies and instruments as and when they expire or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that is materially greater
than the cost of its current insurance coverage. Neither the Company nor any of its subsidiaries
has been denied any insurance coverage which it has sought or for which it has applied.
(kk) Each approval, consent, order, authorization, designation, declaration or filing of, by
or with any regulatory, administrative or other governmental body necessary in connection with the
execution and delivery by the Company of this Agreement and the consummation of the transactions
herein contemplated required to be obtained or performed by the Company (except such additional
steps as may be required by the Financial Industry Regulatory Authority (“FINRA”) or may be
necessary to qualify the Securities and the Warrant Shares under the state securities or Blue Sky
laws) has been obtained or made and is in full force and effect.
14
(ll) There are no affiliations with FINRA among the Company’s officers, directors or, to the
best of the knowledge of the Company, any five percent or greater shareholder of the Company,
except as set forth in the Registration Statement or otherwise disclosed in writing to the
Underwriter.
(mm) (i) Each of the Company, its subsidiaries and its licensees is in compliance in all
material respects with all federal, state, local and foreign rules, laws and regulation relating to
the use, treatment, storage and disposal of toxic substances and protection of health or the
environment which are applicable to its business (“Environmental Laws”); (ii) neither the Company
nor its subsidiaries or licensees has received any notice from any governmental authority or third
party of an asserted claim under Environmental Laws; (iii) each of the Company and its subsidiaries
has received all permits, licenses or other approvals required of it under applicable Environmental
Laws to conduct its business and is in compliance with all terms and conditions of any such permit,
license or approval; (iv) to the Company’s knowledge, no facts currently exist that will require
the Company or any of its subsidiaries to make future material capital expenditures to comply with
Environmental Laws; (v) no property which is or has been owned, leased or occupied by the Company
or its subsidiaries has been designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation of Liability Act of 1980, as amended (42 U.S.C. Section 9601,
et. seq.) (“CERCLA”) or otherwise designated as a contaminated site under applicable foreign, state
or local law. Neither the Company nor any of its subsidiaries has been named as a “potentially
responsible party” under the CERCLA.
(nn) In the ordinary course of its business, the Company periodically reviews the effect of
Environmental Laws on the business, operations and properties of the Company and its subsidiaries,
in the course of which the Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures required for clean up,
closure of properties or compliance with Environmental Laws, or any permit, license or approval,
any related constraints on operating activities and any potential liabilities to third parties).
On the basis of such review, the Company has reasonably concluded that such associated costs and
liabilities would not, singly or in the aggregate, have a Material Adverse Effect.
(oo) The Company and its subsidiaries hold and are operating in compliance in all material
respects with such exceptions, permits, licenses, franchises, authorizations and clearances of the
Food and Drug Administration of the U.S. Department of Health and Human Services (“FDA”) and/or any
committee thereof required, for the conduct of its business as currently conducted (collectively,
the “FDA Permits”), and all such FDA Permits are in full force and effect. The Company has
fulfilled and performed all of its obligations with respect to the FDA Permits, and, no event has
occurred which allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any other impairment of the rights of the holder of any FDA Permit.
(pp) The Company and its subsidiaries: (i) are and at all times have been in compliance in all
material respects with all statutes, rules, regulations, or guidances applicable to the ownership,
testing, development, manufacture, packaging, processing, use, distribution, marketing, labeling,
promotion, sale, offer for sale, storage, import, export or
15
disposal of any product under development, manufactured or distributed by the Company
(“Applicable Laws”); (ii) has not received any notice of adverse finding, warning letter, untitled
letter or other correspondence or notice from the FDA or any other federal, state, local or foreign
governmental or regulatory authority alleging or asserting noncompliance with any Applicable Laws
or any licenses, certificates, approvals, clearances, authorizations, permits and supplements or
amendments thereto required by any such Applicable Laws (“Authorizations”); (iii) has not received
notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or
other action from the FDA or any other federal, state, local or foreign governmental or regulatory
authority or third party alleging that any product operation or activity is in violation of any
Applicable Laws or Authorizations and has no knowledge that the FDA or any other federal, state,
local or foreign governmental or regulatory authority or third party is considering any such claim,
litigation, arbitration, action, suit, investigation or proceeding; (iv) has not received notice
that the FDA or any other federal, state, local or foreign governmental or regulatory authority has
taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations
and has no knowledge that the FDA or any other federal, state, local or foreign governmental or
regulatory authority is considering such action; (v) has filed, obtained, maintained or submitted
all reports, documents, forms, notices, applications, records, claims, submissions and supplements
or amendments as required by any Applicable Laws or Authorizations and that all such reports,
documents, forms, notices, applications, records, claims, submissions and supplements or amendments
were complete and correct on the date filed (or were corrected or supplemented by a subsequent
submission); and (vi) has not, either voluntarily or involuntarily, initiated, conducted, or issued
or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement,
safety alert, post sale warning, “dear doctor” letter, or other notice or action relating to the
alleged lack of safety or efficacy of any product or any alleged product defect or violation and,
to the Company’s knowledge, no third party has initiated, conducted or intends to initiate any such
notice or action.
(qq) The Company is not and, after giving effect to the offering and sale of the Securities
and the application of proceeds thereof as described in the Registration Statement, the General
Disclosure Package and the Prospectus, will not be an “investment company” within the meaning of
the Investment Company Act of 1940, as amended (the “Investment Company Act”).
(rr) The Company or any other person associated with or acting on behalf of the Company
including, without limitation, any director, officer, agent or employee of the Company or its
subsidiaries, has not, directly or indirectly, while acting on behalf of the Company or its
subsidiaries (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 in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any other unlawful payment.
(ss) The operations of the Company and its subsidiaries are and have been conducted at all
times in compliance in all material respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and
16
regulations thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and
no action, suit or proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of it subsidiaries with respect to the Money Laundering
Laws is pending, or to the best knowledge of the Company, threatened.
(tt) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, 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 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.
(uu) Except as described in the Registration Statement, the General Disclosure Package or the
Prospectus, the Company has not sold or issued any shares of Common Stock during the six-month
period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act, other than shares issued pursuant to employee benefit
plans, qualified stock options plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(vv) The Company has fulfilled its obligations, if any, under the minimum funding standards of
Section 302 of the U.S. Employee Retirement Income Security Act of 1974 (“ERISA”) and the
regulations and published interpretations thereunder with respect to each “plan” as defined in
Section 3(3) of ERISA and such regulations and published interpretations in which its employees are
eligible to participate and each such plan is in compliance in all material respects with the
presently applicable provisions of ERISA and such regulations and published interpretations. No
“Reportable Event” (as defined in 12 ERISA) has occurred with respect to any “Pension Plan” (as
defined in ERISA) for which the Company could have any liability. The Company has no obligation to
provide retirement, death or disability benefits to any of the present or past employees of the
Company or any subsidiary, or to any other person; the Company and its subsidiaries are in
compliance with all applicable laws relating to employee benefits.
(ww) None of the Company, its directors or officers has distributed or will distribute prior
to the later of (i) the Firm Securities Closing Date or the Option Securities Closing Date, as the
case may be, and (ii) completion of the distribution of the Securities, any offering material in
connection with the offering and sale of the Securities and the Warrant Shares other than the
Preliminary Prospectus, the Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act and consistent with Section 5(e) below.
(xx) Except
as set forth in the Prospectus, the Company is not a party to any contract, agreement or understanding with any person
that would give rise to a valid claim against the Company or the Underwriter for a brokerage
commission, finder’s fee or like payment, nor is any such
payment being made, in connection with the offering and sale of the
Securities.
17
3. Conditions of the Underwriter’s Obligations. The obligations of the Underwriter
under this Agreement are subject to each of the following terms and conditions:
(a) Notification that the Registration Statement has become effective shall have been received
by the Underwriter and the Prospectus shall have been timely filed with the Commission in
accordance with Section 4(a) of this Agreement and any material required to be filed by the
Company pursuant to Rule 433(d) of the Rules shall have been timely filed with the Commission in
accordance with such rule.
(b) No order preventing or suspending the use of the Preliminary Prospectus, the Prospectus or
any “free writing prospectus” (as defined in Rule 405 of the Rules) shall have been or shall be in
effect and no order suspending the effectiveness of the Registration Statement shall be in effect
and no proceedings for such purpose shall be pending before or threatened by the Commission, and
any requests for additional information on the part of the Commission (to be included in the
Registration Statement, the Preliminary Prospectus or the Prospectus or otherwise) shall have been
complied with to the satisfaction of the Commission and the Underwriter.
(c) The representations and warranties of the Company contained in this Agreement and in the
certificates delivered pursuant to Section 3(d) shall be true and correct when made and on
and as of each Closing Date as if made on such date. The Company shall have performed all covenants
and agreements and satisfied all the conditions contained in this Agreement required to be
performed or satisfied by it at or before each Closing Date.
(d) The Underwriter shall have received on each Closing Date a certificate, addressed to the
Underwriter and dated such Closing Date, of the chief executive officer and chief financial officer
of the Company to the effect that: (i) the representations, warranties and agreements of the
Company in this Agreement were true and correct when made and are true and correct as of such
Closing Date; (ii) the Company has performed all covenants and agreements and satisfied all
conditions contained herein; (iii) he has carefully examined the Registration Statement, the
Prospectus, the General Disclosure Package, and any individual Issuer Free Writing Prospectus and,
in his opinion (A) as of the Effective Date, (1) the Registration Statement and Base Prospectus did
not include, (2) as of the Applicable Time, neither (x) the General Disclosure Package, nor (y) any
individual Issuer Free Writing Prospectus, when considered together with the General Disclosure
Package, included, and (3) as of its date and the Closing Date, the Prospectus, including the
Prospectus Supplement, 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) since the Applicable Time no event has occurred which should have been set
forth in a supplement or otherwise required an amendment to the Registration Statement, the General
Disclosure Package or the Prospectus; and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to his knowledge, no proceedings for that purpose have
been instituted or are pending under the Securities Act.
(e) The Underwriter shall have received: (i) simultaneously with the execution of this
Agreement a signed letter from the Auditor addressed to the Underwriter and dated the date of this
Agreement, in form and substance reasonably satisfactory to the
18
Underwriter, containing statements and information of the type ordinarily included in
accountants’ “comfort letters” with respect to the financial statements and certain financial
information contained in the Registration Statement and the General Disclosure Package, and (ii) on
each Closing Date, a signed letter from the Auditor addressed to the Underwriter and dated such
Closing Date, in form and substance reasonably satisfactory to the Underwriter containing
statements and information of the type ordinarily included in accountants’ “comfort letters” with
respect to the financial statements and certain financial information contained in the Registration
Statement and the Prospectus.
(f) The Underwriter shall have received on each Closing Date from Seyfarth Xxxx LLP, counsel
for the Company, an opinion, addressed to the Underwriter and dated such Closing Date, stating in
effect the matters set forth on Exhibit B-1 attached hereto.
(g) The Underwriter shall have received on each Closing Date from Xxxxxx Xxxxxxx PLLC, special
local counsel for the Company, an opinion, addressed to the Underwriter and dated such Closing
Date, stating in effect the matters set forth on Exhibit B-2 attached hereto.
(h) All proceedings taken in connection with the sale of the Securities as herein contemplated
shall be reasonably satisfactory in form and substance to the Underwriter and its counsel and the
Underwriter shall have received from Xxxxxxx Procter LLP a favorable opinion, addressed to the
Underwriter and dated each Closing Date, covering such matters as are customarily covered in
transactions of this type, and the Company shall have furnished to Xxxxxxx Procter LLP such
documents as they may reasonably request for the purpose of enabling them to pass upon such
matters.
(i) Each director and executive officer (a list of which is contained in Schedule 3
hereto) of the Company has delivered to the Underwriter his enforceable written lock-up agreement
in the form attached to this Agreement as Exhibit A hereto (the “Lock-Up Agreement”).
(j) The Firm Shares, the Option Shares and the Warrant Shares shall have been approved for
listing on the Nasdaq Capital Market.
(k) The Underwriter shall be reasonably satisfied that since the respective dates as of which
information is given in the Registration Statement, the General Disclosure Package and the
Prospectus, (i) there shall not have been any material change in the capital stock of the Company
or any material change in the indebtedness (other than in the ordinary course of business) of the
Company, (ii) except as set forth or contemplated by the Registration Statement, the General
Disclosure Package or the Prospectus, no material oral or written agreement or other transaction
shall have been entered into by the Company or any subsidiary that is not in the ordinary course of
business or that could reasonably be expected to result in a material reduction in the future
earnings of the Company, (iii) no loss or damage (whether or not insured) to the property of the
Company or any subsidiary shall have been sustained that had or could reasonably be expected to
have a Material Adverse Effect, (iv) no legal or governmental action, suit or proceeding affecting
the Company or any subsidiary or any of their properties that is material to the Company or that
affects or could reasonably be expected
19
to affect the transactions contemplated by this Agreement shall have been instituted or
threatened and (v) there shall not have been any material change in the assets, properties,
condition (financial or otherwise), or in the results of operations, business affairs or business
prospects of the Company or its subsidiaries considered as a whole that makes it impractical or
inadvisable in the Underwriter’s judgment to proceed with the purchase or offering of the
Securities as contemplated hereby.
(l) On each Closing Date, the Company shall have furnished to the Underwriter a Secretary’s
Certificate of the Company.
(m) FINRA shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(n) The Company shall have furnished or caused to be furnished to the Underwriter such further
certificates or documents as the Underwriter shall have reasonably requested.
4. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company shall prepare the Prospectus in a form approved by the Underwriter and
file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the
Commission’s close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be required by the
Rules. The Company will file with the Commission all Issuer Free Writing Prospectuses in
the time and manner required under Rules 433(d) or 163(b)(2), as the case may be.
(ii) The Company shall promptly advise the Underwriter in writing (A) when any
post-effective amendment to the Registration Statement shall have become effective or any
supplement to the Prospectus shall have been filed, (B) of any request by the Commission for
any amendment of the Registration Statement or the Prospectus or for any additional
information, (C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or suspending the use
of any “free writing prospectus”, as defined in Rule 405 of the Rules, or the institution or
threatening of any proceeding for that purpose and (D) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Securities and the
Warrant Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any amendment of the Registration
Statement or supplement to the Prospectus or any document incorporated by reference in the
Registration Statement or any Issuer Free Writing Prospectus unless the Company has
furnished the Underwriter a copy for its review prior to filing and shall not file any such
proposed amendment or supplement to which the Underwriter reasonably objects. The Company
shall use its best efforts to prevent the issuance of any such stop order and, if issued, to
obtain as soon as possible the withdrawal thereof.
20
(iii) If, at any time when a prospectus relating to the Securities and the Warrant
Shares (or, in lieu thereof, the notice referred to Rule 173(a) of the Rules) is required to
be delivered under the Securities Act and the Rules, any event occurs 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
the light of the circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the Securities Act or the
Rules, the Company promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (ii) of this Section 4(a), an amendment or supplement
which shall correct such statement or omission or an amendment which shall effect such
compliance.
(iv) If at any time following issuance of an Issuer Free Writing Prospectus there
occurs an event or development as a result of which such Issuer Free Writing Prospectus
would conflict with the information contained in the Registration Statement or would include
an untrue statement of a material fact 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 will promptly
notify the Underwriter and will promptly amend or supplement, at its own expense, such
Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or
omission.
(v) The Company shall make generally available to its security holders and to the
Underwriter as soon as practicable, but not later than 45 days after the end of the 12-month
period beginning at the end of the fiscal quarter of the Company during which the most
recent Effective Date occurs (or 90 days if such 12-month period coincides with the
Company’s fiscal year), an earning statement (which need not be audited) of the Company,
covering such 12-month period, which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Rules.
(vi) The Company shall furnish to the Underwriter and counsel for the Underwriter,
without charge, copies of the Registration Statement (including all exhibits thereto and
amendments thereof) and, so long as delivery of a prospectus by the Underwriter or dealer
may be required by the Securities Act or the Rules, as many copies of any Issuer Free
Writing Prospectus, the Preliminary Prospectus and the Prospectus and any amendments thereof
and supplements thereto as the Underwriter may reasonably request. If applicable, the
copies of the Registration Statement, Issuer Free Writing Prospectus, the Preliminary
Prospectus and Prospectus and each amendment and supplement thereto furnished to the
Underwriter will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(vii) The Company shall cooperate with the Underwriter and its counsel in endeavoring
to qualify the Securities and the Warrant Shares for offer and sale in connection with the
offering under the laws of such jurisdictions as the Underwriter may designate and shall
maintain such qualifications in effect so long as required for the distribution of the
Securities; provided, however, that the Company shall not be required
21
in connection therewith, as a condition thereof, to qualify as a foreign corporation or
to execute a general consent to service of process in any jurisdiction or subject itself to
taxation as doing business in any jurisdiction.
(viii) The Company, during the period when the Prospectus (or, in lieu thereof, the
notice referred to in Rule 173(a) of the Rules) is required to be delivered under the
Securities Act and the Rules or the Exchange Act, will file all reports and other documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange
Act within the time periods required by the Exchange Act and the regulations promulgated
thereunder.
(ix) Without the prior written consent of the Underwriter, (a) for a period of 90 days
after the date of this Agreement, the Company shall not issue, sell or register with the
Commission (other than on Form S-8 or on any successor form), or otherwise dispose of,
directly or indirectly, any equity securities of the Company (or any securities convertible
into, exercisable for or exchangeable for equity securities of the Company), except for the
issuance of the Securities and the Warrant Shares pursuant to the Registration Statement and
the issuance of shares pursuant to the Company’s existing employee benefit plans as
described in the Registration Statement, the General Disclosure Package or the Prospectus
and (b) for a period of 180 days after the date of this Agreement, the Company shall not (i)
issue, sell or register with the Commission, or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any securities convertible into,
exercisable for or exchangeable for equity securities of the Company) pursuant to the
Company’s existing financing program with Fusion Capital Fund II, LLC or (ii) enter into any
similar equity program with any third party. Notwithstanding the foregoing, if (x) during
the last 17 days of the 90 day period or 180 day period, as applicable, described in the
preceding sentence the Company issues an earnings release or material news or a material
event relating to the Company occurs; or (y) prior to the expiration of such 90 day period
or 180 day period, as applicable, the Company announces that it will release earnings
results during the 16 day period beginning on the last day of the 90 day period or 180 day
period, as applicable; the restrictions imposed in this preceding sentence shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event; provided, however, that
this sentence shall not apply if the research published or distributed on the Company is
compliant under Rule 139 of the Securities Act and the Company’s securities are “actively
traded” as defined in Rule 101(c)(1) of Regulation M of the Exchange Act.
(x) On or before completion of this offering, the Company shall make all filings
required under applicable securities laws and by the Nasdaq Capital Market (including any
required registration under the Exchange Act).
(xi) Prior to the Firm Securities Closing Date or the Option Securities Closing Date,
as the case may be, the Company will issue no press release or other communications directly
or indirectly and hold no press conference with respect to the Company, the condition,
financial or otherwise, or the earnings, business affairs or business prospects of any of
them, or the offering of the Securities and the Warrant
22
Shares without the prior written consent of the Underwriter unless in the judgment of
the Company and its counsel, and after notification to the Underwriter, such press release
or communication is required by law.
(xii) The Company will apply the net proceeds from the offering of the Securities in
the manner set forth under “Use of Proceeds” in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the Underwriter, whether or not the
transactions contemplated hereby are consummated or this Agreement is terminated, all costs and
expenses incident to the issuance of the Securities and the performance of the obligations of the
Company under this Agreement including those relating to: (i) the preparation, printing,
reproduction, filing and distribution of the Registration Statement (including all exhibits
thereto), the Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus, all
amendments and supplements to any of the foregoing documents, and any document incorporated by
reference in the Registration Statement, and the printing, filing and distribution of this
Agreement; (ii) the preparation and delivery of certificates for the Securities and the Warrant
Shares; (iii) the registration or qualification of the Securities and the Warrant Shares for offer
and sale under the securities or Blue Sky laws of the various jurisdictions referred to in
Section 4(a)(vii), including the reasonable fees and disbursements of counsel for the
Underwriter in connection with such registration and qualification and the preparation, printing,
distribution and shipment of preliminary and supplementary Blue Sky memoranda; (iv) the furnishing
(including costs of shipping and mailing) to the Underwriter of copies of the Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus, and all amendments or supplements
to any of the foregoing, and of the several documents required by this Section to be so furnished,
as may be reasonably requested for use in connection with the offering and sale of the Securities
and Warrant Shares; (v) the filing fees of FINRA in connection with its review of the terms of the
public offering and reasonable fees and disbursements of counsel for the Underwriter in connection
with such review; (vi) inclusion of the Firm Shares, the Option Shares and the Warrant Shares for
listing on the Nasdaq Capital Market; (vii) the costs and expenses of the Company relating to
investor presentations in connection with the marketing of the offering of the Securities,
including, without limitation, expenses associated with the production of slides and graphics, fees
and expenses of any consultants engaged in connection with the presentations, travel and lodging
expenses of the representatives and officers of the Company and any such consultants; (viii) all
transfer taxes, if any, with respect to the sale and delivery of the Securities and the Warrant
Shares by the Company; and (ix) all reasonable out-of-pocket expenses (including the fees and
disbursements of counsel to the Underwriter) incurred by the Underwriter in connection with this
Agreement and the proposed sale of the Securities and the Warrant Shares or in contemplation of
performing its obligations hereunder; provided, however, that except as otherwise contemplated in
Section 5 or 7(b) hereof, the Company shall only be liable for the reasonable
out-of-pocket expenses (including the fees and disbursements of counsel to the Underwriter)
incurred by the Underwriter in an amount not to exceed $75,000 in the aggregate.
(c) The Company acknowledges and agrees that the Underwriter has acted and is acting solely in
the capacity of a principal in an arm’s length transaction between the Company, on the one hand,
and the Underwriter, on the other hand, with respect to the offering of Securities contemplated
hereby (including in connection with determining the terms of the
23
offering) and not as a financial advisor, agent or fiduciary to the Company or any other
person. Additionally, the Company acknowledges and agrees that the Underwriter has not and will
not advise the Company or any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Company has consulted with its own advisors concerning
such matters and shall be responsible for making its own independent investigation and appraisal of
the transactions contemplated hereby, and the Underwriter shall have no responsibility or liability
to the Company or any other person with respect thereto, whether arising prior to or after the date
hereof. Any review by the Underwriter of the Company, the transactions contemplated hereby or
other matters relating to such transactions have been and will be performed solely for the benefit
of the Underwriter and shall not be on behalf of the Company. The Company agrees that it will not
claim that the Underwriter has rendered advisory services of any nature or respect, or owes a
fiduciary duty to the company or any other person in connection with any such transaction or the
process leading thereto.
(d) The Company represents and agrees that, unless it obtains the prior consent of the
Underwriter, and the Underwriter represents and agrees that, unless it obtains the prior consent of
the Company, it has not made and will not make any offer relating to the Securities and the Warrant
Shares that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that
would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be
filed with the Commission. The Company has complied and will comply with the requirements of Rule
433 under the Securities Act applicable to any Issuer Free Writing Prospectus, including timely
filing with the Commission where required, legending and record keeping. The Company represents
that is has satisfied and agrees that it will satisfy the conditions set forth in Rule 433 of the
Rules to avoid a requirement to file with the Commission any Road Show. The Company consents to
the use by the Underwriter of a free writing prospectus that (a) is not an “issuer free writing
prospectus” as defined in Rule 433, and (b) contains only information describing the preliminary
terms of the Securities and the Warrant Shares or their offering.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Underwriter and each person, if any,
who controls the Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act against any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal and other expenses incurred in connection with, and
any amount paid in settlement of, any action, suit or proceeding or any claim asserted), to which
they, or any of them, may become subject under the Securities Act, the Exchange Act or other
Federal or state law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the Preliminary Prospectus,
the Prospectus, the General Disclosure Package, any Issuer Free Writing Prospectus, any materials
or information provided to investors by, or with the approval of, the Company in connection with
the marketing of the offering of the Securities (“Marketing Materials”), or any
“issuer-information” filed or required to be filed pursuant to Rule 433(d) of the Rules, any
amendment thereof or supplement thereto, or in any Blue Sky application or other information or
other documents executed by the Company filed in any state or other jurisdiction to qualify any or
all of the Securities under the securities laws thereof (any
24
such application, document or information being hereinafter referred to as a “Blue Sky
Application”) or arise out of or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that such indemnity shall not inure to the benefit of the
Underwriter (or any person controlling such Underwriter) on account of any losses, claims, damages
or liabilities arising from the sale of the Securities to any person by such Underwriter if such
untrue statement or omission or alleged untrue statement or omission was made in such Registration
Statement, the Preliminary Prospectus, the Prospectus, the General Disclosure Package, any Issuer
Free Writing Prospectus, or in any Marketing Materials, or such amendment or supplement thereto, or
in any Blue Sky Application in reliance upon and in conformity with the Underwriter’s Information.
This indemnity agreement will be in addition to any liability which the Company may otherwise
have.
(b) The Underwriter agrees to indemnify and hold harmless the Company 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, each director of the Company, and each officer of the Company who signs the
Registration Statement, against any losses, claims, damages or liabilities to which such party may
become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration Statement, the
Preliminary Prospectus, the Prospectus or the General Disclosure Package, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the Registration Statement,
the Preliminary Prospectus, the Prospectus or the General Disclosure Package or any such amendment
or supplement in reliance upon and in conformity with the Underwriter’s Information; provided,
however, that the obligation of the Underwriter to indemnify the Company (including any controlling
person, director or officer thereof) shall be limited to the amount of the underwriting discounts
and commissions applicable to the Securities to be purchased by the Underwriter hereunder.
(c) Any party that proposes to assert the right to be indemnified under this Section will,
promptly after receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. No indemnification provided for in Section
5(a) or 5(b) shall be available to any party who shall fail to give notice as provided
in this Section 5(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the failure to give such
notice but the omission so to notify such indemnifying party of any such action, suit or proceeding
shall not relieve it from any liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit or proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it
shall wish, jointly with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and after
25
notice from the indemnifying party to such indemnified party of its election so to assume the
defense thereof and the approval by the indemnified party of such counsel, the indemnifying party
shall not be liable to such indemnified party for any legal or other expenses, except as provided
below and except for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The indemnified party shall have the
right to employ its counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the employment of counsel by such indemnified
party has been authorized in writing by the indemnifying parties, (ii) the indemnified party shall
have been advised by counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to the indemnifying party (in which case the
indemnifying parties shall not have the right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the commencement thereof, in each
of which cases the fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of any action, suit, and
proceeding or claim effected without its written consent, which consent shall not be unreasonably
withheld or delayed.
6. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 5(a) or 5(b) is
due in accordance with its terms but for any reason is unavailable to or insufficient to hold
harmless an indemnified party in respect to any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the aggregate losses,
liabilities, claims, damages and expenses (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting any contribution received by any person
entitled hereunder to contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriter on the other hand from the
offering of the Securities pursuant to this Agreement or, if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company on the one hand and the Underwriter on
the other hand in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.
The Company, and the Underwriter agree that it would not be just and equitable if contribution
pursuant to this Section 6 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to above. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding the provisions of this Section 6, the Underwriter shall not be
required to contribute any amount in excess of the amount by which the total price at which the
shares placed by it and distributed to the public were offered to the public exceeds the amount of
damages which such Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
26
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution as such Underwriter, and each director of the
Company including any person who, with his or her consent, is named in the Registration Statement
as about to become a director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within the meaning of the
Section 15 of the Securities Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in respect of which a
claim for contribution may be made against another party or parties under this Section 6,
notify such party or parties from whom contribution may be sought, but the omission so to notify
such party or parties from whom contribution may be sought shall not relieve the party or parties
from whom contribution may be sought from any other obligation it or they may have hereunder or
otherwise than under this Section 6. No party shall be liable for contribution with
respect to any action, suit, proceeding or claim settled without its written consent.
7. Termination.
(a) This Agreement may be terminated at any time prior to each Closing Date by the Underwriter
by notifying the Company at any time at or before such Closing Date in the absolute discretion of
the Underwriter if: (i) there has occurred any material adverse change in the securities markets or
any event, act or occurrence that has materially disrupted, or in the opinion of the Underwriter,
will in the future materially disrupt, the securities markets or there shall be such a material
adverse change in general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States is such as to make it, in
the judgment of the Underwriter, inadvisable or impracticable to market the Securities and the
Warrant Shares or enforce contracts for the sale of the Securities and the Warrant Shares; (ii)
there has occurred any outbreak or material escalation of hostilities or other calamity or crisis
the effect of which on the financial markets of the United States is such as to make it, in the
judgment of the Underwriter, inadvisable or impracticable to market the Securities and the Warrant
Shares or enforce contracts for the sale of the Securities; (iii) trading in the shares of Common
Stock or any securities of the Company has been suspended or materially limited by the Commission
or trading generally on the New York Stock Exchange, Inc., the NYSE Amex, the Nasdaq Global Select
Market, the Nasdaq Global Market or the Nasdaq Capital Market has been suspended or materially
limited, or minimum or maximum ranges for prices for securities shall have been fixed, or maximum
ranges for prices for securities have been required, by any of said exchanges or by such system or
by order of the Commission, FINRA, or any other governmental or regulatory authority; (iv) a
banking moratorium has been declared by any state or Federal authority; or (v) in the judgment of
the Underwriter, there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any material adverse change in
the assets, properties, condition, financial or otherwise, or in the results of operations,
business affairs or business prospects of the Company and its subsidiaries considered as a whole,
whether or not arising in the ordinary course of business.
27
(b) If this Agreement is terminated pursuant to any of its provisions, the Company shall not
be under any liability to the Underwriter, and the Underwriter shall not be under any liability to
the Company; provided, however, that if this Agreement is terminated by the Underwriter due to any
event in Section 7(a) above or because of any failure, refusal or inability on the part of
the Company to comply with the terms or to fulfill any of the conditions of this Agreement, the
Company will reimburse the Underwriter for all reasonable out-of-pocket expenses (including all
fees and disbursements of its counsel) incurred by it in connection with this Agreement and the
proposed sale of the Securities and the Warrant Shares or in contemplation of performing its
obligations hereunder.
8. Miscellaneous. The respective agreements, representations, warranties, indemnities
and other statements of the Company and the Underwriter, as set forth in this Agreement or made by
or on behalf of them pursuant to this Agreement, shall remain in full force and effect, regardless
of any investigation (or any statement as to the results thereof) made by or on behalf of the
Underwriter or the Company or any of their respective officers, directors or controlling persons
referred to in Sections 5 and 6 hereof, and shall survive delivery of and payment
for the Securities. In addition, the provisions of Sections 4(b), 5, 6 and
7 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriter, the Company and their
respective successors and assigns, and, to the extent expressed herein, for the benefit of persons
controlling the Underwriter, or the Company, and directors and officers of the Company, and their
respective successors and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term “successors and assigns” shall not include any purchasers of
Securities merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed or delivered or by
telephone or telegraph if subsequently confirmed in writing, (a) if to the Underwriter, to
Xxxxxxxxxxx & Co. Inc., 000 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx XxxXxxxx, and (b) if to the Company, to Aastrom Biosciences, Inc., 24 Xxxxx Xxxxx
Xxxxxx Xxxxx, X.X. Xxx 000, Xxx Xxxxx, Xxxxxxxx 00000 Attention: Xxxxxxx Xxxxxxxx.
This Agreement shall be governed by and construed in accordance with the laws of the State of
New York.
This Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon the same
instrument.
28
Please confirm that the foregoing correctly sets forth the agreement among us.
| Very truly yours, AASTROM BIOSCIENCES, INC. |
||||
| By | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxx | |||
| Title: | Chief Executive Officer and President | |||
| Confirmed: XXXXXXXXXXX & CO. INC. |
||||
| By: | /s/ | |||
| Name: | ||||
| Title: | ||||
SCHEDULE 1
Pricing Information
Shares Offered:
|
46,154,000 shares | |
Class A Warrants Offered:
|
Class A warrants to purchase 34,615,500 shares, at an exercise price of $0.3718 per share. | |
Class B Warrants Offered:
|
Class B warrants to purchase 23,077,000 shares, at an exercise price of $0.26 per share. | |
Purchase Price:
|
$0.26 per unit (each unit composed of a share of Common Stock, a Class A warrant and a Class B warrant) |
SCHEDULE 2
Issuer Free Writing Prospectus
None.
SCHEDULE 3
Directors and Executive Officers Executing Lock-Ups
Xxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx Xx., M.D.
Xxxxxx X. Xxxxx, M.D.
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx Xx., M.D.
Xxxxxx X. Xxxxx, M.D.
EXHIBIT A
Form of Lockup Agreement
, 2010
Xxxxxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Public Offering of Common Stock and Warrants of Aastrom Biosciences, Inc.
Ladies and Gentlemen:
The undersigned, a holder of shares of common stock (“Common Stock”) or rights to acquire
shares of common stock, no par value per share (the “Common Stock”), of Aastrom Biosciences, Inc.
(the “Company”) and/or an officer, director or employee of the Company, understands that the
Company intends to file a prospectus supplement (the “Prospectus Supplement”) to the Company’s
prospectus dated February 19, 2009 pursuant to and in accordance with Rule 424(b) under the
Securities Act of 1933, as amended (the “Act”), with the Securities and Exchange Commission for the
offering of shares of Common Stock and warrants to purchase Common Stock (the “Offering”). The
undersigned further understands that you, as underwriter, are contemplating entering into an
underwriting agreement with the Company in connection with the Offering (the “Underwriting
Agreement”).
In order to induce the Company and you to enter into the Underwriting Agreement and to induce
you to act as the underwriter in the Offering (the “Underwriter”), the undersigned hereby agrees
for the benefit of the Company and the Underwriter that, without your prior written consent, the
undersigned will not, during the period ending 90 days, subject to extension as provided below (the
“Lock-Up Period”), after the date of the Prospectus Supplement , directly or indirectly (1) offer,
pledge, assign, encumber, announce the intention to sell, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock owned either of record
or beneficially (as defined in the Securities Exchange Act of 1934, as amended) by the undersigned
on the date hereof or hereafter acquired or (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise, or publicly announce an intention to
do any of the foregoing. In addition, the undersigned agrees that, without your prior written
consent, it will not, during the period ending 90 days after the date of the Prospectus Supplement,
make any demand for or exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common Stock. The
foregoing shall not apply to (v) transfers to any charitable organization, (w) transfers as a gift
or gifts, or to a trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that the donee or the trustee
of the trust agrees to be bound by the restrictions set forth herein, and further provided that any
such transfer shall not involve a disposition for value, (x) the acquisition or exercise of any
stock option issued pursuant to the Company’s existing stock option plan, including any exercise
effected by the delivery or sale of shares of Common Stock of the Company held by the undersigned,
(y) the sale of the Securities to be sold pursuant to the Prospectus Supplement and (z) sales under
any 10b-5 plan in effect on the date hereof. For purposes of this lock-up agreement, “immediately
family” shall mean any relationship by blood, marriage or adoption, not more remote than first
cousin.
Notwithstanding the foregoing, if (x) during the last 17 days of the Lock-Up Period the
Company issues an earnings release or material news or a material event relating to the Company
occurs; or (y) 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 90-day period;
the restrictions imposed in this Agreement shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or the occurrence of the material
news or material event; provided, however, that this sentence shall not apply if the research
published or distributed on the Company is compliant under Rule 139 of the Securities Act and the
Company’s securities are actively traded as defined in Rule 101(c)(1) of Regulation M of the
Exchange Act.
In furtherance of the foregoing, the Company, and any duly appointed transfer agent for the
registration or transfer of the securities described herein, are hereby authorized to decline to
make any transfer of securities if such transfer would constitute a violation or breach of this
Agreement.
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Agreement. All authority herein conferred or agreed to be conferred
and any obligations of the undersigned shall be binding upon the successors, assigns, heirs or
personal representatives of the undersigned.
The undersigned, whether or not participating in the Offering, understands that the
Underwriter is entering into the Underwriting Agreement and proceeding with the Offering in
reliance upon this Agreement.
This Agreement shall be governed by and construed in accordance with the laws of the State of
New York, without regard to the conflict of laws principles thereof.
| Very truly yours, | ||||
| Name: | ||||
| By: | ||||
EXHIBIT B
Matters to be Covered in the Seyfarth Xxxx LLP Legal Opinion
or the Xxxxxx Xxxxxxx PLLC Legal Opinion
or the Xxxxxx Xxxxxxx PLLC Legal Opinion
