EXHIBIT 1.1
2,600,000 SHARES
I-FLOW CORPORATION
SHARES OF COMMON STOCK
$0.001 PAR VALUE
UNDERWRITING AGREEMENT
April 13, 2004
XX XXXXX SECURITIES CORPORATION
FIRST ALBANY CAPITAL INC.
LAZARD FRERES & CO. LLC
XXXX CAPITAL PARTNERS, LLC
XXXXXXXX CURHAN FORD & CO.
As Representatives of the several Underwriters
c/o XX Xxxxx Securities Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. I-FLOW CORPORATION, a Delaware corporation (the "COMPANY"),
proposes to sell, pursuant to the terms of this Agreement, to the several
underwriters named in Schedule A hereto (the "UNDERWRITERS," or, each, an
"UNDERWRITER"), an aggregate of 2,600,000 shares of common stock, $0.001 par
value per share (the "COMMON STOCK") of the Company. The aggregate of 2,600,000
shares so proposed to be sold is hereinafter referred to as the "FIRM STOCK."
The Company also proposes to sell to the Underwriters, upon the terms and
conditions set forth in Section 3 hereof, up to an additional 390,000 shares of
Common Stock (the "OPTIONAL Stock"). The Firm Stock and the Optional Stock are
hereinafter collectively referred to as the "STOCK." XX Xxxxx Securities
Corporation ("XX XXXXX"), First Albany Capital Inc., Lazard Freres & Co. LLC,
Xxxx Capital Partners, LLC and Xxxxxxxx Curhan Ford & Co. are acting as
representatives of the several Underwriters and in such capacity are hereinafter
referred to as the "REPRESENTATIVES."
2. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-111573) (the
"REGISTRATION STATEMENT") in respect of an aggregate amount of $50,000,000
of common stock, preferred stock and warrants to purchase common stock and
preferred stock has been filed with the Securities and Exchange Commission
(the "COMMISSION"). The Registration Statement and any post-effective
amendment thereto (excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein) each in the
form heretofore delivered to you, for you and each of the other
Underwriters, has been declared effective by the Commission in such form.
Except for documents incorporated by reference therein and the Preliminary
Prospectus (as defined below), no other document relating to the
Registration Statement or document
2
incorporated by reference therein has been filed with the Commission since
effectiveness. No stop order suspending the effectiveness of the
Registration Statement has been issued and to the Company's knowledge, no
proceeding for that purpose has been initiated or threatened by the
Commission. Any preliminary prospectus supplement filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations (as
defined below) is hereinafter called a "PRELIMINARY PROSPECTUS." The term
"Registration Statement" includes: (A) the information contained in the
prospectus contained in the Registration Statement at the time such part
of the Registration Statement became effective (the "BASE PROSPECTUS") and
(B) the documents incorporated by reference in the Base Prospectus, each
as amended at the time such part of the Registration Statement became
effective. The final prospectus supplement (the "FINAL Supplement"), in
the form to be filed pursuant to Rule 424(b) under the Securities Act of
1933, as amended (the "SECURITIES ACT"), together with the Base
Prospectus, is hereinafter collectively called the "PROSPECTUS." Any
reference herein to any Preliminary Prospectus or to the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act, as of
the date of such Preliminary Prospectus or Prospectus, as the case may be.
Any reference to any amendment or supplement to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include any documents
filed after the date of such Preliminary Prospectus or Prospectus, as the
case may be, under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a)
or 15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement.
No document has been or will be prepared or distributed in reliance on
Rule 434 under the Securities Act. No order preventing or suspending the
use of any Preliminary Prospectus has been issued by the Commission.
(b) The Registration Statement conforms (and the Prospectus and any
amendments or supplements to the Registration Statement or the Prospectus,
when they 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 and the rules and the regulations (the "RULES AND
REGULATIONS") of the Commission thereunder and do not and will not, as of
the applicable effective date (as to the Registration Statement and any
amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the foregoing representations and
warranties shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus or any such amendment or
supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company through the Representatives by or on
behalf of any Underwriter specifically for inclusion therein, which
information the parties hereto agree is limited to the Underwriters'
Information (as defined in Section 16 of this Agreement).
(c) The documents incorporated by reference (or deemed to be incorporated
by reference) in the Registration Statement and the Prospectus, at the
time they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and, when read together with the
other information included or incorporated by reference in the Prospectus,
none of such documents contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, at the
time such documents become effective or are
3
filed with 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 applicable rules and regulations of the Commission
thereunder and, when read together with the other information included or
incorporated by reference in the Prospectus, will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(d) The Company and each of its subsidiaries (as defined in Section 14 of
this Agreement) have been duly organized and are validly existing as
corporations or other legal entities in good standing (or the equivalent
thereof, if any) under the laws of their respective jurisdictions of
incorporation or organization and are duly qualified to do business and
are in good standing (or the equivalent thereof, if any) as foreign
corporations or other legal entities, as applicable, in each jurisdiction
in which their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, and have all
power and authority necessary to own or hold their respective properties
and to conduct the businesses in which they are engaged, except where the
failure to be so qualified and in good standing or to have such power or
authority would not reasonably be expected to have, singularly or in the
aggregate, a "MATERIAL ADVERSE EFFECT." Material Adverse Effect means an
event or condition that would have a material adverse effect on the
financial condition, results of operations, business, properties or
prospects of the Company and its subsidiaries taken as a whole. The
Company owns or controls, directly or indirectly, only the following
corporations, partnerships or other entities: Block Medical de Mexico,
S.A. de C.V., InfuSystem, Inc. and I-Flow International, Inc.
(e) This Agreement has been duly authorized, executed and delivered by the
Company.
(f) The Stock to be issued and sold by the Company to the Underwriters
hereunder has been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and nonassessable and free of any preemptive or
similar rights and will conform to the description thereof contained in
the Prospectus.
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued and outstanding shares of capital stock
of the Company have been duly and validly authorized and issued, are fully
paid and non-assessable, have been issued in compliance with federal and
state securities laws, and conform to the description thereof contained in
the Prospectus. None of the outstanding shares of Common Stock was issued
in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company.
Except as set forth in the Prospectus, there are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal
or other rights to purchase, or equity or debt securities convertible into
or exchangeable or exercisable for, any capital stock of the Company or
any of its subsidiaries.
(h) All the outstanding shares of capital stock of each subsidiary of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and, except to the extent set forth in the Prospectus,
including, without limitation, the lien held by Silicon Valley Bank that
is referred to in the Prospectus, are owned by the Company directly or
indirectly through one or more wholly-owned subsidiaries, free and clear
of any claim, lien, encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third party.
(i) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Company
4
or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such actions
result in any violation of the provisions of the charter or by-laws (or
comparable governing documents) of the Company or any of its subsidiaries
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets.
(j) Except for the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or qualifications
as may be required under the Exchange Act and applicable state securities
laws, the National Association of Securities Dealers, Inc. and the Nasdaq
National Market in connection with the purchase and distribution of the
Stock by the Underwriters, no consent, approval, authorization or order
of, or filing or registration with, any such court or governmental agency
or body is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby.
(k) Deloitte & Touche LLP, which has expressed its opinions on the audited
financial statements and related schedules included or incorporated by
reference in the Registration Statement and the Prospectus, are
independent public accountants as required by the Securities Act and the
Rules and Regulations.
(l) The financial statements, together with the related notes and
schedules, included or incorporated by reference in the Prospectus and in
the Registration Statement fairly present the financial position and the
results of operations and changes in financial position of the Company and
its consolidated subsidiaries at the respective dates or for the
respective periods therein specified. Such statements and related notes
and schedules have been prepared in accordance with generally accepted
accounting principles in the United States applied on a consistent basis
except as may be set forth in the Prospectus. The financial statements,
together with the related notes and schedules, included in the Prospectus
comply in all material respects with the Securities Act and the Rules and
Regulations thereunder. No other financial statements or supporting
schedules or exhibits are required by the Securities Act or the Rules and
Regulations thereunder to be included in the Prospectus.
(m) Neither the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus; and, since such date, there has
not been any change in the capital stock (other than shares of Common
Stock issued (i) upon the exercise of currently outstanding warrants or
(ii) pursuant to the Company's equity incentive plans or awards granted
thereunder) or long-term debt of the Company or any of its subsidiaries or
any material adverse change, or any development that would reasonably
expected to have a material adverse change, in or affecting the business,
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a
whole, otherwise than as set forth or contemplated in the Prospectus.
(n) Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company
or any of its subsidiaries is the subject (i) that is required to be
described in the Registration Statement or the Prospectus and is not
described therein, (ii) the resulting future liability of which,
singularly or in the aggregate, would reasonably be expected to have a
Material Adverse Effect or (iii) that would prevent or adversely affect
the ability of the Company
5
to perform its obligations under this Agreement; and to the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(o) Neither the Company nor any of its subsidiaries (i) is in violation of
its charter or by-laws (or comparable governing documents), (ii) is in
default in any respect, and no event has occurred that, with notice or
lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to which
any of its property or assets is subject or (iii) is in violation in any
respect of any law, ordinance, governmental rule, regulation, or decree of
any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company, its
subsidiaries or any of its properties, as applicable (including, without
limitation, those administered by the Food and Drug Administration of the
U.S. Department of Health and Human Services (the "FDA"), the Federal
Trade Commission (the "FTC") or by any foreign, federal, state or local
governmental or regulatory authority performing functions similar to those
performed by the FDA or the FTC), except, with respect to clauses (ii) and
(iii), any violations or defaults that, singularly or in the aggregate,
would not have a Material Adverse Effect.
(p) The Company and each of its subsidiaries has made all filings,
applications and submissions required by, and possesses all approvals,
licenses, certificates, certifications (including, without limitation,
ISO9001 certifications by the European Union under the Medical Devices
Directive), clearances, consents, exemptions, marks (including, without
limitation, the CE xxxx by the European Union under the Medical Devices
Directive), notifications, orders, permits and other authorizations issued
by, the appropriate federal, state or foreign regulatory authorities
(including, without limitation, the FDA, and any other foreign, federal,
state or local government or regulatory authorities performing functions
similar to those performed by the FDA) necessary to conduct its businesses
(collectively, "PERMITS"), except for such Permits which the failure to
obtain would not have a Material Adverse Effect, and is in material
compliance with the terms and conditions of all such Permits; all of such
Permits held by the Company and each of its subsidiaries are valid and in
full force and effect; there is no pending or, to the Company's knowledge,
threatened action, suit, claim or proceeding that may cause any such
Permit to be limited, revoked, cancelled, suspended, modified or not
renewed and neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the limitation, revocation,
cancellation, suspension, modification or non-renewal of any such Permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect, whether
or not arising from transactions in the ordinary course of business,
except as may be set forth in the Prospectus.
(q) Neither the Company nor any of its subsidiaries is, or after giving
effect to the offering of the Stock and the application of the proceeds
thereof as described in the Prospectus will become, an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended and the rules and regulations of the Commission thereunder.
(r) Neither the Company nor any of its officers, directors or affiliates
has taken or will take, directly or indirectly, any action designed or
intended to stabilize or manipulate the price of any security of the
Company, or which caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(s) The Company or its subsidiaries own, possess, license or have other
rights to use all foreign and domestic patents, patent applications,
trademarks, service marks, trademark and
6
service xxxx registrations, trade names, copyrights, licenses, inventions,
trade secrets, technology, Internet domain names, know-how and other
intellectual property (collectively, the "INTELLECTUAL PROPERTY")
necessary for the conduct of the Company's business as now conducted or as
proposed in the Prospectus to be conducted except where failure to own,
possess, license or have such rights would not have a Material Adverse
Effect. Except as set forth in the Prospectus, (a) except as set forth in
Section 2(s)(a) of the Disclosure Schedule, there are no rights of third
parties to any such Intellectual Property; (b) to the Company's knowledge
and except as set forth in Section 2(s)(b) of the Disclosure Schedule,
there is no infringement by third parties of any such Intellectual
Property; (c) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
rights of the Company or its subsidiaries in or to any such Intellectual
Property, and the Company is unaware of any facts that would form a
reasonable basis for any such claim; (d) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the validity or scope of any such Intellectual
Property; (e) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company
and/or its subsidiaries infringe or otherwise violate any patent,
trademark, copyright, trade secret or other proprietary rights of others,
and the Company is unaware of any other fact that would form a reasonable
basis for any such claim; (f) to the Company's knowledge, there is no
third-party U.S. patent or published U.S. patent application that contains
claims for which an Interference Proceeding would reasonably be commenced
against any patent or patent application described in the Prospectus as
being owned by or licensed to the Company; and (g) the Company and its
subsidiaries have taken all reasonable steps necessary to perfect its
ownership of the Intellectual Property.
(t) The Company and each of its subsidiaries have good and legal title to,
or have valid rights to lease or otherwise use, all items of real or
personal property that are material to the business of the Company and its
subsidiaries taken as a whole, in each case, except as disclosed in the
Prospectus, free and clear of all liens, encumbrances, claims and defects
that would reasonably be expected to have a Material Adverse Effect.
(u) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the Company's knowledge, is imminent that would
reasonably be expected to have a Material Adverse Effect. The Company is
not aware that any key employee or significant group of employees of the
Company or any subsidiary plans to terminate employment with the Company
or any such subsidiary.
(v) No "prohibited transaction" (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "CODE")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan that would reasonably be expected to have a
Material Adverse Effect; each employee benefit plan is in compliance in
all material respects with currently applicable provisions of ERISA and
the Code and such regulations and published interpretations thereof; the
Company has not incurred and does not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from,
any "pension plan;" and each "pension plan" (as defined in ERISA) for
which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which could cause the loss of such qualification.
7
(w) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any kind of
toxic or other wastes or other hazardous substances by, due to, or caused
by the Company or any of its subsidiaries (or, to the Company's knowledge,
any other entity for whose acts or omissions the Company or any of its
subsidiaries is or may be liable) upon any of the property now or
previously owned or leased by the Company or any of its subsidiaries, or
upon any other property, in violation of any statute, ordinance, rule,
regulation, order, judgment, decree or permit or which would, under any
statute, ordinance, rule (including rule of common law), regulation,
order, judgment, decree or permit, give rise to any liability, except for
any violation or liability that would not have, singularly or in the
aggregate with all such violations and liabilities, a Material Adverse
Effect; there has been no disposal, discharge, emission or other release
of any kind onto such property or into the environment surrounding such
property of any toxic or other wastes or other hazardous substances with
respect to which the Company or any of its subsidiaries have knowledge,
except for any such disposal, discharge, emission, or other release of any
kind that would not have, singularly or in the aggregate with all such
discharges and other releases, a Material Adverse Effect.
(x) The Company and its subsidiaries each (i) have filed with all
necessary federal, state and foreign income and franchise tax returns,
(ii) have paid all federal state, local and foreign taxes due and payable
for which it is liable, and (iii) do not have any tax deficiency or claims
outstanding or assessed or, to the Company's knowledge, proposed against
it that would reasonably be expected to have a Material Adverse Effect.
(y) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as the Company
reasonably believes is adequate for the conduct of their respective
businesses and the value of their respective properties and as is
customary for companies engaged in similar businesses in similar
industries.
(z) 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 authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles in the United States and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(aa) The minute books of the Company have been made available to the
Underwriters and counsel for the Underwriters and such books (i) contain a
complete record of all meetings and actions of the board of directors
(including each board committee) and stockholders of the Company since
April 13, 2001 through the date of the latest meeting and action and (ii)
accurately in all material respects reflect all transactions referred to
in such minutes.
(bb) There is no franchise, lease, contract, agreement or document
required by the Securities Act or by the Rules and Regulations to be
described in the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described or filed therein as required;
and all descriptions of any such franchises, leases, contracts, agreements
or documents contained in the Registration Statements are accurate and
complete descriptions of such documents in all material respects. Other
than as described in the Prospectus, no such franchise, lease, contract or
agreement has been suspended or terminated for convenience or default by
the Company or any of the other parties thereto, and the Company has not
received notice or any other knowledge of any such pending or threatened
suspension or termination, except for such pending or threatened
8
suspensions or terminations that would not reasonably be expected,
singularly or in the aggregate, to have a Material Adverse Effect.
(cc) To the Company's knowledge, after reasonable inquiry, the clinical,
pre-clinical and other studies and tests conducted by or on behalf of or
sponsored by the Company and its subsidiaries were and, if still pending,
are being conducted in accordance with all statutes, laws, rules and
regulations, as applicable (including, without limitation, those
administered by the FDA or by any foreign, federal, state or local
governmental or regulatory authority performing functions similar to those
performed by the FDA) except where failure to do so would not have a
Material Adverse Effect. The descriptions of the results of such studies
and tests are accurate and complete in all material respects and fairly
present the published data derived from such studies and tests, and the
Company has no knowledge of other studies or tests the aggregate results
of which are inconsistent with or otherwise call into question the
principal findings or results described or referred to in the Prospectus,
except as described in the Prospectus. Neither the Company nor any of its
subsidiaries have received any notices or other correspondence from the
FDA or any other foreign, federal, state or local governmental or
regulatory authority performing functions similar to those performed by
the FDA with respect to any ongoing clinical or pre-clinical studies or
tests requiring the termination or suspension of such studies or tests.
(dd) The Company has established and administers a compliance program
applicable to the Company, to assist the Company and the directors,
officers and employees of the Company in complying with applicable
regulatory guidelines (including, without limitation, those administered
by the FDA and any other foreign, federal, state or local governmental or
regulatory authority performing functions similar to those performed by
the FDA) and to provide compliance policies governing applicable areas for
medical device companies (including, without limitation, pre-clinical and
clinical testing, product design and development, product testing, product
manufacturing, product labeling, product storage, premarket clearance and
approval, advertising and promotion, product sales and distribution,
medical device reporting regulations, and record keeping), except where
the failure to establish, administer or provide such compliance policies
or programs would not have a Material Adverse Effect.
(ee) Neither the Company nor any of its subsidiaries has failed to file
with the applicable regulatory authorities (including, without limitation,
the FDA or any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA) any
filing, declaration, listing, registration, report or submission; all such
filings, declarations, listings, registrations, reports or submissions
were in compliance with applicable laws when filed and except as listed in
Section 2(ee) of the Disclosure Schedule, no deficiencies have been
asserted by any applicable regulatory authority (including, without
limitation, the FDA or any foreign, federal, state or local governmental
or regulatory authority performing functions similar to those performed by
the FDA) with respect to any such filings, declarations, listings,
registrations, reports or submissions, except where any such failure to
file or comply or any such deficiency as described in this Section 2(ee)
would not have a Material Adverse Effect.
(ff) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required
to be described in the Prospectus and which is not so described.
(gg) No person or entity has the right to require registration of shares
of Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement or otherwise, except for
persons and entities who have expressly waived such right or
9
who have been given timely and proper notice and have failed to exercise
such right within the time or times required under the terms and
conditions of such right.
(hh) Neither the Company nor any of its subsidiaries own any "margin
securities" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (the "FEDERAL RESERVE BOARD"), and
none of the proceeds of the sale of the Stock will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Securities to be considered a
"purpose credit" within the meanings of Regulation T, U or X of the
Federal Reserve Board.
(ii) Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Company or the Underwriters for a brokerage
commission, finder's fee or like payment in connection with the offering
and sale of the Stock.
(jj) No forward-looking statement (within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act) contained in the
Prospectus has been made or reaffirmed without a reasonable basis or has
been disclosed other than in good faith.
(kk) The Company has filed with The Nasdaq Stock Market, Inc. ("Nasdaq") a
Notification Form: Listing of Additional Shares with respect to the Stock.
(ll) The Company is in compliance in all material respects with all
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and all rules and
regulations promulgated thereunder or implementing the provisions thereof
(the "XXXXXXXX-XXXXX ACT") that are then in effect and is actively taking
steps to ensure that it will be in material compliance with other
applicable provisions of the Xxxxxxxx-Xxxxx Act not currently in effect
upon and at all times after the effectiveness of such provisions.
(mm) The Company has taken all necessary actions to ensure that, upon and
at all times after the First Closing Date (as defined below), it will be
in material compliance with all applicable corporate governance
requirements set forth in the Nasdaq Marketplace Rules that are then in
effect and is actively taking steps to ensure that it will be in material
compliance with other applicable corporate governance requirements set
forth in the Nasdaq Marketplace Rules not currently in effect upon and all
times after the effectiveness of such requirements.
(nn) Neither the Company nor any of its subsidiaries nor, to the Company's
knowledge, any employee or agent of the Company or any subsidiary, has
made any contribution or other payment to any official of, or candidate
for, any federal, state or foreign office in violation of any law or of
the character required to be disclosed in the Prospectus.
(oo) There are no transactions, arrangements or other relationships
between and/or among the Company, any of its affiliates (as such term is
defined in Rule 405 of the Securities Act) and any unconsolidated entity,
including, but not limited to, any structured finance, special purpose or
limited purpose entity that would reasonably be expected to materially
affect the Company's liquidity or the availability of or requirements for
its capital resources required to be described in the Prospectus which
have not been described as required.
10
(pp) There are no outstanding loans, advances (except normal advances for
business expense in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers
or directors of the Company, except as disclosed in the Prospectus.
(qq) The Company meets the pre-1992 eligibility requirements for the use
of a Registration Statement on Form S-3 in connection with the offering
contemplated thereby and hereby (the pre-1992 eligibility requirements for
the use of the Registration Statement on Form S-3 include (i) having a
non-affiliate, public common equity float of at least $150 million or a
non-affiliate, public common equity float of at least $100 million and
annual trading volume of at least three million shares and (ii) having
been subject to the Exchange Act reporting requirements for a period of 36
months).
3. Purchase Sale and Delivery of Offered Stock. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company, the number of shares of Firm Stock set forth opposite the name
of such Underwriter in Schedule A hereto.
The purchase price per share to be paid by the Underwriters to the Company
for the Stock shall be $14.57 per share (the "PURCHASE PRICE").
The Company will deliver the Firm Stock to the Representatives for the
respective accounts of the several Underwriters (in uncertificated form or in
the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to the
Company given at or prior to 12:00 Noon, New York time, on the second full
Business Day preceding the First Closing Date (as defined below)) against
payment of the aggregate Purchase Price therefor by wire transfer of immediately
available funds to an account at a bank reasonably acceptable to XX Xxxxx,
payable to the order of the Company. Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The time and date of
the delivery and closing shall be at 10:00 A.M., New York time, on April 19,
2004 in accordance with Rule 15c6-1 of the Exchange Act. The time and date of
such payment and delivery are herein referred to as the "FIRST CLOSING DATE."
The First Closing Date and the location of delivery of, and the form of payment
for, the Firm Stock may be varied by agreement between the Company and XX Xxxxx.
The Company shall make the certificates for the Stock, if any, available
to the Representatives for examination on behalf of the Underwriters in New
York, New York at least twenty-four (24) hours prior to the First Closing Date.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Underwriters may purchase all or less than all of the Optional Stock. The price
per share to be paid for the Optional Stock shall be the Purchase Price. The
Company agrees to sell to the Underwriters the number of shares of Optional
Stock specified in the written notice by XX Xxxxx described below and the
Underwriters agree, severally and not jointly, to purchase such shares of
Optional Stock. Such shares of Optional Stock shall be purchased for the account
of each Underwriter in the same proportion as the number of shares of Firm Stock
set forth opposite such Underwriter's name bears to the total number of shares
of Firm Stock (subject to adjustment by XX Xxxxx to eliminate fractions). The
option granted hereby may be exercised as to all or any part of the Optional
Stock at any time, and from time to time (but not more than twice), not more
than thirty (30) calendar days subsequent to the date of this Agreement. No
Optional Stock shall be sold and delivered unless the Firm Stock previously has
been, or simultaneously is, sold and delivered to and purchased by the
Underwriters in accordance with this Agreement. The right to purchase the
Optional Stock or any
11
portion thereof may be surrendered and terminated at any time upon notice by XX
Xxxxx to the Company.
The option granted hereby may be exercised by written notice being given
to the Company by XX Xxxxx setting forth the number of shares of the Optional
Stock to be purchased by the Underwriters and the date and time for delivery of
and payment for the Optional Stock. Each date and time for delivery of and
payment for the Optional Stock (which may be the First Closing Date, but not
earlier) is herein called the "OPTION CLOSING DATE" and shall in no event be
earlier than two (2) Business Days nor later than five (5) Business Days after
written notice is given. The Option Closing Date and the First Closing Date are
herein called the "CLOSING DATES."
The Company will deliver the Optional Stock to the Underwriters (in
uncertificated form or in the form of definitive certificates, issued in such
names and in such denominations as the Representatives may direct by notice in
writing to the Company given at or prior to 12:00 Noon, New York time, on the
second full Business Day preceding the Option Closing Date) against payment of
the aggregate Purchase Price therefor in immediately available funds by wire
transfer to an account at a bank reasonably acceptable to XX Xxxxx payable to
the order of the Company. Time shall be of the essence, and delivery at the time
and place specified pursuant to this Agreement is a further condition of the
obligations of each Underwriter hereunder. The Option Closing Date and the
location of delivery of, and the form of payment for, the Optional Stock may be
varied by agreement between the Company and XX Xxxxx.
The several Underwriters propose to offer the Stock for sale upon the
terms and conditions set forth in the Prospectus.
4. Further Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) The Company will prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the second Business Day following the
execution and delivery of this Agreement; make no further amendment or any
supplement to the Registration Statement or to the Prospectus prior to the
Option Closing Date to which the Representatives shall reasonably object
by notice to the Company after a reasonable period to review; advise the
Representatives, promptly after it receives notice thereof, of the time
when any amendment to either Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with copies
thereof; file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery
of a prospectus is required in connection with the offering or sale of the
Stock; advise the Representatives, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
the Prospectus, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, use promptly all reasonable commercial efforts to obtain
its withdrawal.
(b) If at any time prior to the expiration of nine months after the
effective date of the Registration Statement when a prospectus relating to
the Stock is required to be delivered any event occurs as a result of
which the Prospectus as then amended or supplemented would include
12
any untrue statement of a material fact, or omit to state any material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus to
comply with the Securities Act or the Exchange Act, the Company will
promptly notify the Representatives thereof and upon their request will
prepare an amended or supplemented Prospectus or make an appropriate
filing pursuant to Section 13 or 14 of the Exchange Act which will correct
such statement or omission or effect such compliance. The Company will
furnish without charge to each Underwriter and to any dealer in securities
as many copies as the Representatives may from time to time reasonably
request of such amended or supplemented Prospectus; and in case any
Underwriter is required to deliver a prospectus relating to the Stock nine
months or more after the effective date of the Registration Statement, the
Company upon the request of the Representatives and at the expense of such
Underwriter will prepare promptly an amended or supplemented Prospectus as
may be necessary to permit compliance with the requirements of Section
10(a)(3) of the Securities Act.
(c) To furnish promptly to each of the Representatives and to counsel for
the Underwriters a signed copy of each of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith.
(d) To deliver promptly to the Representatives in New York City such
number of the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statement as originally
filed with the Commission and each amendment thereto (in each case
excluding exhibits), (ii) each Preliminary Prospectus, (iii) the
Prospectus (not later than 10:00 A.M., New York time, of the second
Business Day following the filing thereof pursuant to Section 4(a) of this
Agreement) and any amended or supplemented Prospectus (not later than
10:00 A.M., New York City time, on the Business Day following the date of
such amendment or supplement) and (iv) any document incorporated by
reference in the Prospectus (excluding exhibits thereto).
(e) To make generally available to its stockholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including, at the option
of the Company, Rule 158).
(f) The Company will promptly take from time to time such actions as the
Representatives may reasonably request to qualify the Stock for offering
and sale under the securities or blue sky laws of such jurisdictions as
the Representatives may designate and to continue such qualifications in
effect for so long as required for the distribution of the Stock; provided
that the Company and its subsidiaries shall not be obligated to qualify as
foreign corporations in any jurisdiction in which they are not so
qualified or to file a general consent to service of process in any
jurisdiction;
(g) During the period of three years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the
other Underwriters, (i) as soon as they are available, copies of all
reports or other communications furnished to stockholders and (ii) as soon
as they are available, copies of any reports and financial statements
furnished or filed by the Company with the Commission pursuant to the
Exchange Act; provided that, if such reports or other communications
referred to in (i) or (ii) above are available on the Company's or the
Commission's website, the Company's obligations shall be deemed to be
satisfied.
13
(h) The Company will not directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock for a period of 90 calendar days from the date of the
Final Supplement without the prior written consent of XX Xxxxx other than
the Company's sale of the Stock hereunder and the issuance of shares of
Common Stock pursuant to employee benefit plans, equity incentive plans or
other employee compensation plans existing on the date hereof or pursuant
to currently outstanding options, warrants or rights; provided, however,
that if (i) the Company issues an earnings release or material news or a
material event relating to the Company occurs during the last 17 days of
the lock-up period, or (ii) prior to the expiration of the lock-up period,
the Company announces that it will release earnings results during the
16-day period beginning on the last day of the lock-up period, the
restrictions imposed by 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. The
Company will cause each officer and director listed in Schedule B to
furnish to the Representatives, prior to the First Closing Date, a letter,
substantially in the form of Exhibit I hereto, pursuant to which each such
person shall, among other matters, agree not to directly or indirectly
offer, sell, assign, transfer, pledge, contract to sell, or otherwise
dispose of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock for a period of 90 calendar
days from the date of the Prospectus, without the prior written consent of
XX Xxxxx.
(i) The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
(j) Prior to each of the Closing Dates, the Company will furnish to the
Representatives, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for any
periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(k) Prior to each of the Closing Dates, the Company will not issue any
press release or other communication directly or indirectly or hold any
press conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of business
and consistent with the past practices of the Company and of which the
Representatives are notified), without the prior written consent of the
Representatives, unless in the judgment of the Company and its counsel,
and after notification to the Representatives, such press release or
communication is required by the Securities Act, the Exchange Act, rules
and regulations promulgated by Nasdaq or any other applicable law, rule or
regulation.
(l) In connection with the offering of the Stock, until XX Xxxxx shall
have notified the Company of the completion of the resale of the Stock,
the Company will not, and will cause its affiliated purchasers (as defined
in Regulation M under the Exchange Act) not to, either alone or with one
or more other persons, bid for or purchase, for any account in which it or
any of its affiliated purchasers has a beneficial interest, any Stock, or
attempt to induce any person to purchase any Stock; and not to, and to
cause its affiliated purchasers not to, make bids or purchase for the
purpose of creating actual, or apparent, active trading in or of raising
the price of the Stock.
(m) The Company will not take any action prior to the Option Closing Date
that would require the Prospectus to be amended or supplemented pursuant
to Section 4(b).
14
(n) The Company shall at all times comply in all material respects with
all applicable provisions of the Xxxxxxxx-Xxxxx Act in effect from time to
time.
(o) The Company will apply the net proceeds from the sale of the Stock as
set forth in the Prospectus under the heading "Use of Proceeds."
5. PAYMENT OF EXPENSES. The Company agrees with the Underwriters to pay (a) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Stock and any taxes payable in that connection; (b) the costs incident to
the Registration of the Stock under the Securities Act; (c) the costs incident
to the preparation, printing and distribution of the Registration Statement, the
Preliminary Prospectus and the Prospectus and any amendments and exhibits
thereto or any document incorporated by reference therein, the costs of
printing, reproducing and distributing the "Agreement Among Underwriters"
between the Representatives and the Underwriters, the Master Selected Dealers'
Agreement, the Underwriters' Questionnaire and this Agreement by mail, telex or
other means of communications; (d) the fees and expenses (including related fees
and expenses of counsel for the Underwriters) incurred in connection with
filings made with the National Association of Securities Dealers; (e) any
applicable listing or other similar fees; (f) the fees and expenses of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 4(f) and of preparing, printing and distributing Blue Sky
Memoranda and Legal Investment Surveys (including related fees and expenses of
counsel to the Underwriters); (g) all fees and expenses of the registrar and
transfer agent of the Stock; and (h) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement
(including, without limitation, the fees and expenses of the Company's counsel
and the Company's independent accountants); provided that, except as otherwise
provided in this Section 5 and in Section 10, the Underwriters shall pay their
own costs and expenses, including the fees and expenses of their counsel, any
transfer taxes on the Stock which they may sell and the expenses of advertising
any offering of the Stock made by the Underwriters.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations of the
several Underwriters hereunder are subject to the accuracy, when made and on
each of the Closing Dates, of the representations and warranties of the Company
contained herein, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the Commission, and any request for
additional information on the part of the Commission (to be included in
the Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Representatives. The
Prospectus shall have been timely filed with the Commission in accordance
with Section 4(a).
(b) None of the Underwriters shall have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement or
the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Underwriters,
is material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary
to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Stock, the
Registration Statement and the Prospectus and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all material respects to counsel for the
Underwriters, and the
15
Company shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
(d) Xxxxxx, Xxxx & Xxxxxxxx LLP shall have furnished to the
Representatives such counsel's written opinion, as counsel to the Company,
addressed to the Underwriters and dated the Closing Date, in form and
substance reasonably satisfactory to the Representatives.
In addition, such counsel shall also have furnished to the
Representatives a written statement, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to the
Representatives, to the effect that (A) such counsel has acted as counsel
to the Company in connection with the preparation of the Registration
Statement and (B) based on such counsel's examination of the Registration
Statements and such counsel's investigations made in connection with the
preparation of the Registration Statement and conferences with certain
officers and employees of and with auditors for and counsel to the
Company, and although such counsel is not passing upon and does not assume
the responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or Prospectus, such
counsel has no reason to believe that (I) the Registration Statement, as
of its effective date, contained 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 not misleading, or that
the Prospectus contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading or (II) any document incorporated by
reference in the Prospectus when they were filed with the Commission
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; it being
understood that such counsel need express no opinion as to the financial
statements or other financial or statistical data contained in the
Registration Statement or the Prospectus.
(e) Xxxxxx Martens Xxxxx & Bear LLP, patent counsel for the Company, shall
have furnished to the Representatives such counsel's written opinion,
addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Representatives.
(f) Xxxxx, X'Xxxxx & Xxxxx, LLP, patent counsel for the Company, shall
have furnished to the Representatives such counsel's written opinion,
addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Representatives.
(g) The Representatives shall have received from Xxxxx Raysman Xxxxxxxxx
Xxxxxx & Xxxxxxx LLP, counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Underwriters may reasonably require, and the Company shall have furnished
to such counsel such documents as they request for enabling them to pass
upon such matters.
(h) At the time of the execution of this Agreement, the Representatives
shall have received from Deloitte & Touche LLP a letter, addressed to the
Underwriters and dated such date, in form and substance satisfactory to
the Representatives (i) confirming that they are independent certified
public accountants with respect to the Company and its subsidiaries within
the meaning of the Securities Act and the Rules and Regulations and (ii)
stating the conclusions and findings of such firm with respect to the
financial statements and certain financial information contained or
incorporated by reference in the Prospectus.
(i) On the Closing Date, the Representatives shall have received a letter
(the "BRING-DOWN LETTER") from Deloitte & Touche LLP addressed to the
Underwriters and dated the Closing Date
16
confirming, as of the date of the bring-down letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus as of a
date not more than three Business Days prior to the date of the bring-down
letter), the conclusions and findings of such firm with respect to the
financial information and other matters covered by its letter delivered to
the Representatives concurrently with the execution of this Agreement
pursuant to Section 6(g).
(j) The Company shall have furnished to the Representatives a certificate,
dated the Closing Date, of its Chairman of the Board, its President or an
Executive Vice President and its Chief Financial Officer stating that (i)
such officers have carefully examined the Registration Statement and the
Prospectus and, in their opinion, the Registration Statement as of its
effective date and the Prospectus, as of each such effective date, 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, (ii) since the effective date of the
Registration Statement no event has occurred that should have been set
forth in a supplement or amendment to the Registration Statement or the
Prospectus, (iii) to their knowledge, as of the Closing Date, the
representations and warranties of the Company in this Agreement are true
and correct in all material respects (or, if such representation or
warranty is qualified by materiality or Material Adverse Effect, then such
representation and warranty shall be true and correct in all respects) and
the Company has complied in all material respects with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, and (iv) subsequent to the date
of the most recent financial statements included or incorporated by
reference in the Prospectus, there has been no material adverse change in
the financial position or results of operation of the Company and its
subsidiaries, or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company and its subsidiaries
taken as a whole, except as set forth in the Prospectus.
(k) Neither the Company nor any of its subsidiaries shall have sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus: (i) any loss or interference
with its business from fire, explosion, flood, terrorist act or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set
forth in or contemplated by the Prospectus; (ii) any change in the capital
stock (other than shares of Common Stock issued (x) upon the exercise of
currently outstanding warrants or (y) pursuant to the Company's equity
incentive plans or awards granted thereunder) or long-term debt of the
Company or any of its subsidiaries or (iii) any change, or any development
involving a prospective change, in or affecting the business, general
affairs, management, financial position, stockholders' equity, results of
operations or prospects of the Company and its subsidiaries, otherwise
than as set forth in or contemplated by the Prospectus, the effect of
which, in any such case described in clause (i), (ii) or (iii), is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of the
Stock on the terms and in the manner contemplated by the Prospectus.
(l) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental
agency or body that would, as of the Closing Date, prevent the issuance or
sale of the Stock; and no injunction, restraining order or order of any
other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance
or sale of the Stock.
(m) Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the
17
American Stock Exchange, the Nasdaq National Market or in the
over-the-counter market, or trading in any securities of the Company on
any exchange or in the over-the-counter market, shall have been suspended
or minimum or maximum prices or maximum ranges for prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by
Federal or state authorities or a material disruption has occurred in
commercial banking or securities settlement or clearance services in the
United States, (iii) the United States shall have become engaged in
hostilities, or the subject of an act of terrorism, or there shall have
been an escalation in hostilities involving the United States, (iv) there
shall have been a declaration of a national emergency or war by the United
States, or (v) there shall have occurred a material adverse change in
general economic, political or financial conditions in the United States
(or the effect of international conditions on the financial markets in the
United States shall have resulted in a material adverse change in general
economic, political or financial conditions in the United States), if the
effect of any such event specified in clause (iii), (iv) or (v), in the
judgment of the Representatives, makes it impracticable or inadvisable to
proceed with the sale or delivery of the Stock on the terms and in the
manner contemplated in the Prospectus.
(n) The Company shall have filed such applications as are necessary to
include the Stock on the Nasdaq National Market and satisfactory evidence
of such actions shall have been provided to the Representatives.
(o) XX Xxxxx shall have received the written agreements, substantially in
the form of Exhibit I hereto, of the officers, directors and shareholders
of the Company listed in Schedule B to this Agreement.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and its subsidiaries shall indemnify and hold harmless
each Underwriter, its officers, employees, representatives and agents and
each person, if any, who controls any Underwriter within the meaning of
the Securities Act (collectively the "UNDERWRITER INDEMNIFIED PARTIES"
and, each an "UNDERWRITER INDEMNIFIED PARTY") against any loss, claim,
damage or liability, joint or several, or any action in respect thereof,
to which that Underwriter Indemnified Party may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto a
material fact required to be stated therein or necessary to make the
statements therein not misleading and shall reimburse each Underwriter
Indemnified Party promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter Indemnified Party in connection
with investigating or preparing to defend or defending against or
appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred;
provided, however, that neither the Company nor any of its subsidiaries
will be liable to any Underwriter Indemnified Party with respect to any
loss, claim, damage or liability arising out of or based upon any untrue
statement or omission or alleged untrue statement or omission or alleged
omission to state a material fact in the Preliminary Prospectus which is
corrected in the Prospectus if the
18
person asserting such loss, claim, damage or liability purchased any of
the Stock from an Underwriter but was not sent or given a copy of the
Prospectus at or prior to the written confirmation of the sale of such
Stock to such person; and provided, further, that the Company and the
subsidiaries shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or
alleged omission from the Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for use therein, which information the parties hereto agree
is limited to the Underwriter's Information (as defined in Section 16 of
this Agreement).
This indemnity agreement is not exclusive and will be in addition to any
liability which the Company and its subsidiaries might otherwise have and
shall not limit any rights or remedies which may otherwise be available at
law or in equity to each Underwriter Indemnified Party.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless (i) the Company and its subsidiaries and their respective
directors, officers, employees, representatives and agents and (ii) each
person, if any, who controls the Company within the meaning of the
Securities Act and their respective directors, officers, employees,
representatives and agents (collectively the "COMPANY INDEMNIFIED PARTIES"
and each a "COMPANY INDEMNIFIED PARTY") against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which
the Company Indemnified Parties may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of or is based upon (x) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or (y) 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, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on
behalf of that Underwriter specifically for use therein, and shall
reimburse the Company Indemnified Parties for any legal or other expenses
reasonably incurred by such parties in connection with investigating or
preparing to defend or defending against or appearing as third party
witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred; provided that the parties hereto
hereby agree that such written information provided by the Underwriters
consists solely of the Underwriter's Information. This indemnity agreement
is not exclusive and will be in addition to any liability that the
Underwriters might otherwise have and shall not limit any rights or
remedies that may otherwise be available at law or in equity to the
Company Indemnified Parties.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 7
except to the extent it has been materially prejudiced by such failure;
and, provided, further, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 7. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or
19
action, the indemnifying party shall not be liable to the indemnified
party under this Section 7 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof
other than reasonable costs of investigation; provided, however, that any
indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses
available to it that are different from or additional to those available
to the indemnifying party and in the reasonable judgment of such counsel,
such additional or different defenses are inconsistent or incompatible
with the defenses available to the indemnifying party such that it is
advisable for such indemnified party to employ separate counsel as a
result of such fact or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to
the indemnified party, in which case, if such indemnified party notifies
the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of such action on behalf of
such indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate
firm of attorneys at any time for all such indemnified parties, which firm
shall be designated in writing by XX Xxxxx, if the indemnified parties
under this Section 7 consist of any Underwriter Indemnified Party, or by
the Company if the indemnified parties under this Section 7 consist of any
Company Indemnified Party. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 7(a) and 7(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense
of any such action or claim. Subject to the provisions of Section 7(d)
below, no indemnifying party shall be liable for any settlement of any
such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with its written consent or if
there be a final judgment for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement
or judgment.
(d) If at any time an indemnified party shall have requested that an
indemnifying party reimburse the indemnified party for fees and expenses
of counsel to which the indemnified party is entitled to be reimbursed
pursuant to Section 7(c) above, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated by this
Section 7 effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of
the request for reimbursement, (ii) such indemnifying party shall have
received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into, (iii) such indemnifying party shall
not have reimbursed such indemnified party in accordance with the request
for reimbursement for fees and expenses of counsel prior to the date of
such settlement and (iv) such indemnifying party shall not have delivered
to the indemnified party a good faith written objection to its obligation
to indemnify the indemnified party.
(e) If the indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified party under Section 7(a) or
7(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company and its
subsidiaries on the one hand and the Underwriters on the other from the
offering of the Stock or if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i)
20
above but also the relative fault of the Company and its subsidiaries on
the one hand and the Underwriters on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company
and its subsidiaries on the one hand and the Underwriters on the other
with respect to such offering shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Stock purchased under
this Agreement (before deducting expenses) received by the Company and its
subsidiaries bear to the total underwriting discounts and commissions
received by the Underwriters with respect to the Stock purchased under
this Agreement, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to,
among other matters, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and its subsidiaries on the
one hand or the Underwriters on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission; provided that the parties
hereto agree that the written information furnished to the Company through
the Representatives by or on behalf of the Underwriters for use in any
Preliminary Prospectus, the Registration Statement or the Prospectus
consists solely of the Underwriter's Information. The Company and its
subsidiaries and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7(e) were to be
determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that
does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of
the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 7(e) shall be deemed to include, for
purposes of this Section 7(e), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 7(e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public were offered to the
public less the amount of any damages which such Underwriter has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
The Underwriters' obligations to contribute as provided in this Section
7(e) are several in proportion to their respective underwriting obligations and
not joint.
8. TERMINATION. The obligations of the Underwriters hereunder may be terminated
by XX Xxxxx, in its absolute discretion by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 6(k) or 6(m) have occurred or if
the Underwriters shall decline to purchase the Stock for any reason permitted
under this Agreement.
9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) this Agreement shall have
been terminated pursuant to Section 8 (other than as a result of the last
sentence of the first paragraph of Section 10) or (b) the Company shall fail to
tender the Stock for delivery to the Underwriters for any reason not permitted
under this Agreement, then the Company shall reimburse the Underwriters for the
fees and expenses of their counsel and for such other out-of-pocket expenses as
shall have been reasonably incurred by them in connection with this Agreement
and the proposed purchase of the Stock, and upon demand the Company shall pay
the full amount thereof to the XX Xxxxx.
21
10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase shares of Stock hereunder and
the aggregate number of shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of shares underwritten, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the shares which such defaulting Underwriter or Underwriters agreed but failed
to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 10, (i) the Company
shall have the right to postpone the Closing Dates for a period of not more than
five (5) full Business Days in order that the Company may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
numbers of shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 10 shall be without liability on the part of
any non-defaulting Underwriter or the Company, except expenses to be paid
pursuant to Section 5 and except the provisions of Section 7 shall not terminate
and shall remain in effect.
11. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the several Underwriters, the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the Underwriter Indemnified Parties, and the
indemnities of the several Underwriters shall also be for the benefit of the
Company Indemnified Parties. It is understood that the Underwriters'
responsibility to the Company is solely contractual in nature and the
Underwriters do not owe the Company, or any other party, any fiduciary duty as a
result of this Agreement.
12. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the several Underwriters, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Company or any person controlling any of them and shall
survive delivery of and payment for the Stock.
13. Notices. All statements, requests, notices and agreements hereunder shall be
in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to XX Xxxxx Securities Corporation, 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx Xxxxxxx, Esq.
(Fax: 000-000-0000); with a copy to Xxxxx Raysman Xxxxxxxxx Xxxxxx &
Xxxxxxx LLP, 000 0xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx
Xxxxxxxx, Esq. (Fax: 000-000-0000).
22
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to: I-Flow Corporation, 00000 Xxxxxxx Xxxxx, Xxxx
Xxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx X. Dal Porto (Fax:
000-000-0000); with a copy to Xxxxxx, Xxxx & Xxxxxxxx LLP, 0 Xxxx Xxxxx,
Xxxxxx, Xxxxxxxxxx 00000, Attention Xxxx X. Xxxxxxxxx, Esq. (Fax:
000-000-0000).
14. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, "Business Day"
shall mean any day other than a Saturday, a Sunday, a legal holiday, a day on
which banking institutions or trust companies are authorized or obligated by law
to close in New York City or any day on which the New York Stock Exchange, Inc.
is not open for trading.
"Disclosure Schedule" shall mean the separate schedule delivered by
the Company to the Representatives on the date hereof.
"Interference Proceeding" shall have the meaning set forth in 35
U.S.C. Section 135.
"subsidiaries" shall mean Block Medical de Mexico, S.A. de C.V.,
InfuSystem, Inc. and I-Flow International, Inc.
"To the Company's knowledge" shall mean that which the Company knows
or should have known using the exercise of reasonable due diligence.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. UNDERWRITERS' INFORMATION. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the Underwriters' Information consists
solely of the following information in the Prospectus: (i) the last paragraph on
the front cover page concerning the terms of the offering by the Underwriters;
and (ii) the statements concerning the Underwriters contained in the third,
ninth, tenth and eleventh paragraphs under the heading "Underwriting."
17. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement, the
Representatives will act for and on behalf of the several Underwriters, and any
action taken under this Agreement by the Representatives will be binding on all
the Underwriters.
18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or
enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. GENERAL. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and the Representatives.
20. COUNTERPARTS. 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. Signatures transmitted
electronically or by facsimile shall be deemed to be original signatures.
23
If the foregoing is in accordance with your understanding of the agreement
between the Company, and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
I-FLOW CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman, President and
Chief Executive Officer
Accepted as of
the date first above written:
XX XXXXX SECURITIES CORPORATION
FIRST ALBANY CAPITAL INC.
LAZARD FRERES & CO. LLC
XXXX CAPITAL PARTNERS, INC.
XXXXXXXX CURHAN FORD & CO.
Acting on their own behalf and
as Representatives of
several Underwriters referred
to in the foregoing
Agreement.
By: XX XXXXX SECURITIES CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
24
SCHEDULE A
Number Number of
of Firm Optional
Shares Shares
to be to be
Name Purchased Purchased
--------- -------
XX Xxxxx Securities Corporation 1,200,000 180,000
First Albany Capital Inc. 720,000 108,000
Lazard Freres & Co. LLC 240,000 36,000
Xxxx Capital Partners, LLC 120,000 18,000
Xxxxxxxx Curhan Ford & Co. 120,000 18,000
Natexis Bleichroeder Inc. 50,000 7,500
RBC Capital Markets Corporation 50,000 7,500
ThinkEquity Partners LLC 50,000 7,500
Wedbush Xxxxxx Securities Inc. 50,000 7,500
--------- -------
Total 2,600,000 390,000
========= =======
25
SCHEDULE B
Xxxxxx X. Xxxxxxx
Xxxxx X. Dal Porto
Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx, Esq.
Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, M.D.
Xxxxx Xxxxxxx Tai, Ph.D., M.D.
Xxxx X. Xxxxxx
26
EXHIBIT I
FORM OF LOCK-UP AGREEMENT
XX Xxxxx Securities Corporation
First Albany Capital Inc.
Lazard Freres & Co. LLC
Xxxxxxxx Curhan Ford & Co.
Xxxx Capital Partners, LLC.
As Representatives of the
several Underwriters
c/o XX Xxxxx Securities Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
RE: I-FLOW CORPORATION - PUBLIC OFFERING OF COMMON STOCK
Dear Sirs:
In order to induce XX Xxxxx Securities Corporation ("XX XXXXX"), First
Albany Capital Inc., Lazard Freres & Co. LLC, Xxxxxxxx Curhan Ford & Co. and
Xxxx Capital Partners, LLC. (together with XX Xxxxx, the "REPRESENTATIVES") to
enter into a certain underwriting agreement (the "UNDERWRITING AGREEMENT") with
I-Flow Corporation, a Delaware corporation (the "COMPANY"), with respect to the
public offering of shares (the "OFFERING") of the Company's common stock, par
value $0.001 per share ("COMMON STOCK"), the undersigned hereby agrees that for
a period of 90 calendar days following the date of the final prospectus (the
"FINAL PROSPECTUS") filed by the Company with the Securities and Exchange
Commission in connection with such public offering, the undersigned will not,
without the prior written consent of XX Xxxxx, directly or indirectly, (i)
offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose
of, any shares of Common Stock (including, without limitation, Common Stock
which may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations promulgated under the Securities Act of 1933 (the
"SECURITIES ACT") and the Securities Exchange Act of 1934, as the same may be
amended or supplemented from time to time (such shares, the "BENEFICIALLY OWNED
SHARES")) or securities convertible into or exercisable or exchangeable for
Common Stock, (ii) enter into any swap, hedge or similar agreement or
arrangement that transfers in whole or in part, the economic risk of ownership
of the Beneficially Owned Shares or securities convertible into or exercisable
or exchangeable in Common Stock or (iii) engage in any short selling of the
Common Stock. Notwithstanding the foregoing, nothing contained herein will be
deemed to restrict or prohibit the transfer of shares of Common Stock,
Beneficially Owned Shares or securities convertible into or exercisable or
exchangeable for shares of Common Stock (i) as a bona fide gift, provided the
recipient thereof agrees in writing to be bound by the terms hereof or (ii) as a
distribution to partners, retired partners or the estates of such partners or
retired partners or shareholders of the undersigned, provided that the
distributees thereof agree in writing to be bound by the terms hereof.
If (i) the Company issues an earnings release or material news or a
material event relating to the Company occurs during the last 17 days of the
lock-up period, or (ii) prior to the expiration of the lock-up period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the lock-up period, the restrictions imposed by
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.
27
Anything contained herein to the contrary notwithstanding, any person to
whom shares of Common Stock or Beneficially Owned Shares are transferred from
the undersigned from and after the date hereof shall be bound by the terms of
this Agreement.
In addition, the undersigned hereby waives, from the date hereof until the
expiration of the 90 calendar day period following the date of the Final
Prospectus, any and all rights, if any, to request or demand registration
pursuant to the Securities Act of any shares of Common Stock that are registered
in the name of the undersigned or that are Beneficially Owned Shares. In order
to enable the aforesaid covenants to be enforced, the undersigned hereby
consents to the placing of legends and/or stop-transfer orders with the transfer
agent of the Common Stock with respect to any shares of Common Stock or
Beneficially Owned Shares.
