EXHIBIT 1.1
3,000,000 SHARES
NEUROMETRIX, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
July __, 2004
PUNK, XXXXXX & COMPANY, L.P.
XX XXXXXXXXX + CO, LLC
As Representatives of the several Underwriters
c/o Punk, Xxxxxx & Company, L.P.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. INTRODUCTORY. NeuroMetrix, Inc., 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 3,000,000 shares of common stock, $0.0001 par
value per share (the "Common Stock"), of the Company. The aggregate of 3,000,000
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 450,000 shares of
Common Stock (the "Optional Stock"). The Firm Stock and the Optional Stock are
hereinafter collectively referred to as the "Stock." Punk, Xxxxxx & Company,
L.P. ("Punk Xxxxxx") and XX Xxxxxxxxx + Co, LLC are acting as representatives of
the several Underwriters and in such capacity are hereinafter referred to as the
"Representatives." As part of the offering contemplated by this Agreement, Punk
Xxxxxx (the "Designated Underwriter") has agreed to reserve out of the Firm
Stock purchased by it under this Agreement, up to 150,000 shares, for sale to
the Company's employees, suppliers, consultants, other business associates and
other related persons and such persons' friends and family (collectively,
"Participants"), as set forth in the Prospectus (as defined herein) under the
heading "Underwriting" (the "Directed Share Program"). The Firm Stock to be sold
by the Designated Underwriter pursuant to the Directed Share Program (the
"Directed Shares") will be sold by the Designated Underwriter pursuant to this
Agreement at the public offering price. Any Directed Shares not subscribed for
by the end of the business day on which this Agreement is executed will be
offered to the public by the Underwriters as set forth in the Prospectus.
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-1 (File No. 333-115440) (as amended
by the pre-effective amendments thereto, the "Initial Registration Statement")
in respect of the Stock has been filed with the Securities and Exchange
Commission (the "Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered to you,
and, excluding exhibits thereto, to you for each of the other Underwriters, have
been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a "Rule
462(b) Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as
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amended (the "Securities Act"), and the rules and regulations (the "Rules and
Regulations") of the Commission thereunder, which became effective upon filing,
no other document with respect to the Initial Registration Statement has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated, to the knowledge
of the Company, or threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) of the Rules and Regulations, is hereinafter called a
"Preliminary Prospectus"); the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act and deemed by virtue of Rule 430A under the Securities Act to be
part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statement"; and such final prospectus, in
the form first filed pursuant to Rule 424(b) under the Securities Act, is
hereinafter called the "Prospectus." 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 Rule 462(b) Registration
Statement, if any, the Prospectus and any amendments or supplements to either of
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 Regulations
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 Underwriter's Information (as defined in section 16).
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct of
its business requires such qualification, and has all power and authority
necessary to own or hold its properties and to conduct the business in which it
is engaged, except where the failure to so qualify or have such power or
authority would not have, singularly or in the aggregate, a material adverse
effect on the condition (financial or otherwise), results of operations,
business or prospects of the Company taken as a whole (a "Material Adverse
Effect"). The Company has no subsidiaries and does not own or control, directly
or indirectly, any corporations, partnerships, limited liability partnerships,
limited liability companies, associations or other entities.
(d) This Agreement has been duly authorized executed and delivered by the
Company.
(e) 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.
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(f) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable,
have been issued in compliance with federal and state securities laws, and
conform to the description thereof contained in the Prospectus. None of the
outstanding shares of capital 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. 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 other than those accurately
described in the Prospectus or issued under the Company's Amended and Restated
1998 Equity Incentive Plan after the date as of which outstanding options are
described in the Prospectus. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, as described in the Prospectus accurately and fairly
present in all material respects the information required to be shown with
respect to such plans, arrangements, options and rights by the Securities Act
and the Rules and Regulations. All outstanding shares of the Company's preferred
stock will be converted into Common Stock no later than the First Closing Date
(as defined below).
(g) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
(i) conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the property or assets
of the Company is subject, (ii) result in any violation of the provisions of the
charter or by-laws of the Company, nor (iii) result in any violation of the
provisions of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties or assets, except, in the case of clauses (i) and (iii) above, as
would not, singularly or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(h) 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 Securities Exchange Act of 1934, as amended (the "Exchange
Act"), applicable state securities laws, and the rules and regulations of the
National Association of Securities Dealers, Inc. (the "NASD") 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 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, except where the failure
to obtain such consent, approval, authorization or order, or make such filing or
registration would not reasonably be expected to have a Material Adverse Effect
or materially adversely affect the transactions contemplated hereby.
(i) PricewaterhouseCoopers LLP, who have expressed their opinions on the
audited financial statements and related schedules included in the Registration
Statement and the Prospectus, are independent public accountants as required by
the Securities Act and the Rules and Regulations.
(j) The financial statements, together with the related notes and
schedules, included in the Prospectus and in each Registration Statement fairly
present in all material respects the financial position and the results of
operations and the cash flows of the Company 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 applied on a consistent basis, except that the unaudited interim
financial statements omit some footnotes and normal year-end accruals and
adjustments. 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
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Securities Act or the Rules and Regulations thereunder to be included in the
Prospectus or the Registration Statement.
(k) The Company has not sustained, since the date of the latest audited
financial statements included 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 in the
Prospectus; and, since such date, there has not been any material change in the
capital stock or long-term debt of the Company or any material adverse change,
or any development involving a prospective material adverse change, in or
affecting the business, general affairs, management, financial position,
stockholders' equity or results of operations of the Company, except for option
issuances or issuances of stock upon exercises of options after the date as of
which outstanding options and shares of stock are described in the Prospectus,
or as otherwise as set forth in the Prospectus.
(l) Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company is a party or of which any
property or assets of the Company is the subject which is required to be
described in the Registration Statement or the Prospectus and is not described
therein, or which, singularly or in the aggregate, if determined adversely to
the Company, would reasonably be expected to have a Material Adverse Effect or
would prevent or materially adversely affect the ability of the Company 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.
(m) The Company (i) is not in violation of its charter or by-laws, (ii) is
not in default in any respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, license agreement, manufacturing agreement, 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 not in
violation in any respect of any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets may be subject, except, in
the case of clause (ii) and (iii) above, any violations or defaults which,
singularly or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(n) The Company possesses all licenses, certificates, authorizations and
permits issued by, and has made all declarations and filings with, the
appropriate state, federal or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of its properties or the conduct of its
business as described in the Prospectus, except where any failures to possess or
make the same, singularly or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect, and the Company has not received notification
of any revocation or modification of any such license, certificate,
authorization or permit and has no reasonable basis to believe that any such
license, certificate, authorization or permit will not be renewed.
(o) The Company and its activities are in compliance with all applicable
regulations of the U.S. Food & Drug Administration ("FDA"), except where the
failure to be in compliance would not reasonably be expected to have a Material
Adverse Effect. All products marketed by the Company have received all necessary
approvals from, and the Company has made all required filings with, the FDA to
permit the marketing and distribution of its products in the United States, as
such products are currently marketed or distributed by the Company.
(p) The Company is not or, after giving effect to the offering of the Stock
and the application of the proceeds thereof as described in the Prospectus will
not become, an "investment company" within
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the meaning of the Investment Company Act of 1940, as amended and the rules and
regulations of the Commission thereunder.
(q) Neither the Company nor any of its officers nor, to the knowledge of
the Company, any of its 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.
(r) The Company owns or possesses the right to use all patents, patent
applications, trademarks, trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights described in the Prospectus as being owned or held by it for the conduct
of its business as now conducted and as currently proposed to be conducted that
are material to the Company's business as described in the Prospectus, and the
Company is not aware of any claim to the contrary or any challenge by any other
person to the rights of the Company with respect to any of the foregoing. To the
knowledge of the Company, the Company's business as now conducted and as
proposed to be conducted does not and will not infringe or conflict with any
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses or other intellectual property or franchise right of any person. Except
as described in the Prospectus, no claim has been made against the Company
alleging the infringement by the Company of any patent, trademark, service xxxx,
trade name, copyright, trade secret, license in or other intellectual property
right or franchise right of any person.
(s) The Company has good and marketable title in fee simple to, or has
valid rights to lease or otherwise use, all items of real or personal property
currently being used in the business of the Company that are material to the
business of the Company, in each case free and clear of all liens, encumbrances,
claims and defects that may result in a Material Adverse Effect, except as
described in the Prospectus.
(t) No labor disturbance by the employees of the Company exists or, to the
Company's knowledge, is imminent which might 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 plans to terminate employment with the
Company.
(u) 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 applicable law, including
ERISA and the Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any "pension plan"; and each "pension plan" (as defined in
ERISA) for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
could cause the loss of such qualification.
(v) 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, to the Company's knowledge, any other entity for whose acts or
omissions the Company is or may be liable) upon any of the property now or
previously owned or leased by the Company, or upon any other property, in
violation of any statute or any ordinance, rule,
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regulation, order, judgment, decree or permit or which would, under any statute
or any ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any violation
or liability which would not reasonably be expected to 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 has knowledge, except for any such disposal, discharge, emission, or
other release of any kind which would not reasonably be expected to have,
singularly or in the aggregate with all such discharges and other releases, a
Material Adverse Effect.
(w) The Company (i) has filed all necessary federal, state and foreign
income and franchise tax returns, except in any case in which the failure to so
file would not, singularly or in the aggregate, have a Material Adverse Effect,
(ii) has paid all federal state, local and foreign taxes due and payable for
which it is liable, except for any taxes that are currently being contested in
good faith or as to which the nonpayment would not reasonably be expected to
have a Material Adverse Effect, and (iii) does not have any tax deficiency or
claims outstanding or assessed or, to the Company's knowledge, proposed against
it which could reasonably be expected to have a Material Adverse Effect.
(x) The Company carries, or is covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of its business and the value
of its properties and as is customary for companies engaged in similar
businesses in similar industries.
(y) The Company 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 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.
(z) 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 summary in all material respects of all meetings and actions of the
board of directors (including each board committee) and stockholders of the
Company since the time of its incorporation through the date of the latest
meeting and action, and (ii) accurately in all material respects reflect all
transactions referred to in such minutes.
(aa) 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 which is
not described or filed therein as required; and all descriptions of any such
franchises, leases, contracts, agreements or documents contained in the
Registration Statement 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 or document has been suspended or
terminated for convenience or default by the Company or any of the other parties
thereto, and the Company has not received notice or any other knowledge of any
such pending or threatened suspension or termination, except for such pending or
threatened suspensions or terminations that would not reasonably be expected to,
singularly or in the aggregate, have a Material Adverse Effect.
(bb) 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.
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(cc) No person or entity has the right to require registration of shares of
Common Stock or other securities of the Company in connection with the filing or
effectiveness of the Registration Statement or otherwise, except for persons and
entities who have expressly waived such right or 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. All persons who hold such
registration or similar rights that may be exercised following this offering
have duly and irrevocably waived any rights or requirements that would restrict
the Company's ability to issue or sell securities concurrently with or
subsequent to the exercise of any such rights.
(dd) The Company does not own any "margin securities" as that term is
defined in Regulation U of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), and none of the proceeds of the sale of the 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 Stock to be considered a "purpose
credit" within the meanings of Regulation T, U or X of the Federal Reserve
Board.
(ee) The Company is not a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the Company or the
Underwriters for a brokerage commission, finder's fee or like payment in
connection with the offering and sale of the Stock.
(ff) 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.
(gg) The Stock has been approved for listing, subject to notice of
issuance, on the Nasdaq Stock Market's National Market.
(hh) The Company has taken all necessary actions to ensure that, upon and
at all times after the effectiveness of the Registration Statement, it will be
in compliance with all applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002
and all rules and regulations promulgated thereunder or implementing the
provisions thereof (the "Xxxxxxxx-Xxxxx Act") that are then in effect and
applicable to the Company and is actively taking steps in order to be in
compliance with other applicable provisions of the Xxxxxxxx-Xxxxx Act not
currently in effect that will be applicable to the Company upon and at all times
after the effectiveness of such provisions.
(ii) The Company has taken all necessary actions to ensure that, upon and
at all times after the Nasdaq National Market ("Nasdaq") shall have approved the
Stock for inclusion, it will be in compliance with all applicable corporate
governance requirements set forth in the Nasdaq Marketplace Rules that are then
in effect and must be complied with upon initial listing on Nasdaq and is
actively taking steps in order to be in compliance with other applicable
corporate governance requirements set forth in the Nasdaq Marketplace Rules not
currently in effect or which do not need to be complied with upon initial
listing on Nasdaq upon and all times after the Company is required to comply
with such requirements.
(jj) Neither the Company nor, to the best of the Company's knowledge, any
employee or agent of the Company, 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.
(kk) 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
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unconsolidated entity, including, but not limited to, any structured finance,
special purpose or limited purpose entity that could reasonably be expected to
materially affect the Company's liquidity or the availability of, or
requirements for, its capital resources which transaction, arrangement or other
relationship is required to be described in the Prospectus and which has not
been described as required.
(ll) There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the executive
officers or directors of the Company, except as disclosed in the Prospectus.
(mm) The Registration Statement, the Prospectus and the Preliminary
Prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which they are distributed in connection with the Directed Share Program. No
authorization, approval, consent, license, order, registration or qualification
of or with any government, governmental instrumentality or court, other than
such as have been obtained, is necessary under the securities laws or
regulations of any foreign jurisdiction in which the Directed Shares are offered
outside the United States.
(nn) The Company has not offered, or caused the Underwriters to offer, any
Firm Stock to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or business partner of
the Company to alter the customer's or business partner's level or type of
business with the Company or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
3. PURCHASE SALE AND DELIVERY OF THE STOCK.
(a) On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company that number of shares of Firm Stock
(rounded up or down, as determined by Punk Xxxxxx in its discretion, in order to
avoid fractions) set forth opposite the name of such Underwriter in Schedule A
hereto.
(b) The purchase price per share to be paid by the Underwriters to the
Company for the Stock will be $_____ per share (the "Purchase Price").
(c) The Company will deliver the Firm Stock to the Representatives for the
respective accounts of the several Underwriters (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), or in such other form as is mutually
agreed upon by the Company and the Representatives, against payment of the
aggregate Purchase Price therefor by wire transfer to an account at a bank
reasonably acceptable to Punk Xxxxxx, payable to the order of the Company and,
all at the offices of Xxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000. 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 , 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 Punk Xxxxxx.
(d) The Company shall make the certificates for the Stock available to the
Representatives for examination on behalf of the Underwriters in New York, New
York at least twenty-four hours prior to the First Closing Date, if requested by
the Representatives.
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(e) 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 Punk Xxxxxx 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 from the
Company 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 on Schedule A
hereto bears to the total number of shares of Firm Stock (subject to adjustment
by Punk Xxxxxx 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, not more than thirty (30) days subsequent to the date of the
Prospectus. No Optional Stock shall be sold and delivered unless the Firm Stock
previously has been, or simultaneously is, sold and delivered. The right to
purchase the Optional Stock or any portion thereof may be surrendered and
terminated at any time upon written notice by Punk Xxxxxx to the Company.
(f) The option granted hereby may be exercised by written notice being
given to the Company by Punk Xxxxxx 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.")
(g) The Company will deliver the Optional Stock to the Underwriters (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, or in such other form as is mutually agreed upon by the
Company and the Representatives, against payment of the aggregate Purchase Price
therefor by wire transfer to an account at a bank reasonably acceptable to Punk
Xxxxxx payable to the order of the Company, all at the offices of Xxxxxxxx &
Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000. 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 Company shall make the certificates for the Optional Stock
available to the Representatives for examination on behalf of the Underwriters
in New York, New York not later than 10:00 A.M., New York Time, on the business
day preceding the Option Closing Date, if requested by the Representatives. 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 Punk
Xxxxxx.
(h) 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 Rule 462(b) Registration Statement, if
necessary, in a form approved by the Representatives and file such Rule 462(b)
Registration Statement with the Commission on the date hereof; 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 to the Registration Statement or any supplement to the
Prospectus to which the Representatives shall reasonably object by notice to the
Company after a reasonable period to review, unless otherwise required by law;
advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to the
9
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; 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 its best
efforts to obtain its withdrawal.
(b) If at any time prior to the expiration of nine months after the
effective date of the Initial 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 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 or supplement
the Prospectus to comply with the Securities Act, the Company will promptly
notify the Representatives thereof and upon their request will prepare an
amended or supplemented Prospectus 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 Initial 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 5:00 P.M., New
York time, of the business day following the execution and delivery of this
Agreement) and (iv) any amended or supplemented Prospectus (not later than 10:00
A.M., New York time, on the business day following the date of such amendment or
supplement).
(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 (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
shall not be obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified or to file a general consent to service of
process in any jurisdiction.
10
(g) During the period of five 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 with the
Commission pursuant to the Exchange Act or any national securities exchange or
automatic quotation system on which the Stock is listed or quoted, in each case,
other than such documents as are available on the internet (e.g., at
xxx.xxx.xxx).
(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 180 days from the date of the Prospectus without the prior
written consent of Punk Xxxxxx, other than the Company's sale of the Stock
hereunder and the issuance of shares pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans as in
existence on the date hereof or pursuant to currently outstanding options,
warrants or rights or upon conversion of currently outstanding preferred stock.
The Company has or will cause each officer, director and shareholder listed in
Schedule B to furnish to the Representatives, prior to the First Closing Date, a
letter, substantially in the form of Exhibit A hereto.
(i) The Company will supply the Representatives or their counsel 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 financial statements of the Company for any quarterly 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
in advance), without the prior written consent of the Representatives, which
shall not be unreasonably withheld or delayed unless in the opinion of counsel
to the Company, and after notification to the Representatives, such press
release or communication is required by law.
(l) In connection with the offering of the Stock, until Punk Xxxxxx shall
have notified the Company of the completion of the resale of the Stock, the
Company will not, and will use all commercially reasonable efforts to cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act) not
to, either alone or with one or more other persons, bid for or purchase, for any
account in which it or any of its affiliated purchasers has a beneficial
interest, any Common Stock, or attempt to induce any person to purchase any
Common Stock; and not to, and to use all commercially reasonable efforts to
cause its affiliated purchasers not to, make bids or purchase for the purpose of
creating actual, or apparent, active trading in or of raising the price of the
Common Stock.
(m) The Company will not take any action prior to the Closing Date which
would require the Prospectus to be amended or supplemented pursuant to Section
4(b).
(n) The Company shall use reasonable efforts to at all times comply with
all applicable provisions of the Xxxxxxxx-Xxxxx Act in effect from time to time.
11
(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."
(p) In connection with the Directed Share Program, the Company will ensure
that the Directed Shares will be restricted to the extent required by the NASD
or the NASD rules from sale, transfer, assignment, pledge or hypothecation for a
period of three (3) months following the date of the effectiveness of the
Registration Statement. The Designated Underwriter will notify the Company as to
which Participants will need to be so restricted. The Company will direct the
transfer agent to place stop transfer restrictions upon such securities for such
period of time.
(q) The Company will pay all fees and disbursements of counsel incurred by
the Underwriters in connection with the Directed Share Program, which shall not
exceed $10,000, and all stamp duties, similar taxes or duties or other taxes, if
any, incurred by the Underwriters in connection with the Directed Share Program.
(r) The Company will comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in which the
Directed Shares are offered in connection with the Directed Share Program.
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,
Preliminary Prospectus, Prospectus, any amendments, supplements and exhibits
thereto, the costs of 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 NASD; (e) any applicable listing or
other 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 Common
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 9, 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 in all material
respects, when made and on each of the Closing Dates, of the representations and
warranties of the Company contained herein, to the accuracy in all material
respects 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 Rule 462(b) Registration
Statement, if any, and the Prospectus shall have been timely filed with the
Commission in accordance with Section 4(a).
12
(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
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) Xxxxxxx Procter 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 acceptable to the
Underwriters.
(e) Xxxxxxxxx & Xxxxxxxxx, PC shall have furnished to the Representatives
such counsel's written opinion, as intellectual property counsel to the Company,
addressed to the Underwriters and dated the Closing Date, in form and substance
acceptable to the Underwriters.
(f) The Representatives shall have received from Xxxxxxxx & Xxxxxxxx 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.
(g) At the time of the execution of this Agreement, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter prepared in
accordance with SAS 72, addressed to the Underwriters and dated such date, in
form and substance satisfactory to the Representatives and
PricewaterhouseCoopers LLP (i) confirming that they are independent certified
public accountants with respect to the Company 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.
(h) On the Closing Date, the Representatives shall have received a letter
prepared in accordance with SAS 72 (the "bring-down letter") from
PricewaterhouseCoopers LLP addressed to the Underwriters and dated the Closing
Date confirming, as of the date of the bring-down letter (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the 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).
(i) The Company shall have furnished to the Representatives a certificate,
dated the Closing Date, of its 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 Initial
Registration Statement, no event has occurred which should have been set forth
in a supplement or amendment to the Registration Statement or the Prospectus,
(iii) to the best of their knowledge after reasonable investigation, as of the
Closing Date, the representations and warranties of the Company in this
Agreement are true and correct in
13
all material respects and the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date, and (iv) subsequent to the date of the most recent
audited financial statements in the Prospectus, there has been no material
adverse change in the financial position or results of operation of the Company,
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 taken as a whole that would reasonably be
expected to have a Material Adverse Effect, except as set forth in the
Prospectus.
(j) The Company shall not have sustained, since the date of the latest
audited financial statements included in the Prospectus, any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and (ii) since such date, there shall not have
been any material change in the capital stock or long-term debt of the Company
or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the business, general affairs,
management, financial position, stockholders' equity or results of operations of
the Company, except for option issuances or issuances of stock upon exercises of
options after the date as of which outstanding options and shares of stock are
described in the Prospectus or otherwise as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause (i) or
(ii), 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 in the Prospectus.
(k) 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 which would, as of the Closing Date, prevent the issuance or sale of the
Stock or materially and adversely affect, or potentially materially and
adversely affect, the business or operations of the Company; and no injunction,
restraining order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Stock or materially and adversely affect, or
potentially materially and adversely affect, the business or operations of the
Company.
(l) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange or the American Stock Exchange 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 range 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, or
there shall have been a declaration of a national emergency or war by the United
States, or (iv) there shall have occurred such a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such), as, in such circumstances in clauses (i) - (iv), to make it in the sole
judgment of the Representatives, impracticable or inadvisable to proceed with
the sale or delivery of the Stock on the terms and in the manner contemplated in
the Prospectus.
(m) The Nasdaq National Market shall have approved the Stock for listing,
subject only to official notice of issuance and evidence of satisfactory
distribution.
14
(n) Punk Xxxxxx shall have received the written agreements, substantially
in the form of Exhibit A hereto, of the officers, directors and stockholders 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 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, either of 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 or
(iii) any act or failure to act, or any alleged act or failure to act, by any
Underwriter in connection with, or relating in any manner to, the Stock or the
offering contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based upon
matters covered by clause (i) or (ii) above (provided that the Company shall not
be liable in the case of any matter covered by this clause (iii) to the extent
that it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such act or failure to act undertaken or omitted to be taken by such Underwriter
through its gross negligence or willful misconduct), 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 the Company
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 (i) an untrue
statement or alleged untrue statement in or omission or alleged omission from
the Preliminary Prospectus, either of 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); provided, further, however, that the
foregoing indemnification agreement with respect to the Preliminary Prospectus
shall not inure to the benefit of any Underwriter from which the person
asserting any such loss, claim, damage or liability purchased Stock, or any
officers, employees, representatives, agents or controlling persons of such
Underwriter, if (i) a copy of the Prospectus (as then amended or supplemented)
was required by law to be delivered to such person at or prior to the written
confirmation of the sale of Securities to such person, (ii) a copy of the
Prospectus (as then amended or supplemented) was not sent or given to such
person by or on behalf of such Underwriter and such failure was not due to
non-compliance by the Company with Section 4(d), and (iii) the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such loss,
claim, damage or liability.
The Company shall indemnify and hold harmless the Designated Underwriter
and its officers, employees, representatives and agents and each person, if any,
who controls any Underwriter within the meaning of the Securities Act
(collectively the "Designated Underwriter Indemnified Parties," and each, a
"Designated Underwriter Indemnified Party") against any loss, claim, damage or
liability, joint or several,
15
or any action in respect thereof, to which that Designated 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 any material prepared by or with the consent of the Company
for distribution to Participants in connection with the Directed Share Program,
(ii) the omission or alleged omission to state in any material prepared by or
with the consent of the Company for distribution to Participants in connection
with the Directed Share Program of a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, (iii) the failure of any Participant
to pay for and accept delivery of Directed Shares that the Participant agreed to
purchase, if the Underwriters are not able to sell such Shares to another
purchaser at the time of the offering; or (iv) any other loss, claim, damage or
liability, or any action in respect of, related to, arising out of, or in
connection with the Directed Share Program, other than such losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the willful misconduct or gross
negligence of the Designated Underwriter.
This indemnity agreement is not exclusive and will be in addition to any
liability which the Company 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 the Company its officers, employees, representatives and agents, each
of its directors and each person, if any, who controls the Company within the
meaning of the Securities Act (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 (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Prospectus, either of the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or (ii) 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 Underwriters' Information. This indemnity agreement is not exclusive and
will be in addition to any liability which the Underwriters might otherwise have
and shall not limit any rights or remedies which 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
16
claim or 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 which are different from or
additional to those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to employ
separate counsel 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 Punk Xxxxxx, 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 Parties. 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, 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 and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(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 on the one hand and the Underwriters on the other from
the offering of the Stock or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and the Underwriters on the
other 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
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 bear to the total underwriting discount 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
17
page of the Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the 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, either of the Registration
Statement or the Prospectus consists solely of the Underwriter's Information.
The Company 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 which 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. This Agreement may be terminated by Punk Xxxxxx, 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(j), 6(k) or 6(l) have occurred or if the Underwriters
shall decline to purchase the Stock for any reason permitted under this
Agreement. Any termination of this Agreement pursuant to this Section 8 shall be
without liability of any party to any other party except as provided in Sections
5 and 9 hereof, and provided further that Sections 5, 7 and 9 shall survive such
termination and remain in full force and effect.
9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES If (a) this Agreement shall have been
terminated pursuant to Section 8, (b) the Company shall fail to tender the Stock
for delivery to the Underwriters for any reason not permitted under this
Agreement, or (c) the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement, 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 Punk Xxxxxx. If this
Agreement is terminated pursuant to Section 10 by reason of the default of one
or more Underwriters, the Company shall not be obligated to reimburse any
defaulting Underwriter on account of those expenses.
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
18
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 or
reimbursed pursuant to Sections 5 and 9 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 each Underwriter's
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 Punk, Xxxxxx & Company, L.P., Attention: Equity
Capital Markets (Fax: 000-000-0000); with a copy to: Xxxxxxxx & Xxxxxxxx LLP,
1290 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx X. Xxxxxx, Esq. (Fax: 000-000-0000).
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to NeuroMetrix, Inc., Attention: President (Fax:
000-000-0000); with a copy to: Xxxxxxx Procter LLP, Xxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: H. Xxxxx Xxxxxx, P.C. (Fax: 000-000-0000);
(c) PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to
Section 7 shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its
19
acceptance telex to the Representatives, which address will be supplied to any
other party hereto by Punk Xxxxxx upon request. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof.
14. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, "business day"
means any day on which the New York Stock Exchange, Inc. is open for trading.
For purposes of this Agreement, the phrase "knowledge of the Company" or any
phrase of similar import shall be deemed to refer to the actual knowledge of the
executive officers of the Company.
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,
tenth, eleventh and twelfth paragraphs and the last sentence of the eighth
paragraph under the heading "Underwriting."
17. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement, Punk,
Xxxxxx 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.
20
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,
NEUROMETRIX, INC.
By:____________________________
Name:
Title:
Accepted as of
the date first above written:
PUNK, XXXXXX & COMPANY, L.P.
XX XXXXXXXXX + CO, LLC
Acting on their own behalf
and as Representatives of several
Underwriters referred to in the foregoing Agreement.
By: PUNK, XXXXXX & COMPANY, L.P.
By:______________________________
Name:
Title:
SCHEDULE A
Number
of Firm
Shares
to be
Name Purchased
---- ---------
Punk, Xxxxxx & Company, L.P.
XX Xxxxxxxxx + Co, LLC
----------
Total 3,000,000
==========
SCHEDULE B
List of stockholders and option holders subject to lock-up
restrictions pursuant to Section 4(h)
--------------------------------------------------------------------------------
Xxxxxxxxxx, Xxxxx Xxxxxx, Xxxxxx
--------------------------------------------------------------------------------
Xxxxxxx, Xxxxxxxx Xxxxxxxxxx, Xxxxx
--------------------------------------------------------------------------------
Xxxxxxxxxx, Xxxxxxx Xxxxxxx, Xxxxx
--------------------------------------------------------------------------------
Xxxx, Xxxxxxx Tower, Xxxxxx
--------------------------------------------------------------------------------
Xxxxx, Xxxxxx Xxxxxxx, Xxxxx
--------------------------------------------------------------------------------
Xxxxx, Xxx Xxxx, Xxxxxxx
--------------------------------------------------------------------------------
Xxxxxx, Xxxx Xxxx, Xxxxx
--------------------------------------------------------------------------------
Xxxxxx, Xxxxx X. Arezzo, Xxxxxx
--------------------------------------------------------------------------------
Chan, Xxxxx Xxxx, Xxx
--------------------------------------------------------------------------------
Xxxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxx
--------------------------------------------------------------------------------
Xxxx, Xxxxxx Xxxxxxxx, Xxxxxx
--------------------------------------------------------------------------------
Xxxxx, Xxxx Xxxxxx, Xxxxxx
--------------------------------------------------------------------------------
Xxxxx, Xxxx Rutkove, Seward
--------------------------------------------------------------------------------
D'Arco, Xxxx Xxxxxxxx, Xxxxxx
--------------------------------------------------------------------------------
XxXxxxxxx, Xxxxxxx Xxxxxxx, Xxxxx
--------------------------------------------------------------------------------
XxXxxxx, Xxx Xxxxx, Xxxx
--------------------------------------------------------------------------------
Xxxxxxxx, Xxxx Xxxxx, Xxxxx
--------------------------------------------------------------------------------
Xxxx, Xxxxxxx Xxxxxxx, Xxxxx X.
--------------------------------------------------------------------------------
Fendrock, Xxxxxxx Xxxxx, W. Xxxx
--------------------------------------------------------------------------------
Xxxxxxx, Xxxxxxx Xxxxx, Xxx
--------------------------------------------------------------------------------
Xxxxxxxxx, Xxx Xxxxxxxx, Xxxx
--------------------------------------------------------------------------------
Hall, Xxxxxxx Xxxxx, Xxxx
--------------------------------------------------------------------------------
2
--------------------------------------------------------------------------------
Xxxxxx, Xxx Xxxxx, Xxxxxxx
--------------------------------------------------------------------------------
Xxxxxx, Xxxxx Xxxxxx, Xxxxx X.
--------------------------------------------------------------------------------
Xxxxxxx, Xxxx Kong, Xuan
--------------------------------------------------------------------------------
Xxxxx, Xxxxx LaCourture, Xxxxxxx
--------------------------------------------------------------------------------
Xxxx, Xxxxxx Xxxxx Xxxxxxx, Xxxxxxxxxxx
--------------------------------------------------------------------------------
Khalifa, Xxxxxx Xxx, Xxxxxx
--------------------------------------------------------------------------------
Xxxxxxxxxxxxxx, S. Xxxxxx, Xxxxxxx
--------------------------------------------------------------------------------
Xxxxx, Xxxxxxxxx Xxxxxxxx, Xxxxxx
--------------------------------------------------------------------------------
XxxXxxxxx, Xxxxxxx Xxx, Xxx
--------------------------------------------------------------------------------
Xxxx, Xxxxxxx XxXxxxxx, Xxxxxx
--------------------------------------------------------------------------------
Megerian, J. Xxxxxx Xxxxx (Xxxxxx), Xxx
--------------------------------------------------------------------------------
Xxxxxx, Xxxxx Xxxxx, Xxxx
--------------------------------------------------------------------------------
Xxxxxx, Xxxxxxx Xxxxxxx, Matt
--------------------------------------------------------------------------------
Restucia, Xxxxxx Xxxxxx, Xxxx
--------------------------------------------------------------------------------
Xxxxxxxxx, Xxxx Xxxx, Xxxxxx
--------------------------------------------------------------------------------
Roche, Xxxxxxx Xxxxxx, Xxxxx
--------------------------------------------------------------------------------
Shegos, Xxxx Xxxxx, Xxxxxx
--------------------------------------------------------------------------------
3
EXHIBIT A
LOCK-UP LETTER AGREEMENT
Punk, Xxxxxx & Company, L.P.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Punk, Xxxxxx & Company, L.P. (the
"Underwriter") and
NeuroMetrix, Inc., a Delaware corporation (the "Company")
propose to enter into an
Underwriting Agreement (the "
Underwriting Agreement")
providing for the purchase by the Underwriter of shares (the "Shares") of Common
Stock, par value $0.0001 per share (the "Common Stock"), of the Company, and
that the Underwriter proposes to reoffer the Shares to the public (the
"Offering").
In consideration of the execution of the
Underwriting Agreement by the
Underwriter, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of the
Underwriter, the undersigned will not, directly or indirectly, (1) offer for
sale, sell, pledge, or otherwise dispose of (or enter into any transaction or
device that is designed to, or could be expected to, result in the disposition
by any person at any time in the future of) any shares of Common Stock
(including, without limitation, shares of Common Stock that may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and shares of Common Stock
that may be issued upon exercise of any option or warrant) or securities
convertible into or exchangeable for Common Stock owned by the undersigned on
the date of execution of this Lock-Up Letter Agreement or on the date of the
completion of the Offering, or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, for a period commencing
on the date hereof and ending 180 days after the date of the final Prospectus
relating to the Offering; provided, however, that the foregoing will not apply
to the pledge of shares of Common Stock or securities convertible into or
exchangeable for Common Stock as collateral for a loan from a financial
institution, provided that the conditions set forth in clauses (A), (C) and (D)
are met with respect to any exercise of rights under such pledge by the lender
or other transfer that occurs prior to the expiration of the 180 day period
referred to above resulting from such pledge; provided that each director and
executive officer of the Company that may be deemed to beneficially own any
shares of Common Stock on the date of execution of this Lock-Up Letter Agreement
or on the date of the completion of the Offering in accordance with the rules
and regulations of the Securities and Exchange Commission and each person or
entity holding more than 5% of the capital stock of the Company has also agreed
to restrictions that are no less restrictive of such person or entity than those
contained in this Lock-Up Letter Agreement.
Notwithstanding the foregoing, the undersigned may transfer the
undersigned's shares of Common Stock or securities convertible into or
exchangeable for Common Stock (i) as a bona fide gift or gifts or by will or
intestacy, (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, (iii) if the undersigned
is a corporation, to an "affiliate," as such term is defined in Rule 501(a) of
the General Rules and Regulations under the Securities Act of 1933, as amended
from time to time, (iv) if the undersigned is a limited liability company, to a
member or affiliated limited liability company, (v) if the undersigned is a
partnership, to a partner or affiliated
4
partnership or (vi) if the undersigned is a trust, to its trustees,
beneficiaries or settlors; provided that in any such case, (A) it shall be a
condition to the transfer that the donee or transferee execute an agreement
stating that the donee or transferee is receiving and holding such capital stock
subject to the provisions of this Lock-Up Letter Agreement and there shall be no
further transfer of such capital stock except in accordance with this agreement,
(B) any such transfer shall not involve a disposition for value, (C) no filing
by any party (donor, donee, transferor, transferee, pledgor or pledgee) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), shall be
required or shall be voluntarily made in connection with such transfer or
distribution (other than a filing on a Form 5, Schedule 13D, Schedule 13G or
other filing made after the expiration of the 180-day period referred to above)
and (D) each party (donor, donee, transferor, transferee, pledgor or pledgee)
shall not be required by law (including without limitation the disclosure
requirements of the Securities Act of 1933, as amended, and the Exchange Act) to
make, and shall agree to not voluntarily make, any public announcement of the
transfer or disposition.. In addition, notwithstanding the lock-up restriction
described in this paragraph, the undersigned may at any time enter into a
written plan meeting the requirements of Rule 10b5-1 under the Exchange Act
relating to the sale of shares of Common Stock, if then permitted by the
Company, provided that the shares subject to such plan shall be subject to the
restrictions set forth in the second paragraph of this Lock-Up Letter Agreement.
For purposes of this Lock-Up Letter Agreement, "immediate family" shall mean any
relationship by blood, marriage or adoption, not more remote than first cousin.
Notwithstanding the foregoing, nothing in this Lock-Up Letter Agreement
will prohibit (i) any exercise (including a cashless exercise) of options or
warrants to purchase Common Stock or securities convertible into or exchangeable
for Common Stock or the conversion or exchange of any equity security held by
the undersigned into Common Stock; provided that any Common Stock received upon
such exercise, conversion or exchange will be subject to this Lock-Up Letter
Agreement, or (ii) any transaction with respect to shares of Common Stock
acquired in the Offering or in market transactions after completion of the
Offering.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
In addition, the undersigned hereby waives any rights the undersigned
may have, if any, to require registration of Common Stock in connection with the
filing of a registration statement relating to the Offering.
This Lock-Up Letter Agreement will automatically terminate and be of no
further effect upon the earliest to occur, if any, of: (i) either the
Underwriter or the Company advising the other party in writing, prior to the
execution of the
Underwriting Agreement, that it has determined not to proceed
with the Offering, (ii) the termination of the
Underwriting Agreement before the
sale of any Shares to the Underwriter or (iii) December 31, 2004, in the event
that the
Underwriting Agreement has not been executed by that date.
The undersigned understands that the Company and the Underwriter will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
the
Underwriting Agreement, the terms of which are subject to negotiation
between the Company and the Underwriter.
The undersigned acknowledges that Lock-Up Letter Agreements in form and
substance similar to this Lock-Up Letter Agreement have been or will be
delivered to the Underwriter by other parties in connection with the proposed
Offering, and that the Underwriter, may consent to any sale, transfer,
5
disposition or other action otherwise prohibited under any such other Lock-Up
Letter Agreement without any obligation or liability to the undersigned.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
[Signature Page Follows]
6
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding
Very truly yours,
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Entity:
----------------------------------
Dated:
----------
