2,750,000 Shares ARDEA BIOSCIENCES, INC. Common Stock ($0.001 par value per Share) UNDERWRITING AGREEMENT
Exhibit 1.1
EXECUTION COPY
2,750,000 Shares
ARDEA BIOSCIENCES, INC.
Common Stock
($0.001 par value per Share)
January 20, 2011
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxxxx & Company, Inc.
as Representatives of the several Underwriters
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxx Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Incorporated
Xxxxxxxxx & Company, Inc.
as Representatives of the several Underwriters
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxx Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Introductory. Ardea Biosciences, Inc., a Delaware corporation (the “Company”), proposes to
issue and sell to the several Underwriters named on Schedule A hereto (the “Underwriters”)
an aggregate of 2,750,000 shares of its common stock, par value $0.001 per share (the “Shares”).
The 2,750,000 Shares to be sold by the Company are collectively called the “Firm Shares.” In
addition, the Company has granted to the Underwriters an option to purchase up to an additional
412,500 Shares. The additional 412,500 Shares to be sold by the Company pursuant to such option
are collectively called the “Optional Shares.” The Firm Shares and, if and to the extent such
option is exercised, the Optional Shares are collectively called the “Offered Shares.” Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (“Xxxxxxx Xxxxx”) and Jefferies & Company, Inc.
(“Jefferies”) have agreed to act as representatives of the several Underwriters (in such capacity,
the “Representatives”) in connection with the offering and sale of the Offered Shares.
The Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a shelf registration statement on Form S-3 (File No. 333-170105), and has prepared a
base prospectus (the “Base Prospectus”) to be used in connection with the public offering and sale
of the Offered Shares. Such registration statement, as amended, including the financial
statements, exhibits and schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the “Securities Act”), including all documents incorporated or deemed to
be incorporated by reference therein and any information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430B under the Securities Act or the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (collectively, the “Exchange
Act”), is called the “Registration Statement.” Any registration statement filed by the Company
pursuant to Rule 462(b) under the Securities Act is called the “Rule 462(b) Registration
Statement,” and from and after the date and time of filing
of the Rule 462(b) Registration Statement the term “Registration Statement” shall include the
Rule 462(b) Registration Statement. The preliminary prospectus supplement dated January 19, 2011
describing the Offered Shares and the offering thereof, together with the Base Prospectus, is
called the “Preliminary Prospectus,” and the Preliminary Prospectus and any other preliminary
prospectus supplement to the Base Prospectus that describes the Offered Shares and the offering
thereof and is used prior to the filing of the Prospectus (as defined below), together with the
Base Prospect, is called a “preliminary prospectus.” As used herein, the term “Prospectus” shall
mean the final prospectus supplement to the Base Prospectus that describes the Offered Shares and
the offering thereof (the “Final Prospectus Supplement”), together with the Base Prospectus, in the
form first used by the Underwriters to confirm sales of the Offered Shares or in the form first
made available to the Underwriters by the Company to meet requests of purchasers pursuant to Rule
173 under the Securities Act. As used herein, “Applicable Time” is 8:41 a.m. New York time, on
January 20, 2011. As used herein, “free writing prospectus” has the meaning set forth in Rule 405
under the Securities Act, and “Time of Sale Prospectus” means the preliminary prospectus, as
amended or supplemented immediately prior to the Applicable Time, together with the free writing
prospectuses, if any, identified in Schedule B hereto, each “road show” (as defined in Rule
433 under the Securities Act), if any, related to the offering of the Shares contemplated hereby
that is a “written communication” (as defined in Rule 405 under the Securities Act), and the
pricing information set forth in Schedule C hereto. As used herein, the terms
“Registration Statement,” “Rule 462(b) Registration Statement,” “Preliminary Prospectus,”
“preliminary prospectus,” “Base Prospectus,” “Time of Sale Prospectus” and “Prospectus” shall
include the documents incorporated and deemed to be incorporated by reference therein as of the
date thereof. All references in this Agreement to financial statements and schedules and other
information which are “contained,” “included” or “stated” in the Registration Statement, the Rule
462(b) Registration Statement, the Preliminary Prospectus, any preliminary prospectus, the Base
Prospectus, the Time of Sale Prospectus or the Prospectus (and all other references of like import)
shall be deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the Registration Statement or
the Prospectus, as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement, the Rule 462(b) Registration Statement, the Preliminary
Prospectus, any preliminary prospectus, the Base Prospectus, the Time of Sale Prospectus or the
Prospectus, as the case may be, and all references in this Agreement to amendments or supplements
to the Registration Statement, the Rule 462(b) Registration Statement, the Preliminary Prospectus,
any preliminary prospectus, the Base Prospectus, the Time of Sale Prospectus or the Prospectus
shall be deemed to mean and include the filing of any document under the Exchange Act which is or
is deemed to be incorporated by reference in the Registration Statement, the Rule 462(b)
Registration Statement, the Preliminary Prospectus, any preliminary prospectus, the Base
Prospectus, the Time of Sale Prospectus or the Prospectus, as the case may be. All references in
this Agreement to the Registration Statement, the 462(b) Registration Statement, the Preliminary
Prospectus, any preliminary prospectus, the Base Prospectus or the Prospectus, or any amendments or
supplements to any of the foregoing, shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“XXXXX”).
In the event that the Company has only one subsidiary, then all references herein to
“subsidiaries” of the Company shall be deemed to refer to such single subsidiary, mutatis
mutandis.
The Company hereby confirms its agreements with the Underwriters as follows:
Section 1. Representations and Warranties of the Company. The Company
2
hereby represents, warrants and covenants to each Underwriter, as of the date of this
Agreement, as of the First Closing Date (as hereinafter defined) and as of each Option Closing
Date (as hereafter defined), if any, and covenants with each Underwriter, as follows:
(a) Compliance with Registration Requirements. The Registration Statement and any
Rule 462(b) Registration Statement have been declared effective by the Commission under the
Securities Act. The Company has complied, to the Commission’s satisfaction, with all requests
of the Commission for additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration Statement is in
effect and no proceedings for such purpose have been instituted or are pending or, to the
Company’s knowledge, are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied or will comply in
all material respects with the Securities Act and, if filed by electronic transmission pursuant
to XXXXX (except as may be permitted by Regulation S-T under the Securities Act), was identical
to the copy thereof delivered to the Underwriters for use in connection with the offer and sale
of the Offered Shares. Each of the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendment thereto, at the time it became effective and at all
subsequent times during the period beginning on the date hereof and ending on the later of the
Option Closing Date or such date, as in the opinion of counsel for the Underwriters, the
Prospectus is no longer required by law to be delivered (assuming the absence of Rule 172 under
the Securities Act), in connection with sales by the Underwriters or a dealer (the “Prospectus
Delivery Period”), complied and will comply in all material respects with the Securities Act
and did not and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading. As of the Applicable Time, the Time of Sale Prospectus (including any preliminary
prospectus wrapper) did not, and at the time of each sale of the Offered Shares and at the
First Closing Date (as defined in Section 2), the Time of Sale Prospectus, as then amended or
supplemented by the Company, if applicable, will not, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The Prospectus
(including any Prospectus wrapper), as amended or supplemented, as of its date and at all
subsequent times during the Prospectus Delivery Period, did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the three immediately preceding
sentences do not apply to statements in or omissions from the Registration Statement, any
Rule 462(b) Registration Statement, or any post-effective amendment thereto, or any preliminary
prospectus, the Prospectus or the Time of Sale Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by the Representatives expressly for use therein, it being
understood and agreed that the only such information furnished by the Representatives to the
Company consists of the information described in Section 9(b) below. There are no contracts or
other documents required to be described in the Time of Sale Prospectus or the Prospectus or to
be filed as exhibits to the Registration Statement which have not been described or filed as
required.
The Company is not an “ineligible issuer” in connection with the offering of the Offered
Shares pursuant to Rules 164, 405 and 433 under the Securities Act. Any free writing
prospectus that the Company is required to file pursuant to Rule 433(d) under the
3
Securities Act has been, or will be, filed with the Commission in accordance with the
requirements of the Securities Act. Each free writing prospectus that the Company has filed,
or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared
by or behalf of or used or referred to by the Company complies or will comply in all material
respects with the requirements of Rule 433 under the Securities Act including timely filing
with the Commission or retention where required and legending, and each such free writing
prospectus, as of its issue date and at all subsequent times through the completion of the
public offer and sale of the Offered Shares did not, does not and will not include any
information that conflicted, conflicts with or will conflict with the information contained in
the Registration Statement, any preliminary prospectus or the Prospectus, including any
document incorporated by reference therein. Except for the free writing prospectuses, if any,
identified in Schedule B hereto, and electronic road shows, if any, furnished to you
before first use, the Company has not prepared, used or referred to, and will not, without your
prior consent, prepare, use or refer to, any free writing prospectus.
(b) Offering Materials Furnished to Underwriters. The Company has delivered to the
Representatives two signed copies of the Registration Statement, any amendments thereto and any
Rule 462(b) Registration Statement (including exhibits thereto) and of each consent and
certificate of experts filed as a part thereof.
(c) Distribution of Offering Material By the Company. The Company has not distributed and
will not distribute, prior to the later of (i) the expiration or termination of the option
granted to the several Underwriters in Section 2 and (ii) the completion of the Underwriters’
distribution of the Offered Shares, any offering material in connection with the offering and
sale of the Offered Shares other than the a preliminary prospectus, the Time of Sale
Prospectus, the Prospectus, any free writing prospectus reviewed and consented to by the
Representatives, or the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable against the
Company in accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(e) Authorization of the Offered Shares. The Offered Shares have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and the
issuance and sale of the Offered Shares is not subject to any preemptive rights, rights of
first refusal or other similar rights to subscribe for or purchase the Offered Shares.
(f) No Applicable Registration or Other Similar Rights. There are no persons with
registration or other similar rights to have any equity or debt securities registered for sale
under the Registration Statement or included in the offering contemplated by this Agreement,
except for such rights as have been duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed in the Time of Sale
Prospectus, subsequent to the respective dates as of which information is given in the Time of
Sale Prospectus: (i) there has been no material adverse change, or any development that
4
could reasonably be expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business, operations or prospects, whether or not
arising from transactions in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (any such change is called a “Material Adverse Change”);
(ii) the Company and its subsidiaries, considered as one entity, have not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary course of business
nor entered into any material transaction or agreement not in the ordinary course of business;
and (iii) there has been no dividend or distribution of any kind declared, paid or made by the
Company or, except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of
its subsidiaries of any class of capital stock.
(h) Independent Accountants. Stonefield Xxxxxxxxx, Inc., who have expressed their opinion
with respect to the financial statements (which term as used in this Agreement includes the
related notes thereto) and supporting schedules filed with the Commission as a part of the
Registration Statement and incorporated by reference in the Preliminary Prospectus, the
Prospectus and Time of Sale Prospectus (each, an “Applicable Prospectus” and collectively, the
“Applicable Prospectuses”), are (i) independent public or certified public accountants as
required by the Securities Act and the Exchange Act, (ii) in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X and
(iii) a registered public accounting firm as defined by the Public Company Accounting Oversight
Board (the “PCAOB”) whose registration has not been suspended or revoked and, to the Company’s
knowledge, who has not requested such registration to be withdrawn.
(i) Preparation of the Financial Statements. The financial statements filed with the
Commission as a part of the Registration Statement and included in the Preliminary Prospectus,
the Time of Sale Prospectus and the Prospectus present fairly the consolidated financial
position of the Company and its subsidiaries as of and at the dates indicated and the results
of their operations and cash flows for the periods specified. The supporting schedules
included in the Registration Statement present fairly the information required to be stated
therein. Such financial statements and supporting schedules have been prepared in conformity
with generally accepted accounting principles as applied in the United States applied on a
consistent basis throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules are required to
be included in the Registration Statement or any Applicable Prospectus. The financial data set
forth or incorporated by reference in each Applicable Prospectus fairly present the information
set forth therein on a basis consistent with that of the audited financial statements contained
in the Registration Statement and each Applicable Prospectus. To the Company’s knowledge, no
person who has been suspended or barred from being associated with a registered public
accounting firm, or who has failed to comply with any sanction pursuant to Rule 5300
promulgated by the PCAOB, has participated in or otherwise aided the preparation of, or
audited, the financial statements, supporting schedules or other financial data filed with the
Commission as a part of the Registration Statement and included in any Applicable Prospectus.
(j) Company’s Accounting System. The Company and each of its subsidiaries make and keep
accurate books and records and maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
5
accounting principles as applied in the United States and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences. The Company is not aware of any material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and since December 31, 2009, there
has been no change in the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
(k) Incorporation and Good Standing of the Company and its Subsidiaries. Each of the
Company and its subsidiaries has been duly incorporated or organized, as the case may be, and
is validly existing as a corporation, partnership or limited liability company, as applicable,
in good standing under the laws of the jurisdiction of its incorporation or organization and
has the power and authority (corporate or other) to own, lease and operate its properties and
to conduct its business as described in each Applicable Prospectus and, in the case of the
Company, to enter into and perform its obligations under this Agreement, except where the
failure to be in good standing would not reasonably be expected to result in a Material Adverse
Change. Each of the Company and each subsidiary is duly qualified as a foreign corporation,
partnership or limited liability company, as applicable, to transact business and is in good
standing in the State of California and each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the conduct of business,
except where the failure to be so qualified or in good standing would not reasonably be
expected to result in a Material Adverse Change. All of the issued and outstanding capital
stock or other equity or ownership interests of each subsidiary have been duly authorized and
validly issued, are fully paid and nonassessable and are owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or adverse claim. The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than (i) the subsidiaries listed in Exhibit 21
to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and
(ii) such other entities omitted from Exhibit 21 which, when such omitted entities are
considered in the aggregate as a single subsidiary, would not constitute a “significant
subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X.
(l) Capitalization and Other Capital Stock Matters. The authorized, issued and
outstanding capital stock of the Company is as set forth in each Applicable Prospectus (other
than for subsequent issuances, if any, pursuant to employee benefit plans described in the Time
of Sale Prospectus or upon the exercise of outstanding options or warrants described in each
Applicable Prospectus). The Shares (including the Offered Shares) conform in all material
respects to the description thereof contained in the Time of Sale Prospectus. All of the
issued and outstanding Shares have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with federal and state securities laws. None
of the outstanding Shares 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 or any of its subsidiaries other than those
accurately described in each Applicable 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, set forth in each Applicable Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
6
options and rights. All grants of options to acquire Shares (each, a “Company Stock
Option”) were validly issued and approved by the Board of Directors of the Company, a committee
thereof or an individual with authority duly delegated by the Board of Directors of the Company
or a committee thereof. Grants of Company Stock Options were (i) made in material compliance
with all applicable laws and (ii) as a whole, made in material compliance with the terms of the
plans under which such Company Stock Options were issued. There is no and has been no policy or
practice of the Company to coordinate the grant of Company Stock Options with the release or
other public announcement of material information regarding the Company or its results of
operations or prospects. Except as described in the Time of Sale Prospectus and the Prospectus,
the Company has not sold or issued any Shares during the six-month period preceding the date of
the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act other than Shares issued pursuant to employee benefit plans, qualified stock
options plans or other employee compensation plans or pursuant to outstanding options, rights
or warrants.
(m) Stock Exchange Listing. The Shares are registered pursuant to Section 12(b) of the
Exchange Act and are listed on the Nasdaq Global Select Market, and the Company has taken no
action designed to, or likely to have the effect of, terminating the registration of the Shares
under the Exchange Act or delisting the Shares from the Nasdaq Global Select Market, nor has
the Company received any notification that the Commission or the Nasdaq Global Select Market is
contemplating terminating such registration or listing.
(n) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required. Neither the Company nor any of its subsidiaries is in violation of its charter or
by-laws, partnership agreement or operating agreement or similar organizational document, as
applicable, or is in default (or, with the giving of notice or lapse of time, would be in
default) (“Default”) under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound (including, without limitation, any credit
agreement, indenture, pledge agreement, security agreement or other instrument or agreement
evidencing, guaranteeing, securing or relating to indebtedness of the Company or any of its
subsidiaries ), or to which any of the property or assets of the Company or any of its
subsidiaries is subject (each, an “Existing Instrument”), except for such Defaults as would not
reasonably be expected to, individually or in the aggregate, result in a Material Adverse
Change. The Company’s execution, delivery and performance of this Agreement, consummation of
the transactions contemplated hereby and by each Applicable Prospectus and the issuance and
sale of the Offered Shares (i) have been duly authorized by all necessary corporate action and
will not result in any violation of the provisions of the charter or by-laws, partnership
agreement or operating agreement or similar organizational document of the Company or any
subsidiary, as applicable, (ii) will not conflict with or constitute a breach of, or Default
under, or result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, or require the
consent of any other party to, any Existing Instrument, except for such breaches, Defaults or
results, or failure to obtain such consent, as would not reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Change and (iii) will not result in any
violation of any law, administrative regulation or administrative or court decree applicable to
the Company or any subsidiary, except for such violations as would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Change. No consent,
approval, authorization or other order of, or registration or filing with, any court or other
governmental or regulatory authority or agency, is required for the Company’s execution,
delivery and performance of this Agreement and consummation of
7
the transactions contemplated hereby and by each Applicable Prospectus, except such as
have been obtained or made or will be made by the Company under the Securities Act, or that may
be required under applicable state securities or blue sky laws and from the Financial Industry
Regulatory Authority (“FINRA”).
(o) No Material Actions or Proceedings. There are no legal or governmental actions, suits
or proceedings pending or, to the Company’s knowledge, threatened (i) against or affecting the
Company or any of its subsidiaries, (ii) which have as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its subsidiaries or
(iii) relating to environmental or discrimination matters, where in any such case (A) to the
Company’s knowledge, there is a substantial likelihood that such action, suit or proceeding
will be determined adversely to the Company, such subsidiary or such officer or director,
(B) any such action, suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Change or adversely affect the consummation of the
transactions contemplated by this Agreement or (C) any such action, suit or proceeding is or
would be material in the context of the sale of Shares. No material labor dispute with the
employees of the Company or any of its subsidiaries, or to the Company’s knowledge, with the
employees of any principal supplier, manufacturer, customer or contractor of the Company,
exists or, to the Company’s knowledge, is threatened or imminent.
(p) Intellectual Property Rights. The Company and its subsidiaries own, possess or can
acquire on reasonable terms sufficient trademarks, trade names, patent rights, copyrights,
domain names, licenses, approvals, trade secrets and other similar rights (collectively,
“Intellectual Property Rights”) reasonably necessary to conduct their businesses as now
conducted; except to the extent failure to own, possess or acquire such Intellectual Property
Rights would not result in a Material Adverse Change. Neither the Company nor any of its
subsidiaries has received, or has any reason to believe that it will receive, any notice of
infringement or conflict with asserted Intellectual Property Rights of others. Except as would
not be reasonably likely to result, individually or in the aggregate, in a Material Adverse
Change (A) to the Company’s knowledge, there is no infringement, misappropriation or violation
by third parties of any of the Intellectual Property Rights owned by the Company; (B) there is
no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging the rights of the Company and its subsidiaries in or to any such
Intellectual Property Rights, and the Company is unaware of any facts which would form a
reasonable basis for any such claim, that would, individually or in the aggregate, together
with any other claims in this subsection (p) result in a Material Adverse Change; (C) the
Intellectual Property Rights owned by the Company and its subsidiaries and, to the Company’s
knowledge, the Intellectual Property Rights licensed to the Company and its subsidiaries have
not been adjudged by a court of competent jurisdiction invalid or unenforceable, in whole or in
part, and there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any such Intellectual
Property Rights, and the Company is unaware of any facts which would form a reasonable basis
for any such claim that would, individually or in the aggregate, together with any other claims
in this subsection (p) result in a Material Adverse Change; (D) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company or
its subsidiaries infringe, misappropriate or otherwise violate any Intellectual Property Rights
or other proprietary rights of others, the Company and its subsidiaries have not received any
written notice of such claim and the Company is unaware of any other facts which would form a
reasonable basis for any such claim that would reasonably be expected, individually or in the
aggregate, together with any other claims in this subsection (p) to result in a Material
Adverse Change; and (E) to the
8
Company’s knowledge, no employee of the Company or a subsidiary of the Company is in or
has ever been in violation in any material respect of any term of any employment contract,
patent disclosure agreement, invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a
former employer where the basis of such violation relates to such employee’s employment with
the Company or a subsidiary of the Company, or actions undertaken by the employee while
employed with the Company or a subsidiary of the Company and would reasonably be expected to
result, individually or in the aggregate, in a Material Adverse Change. To the Company’s
knowledge, all material technical information developed by and belonging to the Company and its
subsidiaries for which they have not sought, and do not intend to seek, to patent or otherwise
protect pursuant to applicable intellectual property laws has been kept confidential or
disclosed only under obligations of confidentiality. The Company is not a party to or bound by
any options, licenses or agreements with respect to the Intellectual Property Rights of any
other person or entity that are required to be set forth in the Prospectus and are not
described therein. The Time of Sale Prospectus contains in all material respects the same
description of the matters set forth in the preceding sentence contained in the Prospectus.
None of the technology employed by the Company or any of its subsidiaries has been obtained or
is being used by the Company or any of its subsidiaries in violation of any contractual
obligation binding on the Company or any of its subsidiaries or, to the Company’s knowledge,
any of its or its subsidiaries’ officers, directors or employees or otherwise in violation of
the rights of any persons, except in each case for such violations that would not reasonably be
expected to result in a Material Adverse Change.
(q) All Necessary Permits, etc. The Company and each subsidiary possess such valid and
current certificates, authorizations or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct their respective businesses, and
neither the Company nor any subsidiary has received, or has any reason to believe that it will
receive, any notice of proceedings relating to the revocation or modification of, or
non-compliance with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be
expected to result in a Material Adverse Change.
(r) Title to Properties. The Company and each of its subsidiaries has good and marketable
title to all of the real and personal property and other assets reflected as owned in the
financial statements referred to in Section 1(i) above (or elsewhere in any Applicable
Prospectus), in each case free and clear of any security interests, mortgages, liens,
encumbrances, equities, adverse claims and other defects, except such as do not materially and
adversely affect the value of such property and do not materially interfere with the use made
or proposed to be made of such property by the Company or such subsidiary. To the Company’s
knowledge, the real property, improvements, equipment and personal property held under lease by
the Company or any subsidiary are held under valid and enforceable leases, with such exceptions
as are not material and do not materially interfere with the use made or proposed to be made of
such real property, improvements, equipment or personal property by the Company or such
subsidiary.
(s) Tax Law Compliance. The Company and its consolidated subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns or have properly
requested extensions thereof and have paid all taxes required to be paid by any of them and, if
due and payable, any related or similar assessment, fine or penalty levied against any of them
except as may be being contested in good faith and by appropriate proceedings. The Company has
made adequate charges, accruals and reserves in the applicable financial
9
statements referred to in Section 1(i) above in respect of all federal, state and foreign
income and franchise taxes for all periods as to which the tax liability of the Company or any
of its consolidated subsidiaries has not been finally determined.
(t) Company Not an “Investment Company.” The Company has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended (the “Investment Company
Act”). The Company is not, and will not be, either after receipt of payment for the Offered
Shares or after the application of the proceeds therefrom as described under “Use of Proceeds”
in each Applicable Prospectus, an “investment company” within the meaning of Investment Company
Act and will conduct its business in a manner so that it will not become subject to the
Investment Company Act.
(u) Insurance. Each of the Company and its subsidiaries are insured by recognized,
financially sound and reputable institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and personal property owned or
leased by the Company and its subsidiaries against theft, damage, destruction and acts of
vandalism and policies covering the Company and its subsidiaries for product liability claims
and clinical trial liability claims. The Company has no reason to believe that it or any
subsidiary will not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct its business as now conducted and at a cost that would not
result in a Material Adverse Change. The Company has not been denied any insurance coverage
material to the Company which it has sought or for which it has applied.
(v) No Price Stabilization or Manipulation; Compliance with Regulation M. The Company has
not taken, directly or indirectly, any action designed to or that might be reasonably expected
to cause or result in stabilization or manipulation of the price of the Shares or any other
“reference security” (as defined in Rule 100 of Regulation M under the 1934 Act (“Regulation
M”)) whether to facilitate the sale or resale of the Offered Shares or otherwise, and has taken
no action which would directly or indirectly violate Regulation M. The Company acknowledges
that the Underwriters may engage in passive market making transactions in the Offered Shares on
the Nasdaq Global Select Market in accordance with Regulation M.
(w) Related Party Transactions. There are no business relationships or related-party
transactions involving the Company or any of its subsidiaries or any other person required to
be described in each Applicable Prospectus which have not been described as required. The Time
of Sale Prospectus contains in all material respects the same description of the matters set
forth in the preceding sentence contained in the Prospectus.
(x) S-3 Eligibility. At the time the Registration Statement was originally declared
effective and at the time the Company’s Annual Report on Form 10-K for the year ended December
31, 2009 was filed with the Commission, the Company met the then applicable requirements for
use of Form S-3 under the Securities Act. The company is eligible to offer and sell securities
under the Registration Statement (including the offer and sale of the Offered Shares) without
reliance on General Instruction I.B.6 of Form S-3.
(y) Exchange Act Compliance. The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the requirements of
10
the Exchange Act, and, when read together with the other information in the Prospectus, at
the time the Registration Statement and any amendments thereto become effective and at the
First Closing Date and the applicable Option Closing Date, as the case may be, will not contain
an untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(z) FINRA Matters. All of the information provided to the Underwriters or to counsel for
the Underwriters by the Company, its officers and directors and the holders of any securities
(debt or equity) or options to acquire any securities of the Company in connection with
letters, filings or other supplemental information provided to FINRA pursuant to FINRA Rule
5110 or the National Association of Securities Dealers Inc. (the “NASD”) Conduct Rule 2710 or
2720 is true, complete and correct. Neither the Company nor, to the knowledge of the Company,
any of its affiliates (within the meaning of the NASD Conduct Rule 2720(f)(1)) directly or
indirectly controls, is controlled by, or is under common control with, or is an associated
person (within the meaning of Article I, Section 1(ee) of the By-laws of FINRA) of , any member
of FINRA. To the Company’s knowledge, there are no affiliations with the FINRA among the
Company’s officers or directors.
(aa) Parties to Lock-Up Agreements. Each of the Company’s directors and executive
officers listed in Exhibit A has executed and delivered to Xxxxxxx Xxxxx and Jefferies
a lock-up agreement in the form of Exhibit B hereto. Exhibit A hereto contains
a true, complete and correct list of all directors and executive officers of the Company. If
any additional persons shall become directors or executive officers of the Company prior to the
end of the Company Lock-up Period (as defined below), the Company shall cause each such person,
prior to or contemporaneously with their appointment or election as a director or executive
officer of the Company, to execute and deliver to Xxxxxxx Xxxxx and Jefferies an agreement in
the form attached hereto as Exhibit B.
(bb) Statistical and Market-Related Data. The statistical, demographic and market-related data
included in the Registration Statement and each Applicable Prospectus are based on or derived
from sources that the Company believes to be reliable and accurate or represent the Company’s
good faith estimates that are made on the basis of data derived from such sources.
(cc) No Unlawful Contributions or Other Payments. Neither the Company nor any of its
subsidiaries nor, to the Company’s knowledge, any employee or agent of the Company or any
subsidiary, has made any contribution or other payment to any official of, or candidate for,
any federal, state or foreign office in violation of any law or of the character required to be
disclosed in the Registration Statement and each Applicable Prospectus.
(dd) Disclosure Controls and Procedures; Deficiencies in or Changes to Internal Control
Over Financial Reporting. The Company has established and maintains disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), which (i) are designed
to ensure that material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company’s principal executive officer and its principal
financial officer by others within those entities, particularly during the periods in which the
periodic reports required under the Exchange Act are being prepared; (ii) have been evaluated
by management of the Company for effectiveness as of the end of the Company’s most recent
fiscal quarter; and (iii) the Company’s principal executive officer and principal financial
officer concluded to be effective at the reasonable assurance level. Based
11
on the most recent evaluation of its internal control over financial reporting, the
Company is not aware of (i) any significant deficiencies or material weaknesses in the design
or operation of internal control over financial reporting which are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report financial
information or (ii) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal control over financial
reporting. The Company is not aware of any change in its internal control over financial
reporting that has occurred during its most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control over financial
reporting.
(ee) Compliance with Environmental Laws. Except as described in each Applicable
Prospectus and except as would not reasonably be expected to, singly or in the aggregate,
result in a Material Adverse Change, (i) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, “Environmental Laws”), (ii) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable Environmental Laws and are
each in compliance with their requirements, (iii) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries, and (iv) there are no events
or circumstances that might reasonably be expected to form the basis of an order for clean-up
or remediation, or an action, suit or proceeding by any private party or governmental body or
agency, against or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(ff) ERISA Compliance. The Company and its subsidiaries and any “employee benefit plan”
(as defined under the Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder (collectively, “ERISA”)) established or
maintained by the Company, its subsidiaries or their “ERISA Affiliates” (as defined below) are
in compliance in all material respects with ERISA. “ERISA Affiliate” means, with respect to
the Company or a subsidiary, any member of any group of organizations described in
Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended, and the
regulations and published interpretations thereunder (the “Code”) of which the Company or such
subsidiary is a member. No “reportable event” (as defined under ERISA) has occurred or is
reasonably expected to occur with respect to any “employee benefit plan” established or
maintained by the Company, its subsidiaries or any of their ERISA Affiliates. No “employee
benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such “employee benefit plan” were terminated, would have any “amount of unfunded
benefit liabilities” (as defined under ERISA). Neither the Company, its subsidiaries nor any
of their ERISA Affiliates has incurred or reasonably expects to incur any liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit
plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan”
established or maintained
12
by the Company, its subsidiaries or any of their ERISA Affiliates that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by
action or failure to act, which would reasonably be expected to result in the loss of such
qualification.
(gg) Brokers. Except as contemplated by this Agreement, there is no broker, finder or
other party that is entitled to receive from the Company any brokerage or finder’s fee or other
fee or commission as a result of any transactions contemplated by this Agreement.
(hh) No Outstanding Loans or Other Extensions of Credit. Since the adoption of Section
13(k) of the Exchange Act, neither the Company nor any of its subsidiaries has extended or
maintained credit, arranged for the extension of credit, or renewed any extension of credit, in
the form of a personal loan, to or for any director or executive officer (or equivalent
thereof) of the Company and/or such subsidiary except for such extensions of credit as are
expressly permitted by Section 13(k) of the Exchange Act.
(ii) Compliance with Laws. The Company has not been advised, and has no reason to
believe, that it and each of its subsidiaries are not conducting business in compliance with
all applicable laws, rules and regulations of the jurisdictions in which it is conducting
business, except where failure to be so in compliance would not result in a Material Adverse
Change. The Company has not received any FDA Form 483, notice of adverse finding, warning
letter, untitled letter or other correspondence or notice from the U.S. Food and Drug
Administration or any other governmental authority alleging or asserting noncompliance with any
laws applicable to the Company.
(jj) Clinical Trials. The studies, tests and preclinical and clinical trials conducted by
or on behalf of the Company and its subsidiaries were and, if still pending, are being
conducted in compliance with experimental protocols, procedures and controls pursuant to
accepted professional scientific standards and all applicable laws and authorizations,
including, without limitation, the Federal Food, Drug and Cosmetic Act and the rules and
regulations promulgated thereunder, except where the failure to be in compliance has not
resulted and would not reasonably be expected to result in a Material Adverse Change; the
descriptions of the results of such studies, tests and trials contained in any Applicable
Prospectus are accurate and complete in all material respects and fairly present the data
derived from such studies, tests and trials; except to the extent disclosed in any Applicable
Prospectus, the Company is not aware of any studies, tests or trials, the results of which the
Company believes reasonably call into question the study, test, or trial results described or
referred to in any Applicable Prospectus when viewed in the context in which such results are
described and the clinical state of development; and the Company and its subsidiaries have not
received any notices or correspondence from any applicable governmental authority requiring the
termination, suspension or material modification of any studies, tests or preclinical or
clinical trials conducted by or on behalf of the Company or its subsidiaries.
(kk) Dividend Restrictions. No subsidiary of the Company is prohibited or restricted,
directly or indirectly, from paying dividends to the Company, or from making any other
distribution with respect to such subsidiary’s equity securities or from repaying to the
Company or any other subsidiary of the Company any amounts that may from time to time become
due under any loans or advances to such subsidiary from the Company or from transferring any
property or assets to the Company or to any other subsidiary.
13
(ll) Foreign Corrupt Practices Act. Neither the Company nor any of its subsidiaries nor,
to the Company’s knowledge, any director, officer, agent, employee, affiliate or other person
acting on behalf of the Company or any of its subsidiaries is aware of or has taken any action,
directly or indirectly, that has resulted or would result in a violation of the Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”),
including, without limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to pay or
authorization of the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any “foreign official” (as such term is
defined in the FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA; and the Company and its subsidiaries
and, to the Company’s knowledge, the Company’s affiliates have conducted their respective
businesses in compliance with the FCPA and have instituted and maintain policies and procedures
designed to ensure, and which are reasonably expected to continue to ensure, continued
compliance therewith.
(mm) Money Laundering Laws. The operations of the Company and its subsidiaries are, and
have been conducted at all times, in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all applicable jurisdictions, the rules and
regulations thereunder and any related or similar applicable rules, regulations or guidelines,
issued, administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its subsidiaries
with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company,
threatened.
(nn) OFAC. Neither the Company nor any of its subsidiaries nor, to the Company’s
knowledge, any director, officer, agent, employee, affiliate or person acting on behalf of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by
the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company
will not directly or indirectly use the proceeds of this offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(oo) FINRA Filing Exemption. To enable the Underwriters to rely on FINRA Rule
5110(b)(7)(C)(i), (i) the Company was subject to the requirements of Section 12 or 15(d) of the
Exchange Act and filed all the material required to be filed pursuant to Sections 13, 14 or
15(d) for a period of at least thirty-six calendar months immediately preceding the date of
this Agreement; (ii) the Company filed in a timely manner all reports required to be filed
pursuant to Section 13, 14 or 15(d) of the Exchange Act during the twelve calendar months and
any portion of a month immediately preceding the date of this Agreement; (iii) the last
reported sale price of the Company’s common stock on the Nasdaq Global Select Market on January
18, 2011 was $27.58; (iv) as of such date, there were greater than 3,625,816 shares of the
Company’s common stock outstanding and held by non-affiliates of the Company; and (v) the
Company has annual trading volume of 3 million shares or more.
Any certificate contemplated hereby and signed by any officer of the Company or any of its
subsidiaries and delivered to the Representatives or to counsel for the
14
Underwriters shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
The Company acknowledges that the Underwriters and, for purposes of the opinions to be
delivered pursuant to Section 6 hereof, counsel to the Company and counsel to the Underwriters,
will rely upon the accuracy and truthfulness of the foregoing representations and hereby
consents to such reliance.
Section 2. Purchase, Sale and Delivery of the Offered Shares.
(a) The Firm Shares. Upon the terms herein set forth, the Company agrees to issue and
sell to the several Underwriters an aggregate of 2,750,000 Firm Shares. On the basis of the
representations, warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Underwriters agree, severally and not jointly, to purchase
from the Company the respective number of Firm Shares set forth opposite their names on
Schedule A, at a purchase price of (i) $26.00 per share for an aggregate of 577,400
Firm Shares (the “Other Firm Shares”) sold by the Underwriters to certain existing stockholders
of the Company, or entities affiliated with them, and (ii) $24.44 per share for all other Firm
Shares. With respect to the Other Firm Shares, each Underwriter agrees, severally and not
jointly, to purchase the number of Other Firm Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same proportion to the
total number of Other Firm Shares to be purchased as the number of Firm Shares set forth on
Schedule A opposite the name of such Underwriter bears to the total number of Firm
Shares.
(b) The First Closing Date. Delivery of certificates for the Firm Shares to be purchased
by the Underwriters and payment therefor shall be made at the offices of Xxxxxxx Xxxxx, Xxx
Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other place as may be agreed to by the Company
and the Representatives) at 9:00 a.m. New York time, on January 25, 2011, or such other time
and date not later than 1:30 p.m. New York time, on February 4, 2011 as the Representatives
shall designate by notice to the Company (the time and date of such closing are called the
“First Closing Date”).
(c) The Optional Shares; Option Closing Date. In addition, on the basis of the
representations, warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Company hereby grants an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of 412,500 Optional
Shares from the Company at the purchase price of $24.44 per share to be paid by the
Underwriters for the Firm Shares. The option granted hereunder is for use by the Underwriters
solely in covering any over-allotments in connection with the sale and distribution of the Firm
Shares. The option granted hereunder may be exercised at any time and from time to time in
whole or in part upon notice by the Representatives to the Company, which notice may be given
at any time within 30 days from the date of this Agreement. Such notice shall set forth
(i) the aggregate number of Optional Shares as to which the Underwriters are exercising the
option, (ii) the names and denominations in which the certificates for the Optional Shares are
to be registered and (iii) the time, date and place at which such certificates will be
delivered (which time and date may be simultaneous with, but not earlier than, the First
Closing Date; and in the event that such time and date are simultaneous with the First Closing
Date, the term “First Closing Date” shall refer to the time and date of delivery of
certificates for the Firm Shares and such Optional Shares). Any such time and date of
delivery, if subsequent to the First Closing Date, is called an “Option
15
Closing Date” and shall be determined by the Representatives and shall not be earlier than
three nor later than seven full business days after delivery of such notice of exercise. If
any Optional Shares are to be purchased, each Underwriter agrees, severally and not jointly, to
purchase the number of Optional Shares (subject to such adjustments to eliminate fractional
shares as the Representatives may determine) that bears the same proportion to the total number
of Optional Shares to be purchased as the number of Firm Shares set forth on Schedule A
opposite the name of such Underwriter bears to the total number of Firm Shares. The
Representatives may cancel the option at any time prior to its expiration by giving written
notice of such cancellation to the Company.
(d) Public Offering of the Offered Shares. The Representatives hereby advise the Company
that the Underwriters intend to offer for sale to the public, initially on the terms set forth
in the Time of Sale Prospectus and the Prospectus, the Offered Shares as soon after this
Agreement has been executed as the Representatives, in their sole judgment, have determined is
advisable and practicable.
(e) Payment for the Offered Shares. Payment for the Offered Shares shall be made at the
First Closing Date (and, if applicable, at each Option Closing Date) by wire transfer of
immediately available funds to the order of the Company.
It is understood that the Representatives have been authorized, for their own account and
the accounts of the several Underwriters, to accept delivery of and receipt for, and make
payment of the purchase price for, the Firm Shares and any Optional Shares the Underwriters
have agreed to purchase. Each of Xxxxxxx Xxxxx and Jefferies, individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make payment for any
Offered Shares to be purchased by any Underwriter whose funds shall not have been received by
the Representatives by the First Closing Date or the applicable Option Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
(f) Delivery of the Offered Shares. The Company shall deliver, or cause to be delivered,
to the Representatives for the accounts of the several Underwriters certificates for the Firm
Shares at the First Closing Date, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor. The Company shall
also deliver, or cause to be delivered, to the Representatives for the accounts of the several
Underwriters, certificates for the Optional Shares the Underwriters have agreed to purchase at
the First Closing Date or the applicable Option Closing Date, as the case may be, against the
irrevocable release of a wire transfer of immediately available funds for the amount of the
purchase price therefor. If the Representatives so elect, delivery of the Offered Shares may
be made by credit to the accounts designated by the Representatives though The Depository Trust
Company’s full fast transfer or DWAC programs. If the Representatives so elect, the
certificates for the Offered Shares shall be in definitive form and registered in such names
and denominations as the Representatives shall have requested at least two full business days
prior to the First Closing Date (or the applicable Option Closing Date, as the case may be) and
shall be made available for inspection on the business day preceding the First Closing Date (or
the applicable Option Closing Date, as the case may be) at a location in New York City as the
Representatives may designate. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the obligations of the
Underwriters.
16
Section 3. Additional Covenants of the Company. The Company further covenants and agrees
with each Underwriter as follows:
(a) Delivery of Registration Statement, Time of Sale Prospectus and Prospectus. The
Company shall furnish to you, without charge, two signed copies of the Registration Statement,
any amendments thereto and any Rule 462(b) Registration Statement (including exhibits thereto)
and shall furnish to you in New York City, without charge, prior to 10:00 a.m. New York City
time on the business day next succeeding the date of this Agreement and during the period
mentioned in Section 3(e) or 3(f) below, as many copies of the Time of Sale Prospectus, the
Prospectus and any supplements and amendments thereto or to the Registration Statement as you
may reasonably request.
(b) Representatives’ Review of Proposed Amendments and Supplements. During the Prospectus
Delivery Period, prior to amending or supplementing the Registration Statement (including any
registration statement filed under Rule 462(b) under the Securities Act), the any preliminary
prospectus, the Time of Sale Prospectus or the Prospectus (including any amendment or
supplement through incorporation of any report filed under the Exchange Act), the Company: (i)
shall furnish to the Representatives for review, a reasonable amount of time prior to the
proposed time of filing or use thereof, a copy of each such proposed amendment or supplement,
(ii) shall not file or use any such proposed amendment or supplement without the
Representatives’ consent, and (iii) shall file with the Commission within the applicable period
specified in Rule 424(b) under the Securities Act, any prospectus required to be filed pursuant
to such Rule.
(c) Free Writing Prospectuses. The Company shall furnish to the Representatives for
review, a reasonable amount of time prior to the proposed time of filing or use thereof, a copy
of each proposed free writing prospectus or any amendment or supplement thereto to be prepared
by or on behalf of, used by, or referred to by the Company and the Company shall not file, use
or refer to any proposed free writing prospectus or any amendment or supplement thereto without
the Representatives’ consent. The Company shall furnish to each Underwriter, without charge,
as many copies of any free writing prospectus prepared by or on behalf of, or used by the
Company, as such Underwriters may reasonably request. If during the Prospectus Delivery Period
there occurred or occurs an event or development as a result of which any free writing
prospectus prepared by or on behalf of, used by, or referred to by the Company conflicted or
would conflict with the information contained in the Registration Statement or included or
would include an untrue statement of a material fact or omitted or would omit to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances prevailing at that subsequent time, not misleading, the Company shall promptly
amend or supplement such free writing prospectus to eliminate or correct such conflict or so
that the statements in such free writing prospectus as so amended or supplemented will not
include an untrue statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances prevailing at such
subsequent time, not misleading, as the case may be; provided, however, that prior to amending
or supplementing any such free writing prospectus, the Company shall furnish to the
Representatives for review, a reasonable amount of time prior to the proposed time of filing or
use thereof, a copy of such proposed amended or supplemented free writing prospectus and the
Company shall not file, use or refer to any such amended or supplemented free writing
prospectus without the Representatives’ consent.
(d) Filing of Underwriter Free Writing Prospectuses. The Company shall not take any
action that would result in an Underwriter or the Company being required to file with the
17
Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus
prepared by or on behalf of the Underwriters that the Underwriters otherwise would not have
been required to file thereunder.
(e) Amendments and Supplements to Time of Sale Prospectus. If the Time of Sale Prospectus
is being used to solicit offers to buy the Shares at a time when the Prospectus is not yet
available to prospective purchasers and any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Time of Sale Prospectus so that the Time of
Sale Prospectus does not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances when delivered to a prospective purchaser, not misleading, or if any event shall
occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the
information contained in the Registration Statement, or if, in the opinion of the Company,
counsel for the Company, the Representatives or counsel for the Underwriters, it is necessary
to amend or supplement the Time of Sale Prospectus to comply with applicable law, including the
Securities Act, the Company shall (subject to Sections 3(b) and 3(c)) promptly prepare, file
with the Commission and furnish, at its own expense, to the Underwriters and to any dealer upon
request, amendments or supplements to the Time of Sale Prospectus so that the statements in the
Time of Sale Prospectus as so amended or supplemented will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances when delivered to a prospective purchaser, not
misleading or so that the Time of Sale Prospectus, as amended or supplemented, will no longer
conflict with the Registration Statement, or so that the Time of Sale Prospectus, as amended or
supplemented, will comply with applicable law, including the Securities Act.
(f) Securities Act Compliance. After the date of this Agreement, the Company shall
promptly advise the Representatives in writing (i) of the receipt of any comments of, or
requests for additional or supplemental information from, the Commission, (ii) of the time and
date of any filing of any post-effective amendment to the Registration Statement, any Rule
462(b) Registration Statement or any amendment or supplement to the any preliminary prospectus,
the Time of Sale Prospectus, any free writing prospectus or the Prospectus, (iii) of the time
and date that any post-effective amendment to the Registration Statement or any Rule 462(b)
Registration Statement becomes effective and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto, any Rule 462(b) Registration Statement or any amendment or supplement to any
preliminary prospectus, the Time of Sale Prospectus or the Prospectus or of any order
preventing or suspending the use of any preliminary prospectus, the Time of Sale Prospectus,
any free writing prospectus or the Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Shares from any securities exchange upon which they are
listed for trading or included or designated for quotation, or of the threatening or initiation
of any proceedings for any of such purposes. If the Commission shall enter any such stop order
at any time, the Company will use its best efforts to obtain the lifting of such order at the
earliest possible moment. Additionally, the Company agrees that it shall comply with the
provisions of Rule 424(b) or Rule 433, as applicable, under the Securities Act and will use its
reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) or
Rule 433 were received in a timely manner by the Commission.
(g) Amendments and Supplements to the Prospectus and Other Securities Act Matters. If any
event shall occur or condition exist as a result of which it is necessary to amend or
18
supplement the Prospectus so that the Prospectus does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if in the opinion of the Company, counsel for the Company, the Representatives
or counsel for the Underwriters, it is otherwise necessary to amend or supplement the
Prospectus to comply with applicable law, including the Securities Act, the Company agrees
(subject to Section 3(b) and 3(c)) to promptly prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to any dealer upon request, amendments or
supplements to the Prospectus so that the statements in the Prospectus as so amended or
supplemented will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading or so that the
Prospectus, as amended or supplemented, will comply with applicable law including the
Securities Act. Neither the Representatives’ consent to, nor delivery of, any such amendment
or supplement shall constitute a waiver of any of the Company’s obligations under Sections 3(b)
or (c).
(h) Blue Sky Compliance. The Company shall cooperate with the Representatives and counsel
for the Underwriters to qualify or register the Offered Shares for sale under (or obtain
exemptions from the application of) the state securities or blue sky laws or Canadian
provincial securities laws of those jurisdictions designated by the Representatives, shall
comply with such laws and shall continue such qualifications, registrations and exemptions in
effect so long as required for the distribution of the Offered Shares; provided that the
Company shall not be required to qualify as a foreign corporation or to take any action that
would subject it to general service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a foreign corporation. The
Company will advise the Representatives promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Offered Shares for offering, sale or
trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification, registration or
exemption, the Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(i) Use of Proceeds. The Company shall apply the net proceeds from the sale of the
Offered Shares sold by it in the manner described under the caption “Use of Proceeds” in each
Applicable Prospectus.
(j) Transfer Agent. The Company shall engage and maintain, at its expense, a registrar
and transfer agent for the Shares.
(k) Earnings Statement. As soon as practicable, but in any event not later than 45 days
after the end of the 12-month period beginning at the end of the fiscal quarter of the Company
during which the most recent effective date of the Registration Statement occurs (or 90 days
after the end of such 12-month period if such 12-month period coincides with the Company’s
fiscal year), the Company will make generally available to its security holders and to the
Representatives an earnings statement (which need not be audited) covering such 12-month period
which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
19
(l) Exchange Act Compliance. The Company shall file all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act in the manner and
within the time periods required by the Exchange Act.
(m) Listing. The Company will use its best efforts to list, subject to notice of
issuance, the Offered Shares on the Nasdaq Global Select Market and to maintain the listing of
the Shares on the Nasdaq Global Select Market.
(n) Company to Provide Copy of the Prospectus in Form That May be Downloaded from the
Internet. The Company shall cause to be prepared and delivered, at its expense, within one
business day from the effective date of this Agreement, to Xxxxxxx Xxxxx and Jefferies an
“electronic Prospectus” to be used by the Underwriters in connection with the offering and sale
of the Offered Shares. As used herein, the term “electronic Prospectus” means a form of Time
of Sale Prospectus, and any amendment or supplement thereto, that meets each of the following
conditions: (i) it shall be encoded in an electronic format, satisfactory to Xxxxxxx Xxxxx and
Jefferies, that may be transmitted electronically by Xxxxxxx Xxxxx, Jefferies and the other
Underwriters to offerees and purchasers of the Offered Shares; (ii) it shall disclose the same
information as the paper Time of Sale Prospectus, except to the extent that graphic and image
material cannot be disseminated electronically, in which case such graphic and image material
shall be replaced in the electronic Prospectus with a fair and accurate narrative description
or tabular representation of such material, as appropriate; and (iii) it shall be in or
convertible into a paper format or an electronic format, satisfactory to Xxxxxxx Xxxxx and
Jefferies, that will allow investors to store and have continuously ready access to the Time of
Sale Prospectus at any future time, without charge to investors (other than any fee charged for
subscription to the Internet as a whole and for on-line time). The Company hereby confirms
that it has included or will include in the Prospectus filed pursuant to XXXXX or otherwise
with the Commission and in the Registration Statement at the time it was declared effective an
undertaking that, upon receipt of a request by an investor or his or her representative, the
Company shall transmit or cause to be transmitted promptly, without charge, a paper copy of the
Time of Sale Prospectus.
(o) Agreement Not to Offer or Sell Additional Shares. During the period commencing on and
including the date hereof and ending on and including the 90th day following the date of the
Prospectus (as the same may be extended as described below, the “Lock-up Period”), the Company
will not, without the prior written consent of Xxxxxxx Xxxxx (which consent may be withheld at
the sole discretion of Xxxxxxx Xxxxx), directly or indirectly, sell (including, without
limitation, any short sale), offer, contract or grant any option to sell, pledge, transfer or
establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any Shares, options, rights or
warrants to acquire Shares or securities exchangeable or exercisable for or convertible into
Shares (other than as contemplated by this Agreement with respect to the Offered Shares) or
publicly announce the intention to do any of the foregoing; provided, however, that the Company
may issue (i) securities or Shares pursuant to transactions relating to any director or
employee stock option plan, stock ownership plan or dividend reinvestment plan of the Company
in effect at the date of the Prospectus and described in the Prospectus (including the issuance
of securities thereunder and the issuance of Shares upon the exercise of options issued
pursuant thereto), (ii) Shares pursuant to the conversion of securities or the exercise of
warrants outstanding at the date of the Prospectus and described in the Prospectus, or (iii)
Shares to one or more counterparties in connection with the consummation of a strategic
partnership, joint venture, collaboration, merger or the acquisition or license of any business
20
products or technology; provided that, with respect to this subsection (iii), (1) the sum
of the aggregate number of Shares so issued shall not exceed 5% of the total outstanding Shares
immediately following the completion of this offering of Shares and (2) prior to the issuance
of such Shares each recipient of such Shares agrees in writing not to sell, offer, dispose of
or otherwise transfer any such Shares during such Lock-up Period without the prior written
consent of Xxxxxxx Xxxxx (which consent may be withheld at the sole discretion of Xxxxxxx
Xxxxx). Notwithstanding the foregoing, if (A) during the last 17 days of the Lock-up Period,
the Company issues an earnings release or material news or a material event relating to the
Company occurs or (B) prior to the expiration of the Lock-up Period, the Company announces that
it will release earnings results during the 16-day period beginning on the last day of the
Lock-up Period, then in each case the Lock-up Period will be extended until the expiration of
the 18-day period beginning on the date of the issuance of the earnings release or the
occurrence of the material news or material event, as applicable, unless Xxxxxxx Xxxxx waives,
in writing, such extension (which waiver may be withheld at the sole discretion of Xxxxxxx
Xxxxx), except that such extension will not apply if, (i) the Shares are “actively traded
securities” (as defined in Regulation M), (ii) the Company meets the applicable requirements of
paragraph (a)(1) of Rule 139 under the Securities Act in the manner contemplated by NASD
Conduct Rule 2711(f)(4), and (iii) the provisions of NASD Conduct Rule 2711(f)(4) do not
restrict the publishing or distribution of any research reports relating to the Company
published or distributed by any of the Underwriters during the 15 days before or after the last
day of the Lock-up Period (before giving effect to such extension). The Company will provide
the Representatives with prior notice of any such announcement that gives rise to an extension
of the Lock-up Period.
(p) Future Reports to the Representatives. During the period of five years hereafter the
Company will furnish or make available to Xxxxxxx Xxxxx at Xxx Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx
00000, attention of Syndicate Department, with a copy to ECM Legal, and to Jefferies at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx Attention: Capital Markets: (i) as soon as practicable after
the end of each fiscal year, copies of the Annual Report of the Company containing the balance
sheet of the Company as of the close of such fiscal year and statements of income,
stockholders’ equity and cash flows for the year then ended and the opinion thereon of the
Company’s independent public or certified public accountants; (ii) as soon as practicable after
the filing thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other report filed by the Company with the
Commission, FINRA or any securities exchange; and (iii) as soon as available, copies of any
report or communication of the Company furnished or made available generally to holders of its
capital stock; provided that the requirements of this subsection (p) shall be satisfied to the
extent the reports, communications, financial statements or other documents referenced herein
are available on XXXXX.
(q) Investment Limitation. The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Offered Shares in such a manner as would require
the Company or any of its subsidiaries to register as an investment company under the
Investment Company Act.
(r) No Stabilization or Manipulation; Compliance with Regulation M. The Company will not
take, directly or indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Shares or any other
reference security, whether to facilitate the sale or resale of the Offered Shares or
otherwise, and the Company will, and shall cause each of its affiliates to, comply with all
applicable provisions of Regulation M. If the limitations of Rule 102 of Regulation M
21
(“Rule 102”) do not apply with respect to the Offered Shares or any other reference
security pursuant to any exception set forth in Section (d) of Rule 102, then promptly upon
notice from the Representatives (or, if later, at the time stated in the notice), the Company
will, and shall cause each of its affiliates to, comply with Rule 102 as though such exception
were not available but the other provisions of Rule 102 (as interpreted by the Commission) did
apply.
(s) Existing Lock-Up Agreements. During the Lock-up Period, the Company will enforce all
existing agreements between the Company and any of its security holders that prohibit the sale,
transfer, assignment, pledge or hypothecation of any of the Company’s securities. In addition,
the Company will direct the transfer agent to place stop transfer restrictions upon any such
securities of the Company that are bound by such existing “lock-up” agreements for the duration
of the periods contemplated in such agreements, including, without limitation, “lock-up”
agreements entered into by the Company’s officers and directors pursuant to Section 6(h).
Section 4. Payment of Expenses. The Company agrees to pay all costs, fees and expenses
incurred in connection with the performance of its obligations hereunder and in connection with
the offering of the Offered Shares hereunder, including without limitation (i) all expenses
incident to the issuance and delivery of the Offered Shares (including all printing and
engraving costs), (ii) all fees and expenses of the registrar and transfer agent of the Shares,
(iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and
sale of the Offered Shares to the Underwriters, (iv) all fees and expenses of the Company’s
counsel, independent public or certified public accountants and other advisors, (v) all costs
and expenses incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial statements, exhibits,
schedules, consents and certificates of experts), the Time of Sale Prospectus, the Prospectus,
any free writing prospectus prepared by or on behalf of, used by, or referred to by the
Company, and each preliminary prospectus, and all amendments and supplements thereto, and this
Agreement, (vi) all filing fees, attorneys’ fees and expenses incurred by the Company or the
Underwriters in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Offered Shares for offer and sale
under the state securities or blue sky laws or the provincial securities laws of Canada, and,
if requested by the Representatives, preparing and printing a “Blue Sky Survey” or memorandum
and a “Canadian wrapper”, and any supplements thereto, advising the Underwriters of such
qualifications, registrations, determinations and exemptions; provided such fees and
disbursements related to distribution in Canada do not exceed $10,000 in the aggregate,
(vii) the filing fees incident to, and the reasonable fees and expenses of counsel for the
Underwriters in connection with, FINRA’s review, if any, and approval of the Underwriters’
participation in the offering and distribution of the Offered Shares; provided such fees and
disbursements do not exceed $10,000 in the aggregate, (viii) the costs and expenses of the
Company relating to investor presentations on any “road show” undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses associated
with the preparation or dissemination of any electronic road show, expenses associated with the
production of road show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the Company, and travel
and lodging expenses of the representatives, employees and officers of the Company and of the
Representatives and any such consultants, (ix) the fees and expenses associated with listing
the Offered Shares on the Nasdaq Global Select Market, and (ix) all other fees, costs and
expenses of the nature referred to in Item 14 of Part II of the Registration Statement. Except
as provided in this Section 4, Section 7,
22
Section 9 and Section 10 hereof, the Underwriters shall pay their own expenses, including
the fees and disbursements of their counsel.
Section 5. Covenant of the Underwriters. Each Underwriter, severally and not jointly,
covenants with the Company not to take any action that would result in the Company being
required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free
writing prospectus prepared by or on behalf of such Underwriter that otherwise would not be
required to be filed by the Company thereunder, but for the action of the Underwriters.
Section 6. Conditions of the Obligations of the Underwriters. The obligations of the
several Underwriters to purchase and pay for the Offered Shares as provided herein on the First
Closing Date and, with respect to the Optional Shares, each Option Closing Date, shall be
subject to the accuracy of the representations and warranties on the part of the Company set
forth in Section 1 hereof as of the date hereof and as of the First Closing Date as though then
made and, with respect to the Optional Shares, as of each Option Closing Date as though then
made, to the timely performance by the Company of its covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) Accountants’ Comfort Letter. On the date hereof, the Representatives shall have
received from each of Stonefield Xxxxxxxxx, Inc. and Xxxxxx, LLP, independent public or
certified public accountants for the Company, (i) a letter dated the date hereof addressed to
the Underwriters, in form and substance satisfactory to the Representatives, containing
statements and information of the type ordinarily included in accountant’s “comfort letters” to
underwriters, delivered according to Statement of Auditing Standards No. 72 (or any successor
bulletin), with respect to the audited and unaudited financial statements and certain financial
information contained in the Registration Statement and the Preliminary Prospectus, and, with
respect to each letter dated the date hereof only, the Prospectus, and the Representatives
shall have received an additional conformed copy of such accountants’ letter for each of the
other several Underwriters, and (ii) confirming that they are (A) independent public or
certified public accountants as required by the Securities Act and the Exchange Act and (B) in
compliance with the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X.
(b) Compliance with Registration Requirements; No Stop Order; No Objection from FINRA.
For the period from and after effectiveness of this Agreement and prior to the First Closing
Date and, with respect to the Optional Shares, each Option Closing Date:
(i) the Company shall have filed the Prospectus with the Commission (including the
information previously omitted from the Registration Statement pursuant to Rule 430B under
the Securities Act) in the manner and within the time period required by Rule 424(b) under
the Securities Act; or the Company shall have filed a post-effective amendment to the
Registration Statement containing the information previously omitted pursuant to such Rule
430B, and such post-effective amendment shall have become effective;
(ii) no stop order suspending the effectiveness of the Registration Statement, any
Rule 462(b) Registration Statement, or any post-effective amendment to the Registration
Statement, shall be in effect and no proceedings for such purpose shall have been
instituted or threatened by the Commission; and
23
(iii) FINRA shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(c) No Material Adverse Change. For the period from and after the date of this Agreement
and through and including the First Closing Date and, with respect to the Optional Shares, each
Option Closing Date, in the judgment of the Representatives, there shall not have occurred any
Material Adverse Change.
(d) Opinion of Counsel for the Company. On each of the First Closing Date and each Option
Closing Date the Representatives shall have received the opinion and negative assurance letter
of Xxxxxx LLP, counsel for the Company, dated as of such Closing Date, the form of which are
attached as Exhibits C-1 and C-2, respectively.
(e) Opinion of Intellectual Property Counsel for the Company. On each of the First
Closing Date and each Option Closing Date the Representatives shall have received the opinion
of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., intellectual property counsel for the Company, dated
as of such Closing Date, with respect to certain intellectual property matters, the form of
which is attached as Exhibit D.
(f) Opinion of Counsel for the Underwriters. On each of the First Closing Date and each
Option Closing Date the Representatives shall have received the opinion and negative assurance
letter of Xxxxxx & Xxxxxxx LLP, counsel for the Underwriters, in form and substance
satisfactory to the Representatives, dated as of such Closing Date.
(g) Officers’ Certificate. On each of the First Closing Date and each Option Closing Date
the Representatives shall have received a written certificate executed by the Chief Executive
Officer or President of the Company and the Chief Financial Officer of the Company, dated as of
such Closing Date, to the effect set forth in subsection (b)(ii) of this Section 6, and further
to the effect that:
(i) for the period from and including the date of this Agreement through and including
such Closing Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company set forth in
Section 1 of this Agreement are true and correct with the same force and effect as though
expressly made on and as of such Closing Date; and
(iii) the Company has complied with all the agreements hereunder and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior to such Closing
Date.
(h) Bring-down Comfort Letter. On each of the First Closing Date and each Option Closing
Date the Representatives shall have received from each of Stonefield Xxxxxxxxx, Inc. and
Xxxxxx, LLP, independent public or certified public accountants for the Company, a letter dated
such date, in form and substance satisfactory to the Representatives, to the effect that they
reaffirm the statements made in the letter furnished by them pursuant to subsection (a) of this
Section 6, except that the specified date referred to therein for the carrying out of
procedures shall be no more than five business days prior to the First Closing Date or the
applicable Option Closing Date, as the case may be, and the Representatives shall have received
an additional conformed copy of such accountants’ letter for each of the other several
Underwriters.
24
(i) Lock-Up Agreements. On or prior to the date hereof, the Company shall have furnished
to the Representatives an agreement in the form of Exhibit B hereto from the persons
listed on Exhibit A hereto, and such agreement shall be in full force and effect on
each of the First Closing Date and each Option Closing Date.
(j) Additional Documents. On or before each of the First Closing Date and each Option
Closing Date, the Representatives and counsel for the Underwriters shall have received such
information, documents and opinions as they may reasonably request for the purposes of enabling
them to pass upon the issuance and sale of the Offered Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Offered Shares as
contemplated herein and in connection with the other transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to the Representatives and
counsel for the Underwriters.
If any condition specified in this Section 6 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Representatives by notice to the Company at
any time on or prior to the First Closing Date and, with respect to the Optional Shares, at any
time on or prior to the applicable Option Closing Date, which termination shall be without
liability on the part of any party to any other party, except that Section 4, Section 6,
Section 8 and Section 9 shall at all times be effective and shall survive such termination.
Section 7. Reimbursement of Underwriters’ Expenses. If this Agreement is terminated by
the Representatives pursuant to Section 6 prior to the First Closing Date, as a result of the
failure of any of the conditions of subsections (a), (b), (c), (d), (e), (g), (h) or (i) of
Section 6 to be satisfied when and as required to be satisfied, or Section 12 prior to the
First Closing Date, or if the sale to the Underwriters of the Offered Shares on the First
Closing Date is not consummated because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any provision hereof, the Company
agrees to reimburse the Representatives and the other Underwriters (or such Underwriters as
have terminated this Agreement with respect to themselves), severally upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the Representatives and the
Underwriters in connection with the proposed purchase and the offering and sale of the Offered
Shares, including but not limited to fees and disbursements of counsel, printing expenses,
travel expenses, postage, facsimile and telephone charges.
Section 8. Effectiveness of this Agreement. This Agreement shall become effective
upon the execution of this Agreement by the parties hereto.
Section 9. Indemnification.
(a) Indemnification of the Underwriters. The Company agrees to indemnify and hold
harmless each Underwriter, its officers and employees, and each person, if any, who controls
any Underwriter within the meaning of the Securities Act or the Exchange Act against any loss,
claim, damage, liability or expense, as incurred, to which such Underwriter or such officer,
employee or controlling person may become subject, under the Securities Act, the Exchange Act,
other federal or state statutory law or regulation, or the laws or regulations of foreign
jurisdictions where Offered Shares have been offered or sold or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected in
25
accordance with Section 9(d) below), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information deemed to be a part
thereof pursuant to Rule 430B under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make the statements
therein not misleading; or (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, the Time of Sale Prospectus, any free writing
prospectus that the Company has used, referred to or filed, or is required to file, pursuant to
Rule 433(d) of the Securities Act or the Prospectus (or any amendment or supplement thereto),
or the omission or alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading; and to reimburse such Underwriter and each such officer, employee and controlling
person for any and all expenses (including the fees and disbursements of counsel chosen by
Xxxxxxx Xxxxx and Jefferies) as such expenses are reasonably incurred by such Underwriter or
such officer, employee or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability, expense or action;
provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, arising out of or based
upon any untrue statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the Company by the
Representatives expressly for use in the Registration Statement, any preliminary prospectus,
the Time of Sale Prospectus, any such free writing prospectus or the Prospectus (or any
amendment or supplement thereto), it being understood and agreed that the only such information
furnished by the Representatives to the Company consists of the information described in
subsection (b) below. The indemnity agreement set forth in this Section 9(a) shall be in
addition to any liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each Underwriter agrees,
severally and not jointly, to indemnify and hold harmless the Company, each of its directors
and officers, and each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer or controlling person may become
subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, any preliminary prospectus, the Time of Sale
Prospectus, any free writing prospectus that the Company has used, referred to or filed, or is
required to file, pursuant to Rule 433(d) of the Securities Act or the Prospectus (or such
amendment or supplement thereto), or arises out of or is based upon the omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged omission was made in
the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, such free
writing prospectus that the Company has used, referred to or filed, or is required to file,
pursuant to Rule 433(d) of the Securities Act, the Prospectus (or such amendment or supplement
thereto), in reliance upon and in conformity with written information furnished to the Company
by the Representatives expressly for use therein; and to reimburse the Company, or any such
director, officer or controlling person for any legal
26
and other expense as such expenses are reasonably incurred by the Company, or any such
director, officer or controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or action. The Company
hereby acknowledges that the only information that the Representatives and the Underwriters
have furnished to the Company expressly for use in the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, any free writing prospectus that the Company has
filed, or is required to file, pursuant to Rule 433(d) of the Securities Act or the Prospectus
(or any amendment or supplement thereto) are the statements set forth in the first paragraph
under the subsection entitled “Commissions and Discounts,” the second, third and fourth
paragraphs under the subsection entitled “Price Stabilization, Short Positions,” the subsection
entitled “Passive Market Making” and the subsection entitled “Electronic Offer, Sale and
Distribution of Shares” under the caption “Underwriting” in the Company’s final prospectus
supplement dated January 20, 2011 relating to the offering of the Offered Shares. The indemnity
agreement set forth in this Section 9(b) shall be in addition to any liabilities that each
Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 9 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an indemnifying
party under this Section 9, notify the indemnifying party in writing of the commencement
thereof, but the failure to so notify the indemnifying party shall not relieve the indemnifying
party from any liability that it may have to any indemnified party for contribution or
otherwise under the indemnity agreement contained in this Section 9 except to the extent such
indemnifying party has been materially prejudiced by such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be entitled to participate
in, and, to the extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants
in any such action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise between the
positions of the indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of such indemnifying party’s election so to assume the defense of such action
and approval by the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 9 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the proviso to the
preceding sentence (it being understood, however, that the indemnifying party shall not be
liable for the fees and expenses of more than one separate counsel (together with local
counsel), representing the indemnified parties who are parties to such action), which counsel
(together with any local counsel) for the indemnified parties shall be selected by Xxxxxxx
Xxxxx and Jefferies (in the case of counsel for the indemnified parties referred to in
Section 9(a) above) or by the Company (in the case of counsel for the indemnified parties
referred to in Section 9(b) above)) (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified party
27
within a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized in writing the employment of counsel for the indemnified
party at the expense of the indemnifying party, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party and shall be paid as they are
incurred.
(d) Settlements. The indemnifying party under this Section 9 shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party against any loss, claim, damage, liability or expense by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by Section 9(c) hereof, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such action, suit
or proceeding.
Section 10. Contribution. If the indemnification provided for in Section 9 is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, liabilities or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount paid or payable by such
indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or
expenses referred to therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on the other hand,
from the offering of the Offered Shares pursuant to this Agreement 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 hand, in
connection with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, 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 hand, in
connection with the offering of the Offered Shares pursuant to this Agreement shall be deemed
to be in the same respective proportions as the total net proceeds from the offering of the
Offered Shares pursuant to this Agreement (before deducting expenses) received by the Company,
and the total underwriting discounts and commissions received by the Underwriters, in each case
as set forth on the front cover page of the Prospectus bear to the aggregate initial public
offering price of the Offered Shares as set forth on such cover. The relative fault of the
Company, on the one hand, and the Underwriters, on the other hand, shall be determined by
reference to, among other things, whether any such untrue or alleged untrue statement of a
material fact or 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 hand, and the
parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
28
The amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 9(c), any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or claim. The
provisions set forth in Section 9(c) with respect to notice of commencement of any action shall
apply if a claim for contribution is to be made under this Section 10; provided, however, that
no additional notice shall be required with respect to any action for which notice has been
given under Section 9(c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 10 were 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 account of the equitable considerations referred to in this Section 10.
Notwithstanding the provisions of this Section 10, no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions received by such
Underwriter in connection with the Offered Shares underwritten by it and distributed to the
public. 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 pursuant to
this Section 10 are several, and not joint, in proportion to their respective underwriting
commitments as set forth opposite their respective names on Schedule A. For purposes
of this Section 10, each officer and employee of an Underwriter and each person, if any, who
controls an Underwriter within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as such Underwriter, and each director of the Company, and each
person, if any, who controls the Company with the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Company.
Section 11. Default of One or More of the Several Underwriters. If, on the First Closing
Date or the applicable Option Closing Date, as the case may be, any one or more of the several
Underwriters shall fail or refuse to purchase Offered Shares that it or they have agreed to
purchase hereunder on such date, and the aggregate number of Offered Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase does not exceed
10% of the aggregate number of the Offered Shares required to be purchased on such date by the
Underwriters, the Representatives may make arrangements satisfactory to the Company for the
purchase of such Offered Shares by other persons, including any of the Underwriters, but if no
such arrangements are made by such Closing Date, the other Underwriters shall be obligated,
severally and not jointly, in the proportions that the number of Firm Shares set forth opposite
their respective names on Schedule A bears to the aggregate number of Firm Shares set
forth opposite the names of all such non-defaulting Underwriters, or in such other proportions
as may be specified by the Representatives with the consent of the non-defaulting Underwriters,
to purchase the Offered Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date. If, on the First Closing Date or the applicable
Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or
refuse to purchase Offered Shares and the aggregate number of Offered Shares with respect to
which such default occurs exceeds 10% of the aggregate number of Offered Shares required to be
purchased on such date by the Underwriters, and arrangements satisfactory to the
Representatives and the Company for the purchase of such Offered Shares are not made within 48
hours after such default, this
29
Agreement shall terminate without liability of any non-defaulting party to any other party
(provided that if such default occurs with respect to Optional Shares after the First Closing
Date, this Agreement will not terminate as to the Firm Shares or any Optional Shares purchased
prior to such termination) except that the provisions of Section 4, Section 9 and Section 10
shall at all times be effective and shall survive such termination. In any such case either
the Representatives or the Company shall have the right to postpone the First Closing Date or
the applicable Option Closing Date, as the case may be, but in no event for longer than seven
days in order that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. As used in this Agreement,
the term “Underwriter” includes any person substituted for an Underwriter under this Section
11. Nothing herein will relieve a defaulting Underwriter from liability for its default.
Section 12. Termination of this Agreement. Prior to the purchase of the Firm Shares by
the Underwriters on the First Closing Date, this Agreement may be terminated by the
Representatives by notice given to the Company if at any time (i) trading or quotation in any
of the Company’s securities shall have been suspended or materially limited by the Commission
or by the Nasdaq Global Select Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or materially limited, or
minimum or maximum prices shall have been generally established on any of such stock exchanges
by the Commission or FINRA; (ii) a general banking moratorium shall have been declared by any
of federal, New York, Delaware or California authorities; (iii) there shall have occurred any
outbreak or escalation of national or international hostilities or any crisis or calamity, or
any change in the United States or international financial markets, or any substantial change
or development involving a prospective substantial change in United States’ or international
political, financial or economic conditions, as in the judgment of the Representatives is
material and adverse and makes it impracticable to market the Offered Shares in the manner and
on the terms described in the Time of Sale Prospectus or the Prospectus or to enforce contracts
for the sale of securities; or (iv) in the judgment of the Representatives there shall have
occurred any Material Adverse Change. Any termination pursuant to this Section 12 shall be
without liability on the part of (a) the Company to any Underwriter, except that the Company
shall be obligated to reimburse the expenses of the Representatives and the Underwriters
pursuant to Sections 4 and 7 hereof, (b) any Underwriter to the Company, or (c) of any party
hereto to any other party except that the provisions of Section 9 and Section 10 shall at all
times be effective and shall survive such termination.
Section 13. No Advisory or Fiduciary Relationship. The Company acknowledges and agrees
that (a) the purchase and sale of the Offered Shares pursuant to this Agreement, including the
determination of the public offering price of the Offered Shares and any related discounts and
commissions, is an arm’s-length commercial transaction between the Company, on the one hand,
and the several Underwriters, on the other hand, (b) in connection with the offering
contemplated hereby and the process leading to such transaction each Underwriter is and has
been acting solely as a principal and is not the agent or fiduciary of the Company, or its
stockholders, creditors, employees or any other party, (c) no Underwriter has assumed or will
assume an advisory or fiduciary responsibility in favor of the Company with respect to the
offering contemplated hereby or the process leading thereto (irrespective of whether such
Underwriter has advised or is currently advising the Company on other matters) and no
Underwriter has any obligation to the Company with respect to the offering contemplated hereby
except the obligations expressly set forth in this Agreement, (d) the Underwriters and their
respective affiliates may be engaged in a broad range of transactions
30
that involve interests that differ from those of the Company, and (e) the Underwriters
have not provided any legal, accounting, regulatory or tax advice with respect to the offering
contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax
advisors to the extent it deemed appropriate.
Section 14. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the Company, of
its officers and of the several Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of its or their partners, officers or directors or any
controlling person, as the case may be, and, anything herein to the contrary notwithstanding,
will survive delivery of and payment for the Offered Shares sold hereunder and any termination
of this Agreement.
Section 15. Notices. All communications hereunder shall be in writing and shall be
mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxx Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Syndicate Department
Incorporated
Xxx Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Syndicate Department
With a copy to:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxx Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ECM Legal
Incorporated
Xxx Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ECM Legal
and
Xxxxxxxxx & Company, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
If to the Company:
Ardea Biosciences, Inc.
0000 Xxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
0000 Xxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
Any party hereto may change the address for receipt of communications by giving written notice
to the others.
31
Section 16. Successors. This Agreement will inure to the benefit of and be binding upon
the parties hereto, including any substitute Underwriters pursuant to Section 11 hereof, and to
the benefit of the employees, officers and directors and controlling persons referred to in
Section 9 and Section 10, and in each case their respective successors, and no other person
will have any right or obligation hereunder. The term “successors” shall not include any
purchaser of the Offered Shares as such from any of the Underwriters merely by reason of such
purchase.
Section 17. 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.
Section 18. Governing Law Provisions. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York applicable to agreements made and
to be performed in such state. Any legal suit, action or proceeding arising out of or based
upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) may be
instituted in the federal courts of the United States of America located in the Borough of
Manhattan in the City of New York or the courts of the State of New York in each case located
in the Borough of Manhattan in the City of New York (collectively, the “Specified Courts”), and
each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted
in regard to the enforcement of a judgment of any such court (a “Related Judgment”), as to
which such jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such party’s
address set forth above shall be effective service of process for any suit, action or other
proceeding brought in any such court. The parties irrevocably and unconditionally waive any
objection to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such
court that any such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
With respect to any Related Proceeding, each party irrevocably waives, to the fullest
extent permitted by applicable law, all immunity (whether on the basis of sovereignty or
otherwise) from jurisdiction, service of process, attachment (both before and after judgment)
and execution to which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified Courts or any
other court of competent jurisdiction, and will not raise or claim or cause to be pleaded any
such immunity at or in respect of any such Related Proceeding or Related Judgment, including,
without limitation, any immunity pursuant to the United States Foreign Sovereign Immunities Act
of 1976, as amended.
Section 19. General Provisions. 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. This
Agreement may be executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the parties hereto,
and no condition herein (express or implied) may be waived unless waived in writing by each
party whom the condition is meant to benefit. The Table of Contents and the
32
Section headings herein are for the convenience of the parties only and shall not affect
the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof,
including, without limitation, the indemnification provisions of Section 9 and the contribution
provisions of Section 10, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 9 and 10 hereto fairly allocate the
risks in light of the ability of the parties to investigate the Company, its affairs and its
business in order to assure that adequate disclosure has been made in the Registration
Statement, any preliminary prospectus, the Time of Sale Prospectus, each free writing
prospectus and the Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
[Remainder of this page intentionally left blank]
33
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.
Very truly yours, | ||||||
ARDEA BIOSCIENCES, INC. | ||||||
By: | /s/ Xxxxx Quart | |||||
Name: | Xxxxx X. Quart | |||||
Title: | CEO & President | |||||
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representatives
in New York, New York as of the date first above written.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
XXXXXXXXX & COMPANY, INC.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
INCORPORATED
XXXXXXXXX & COMPANY, INC.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
INCORPORATED
By:
|
/s/ Xxxxxx Xxxxxxxx | |||
Name:
|
Xxxxxx Xxxxxxxx | |||
Title:
|
Managing Director | |||
By: XXXXXXXXX & COMPANY, INC. | ||||
By:
|
/s/ Xxxx Xxxxx | |||
Name:
|
Xxxx Xxxxx | |||
Title:
|
Managing Director, Global Head of | |||
Healthcare Investment Banking | ||||
34
SCHEDULE A
Number of | ||||
Firm Shares | ||||
Underwriters | to be Purchased | |||
Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated |
1,567,500 | |||
Xxxxxxxxx & Company, Inc. |
495,000 | |||
JMP Securities LLC |
275,000 | |||
Xxxxx Xxxxxx, Carret & Co., LLC |
275,000 | |||
Xxxx Capital Partners, LLC |
137,500 | |||
Total |
2,750,000 |
SCHEDULE B
Schedule of Free Writing Prospectuses included in the Time of Sale Prospectus
None.
SCHEDULE C
Schedule of Pricing Information Included in the Time of Sale Prospectus
Price per share to the public: $26.00
Number of shares being sold: 2,750,000
Number of shares potentially issuable pursuant to the overallotment option: 412,500
Number of shares purchased by two director affiliates: 577,400
Number of shares being sold: 2,750,000
Number of shares potentially issuable pursuant to the overallotment option: 412,500
Number of shares purchased by two director affiliates: 577,400
EXHIBIT A
LIST OF PERSONS EXECUTING LOCK-UPS
Executive Officers and Directors
Xxxxx X. Quart, Pharm. D.
Xxxxxxx X. Xxxxx
Xxxx X. Xxxx
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxx, Ph.D.
Xxxxx X. Xxxxx, Ph.D.
Xxxxx X. Xxxxx, M.D.
Xxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxxx, M.D.
Xxxxx X. Xxxx
Xxxxxxx X. Xxxxx
Xxxx X. Xxxx
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxx, Ph.D.
Xxxxx X. Xxxxx, Ph.D.
Xxxxx X. Xxxxx, M.D.
Xxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxxx, M.D.
Xxxxx X. Xxxx
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
January 18, 2011
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxxxx & Company, Inc.Incorporated
as Representatives of the several Underwriters
c/o Merrill Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxx Xxxxxx XxxxIncorporated
Xxx Xxxx, Xxx Xxxx 00000
RE: Ardea Biosciences, Inc. (the “Company”)
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of common stock, par value
$0.001 per share, of the Company (“Shares”) or securities convertible into or exchangeable or
exercisable for Shares. The Company proposes to carry out a public offering of Shares (the
“Offering”) for which Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (“Merrill”) and Xxxxxxxxx
& Company, Inc. will act as the representatives of the several underwriters (the “Underwriters”).
The undersigned recognizes that the Offering will be of benefit to the undersigned and will benefit
the Company by, among other things, raising additional capital for its operations. The undersigned
acknowledges that you and any other underwriter are relying on the representations and agreements
of the undersigned contained in this letter agreement in carrying out the Offering and in entering
into underwriting arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the undersigned will not,
(and will cause any spouse or immediate family of the spouse or the undersigned living in the
undersigned’s household not to), without the prior written consent of Merrill (which consent may be
withheld in its sole discretion), directly or indirectly, sell, offer, contract or grant any option
to sell (including without limitation any short sale), pledge, transfer, establish an open “put
equivalent position” within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), or otherwise dispose of any Shares, options or warrants to acquire
Shares, or securities exchangeable or exercisable for or convertible into Shares currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3 under the Exchange Act)
by the undersigned (or such spouse or family member), or publicly announce an intention to do any
of the foregoing, for a period commencing on the date hereof and continuing through the close of
trading on the date 90 days after the date of the Prospectus (as defined in the Underwriting
Agreement relating to the Offering to which the Company is a party)(the “Lock-up Period”);
provided, that if (i) during the last 17 days of the Lock-up Period, the Company issues an earnings
release or material news or a material event relating to the Company occurs or (ii) prior to the
expiration of the Lock-up Period, the Company announces
that it will release earnings results during the 16-day period beginning on the last day of the
Lock-up Period, then in each case the Lock-up Period will be extended until the expiration of the
18-day period beginning on the date of the issuance of the earnings release or the occurrence of
the material news or material event, as applicable, unless Merrill waives, in writing, such
extension, except that such extension will not apply if (a) the Shares are “actively traded
securities” (as defined in Regulation M of the Exchange Act), (b) the Company meets the applicable
requirements of paragraph (a)(1) of Rule 139 under the Securities Act of 1933, as amended (the
“Securities Act”), in the manner contemplated by NASD Conduct Rule 2711(f)(4), and (c) the
provisions of NASD Conduct Rule 2711(f)(4) do not restrict the publishing or distribution of any
research reports relating to the Company published or distributed by any of the Underwriters during
the 15 days before or after the last day of the Lock-up Period (before giving effect to such
extension). The foregoing restrictions shall not apply to (1) in the case of a natural person, the
transfer of any or all of the Shares owned by the undersigned, either during his or her lifetime or
on death, by gift, will or intestate succession to the immediate family of the undersigned or to a
trust the beneficiaries of which are exclusively the undersigned and/or a member or members of his
or her immediate family, (2) in the case of a non-natural person, distributions of any or all of
the Shares held by the undersigned to general or limited partners or stockholders or members of the
undersigned, (3) the transfer or sale of any Shares or other securities pursuant to any contract,
instruction or plan meeting the requirements of Rule 10b5-1 under the Exchange Act that has been
entered into by the undersigned prior to the date of the Prospectus, and (4) any transactions with
the Company or in which the undersigned exercises investment discretion as a fiduciary for any
other legal person; provided, however, that in the case of any transfer or distribution pursuant to
clauses (1) or (2) above, it shall be a condition to such transfer or distribution that the donee,
beneficiary, distributee or transferee executes and delivers to Merrill an agreement stating that
he, she or it is receiving and holding the Shares subject to the provisions of this letter
agreement, and there shall be no further transfer or distribution of such Shares, except in
accordance with this letter agreement; provided, further, that in the case of any distribution
pursuant to clause (2) above, it shall be a condition to such distribution that no filing by any
party under the Exchange Act shall be required or shall be voluntarily made in connection with such
distribution (other than a filing made after the expiration of the Lock-up Period (as such may have
been extended pursuant to the terms of this letter agreement)). For the purposes of this
paragraph, “immediate family” shall mean the spouse, domestic partner, lineal descendant (including
adopted children), father, mother, brother or sister of the transferor. In addition,
notwithstanding the lock-up restrictions described herein, the undersigned may at any time after
the date hereof (A) exercise any options or warrants to purchase Shares (including by cashless
exercise to the extent permitted by the instruments representing such options or warrants);
provided, however, that in any such case the Shares issued upon exercise shall remain subject to
the provisions of this letter agreement, or (B) enter into a trading plan (a “New Plan”) meeting
the requirements of Rule 10b5-1 under the Exchange Act relating to the sale of Shares, if then
permitted by the Company and applicable law; provided that the Shares subject to such New Plan may
not be sold
during the Lock-Up Period; provided further, that the Company is not required to report
the establishment of such New Plan in any public report or filing with the Securities and Exchange
Commission under the Exchange Act during the Lock-Up Period and does not otherwise voluntarily
effect any such public filing or report regarding such New Plan. The undersigned hereby
acknowledges and agrees that written notice of any extension of the Lock-up Period pursuant to this
letter agreement will be delivered
by Merrill to the Company and that any such notice properly delivered will be deemed to have been
given to, and received by, the undersigned.
The undersigned also agrees and consents to the entry of stop transfer instructions with the
Company’s transfer agent and registrar against the transfer of Shares or securities convertible
into or exchangeable or exercisable for Shares held by the undersigned except in compliance with
the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration rights relating to
registration under the Securities Act of any Shares owned either of record or beneficially by the
undersigned, including any rights to receive notice of the Offering.
It is understood that, if (i) the Company notifies Merrill in writing that it does not intend to
proceed with the Offering, (ii) if the Underwriting Agreement relating to the Offering is not
executed by February 28, 2011, or (iii) if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated for any reason prior to payment
for and delivery of the Shares to be sold thereunder, this letter agreement shall immediately be
terminated and the undersigned shall automatically be released from all of his, her or its
obligations under this letter agreement.
The undersigned hereby represents and warrants that the undersigned has full power and authority to
enter into this letter agreement. This letter agreement is irrevocable and all authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and
any obligations of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
This letter agreement shall be governed by and construed in accordance with the laws of the State
of New York, without regard to the conflict of laws principles thereof.
[Remainder of page intentionally left blank]
Very truly yours,
________________________________________
Name of Security Holder (Print exact name)
Name of Security Holder (Print exact name)
________________________________________
Signature
Signature
If not signing in an individual capacity:
________________________________________
Name of Authorized Signatory (Print)
Name of Authorized Signatory (Print)
________________________________________
Title of Authorized Signatory (Print)
Title of Authorized Signatory (Print)