Exhibit 2.1
5,600,000 Shares
INNOVATIVE DRUG DELIVERY SYSTEMS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
Dated __________, 2002
TABLE OF CONTENTS
Page
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1. Representations and Warranties of the Company.............................2
1.1. Effective Registration Statement.................................2
1.2. Contents of Registration Statement...............................2
1.3. Due Incorporation................................................2
1.4. Subsidiaries.....................................................2
1.5. Underwriting Agreement...........................................2
1.6. Description of Capital Stock.....................................3
1.7. Authorized Stock.................................................3
1.8. Validly Issued Shares............................................3
1.9. No Conflict......................................................3
1.10. No Material Adverse Change.......................................3
1.11. Legal Proceedings; Exhibits......................................3
1.12. Compliance with Securities Act...................................3
1.13. Not an Investment Company........................................3
1.14. Compliance with Laws.............................................4
1.15. No Environmental Costs...........................................4
1.16. No Registration Rights...........................................4
1.17. Cuban Business Statute...........................................4
1.18. Absence of Material Charges......................................4
1.19. Good Title to Properties.........................................4
1.20. Intellectual Property Rights.....................................5
1.21. No Labor Disputes................................................5
1.22. Insurance........................................................5
1.23. Governmental Permits.............................................5
1.24. Accounting Controls..............................................5
1.25. Directed Share Program...........................................5
1.26. Compliance with Laws.............................................6
2. Purchase and Sale Agreements..............................................6
2.1. Firm Shares......................................................6
2.2. Additional Shares................................................6
2.3. Market Standoff Provision........................................6
2.4. Terms of Public Offering.........................................7
3. Payment and Delivery......................................................7
3.1. Firm Shares......................................................7
3.2. Additional Shares................................................7
3.3. Delivery of Certificates.........................................8
4. Covenants of the Company..................................................8
4.1. Furnish Copies of Registration Statement and Prospectus..........8
4.2. Notification of Amendments or Supplements........................8
4.3. Filings of Amendments or Supplements.............................8
4.4. Blue Sky Laws....................................................8
4.5. Earning Statement................................................9
4.6. Use of Proceeds..................................................9
4.7. Transfer Agent...................................................9
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TABLE OF CONTENTS
(continued)
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4.8. Periodic Reporting Obligations...................................9
4.9. Directed Share Program...........................................9
4.10. Exchange Act Compliance..........................................9
4.11. Lock-Up Period...................................................9
5. Conditions to the Underwriters' Obligations..............................10
5.1. Effective Registration Statement................................10
5.2. Rule 462 Registration Statement.................................10
5.3. Prospectus Filed with Commission................................10
5.4. No Stop Order...................................................10
5.5. No NASD Objection...............................................10
5.6. No Material Adverse Change......................................10
5.7. Officer's Certificate...........................................10
5.8. Opinion of Company Counsel......................................11
5.9. Opinion of Patent Counsel.......................................11
5.10. Opinion of Underwriters Counsel.................................11
5.11. Accountant's Comfort Letter.....................................11
5.12. Lock-Up Agreements..............................................11
5.13. Additional Documents............................................11
6. Expenses.................................................................12
7. Indemnity and Contribution...............................................12
7.1. Indemnification of the Underwriters.............................12
7.2. Indemnification by the Underwriters.............................13
7.3. Indemnification Procedures......................................13
7.4. Indemnification for Directed Share Program......................14
7.5. Contribution Agreement..........................................15
7.6. Contribution Amounts............................................15
7.7. Survival of Provisions..........................................16
8. Effectiveness............................................................16
9. Termination..............................................................16
10. Defaulting Underwriters..................................................16
11. Counterparts.............................................................17
12. Headings; Table of Contents..............................................17
13. Notices..................................................................17
14. Successors...............................................................18
15. Partial Unenforceability.................................................18
16. Governing Law............................................................18
17. Consent to Jurisdiction..................................................18
18. Entire Agreement.........................................................19
19. Amendments...............................................................19
20. Sophisticated Parties....................................................19
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TABLE OF CONTENTS
(continued)
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Schedules
A List of Underwriters
Exhibits
A Form of Legal Opinion of Company Counsel
B Form of Legal Opinion of Patent Counsel
C Form of Lock-Up Agreement
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_______, 2002
Xxxxxx Xxxxxx Partners LLC
Xxxxx Fargo Securities, LLC
Xxxxxxxxx & Company Inc.
As Representatives of the several Underwriters
c/oThomas Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Introduction. Innovative Drug Delivery Systems, Inc., a Delaware
corporation (the "Company"), proposes to issue and sell to the several
underwriters named in Schedule A hereto (the "Underwriters") an aggregate of
5,600,000 shares of the common stock, par value $.001 per share, of the Company
(the "Firm Shares").
The Company also proposes to issue and sell to the several Underwriters
not more than an additional 840,000 shares of its common stock, par value $.001
per share (the "Additional Shares"), if and to the extent that you shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such shares of common stock granted to the Underwriters in Section 2 hereof. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "Shares." The shares of common stock, par value $.001 per share, of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the "Common Stock." Xxxxxx Xxxxxx Partners LLC,
Xxxxx Fargo Securities, LLC and Xxxxxxxxx & Company Inc. have agreed to act as
representatives of the several Underwriters (in such capacity, the
"Representatives") in connection with the offering and sale of the Shares.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (file no. 333-76190),
including a prospectus, relating to the Shares. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"Securities Act"), is hereinafter referred to as the "Registration Statement";
the prospectus in the form first used to confirm sales of Shares is hereinafter
referred to as the "Prospectus." If the Company has filed a registration
statement to register additional shares of Common Stock pursuant to Rule 462(b)
under the Securities Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed to include
the Rule 462 Registration Statement. All references in this Agreement to the
Registration Statement, the Rule 462 Registration Statement, a preliminary
prospectus, 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").
As part of the offering contemplated by this Agreement, Xxxxxx Xxxxxx
Partners LLC has agreed to reserve, out of the Shares set forth opposite its
name on Schedule A to this Agreement, up to 280,000 shares, for sale to the
Company's employees, officers and directors, and other parties associated with
the Company (collectively, "Participants"), as set forth in the Prospectus under
the heading "Underwriting" (the "Directed Share Program"). The Shares to be sold
by Xxxxxx Xxxxxx Partners LLC pursuant to the Directed Share Program (the
"Directed Shares") will be sold by Xxxxxx Xxxxxx Partners LLC pursuant to this
Agreement at the public offering price. Any Directed Shares not orally confirmed
for purchase by any Participants by the end of the first business day after the
date on which this Agreement is executed will be offered to the public by Xxxxxx
Xxxxxx Partners LLC as set forth in the Prospectus.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
1.1. Effective Registration Statement. The Registration Statement has
become effective; no stop order suspending the effectiveness of the Registration
Statement is in effect, and no proceedings for such purpose are pending before
or, to the knowledge of the Company, threatened by the Commission.
1.2. Contents of Registration Statement. (i) The Registration
Statement, when it became effective, did not contain and, as amended or
supplemented, if applicable, 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, (ii) the Registration Statement
and the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, 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, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus as amended or supplemented, if
applicable, based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
1.3. Due Incorporation. The Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company.
1.4. Subsidiaries. The Company has no subsidiaries.
1.5. Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company, and is a valid and binding agreement of
the Company, enforceable 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.
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1.6. Description of Capital Stock. The authorized capital stock of the
Company conforms as to legal matters to the description thereof contained in the
Prospectus.
1.7. Authorized Stock. The shares of Common Stock outstanding prior to
the issuance of the Shares to be sold by the Company have been duly authorized
and are validly issued, fully paid and non-assessable.
1.8. Validly Issued Shares. The Shares to be sold by the Company have
been duly authorized and, when issued and delivered in accordance with the terms
of this Agreement, will be validly issued, fully paid and non-assessable, and
the issuance of such Shares will not be subject to any preemptive or similar
rights.
1.9. No Conflict. The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will not
contravene any provision of applicable law or the certificate of incorporation
or by-laws of the Company or any agreement or other instrument binding upon the
Company that is material to the Company, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company of
its obligations under this Agreement, except such as may be required by the
securities or "blue sky" laws of the various states in connection with the offer
and sale of the Shares.
1.10. No Material Adverse Change. There has not occurred any material
adverse change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings, business
or operations of the Company from that set forth in the Prospectus (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement).
1.11. Legal Proceedings; Exhibits. There are no legal or governmental
proceedings pending or, to the knowledge of the Company, threatened to which the
Company is a party or to which any of the properties of the Company is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations, contracts or
other documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
1.12. Compliance with Securities Act. Each preliminary prospectus filed
as part of the registration statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
1.13. Not an Investment Company. The Company is not and, after giving
effect to the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
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1.14. Compliance with Laws. The Company (i) is in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) has received all permits, licenses or other
approvals required of it under applicable Environmental Laws to conduct its
businesses and (iii) is in compliance with all terms and conditions of any such
permit, license or approval, except where any such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the aggregate, have a
material adverse effect on the Company.
1.15. No Environmental Costs. There are no costs or liabilities
associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties) that would, individually or in the aggregate, have a material
adverse effect on the Company.
1.16. No Registration Rights. There are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the Registration
Statement other than as described in the Registration Statement and as have been
waived in writing in connection with the offering contemplated hereby.
1.17. Cuban Business Statute. The Company has complied with all
provisions of Section 517.075, Florida Statutes relating to doing business with
the Government of Cuba or with any person or affiliate located in Cuba.
1.18. Absence of Material Charges. Subsequent to the respective dates
as of which information is given in the Registration Statement and the
Prospectus, (i) the Company has not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction, in
each case, not in the ordinary course of business; (ii) the Company has not
purchased any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock other than
ordinary and customary dividends; and (iii) there has not been any material
change in the capital stock, short-term debt or long-term debt of the Company,
except in each case as described in the Prospectus.
1.19. Good Title to Properties. The Company has good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by it that is material to the business of the Company,
in each case free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be made
of such property by the Company; and any real property and buildings held under
lease by the Company is held by it under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
in each case except as may be described in the Prospectus.
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1.20. Intellectual Property Rights. The Company owns or possesses, or
can acquire on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
or unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names needed by the Company in connection
with the business described in the Prospectus, and the Company has not received
any notice of infringement of or conflict with asserted rights of others with
respect to any of the foregoing that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a material
adverse affect on the Company.
1.21. No Labor Disputes. No material labor dispute with the employees
of the Company exists, or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing, threatened or imminent labor disturbance
by the employees of any of its principal suppliers, manufacturers or contractors
that could have a material adverse effect on the Company.
1.22. Insurance. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are customary in the business in which it is engaged; and the Company has no
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a material adverse effect on the Company, except as may be
described in the Prospectus.
1.23. Governmental Permits. The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business, and the Company has
not received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit that, individually
or in the aggregate, is reasonably likely to have a material adverse effect on
the Company, except as may be described in the Prospectus.
1.24. Accounting Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
1.25. Directed Share Program. The Company represents and warrants to
Xxxxxx Xxxxxx Partners LLC that (i) the Registration Statement, the Prospectus
and any preliminary prospectus comply, and any further amendments or supplements
thereto will comply, with any applicable laws or regulations of foreign
jurisdictions in which the Prospectus or any preliminary prospectus, as amended
or supplemented, if applicable, are distributed in connection with the Directed
Share Program, and that (ii) no authorization, approval, consent, license,
order, registration or qualification of or with any government, governmental
instrumentality or court, other than such as have been obtained, is necessary
under the securities laws and regulations of foreign jurisdictions in which the
Directed Shares are offered outside the United States.
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1.26. Compliance with Laws. To the Company's knowledge, the Company is
conducting its business in compliance with the Fair Labor Standards Act, the
rules and regulations of the federal Food and Drug Administration, and all
applicable federal, state and local laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without limitation,
all applicable local, state and federal laws and regulations governing health,
sanitation, safety, environmental matters, zoning and land use, except where the
failure to be so in compliance would not have a material adverse effect on the
Company.
2. Purchase and Sale Agreements.
2.1. Firm Shares. The Company hereby agrees to sell to the several
Underwriters, and each Underwriter, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
agrees, severally and not jointly, to purchase from the Company at $______ a
share (the "Purchase Price") the number of Firm Shares (subject to such
adjustments to eliminate fractional shares as you may determine) set forth in
Schedule A hereto opposite the name of such Underwriter.
2.2. Additional Shares. On the basis of the representations and
warranties contained in this Agreement, and subject to its terms and conditions,
the Company agrees to sell to the Underwriters the Additional Shares, and the
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to 840,000 Additional Shares at the Purchase Price. If you, on behalf of the
Underwriters, elect to exercise such option, you shall so notify the Company in
writing not later than 30 days after the date of this Agreement, which notice
shall specify the number of Additional Shares to be purchased by the
Underwriters and the date on which such shares are to be purchased. Such date
may be the same as the Closing Date (as defined below) but not earlier than the
Closing Date nor later than ten (10) business days after the date of such
notice. Additional Shares may be purchased as provided in Section 3 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. If any Additional Shares are to be purchased, each
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
you may determine) that bears the same proportion to the total number of
Additional Shares to be purchased as the number of Firm Shares set forth in
Schedule A hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
2.3. Market Standoff Provision. The Company hereby agrees that, without
the prior written consent of Xxxxxx Xxxxxx Partners LLC, it will not, during the
period ending 180 days after the date of the Prospectus, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership
of the Common Stock, whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Shares to be sold hereunder, (B) the issuance by the Company of shares of
Common Stock upon the exercise of options or warrants or the conversion of a
security outstanding on the date hereof of which the Underwriters have been
advised in writing and that is described in the Prospectus. In addition, during
such period, the Company will not file any registration statement (other than a
Form S-8 registration statement filed in connection with shares of Common Stock
received under a Company directors' and employees' stock plan, stock ownership
plan, employment agreement or dividend reinvestment plan) with respect to the
registration of any shares of Common Stock or any securities convertible into or
excercisable or exchangeable for Common Stock without the prior written consent
of Xxxxxx Xxxxxx Partners LLC (C) the award of options under the Company's stock
plans in the ordinary course of business consistent with past practices that are
not exercisable within 180 days from the date of the Prospectus or (D) the
Company's issuance of shares of Common Stock in connection with any strategic
partnership or other joint venture, provided that the terms of such issuance
contractually prohibit the resale or other disposition of such shares of Common
Stock within 180 days from the date of the Prospectus.
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2.4. Terms of Public Offering. The Company is advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable. The Company is
further advised by you that the Shares are to be offered to the public initially
at $_____________ a share (the "Public Offering Price") and to certain dealers
selected by you at a price that represents a concession not in excess of $______
a share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $_____ a share, to any
Underwriter or to certain other dealers.
3. Payment and Delivery.
3.1. Firm Shares. Payment for the Firm Shares to be sold by the Company
shall be made to the Company in immediately available funds against delivery of
such Firm Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on ____________, 2002, or at such other time on
the same or such other date, not later than _________, 2002, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Closing Date."
3.2. Additional Shares. Payment for any Additional Shares shall be made
to the Company in immediately available funds in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2.2 hereof or at such other time on the same or on
such other date, in any event not later than _______, 2002, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Option Closing Date."
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3.3. Delivery of Certificates. Certificates for the Firm Shares and
Additional Shares shall be in definitive form and registered in such names and
in such denominations as you shall request in writing not later than one full
business day prior to the Closing Date or the Option Closing Date, as the case
may be. The certificates evidencing the Firm Shares and Additional Shares shall
be delivered to you on the Closing Date or the Option Closing Date, as the case
may be, for the respective accounts of the several Underwriters, with any
transfer taxes payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the Purchase Price therefor.
4. Covenants of the Company. In further consideration of the agreements
of the several Underwriters herein contained, the Company covenants with each
Underwriter as follows:
4.1. Furnish Copies of Registration Statement and Prospectus. To
furnish to you and counsel for the Underwriters, without charge, three signed
copies of the Registration Statement (including exhibits thereto) and for
delivery to each other Underwriter a conformed copy of the Registration
Statement (without exhibits thereto) and to 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 4.3 hereof, as many copies of the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
4.2. Notification of Amendments or Supplements. Before amending or
supplementing the Registration Statement or the Prospectus, to furnish to you a
copy of each such proposed amendment or supplement and not to file any such
proposed amendment or supplement to which you reasonably object, and to 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.
4.3. Filings of Amendments or Supplements. If, during such period after
the first date of the public offering of the Shares as in the opinion of counsel
for the Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
Period"), any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus 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 counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been sold by
you on behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
4.4. Blue Sky Laws. To endeavor to qualify the Shares for offer and
sale under the securities or "blue sky" laws of such jurisdictions as you shall
reasonably request, provided that the Company shall not be required to qualify
as a foreign corporation or to file a general consent to service of process in
any jurisdiction where it is not now so qualified or required to file such a
consent.
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4.5. Earning Statement. To make generally available to its
securityholders as soon as practicable, but in any event not later than 18
months after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Securities Act), an earning statement of the Company
(which need not be audited) complying with Section 11(a) of the Securities Act
and the rules and regulations thereunder (including, at the option of the
Company, Rule 158).
4.6. Use of Proceeds. To apply the net proceeds from the sale of the
Shares sold by it in the manner described under the caption "Use of Proceeds" in
the Prospectus.
4.7. Transfer Agent. To engage and maintain, at its expense, a
registrar and transfer agent for the Common Stock.
4.8. Periodic Reporting Obligations. During the Prospectus Delivery
Period, to file, on a timely basis, with the Commission and the Nasdaq National
Market all reports and documents required to be filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Additionally, the Company
shall file with the Commission such information on Form 10-Q or Form 10-K as may
be required by Rule 463 under the Securities Act.
4.9. Directed Share Program. That in connection with the Directed Share
Program, to ensure that the Directed Shares will be restricted to the extent
required by the National Association of Securities Dealers, Inc. (the "NASD") or
the NASD rules from sale, transfer, assignment, pledge or hypothecation for a
period of three months following the date of the effectiveness of the
Registration Statement. Xxxxxx Xxxxxx Partners LLC will notify the Company as to
which Participants will need to be so restricted. The Company will direct the
transfer agent to place stop transfer restrictions upon such securities for such
period of time. Furthermore, the Company covenants with Xxxxxx Xxxxxx Partners
LLC that the Company will comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in which the
Directed Shares are offered in connection with the Directed Share Program.
4.10. Exchange Act Compliance. During the Prospectus Delivery Period,
to 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.
4.11. Lock-Up Period. For a period of 180 days from the date of the
Prospectus (the "Lock-Up Period"), without the prior written consent of Xxxxxx
Xxxxxx Partners LLC, the Company shall not release any holder of the Company's
Common Stock from contractual restrictions on such holder's ability to (1) offer
for sale, contract to sell, sell, pledge or otherwise dispose of (or enter into
any transaction or device which is designed to, or could be expected to, result
in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by any person at any time in
the future of) any shares of Common Stock or securities convertible into,
exercisable or exchangeable for, or that represent the right to receive, Common
Stock or sell or grant options, rights or warrants with respect to any shares of
Common Stock or any of the foregoing or announce the offering of or register for
sale any of the foregoing or any outstanding shares of Common Stock; or (2)
enter into any swap, repurchase agreement, pledge, transfer or other transaction
that transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock, in cash or otherwise.
9
5. Conditions to the Underwriters' Obligations. The obligations of the
Company to sell the Shares to the several Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date (and the Option Closing Date, if applicable) are subject to the
following conditions:
5.1. Effective Registration Statement. The Registration Statement shall
have become effective not later than __________, New York City time, on the date
hereof.
5.2. Rule 462 Registration Statement. If the Company elects to rely
upon Rule 462(b), the Company shall file a Rule 462 Registration Statement with
the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C.
time, on the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462 Registration
Statement or give irrevocable instructions for the payment of such fee pursuant
to Rule 111(b) under the Securities Act.
5.3. Prospectus Filed with Commission. The Company shall have filed the
Prospectus with the Commission (including the information required by Rule 430A
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 required by such Rule 430A and such post-effective amendment shall
have become effective.
5.4. No Stop Order. No stop order suspending the effectiveness of the
Registration Statement, the Rule 462 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.
5.5. No NASD Objection. The NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and arrangements.
5.6. No Material Adverse Change. There shall not have occurred any
change, or any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company from that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
5.7. Officer's Certificate. The Underwriters shall have received on the
Closing Date (and any Option Closing Date, if applicable) a certificate, dated
the Closing Date (or the Option Closing Date, if applicable) and signed by the
Chief Executive Officer or President of the Company, to the effect set forth in
Sections 5.4 and 5.6 hereof and to the effect that the representations and
warranties of the Company contained in this Agreement are true and correct as of
the Closing Date (and the Option Closing Date, if applicable) and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before the
Closing Date (and the Option Closing Date, if applicable).
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5.8. Opinion of Company Counsel. The Underwriters shall have received
on the Closing Date (and the Option Closing Date, if applicable) an opinion of
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Company, dated the Closing Date
(or the Option Closing Date, if applicable), the form of which is attached
hereto as Exhibit A. The opinion shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
5.9. Opinion of Patent Counsel. The Underwriters shall have received on
the Closing Date (and the Option Closing Date, if applicable) an opinion of
Xxxxx & Xxxxx, patent counsel for the Company, dated the Closing Date (or the
Option Closing Date, if applicable), the form of which is attached hereto as
Exhibit B. The opinion shall be rendered to the Underwriters at the request of
the Company and shall so state therein.
5.10. Opinion of Underwriters Counsel. The Underwriters shall have
received from Pillsbury Winthrop LLP, Underwriters' counsel, a favorable
opinion, dated the Closing Date (or the Option Closing Date, if applicable),
with respect to the issuance and sale of the Shares, the Registration Statement,
the Prospectus and other related matters as you may reasonably require and such
counsel shall have been furnished with such documents as they may reasonably
request for the purpose of enabling them to pass upon the matters referred to in
this Section 5.10.
5.11. Accountant's Comfort Letter. The Underwriters shall have
received, on each of the date hereof and the Closing Date (and the Option
Closing Date, if applicable), a letter dated the date hereof or the Closing Date
(or the Option Closing Date, if applicable), as the case may be, in form and
substance satisfactory to the Underwriters, from PricewaterhouseCoopers LLP,
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date (and the Option Closing Date, if applicable) shall
use a "cut-off date" not earlier than the date hereof.
5.12. Lock-Up Agreements. The "lock-up" agreements, each substantially
in the form of Exhibit C hereto, between you and certain shareholders, officers
and directors of the Company, delivered to you on or before the date hereof,
shall be in full force and effect on the Closing Date (and the Option Closing
Date, if applicable).
5.13. Additional Documents. On the Closing Date (and the Option Closing
Date, if applicable), the Representatives and counsel for the Underwriters shall
have received such information, documents and opinions as they may reasonably
require for the purposes of enabling them to pass upon the issuance and sale of
the 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.
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6. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any "blue sky" or legal investment memorandum in
connection with the offer and sale of the Shares under state securities laws and
all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as contemplated by Section 4.4 hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection with such qualification and in connection with
the "blue sky" or legal investment memorandum, (iv) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares by
the NASD, (v) all fees and expenses in connection with the preparation and
filing of the registration statement on Form 8-A relating to the Shares and all
costs and expenses incident to listing the Shares on the Nasdaq National Market,
(vi) the cost of printing certificates representing the Shares, (vii) the costs
and charges of any transfer agent, registrar or depositary, (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 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, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show as separately agreed between the Company and the
Representatives, (ix) all reasonable fees and disbursements of counsel incurred
by the Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program and (x) all other
costs and expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section 6. It is
understood, however, that except as provided in this Section 6, Section 7 hereof
and the last paragraph of Section 10 hereof, the Underwriters will pay all of
their costs and expenses, including fees and disbursements of their counsel and
any advertising expenses connected with any offers they may make.
7. Indemnity and Contribution.
7.1. Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
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7.2. Indemnification by the Underwriters. Each Underwriter agrees,
severally and not jointly, to indemnify and hold harmless the Company, the
directors of the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through you expressly for use in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendments or
supplements thereto.
7.3. Indemnification Procedures. In case any proceeding (including any
governmental investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to this Section 7, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters and such control persons of any Underwriters,
such firm shall be designated in writing by Xxxxxx Xxxxxx Partners LLC. In the
case of any such separate firm for the Company, and such directors, officers and
control persons of the Company, such firm shall be designated in writing by the
Company. The indemnifying party 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 from and against any loss or
liability 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 the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (A) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (B) 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 of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
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Notwithstanding anything contained herein to the contrary, if indemnity
may be sought pursuant to Section 7.4 hereof in respect of such action or
proceeding, then in addition to such separate firm for the indemnified parties,
the indemnifying party shall be liable for the reasonable fees and expenses of
not more than one separate firm (in addition to any local counsel) for Xxxxxx
Xxxxxx Partners LLC for the defense of any losses, claims, damages and
liabilities arising out of the Directed Share Program, and all persons, if any,
who control Xxxxxx Xxxxxx Partners LLC within the meaning of either Section 15
of the Act or Section 20 of the Exchange Act.
7.4. Indemnification for Directed Share Program. The Company agrees to
indemnify and hold harmless Xxxxxx Xxxxxx Partners LLC and each person, if any,
who controls Xxxxxx Xxxxxx Partners LLC within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act ("Xxxxxx Xxxxxx Partners
Entities"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) (i)
caused by any untrue statement or alleged untrue statement of a material fact
contained in the prospectus wrapper material prepared by or with the consent of
the Company for distribution in foreign jurisdictions in connection with the
Directed Share Program attached to the Prospectus or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement therein, when
considered in conjunction with the Prospectus or any applicable preliminary
prospectus, not misleading, (ii) caused by the failure of any Participant to pay
for and accept delivery of the shares that, immediately following the
effectiveness of the Registration Statement, were subject to a properly
confirmed agreement to purchase or (iii) related to, arising out of, or in
connection with the Directed Share Program, provided that, the Company shall not
be responsible under this clause (iii) for any losses, claim, damages or
liabilities (or expenses relating thereto) that are finally judicially
determined to have resulted from the bad faith or gross negligence of Xxxxxx
Xxxxxx Partners Entities.
14
7.5. Contribution Agreement. To the extent the indemnification provided
for in this Section 7 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
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 indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, 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 Shares shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Shares (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Shares. 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 the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.
7.6. Contribution Amounts. The Company and the Underwriters agree that
it would not be just or equitable if contribution pursuant to this Section 7
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 that does not
take account of the equitable considerations referred to in Section 7.5 hereof.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies that may otherwise be
available to any indemnified party at law or in equity.
15
7.7. Survival of Provisions. The indemnity and contribution provisions
contained in this Section 7 and the representations, warranties and other
statements of the Company contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Shares.
8. Effectiveness. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange or the National Association
of Securities Dealers, Inc., (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York, Delaware or
California shall have been declared by either federal or New York, Delaware or
California state authorities or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis that, in your judgment, is material and adverse or (v) in the judgment of
the Representatives, there shall have occurred any material adverse change, or
any development that 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 (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(v), such event,
individually or together with any other such event, makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
10. Defaulting Underwriters. If, on the Closing Date or the Option
Closing Date, as the case may be, any one or more of the Underwriters shall fail
or refuse to purchase Shares that it has or they are obligated to purchase
hereunder on such date, and the aggregate number of Shares that such defaulting
Underwriter or Underwriters is obligated but failed or refused to purchase is
not more than one-tenth of the aggregate number of the Shares to be purchased on
such date, the other Underwriters shall be obligated severally in the
proportions that the number of Firm Shares set forth opposite their respective
names in 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 you may specify, to purchase the Shares that such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Shares that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 10 by an amount in excess of one-ninth of such number of Shares without
the written consent of such Underwriter. If, on the Closing Date, any
Underwriter or Underwriters is obligated but shall fail or refuse to purchase
Firm Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares to
be purchased, and arrangements satisfactory to you and the Company for the
purchase of such Firm Shares are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case you shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If, on
the Option Closing Date, any Underwriter or Underwriters is obligated but shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase Additional Shares or (ii) purchase not less
than the number of Additional Shares that such non-defaulting Underwriters would
have been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
16
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the reasonable fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
12. Headings; Table of Contents. The headings of the sections of this
Agreement and the table of contents have been inserted for convenience of
reference only and shall not be deemed a part of this Agreement.
13. 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:
Xxxxxx Xxxxxx Partners LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx III
with a copy to:
Xxxxxx Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
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If to the Company:
Innovative Drug Delivery Systems, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, M.D.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
14. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 10 hereof, and to the benefit of the officers and directors and
controlling persons referred to in Section 7 hereof, 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 Shares
as such from any of the Underwriters merely by reason of such purchase.
15. 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.
16. Governing Law. 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.
17. Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby may be instituted in the federal courts of the United States of America
located in the City and County of New York or the courts of the State of New
York in each case located in the City and County 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, 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.
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18. Entire Agreement. 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.
19. Amendments. This Agreement may only be amended or modified in
writing, signed 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.
20. Sophisticated Parties. 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 and contribution provisions of Section 7 hereof,
and is fully informed regarding said provisions. Each of the parties hereto
further acknowledges that the provisions of Section 7 hereof 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 and the
Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
[Remainder of page intentionally left blank]
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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,
INNOVATIVE DRUG DELIVERY SYSTEMS, INC.
By:
----------------------------------
Name:
Title:
Accepted as of the date hereof
Xxxxxx Xxxxxx Partners LLC
Xxxxx Fargo Securities, LLC
Xxxxxxxxx & Company Inc.
Acting severally on behalf of themselves
and the several Underwriters named
in Schedule A hereto.
By: Xxxxxx Xxxxxx Partners LLC
By:
---------------------------------
Name:
Title:
20
SCHEDULE A
Underwriter Number of Firm Shares
To Be Purchased
Xxxxxx Xxxxxx Partners LLC
Xxxxx Fargo Securities, LLC
Xxxxxxxxx & Company Inc.
Total
1
EXHIBIT A
Form of Legal Opinion of Company Counsel
1
EXHIBIT B
Form of Legal Opinion of Patent Counsel
1
EXHIBIT C
FORM OF LOCK-UP AGREEMENT
____________, 2002
Xxxxxx Xxxxxx Partners LLC
Xxxxx Fargo Securities, LLC
Xxxxxxxxx & Company Inc.
As Representatives of the several Underwriters
c/o Thomas Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Lock-Up Agreement (the "Agreement")
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of common stock, par value $.001 per share (the "Common Stock"), of Innovative
Drug Delivery Systems, Inc., a Delaware corporation (the "Company"), or
securities convertible into or exchangeable or exercisable for Common Stock. The
undersigned understands that you, as representatives (the "Representatives"),
propose to enter into an Underwriting Agreement on behalf of the several
Underwriters named in Schedule A to such agreement (collectively, the
"Underwriters"), with the Company providing for a public offering of the Common
Stock of the Company pursuant to a Registration Statement on form S-1 to be
filed with the Securities and Exchange Commission (the "Public Offering"). The
undersigned recognizes that the Public 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
the other Underwriters are relying on the representations and agreements of the
undersigned contained in this letter in carrying out the Public Offering and in
entering into underwriting arrangements with the Company with respect to the
Public Offering.
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxx Partners LLC (which consent may be withheld in its sole discretion), it
will not, during the period commencing on the date hereof and ending 180 days
after the date of the final prospectus relating to the Public Offering (the
"Prospectus"), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (2) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. In addition, the
undersigned agrees that, without the prior written consent of Xxxxxx Xxxxxx
Partners LLC (which consent may be withheld in its sole discretion), it will
not, during the period commencing on the date hereof and ending 180 days after
the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. With respect
to the Public Offering, the undersigned waives any registration rights relating
to registration under the Securities Act of any Common Stock owned either of
record or beneficially by the undersigned, including any rights to receive
notice of the Public Offering.
1
The foregoing restrictions are expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction that is designed
to or reasonably expected to lead to or result in a sale or disposition of the
Common Stock even if such Common Stock would be disposed of by someone other
than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put option or put equivalent position or
call option or call equivalent position) with respect to any of the Common Stock
or with respect to any security that includes, relates to, or derives any
significant part of its value from such Common Stock.
Notwithstanding the foregoing, the undersigned may transfer shares of
Common Stock (i) as a bona fide gift or gifts, provided that the donee or donees
thereof agree to be bound by the restrictions set forth herein, (ii) to any
trust for the direct or indirect benefit of the undersigned or the immediate
family of the undersigned, provided that the trustee of the trust agrees to be
bound by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value or (iii) to the Underwriters
pursuant to the Underwriting Agreement. For purposes of this Agreement,
"immediate family" shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin. In addition, notwithstanding the foregoing,
if the undersigned is a corporation, the corporation may transfer the capital
stock of the Company to any wholly-owned subsidiary of such corporation;
provided, however, that in any such case, it shall be a condition to the
transfer that the transferee execute an agreement stating that the transferee is
receiving and holding such capital stock subject to the provisions of this
Agreement and there shall be no further transfer of such capital stock except in
accordance with this Agreement, and provided further that any such transfer
shall not involve a disposition for value.
The undersigned understands that whether or not the Public Offering
actually occurs depends on a number of factors, including stock market
conditions. The Public Offering will only be made pursuant to an Underwriting
Agreement, the terms of which are subject to negotiation among the Company and
the Underwriters.
The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
2
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
Very truly yours,
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(Name)
-------------------------------
(Address)
3
