Hythiam, Inc. [___] Shares Common Stock ($.0001 par value per Share) Underwriting Agreement
Exhibit 1.1
Hythiam, Inc.
[___] Shares
Common Stock
($.0001 par value per Share)
($.0001 par value per Share)
October [ ], 2005
October [ ], 2005
UBS Securities LLC
First Albany Capital
as Managing Underwriters
First Albany Capital
as Managing Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Hythiam, Inc., a Delaware corporation (the “Company”), proposes to issue and sell to
the Underwriters an aggregate of [# of firm shares] shares (the “Firm Shares”) of common
stock, $.0001 par value per share (the “Common Stock”), of the Company. In addition,
solely for the purpose of covering over-allotments, the Company proposes to grant to the
Underwriters the option to purchase from the Company up to an additional [# of additional shares]
shares of Common Stock (the “Additional Shares”). The Firm Shares and the Additional
Shares are hereinafter collectively sometimes referred to as the “Shares.” The Shares are
described in the Prospectus which is referred to below.
The Company has prepared and filed, in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations thereunder (collectively, the “Act”), with
the Securities and Exchange Commission (the “Commission”) a registration statement on Form
S-3 (File No. 333-123772, 333-128544 and 333-[ ]) under the Act, including a prospectus,
relating to the Shares, which incorporates by reference documents (the “Incorporated
Documents”) which the Company has filed, or will file, in accordance with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder
(collectively, the “Exchange Act”). The Company has furnished to you, for use by the
Underwriters and by dealers, copies of one or more preliminary prospectuses and the documents
incorporated by reference therein (each such preliminary prospectuses, including the documents
incorporated therein by reference, being herein called a “Preliminary Prospectus”) relating
to the Shares. Except where the context otherwise requires, the registration statement, as amended
when it became effective, including all documents filed as a part thereof or incorporated by
reference therein, and including any information contained in a prospectus subsequently filed with
the Commission pursuant to Rule 424(b) under the Act and deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the Act and also including any
registration statement filed pursuant to Rule 462(b) under the Act, is herein called the
“Registration Statement,” and the prospectus, including all documents incorporated therein
by reference, in the form filed by the Company with the Commission pursuant to Rule 424(b) under
the Act on or before the second business day after the date hereof (or such earlier time as may be
required under the Act), or, if no such filing is required, the form of final prospectus included
in the Registration Statement at the time it became effective, is herein called the
“Prospectus.” Any reference herein to the terms “amend,” “amendment” or
“supplement” with respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any document under the Exchange
Act on or after the initial effective date of the Registration Statement, or the date of the
Preliminary Prospectus or the Prospectus, as the case may be, and deemed to be incorporated therein
by reference. As used in this Agreement, “business day” shall mean a day on which the New
York Stock Exchange (the “NYSE”) is open for trading. The terms “herein,” “hereof,”
“hereto,” “hereinafter” and similar terms, as used in this Agreement, shall in each case refer to
this Agreement as a whole and not to any particular section, paragraph, sentence or other
subdivision of this Agreement.
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the
Underwriters and the Underwriters agree to purchase from the Company the Firm Shares at a purchase
price of $[___] per Share. The Company is advised by you that the Underwriters intend (i) to make
a public offering of their respective portions of the Firm Shares as soon after the date of this
Agreement as in your judgment is advisable and (ii) initially to offer the Firm Shares upon the
terms set forth in the Prospectus. You may from time to time increase or decrease the public
offering price after the initial public offering to such extent as you may determine.
In addition, the Company hereby grants to the Underwriters the option to purchase, and upon
the basis of the representations and warranties and subject to the terms and conditions herein set
forth, the Underwriters shall have the right to purchase from the Company, ratably in accordance
with the number of Firm Shares to be purchased by each of them, all or a portion of the Additional
Shares as may be necessary to cover over-allotments made in connection with the offering of the
Firm Shares, at the same purchase price per share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised by the Underwriters at any time and from time to
time on or before the thirtieth day following the date of the Prospectus, by written notice to the
Company. Such notice shall set forth the aggregate number of Additional Shares as to which the
option is being exercised and the date and time when the Additional Shares are to be delivered (any
such date and time being herein referred to as an “additional time of purchase”);
provided, however, that no additional time of purchase shall be earlier than the
“time of purchase” (as defined below) nor earlier than the second business day after the date on
which the option shall have been exercised nor later than the tenth business day after the date on
which the option shall have been exercised. The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same proportion to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth opposite the name of such
Underwriter on Schedule A hereto bears to the total number of Firm Shares (subject, in each
case, to such adjustment as you may determine to eliminate fractional shares).
2. Payment and Delivery. Payment of the purchase price for the Firm Shares shall be
made to the Company by Federal Funds wire transfer against delivery of the certificates for the
Firm Shares to you through the facilities of The Depository Trust Company (“DTC”) for the
respective accounts of the Underwriters. Such payment and delivery shall be made at 10:00
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A.M., New York City time, on October [ ], 2005 (unless another time shall be agreed to by you
and the Company). The time at which such payment and delivery are to be made is hereinafter
sometimes called “the time of purchase.” Electronic transfer of the Firm Shares shall be
made to you at the time of purchase in such names and in such denominations as you shall specify.
Payment of the purchase price for the Additional Shares shall be made at the additional time
of purchase in the same manner and at the same office as the payment for the Firm Shares.
Electronic transfer of the Additional Shares shall be made to you at the additional time of
purchase in such names and in such denominations as you shall specify.
Deliveries of the documents described in Section 6 hereof with respect to the purchase of the
Shares shall be made at the offices of _________at _________, _________, at 9:00 A.M.,
New York City time, on the date of the closing of the purchase of the Firm Shares or the Additional
Shares, as the case may be.
3. Representations and Warranties of the Company. The Company represents and warrants
to and agrees with the Underwriters that:
(a) the Registration Statement has heretofore become, and is, effective under the Act;
no stop order of the Commission preventing or suspending the use of any Preliminary
Prospectus or the effectiveness of the Registration Statement has been issued, and no
proceedings for such purpose have been instituted or, to the Company’s knowledge after due
inquiry, are contemplated by the Commission; each Preliminary Prospectus complied, at the
time of filing thereof, and complies in all material respects with the requirements of the
Act, and each Preliminary Prospectus distributed in connection with the offering of the
Shares did not, as of its date, and does not and at the time of purchase and any additional
time of purchase will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; the Registration
Statement complied when it became effective, complies and, at the time of purchase and any
additional time of purchase and any time at which any sales with respect to which the
Prospectus is delivered, will comply, in all material respects, with the requirements of the
Act, and the Prospectus will comply, as of its date and at the time of purchase and any
additional times of purchase and any time at which any sales with respect to which the
Prospectus is delivered, in all material respects, with the requirements of the Act; any
statutes, regulations, contracts, related party transactions 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 or any document incorporated by reference in the
Registration Statement or Prospectus have been and will be so described or filed as
required; the conditions to the use of Form S-3 with respect to the Registration Statement
in connection with the offering and sale of the Shares as contemplated by the Underwriting
Agreement have been satisfied; the Registration Statement did not when it became effective,
does not and, at the time of purchase and any additional time of purchase and any time at
which any sales with respect to which the Prospectus is delivered, 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
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make the statements therein not misleading, and the Prospectus will not, as of its date
and at the time of purchase and any additional time of purchase and any time at which any
sales with respect to which the Prospectus is delivered, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no warranty or
representation with respect to any statement contained in the Registration Statement or the
Prospectus in reliance upon and in conformity with information concerning an Underwriter and
furnished in writing by or on behalf of such Underwriter through you to the Company
expressly for use in the Registration Statement or the Prospectus; the documents
incorporated by reference in the Preliminary Prospectus, the Registration Statement or the
Prospectus, at the time each such document was filed, at the times the Preliminary
Prospectus and the Prospectus were filed with the Commission and at the time the
Registration Statement became effective under the Act, complied, in all material respects,
with the requirements of the Act and the Exchange Act and did not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading; and the Company has not, prior to the execution of this
Agreement, distributed any “prospectus” (within the meaning of the Act) or offering material
in connection with the offering or sale of the Shares other than the then most recent
Preliminary Prospectus and will not, at any time on or after the execution of this
Agreement, distribute any “prospectus” (within the meaning of the Act) or offering material
in connection with the offering or sale of the Shares other than the then most recent
Prospectus;
(b) as of the date of this Agreement, the Company has an authorized and outstanding
capitalization as set forth in the sections of the Registration Statement and the Prospectus
entitled “Capitalization” and “Description of Common Stock”, and, as of the time of purchase
and any additional time of purchase, as the case may be, the Company shall have an
authorized and outstanding capitalization as set forth in the sections of the Registration
Statement and the Prospectus entitled “Capitalization” and “Description of capital stock”
(subject, in each case, to the issuance of shares of Common Stock upon exercise of stock
options and warrants disclosed as outstanding in the Registration Statement and the
Prospectus and the grant of options under existing stock option plans described in the
Registration Statement and the Prospectus); all of the issued and outstanding shares of
capital stock, including the Common Stock, of the Company have been duly authorized and
validly issued and are fully paid and non-assessable, have been issued in compliance with
all federal and state securities laws and were not issued in violation of any preemptive
right, resale right, right of first refusal or similar right; and no further approval or
authority of the stockholders or the Board of Directors of the Company are required for the
issuance and sale of the Shares; and the Amended and Restated Certificate of Incorporation
of the Company and the Amended and Restated Bylaws of the Company, each in the form
incorporated by reference in the Registration Statement, have been heretofore duly
authorized and approved in accordance with the Delaware General Corporation Law and are
effective and in full force and effect; the Shares are duly listed, and admitted and
authorized for trading on the Nasdaq National
Market (the “Nasdaq”);
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(c) the Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with full corporate power and
authority to own, lease and operate its properties and conduct its business as described in
the Registration Statement and the Prospectus, to execute and deliver this Agreement and to
issue, sell and deliver the Shares as contemplated herein;
(d) the Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the failure to be so
qualified and in good standing would not, individually or in the aggregate, either (i) have
a material adverse effect on the business, properties, financial condition, results of
operations or prospects of the Company and its Subsidiaries (as hereinafter defined) taken
as a whole, (ii) prevent or materially interfere with consummation of the transactions
contemplated hereby or (iii) result in the delisting of shares of Common Stock from the
NASDAQ (the occurrence of any such effect or any such prevention or interference or any such
result described in the foregoing clauses (i), (ii) and (iii) being herein referred to as a
“Material Adverse Effect”)”];
(e) the Company has no subsidiaries (as defined under the Act) other than Hythiam
International (Cayman) Ltd. and its subsidiaries, Hythiam International Sarl, Hythiam
Switzerland Sarl, Quit System Sarl and Quit System Italy Sarl; the Company owns directly or
indirectly all of the issued and outstanding capital stock of the Subsidiaries; other than
the capital stock of the Subsidiaries, the Company does not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any corporation or have
any equity interest in any firm, partnership, joint venture, association or other entity;
complete and correct copies of the charters and the bylaws of the Company and each
Subsidiary and all amendments thereto have been delivered or made available to you, and,
except as set forth in the exhibits to the Registration Statement, no changes therein will
be made on or after the date hereof or on or before the time of purchase or, if later, any
additional time of purchase; each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration Statement and the
Prospectus; each Subsidiary is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the ownership or leasing of its properties or
the conduct of its business requires such qualification, except where the failure to be so
qualified and in good standing would not, individually or in the aggregate, have a Material
Adverse Effect; each Subsidiary is in compliance in all respects with the laws, orders,
rules, regulations and directives issued or administered by such jurisdictions, except where
the failure to be in compliance would not, individually or in the aggregate, have a Material
Adverse Effect; all of the outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued, are fully paid and non-assessable, have been issued in
compliance with all applicable securities laws, have been issued in compliance with all
federal and state
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securities laws, were not issued in violation of any preemptive right, resale right,
right of first refusal or similar right and are owned by the Company subject to no security
interest, other encumbrance or adverse claims; and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert any obligation
into shares of capital stock or ownership interests in each Subsidiary are outstanding;
(f) the Shares have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued, fully paid and
non-assessable and free of statutory and contractual preemptive rights, resale rights,
rights of first refusal and similar rights;
(g) the capital stock of the Company, including the Shares, conforms in all material
respects to the description thereof contained or incorporated by reference in the
Registration Statement and the Prospectus; the certificates for the Shares are in due and
proper form; and the holders of the Shares will not be subject to personal liability by
reason of being such holders;
(h) this Agreement has been duly authorized, executed and delivered by the Company;
(i) neither the Company nor any of its Subsidiaries is in breach or violation of or in
default under (nor has any event occurred which with notice, lapse of time or both would
result in any breach or violation of, constitute a default under or give the holder of any
indebtedness (or a person acting on such holder’s behalf) the right to require the
repurchase, redemption or repayment of all or a part of such indebtedness under) (A) its
respective charter or bylaws, or (B) any indenture, mortgage, deed of trust, bank loan or
credit agreement or other evidence of indebtedness, or any license, lease, contract or other
agreement or instrument to which the Company or any Subsidiary is a party or by which any of
them or any of their respective properties may be bound or affected, or (C) any federal,
state, local or foreign law, regulation or rule, or (D) any rule or regulation of any
self-regulatory organization or other non-governmental regulatory authority (including,
without limitation, the rules and regulations of the NASDAQ), or (E) any decree, judgment or
order applicable to the Company or any Subsidiary or any of their respective properties; and
the execution, delivery and performance of this Agreement, the issuance and sale of the
Shares and the consummation of the transactions contemplated hereby will not conflict with,
result in any breach or violation of or constitute a default under (nor constitute any event
which with notice, lapse of time or both would result in any breach or violation of or
constitute a default under or give the holder of any indebtedness (or a person acting on
such holder’s behalf) the right to require the repurchase, redemption or repayment of all or
a part of such indebtedness under) (or result in the creation or imposition of a lien,
charge or encumbrance on any property or assets of the Company or any Subsidiary pursuant
to) (I) the charter or bylaws of the Company or any Subsidiary, or (II) any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or
any license, lease, contract or other agreement or instrument to which the Company or any of
its Subsidiaries is a party
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or by which any of them or any of their respective properties may be bound or affected,
or (III) any federal, state, local or foreign law, regulation or rule, or (IV) any rule or
regulation of any self-regulatory organization or other non-governmental regulatory
authority (including, without limitation, the rules and regulations of the NASDAQ, or (V)
any decree, judgment or order applicable to the Company or any Subsidiary or any of their
respective properties;
(j) no approval, authorization, consent or order of or filing with any federal, state,
local or foreign governmental or regulatory commission, board, body, authority or agency, or
of or with any self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, the NASDAQ), or approval of the stockholders of the Company,
is required in connection with the issuance and sale of the Shares or the consummation by
the Company of the transactions contemplated hereby other than registration of the Shares
under the Act, which has been effected, and any necessary qualification under the securities
or blue sky laws of the various jurisdictions in which the Shares are being offered by the
Underwriters or under the rules and regulations of the National Association of Securities
Dealers, Inc. (the “NASD”);
(k) except as expressly set forth in the Registration Statement and the Prospectus, (i)
no person has the right, contractual or otherwise, to cause the Company to issue or sell to
it any shares of Common Stock or shares of any other capital stock or other equity interests
of the Company, (ii) no person has any preemptive rights, resale rights, rights of first
refusal or other rights to purchase any shares of Common Stock or shares of any other
capital stock of or other equity interests in the Company and (iii) no person has the right
to act as an underwriter or as a financial advisor to the Company in connection with the
offer and sale of the Shares, in the case of each of the foregoing clauses (i), (ii) and
(iii), whether as a result of the filing or effectiveness of the Registration Statement or
the sale of the Shares as contemplated thereby or otherwise; no person has the right,
contractual or otherwise, to cause the Company to register under the Act any shares of
Common Stock or shares of any other capital stock of or other equity interests in the
Company, or to include any such shares or interests in the Registration Statement or the
offering contemplated thereby, whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby or otherwise;
(l) each of the Company and its Subsidiaries has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings required under any
federal, state, local or foreign law, regulation or rule, and has obtained all necessary
licenses, authorizations, consents and approvals from other persons, in order to conduct its
respective business; neither the Company nor any of its Subsidiaries is in violation of, or
in default under, or has received notice of any proceedings relating to revocation or
modification of, any such license, authorization, consent or approval or any federal, state,
local or foreign law, regulation or rule or any decree, order or judgment applicable to the
Company or any of its Subsidiaries, except where such violation, default, revocation or
modification would not, individually or in the aggregate, have a Material Adverse Effect;
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(m) all legal or governmental proceedings, affiliate transactions, off-balance sheet
transactions (including, without limitation, transactions related to, and the existence of,
“variable interest entities” within the meaning of Financial Accounting Standards Board
Interpretation No. 46), contracts, licenses, agreements, properties, leases or documents of
a character required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement or any Incorporated Document have been
so described or filed as required;
(n) except as discussed in each of the Registration Statement and prospectus there are
no actions, suits, claims, investigations or proceedings pending or to the Company’s
knowledge threatened or contemplated to which the Company or any of its Subsidiaries or any
of their respective directors or officers is or would be a party or of which any of their
respective properties is or would be subject at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board, body, authority or
agency, or before or by any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, the rules and regulations of the
NASDAQ), except any such action, suit, claim, investigation or proceeding which would not
result in a judgment, decree or order having, individually or in the aggregate, a Material
Adverse Effect;
(o) BDO Xxxxxxx, LLP, whose report on the consolidated financial statements of the
Company and its Subsidiaries is incorporated by reference in the Registration Statement and
the Prospectus, are independent registered public accountants as required by the Act and by
the rules of the Public Company Accounting Oversight Board;
(p) the financial statements included or incorporated by reference in the Registration
Statement and the Prospectus, together with the related notes and schedules, present fairly
the consolidated financial position of the Company and its Subsidiaries as of the dates
indicated and the consolidated results of operations and cash flows of the Company and its
Subsidiaries for the periods specified and have been prepared in compliance with the
requirements of the Act and Exchange Act and in conformity with generally accepted
accounting principles applied on a consistent basis during the periods involved; all pro
forma financial statements or data included or incorporated by reference in the Registration
Statement and the Prospectus comply with the requirements of Regulation S-X of the Act,
including, without limitation, Article 11 thereof, and the assumptions used in the
preparation of such pro forma financial statements and data are reasonable, the pro forma
adjustments used therein are appropriate to give effect to the transactions or circumstances
described therein and the pro forma adjustments have been properly applied to the historical
amounts in the compilation of those statements and data; the other financial and statistical
data set forth or incorporated by reference in the Registration Statement or the Prospectus
are accurately and fairly presented and prepared on a basis consistent with the financial
statements and books and records of the Company; there are no financial statements
(historical or pro forma) that are required to be included or incorporated by reference in
the Registration Statement and the Prospectus (including, without limitation, as required by
Rules 3-12 or 3-05 or Article 11 of
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Regulation S-X under the Act) that are not included or incorporated by reference as
required; the Company and each of its Subsidiaries do not have any material liabilities or
obligations, direct or contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement and the Prospectus; except as disclosed in the
Registration Statement and the Prospectus, neither the Company nor any Subsidiary is,
together with its “related parties,” the “primary beneficiary” of any “variable interest
entity” (as such terms are used in Financial Accounting Standards Board Interpretation No.
46); and all disclosures contained in the Registration Statement or the Prospectus,
including the documents incorporated by reference therein, regarding “non-GAAP financial
measures” (as such term is defined by the rules and regulations of the Commission) comply
with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Act, to the
extent applicable;
(q) subsequent to the time of execution of this Agreement or, if earlier, the
respective dates as of which information is given in the Registration Statement and the
Prospectus, there has not been (i) any material adverse change, or any development involving
a prospective material adverse change, in the business, properties, management, financial
condition or results of operations of the Company and its Subsidiaries taken as a whole,
(ii) any transaction which is material to the Company and its Subsidiaries taken as a whole,
(iii) any obligation, direct or contingent (including any off-balance sheet obligations),
incurred by the Company or any Subsidiary, which is material to the Company and its
Subsidiaries taken as a whole, (iv) any change in the capital stock or outstanding
indebtedness of the Company or any Subsidiary or (v) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company or any Subsidiary;
(r) the Company has obtained for the benefit of the Underwriters the agreement (a
“Lock-Up Agreement”), in the form set forth as Exhibit A hereto, of (i) each
of its directors and “officers” (within the meaning of Rule 16a-1(f) under the Act); and
(ii) each stockholder named in Exhibit A-1 hereto;
(s) neither the Company nor any Subsidiary is and, after giving effect to the offering
and sale of the Shares, neither of them will be an “investment company” or an entity
“controlled” by an “investment company,” as such terms are defined in the Investment Company
Act of 1940, as amended (the “Investment Company Act”);
(t) the Company, and each Subsidiary, has good and marketable title to all property
(real and personal) described in the Registration Statement or in the Prospectus as being
owned by each of them, free and clear of all liens, claims, security interests or other
encumbrances except as are described in each of the Registration Statement and the
Prospectus or except those that would individually or in the aggregate have a Material
Adverse Effect; all the property described in the Registration Statement or the Prospectus
or any Incorporated Document as being held under lease by the Company or each Subsidiary is
held thereby under valid, subsisting and enforceable leases;
(u) the Company and each Subsidiary own, or have obtained valid and
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enforceable licenses for, or other rights to use, the inventions, patent applications,
patents, trademarks (both registered and unregistered), tradenames, service names,
copyrights, trade secrets and other proprietary information described in the Registration
Statement or the Prospectus as being owned or licensed by them or which are necessary for
the conduct of their respective businesses as currently conducted or as described in the
Registration Statement or Prospectus to be conducted, except where the failure to own,
license or have such rights would not, individually or in the aggregate, have a Material
Adverse Effect (collectively, “Intellectual Property”); subject to normal patent
examination process (i) there are no third parties who have or, to the Company’s knowledge,
will be able to establish rights to any Intellectual Property, except for, and to the extent
of, the ownership rights of the owners of the Intellectual Property which the Registration
Statement and Prospectus disclose is licensed or assigned to the Company; (ii) to the
Company’s knowledge there is no infringement by third parties of any Intellectual Property;
(iii) there is no pending or to the Company’s knowledge threatened action, suit, proceeding
or claim by others challenging the Company’s rights in or to any Intellectual Property, and
the Company is unaware of any facts which could form a reasonable basis for any such action,
suit, proceeding or claim; (iv) there is no pending or to the Company’s knowledge threatened
action, suit, proceeding or claim by others challenging the validity, enforceability or
scope of any Intellectual Property, and the Company is unaware of any facts which could form
a reasonable basis for any such action, suit, proceeding or claim; (v) there is no pending
or to the Company’s knowledge threatened action, suit, proceeding or claim by others that
the Company or any Subsidiary infringes or otherwise violates, or would, upon the
commercialization of any product or service described in the Registration Statement or
Prospectus as under development, infringe or violate, any patent, trademark, tradename,
service name, copyright, trade secret or other proprietary rights of others, and the Company
is unaware of any facts which could form a reasonable basis for any such action, suit,
proceeding or claim; (vi) the Company and its Subsidiaries have complied with the terms of
any agreement pursuant to which Intellectual Property has been licensed to the Company or
any Subsidiary, and all such agreements are in full force and effect except those that would
not individually or in the aggregate have a Material Adverse Effect; (vii) the licensing of
any protocol described in the Registration Statement or Prospectus or any Incorporated
Document would not, to the Company’s knowledge, be held to infringe any claims in any
patents of third parties; (viii) there is no patent or patent application that contains
claims that interfere with the issued or, to the Company’s knowledge, pending claims of any
of the Intellectual Property or that challenges the validity, enforceability or scope of any
of the Intellectual Property; and (ix) to the Company’s knowledge there is no prior art that
may render any patent application owned by the Company or any Subsidiary of the Intellectual
Property unpatentable that has not been disclosed to the U.S. Patent and Trademark Office;
(v) neither the Company nor any Subsidiary is engaged in any unfair labor practice;
except for matters which would not, individually or in the aggregate, have a Material
Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or, to the
Company’s knowledge after due inquiry, threatened against the Company or any Subsidiary
before the National Labor Relations Board, and no grievance or arbitration
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proceeding arising out of or under collective bargaining agreements is pending or
threatened, (B) no strike, labor dispute, slowdown or stoppage pending or, to the Company’s
knowledge after due inquiry, threatened against the Company or any Subsidiary and (C) no
union representation dispute currently existing concerning the employees of the Company or
any Subsidiary, and (ii) to the Company’s knowledge after due inquiry, (A) no union
organizing activities are currently taking place concerning the employees of the Company or
any Subsidiary and (B) there has been no violation of any federal, state, local or foreign
law relating to discrimination in the hiring, promotion or pay of employees, any applicable
wage or hour laws or any provision of the Employee Retirement Income Security Act of 1974
(“ERISA”) or the rules and regulations promulgated thereunder concerning the
employees of the Company or any Subsidiary;
(w) the Company and each Subsidiary and their properties, assets and operations each is
in compliance with, and holds all permits, authorizations and approvals required under,
Environmental Laws (as defined below), except to the extent that failure to so comply or to
hold such permits, authorizations or approvals would not, individually or in the aggregate,
have a Material Adverse Effect; there are no past, present or, to the Company’s knowledge
after due inquiry, reasonably anticipated future events, conditions, circumstances,
activities, practices, actions, omissions or plans that could reasonably be expected to give
rise to any material costs or liabilities to the Company or any Subsidiary under, or to
interfere with or prevent compliance by the Company or any Subsidiary with, Environmental
Laws; except as would not, individually or in the aggregate, have a Material Adverse Effect,
neither the Company nor any Subsidiary to its knowledge (i) is the subject of any
investigation, (ii) has received any notice or claim, (iii) is a party to or affected by any
pending or threatened action, suit or proceeding, (iv) is bound by any judgment, decree or
order or (v) has entered into any agreement, in each case relating to any alleged violation
of any Environmental Law or any actual or alleged release or threatened release or cleanup
at any location of any Hazardous Materials (as defined below) (as used herein,
“Environmental Law” means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, decree, judgment, injunction, permit, license,
authorization or other binding requirement, or common law, relating to health, safety or the
protection, cleanup or restoration of the environment or natural resources, including those
relating to the distribution, processing, generation, treatment, storage, disposal,
transportation, other handling or release or threatened release of Hazardous Materials, and
“Hazardous Materials” means any material (including, without limitation, pollutants,
contaminants, hazardous or toxic substances or wastes) that is regulated by or may give rise
to liability under any Environmental Law);
(x) all tax returns required to be filed by the Company or its Subsidiaries have been
timely filed, and all taxes and other assessments of a similar nature (whether imposed
directly or through withholding) including any interest, additions to tax or penalties
applicable thereto due or claimed to be due from such entities have been timely paid, other
than those being contested in good faith and for which adequate reserves have been provided;
(y) the Company, and each Subsidiary, maintains insurance covering its
11
properties, operations, personnel and businesses as the Company reasonably deems
adequate; such insurance insures against such losses and risks to an extent which is
adequate in accordance with customary industry practice to protect the Company and each
Subsidiary and their businesses; all such insurance is fully in force on the date hereof and
will be fully in force at the time of purchase and any additional time of purchase;
(z) neither the Company nor any Subsidiary has sustained since the date of the last
audited financial statements incorporated by reference in the Registration Statement and the
Prospectus any loss or interference with its respective business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree;
(aa) except as would not individually or in the aggregate have a Material Adverse
Effect, neither the Company nor any Subsidiary has sent or received any communication
regarding termination of, or intent not to renew, any of the contracts or agreements
referred to or described in, or filed as an exhibit to, the Registration Statement or any
Incorporated Document, and no such termination or non-renewal has been threatened by the
Company or any Subsidiary or, to the Company’s knowledge after due inquiry, any other party
to any such contract or agreement;
(bb) the Company, and its Subsidiaries, 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 authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any
differences;
(cc) the Company has established and maintains and evaluates “disclosure controls and
procedures” (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act) and
“internal control over financial reporting” (as such term is defined in Rule 13a-15 and
15d-15 under the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its consolidated
Subsidiaries, is made known to the Company’s Chief Executive Officer and its Chief Financial
Officer by others within those entities, and such disclosure controls and procedures are
effective to perform the functions for which they were established; the Company’s auditors
and the Audit Committee of the Board of Directors of the Company have been advised of: (i)
any significant deficiencies in the design or operation of internal controls which could
adversely affect the Company’s ability to record, process, summarize, and report financial
data; and (ii) any fraud, whether or not material, that involves management or other
employees who have a role in the Company’s internal controls; any material weaknesses in
internal controls have been identified for the Company’s auditors; since the date of the
most recent evaluation of
12
such disclosure controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and material
weaknesses; the principal executive officers (or their equivalents) and principal financial
officers (or their equivalents) of the Company have made all certifications required by the
Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”) and any related rules and
regulations promulgated by the Commission, and the statements contained in any such
certification are complete and correct; and the Company, its Subsidiaries and the Company’s
directors and officers each are in compliance in all material respects with all applicable
effective provisions of the Xxxxxxxx-Xxxxx Act and the rules and regulations of the
Commission and the NASDAQ promulgated thereunder;
(dd) the Company has made available to you true, correct and complete copies of all
documentation pertaining to any extension of credit in the form of a personal loan made,
directly or indirectly, by the Company or any Subsidiary to any director or executive
officer of the Company, or to any family member or affiliate of any director or executive
officer of the Company; and on or after July 30, 2002, the Company has not, directly or
indirectly, including through any Subsidiary: (i) extended credit, arranged to extend
credit, or renewed any extension of credit, in the form of a personal loan, to or for any
director or executive officer of the Company, or to or for any family member or affiliate of
any director or executive officer of the Company; or (ii) made any material modification,
including any renewal thereof, to any term of any personal loan to any director or executive
officer of the Company, or any family member or affiliate of any director or executive
officer, which loan was outstanding on July 30, 2002;
(ee) each “forward-looking statement” (within the meaning of Section 27A of the Act or
Section 21E of the Exchange Act) contained in the Registration Statement or the Prospectus
or any Incorporated Document has been made or reaffirmed with a reasonable basis and has
been disclosed in good faith;
(ff) all statistical or market-related data included or incorporated by reference in
the Registration Statement or the Prospectus are based on or derived from sources that the
Company believes to be reliable and accurate, and the Company has obtained the written
consent to the use of such data from such sources to the extent required;
(gg) neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge
after due inquiry, any employee or agent of the Company or any Subsidiary has made any
payment of funds of the Company or any Subsidiary or received or retained any funds in
violation of any law, rule or regulation (including, without limitation, the Foreign Corrupt
Practices Act of 1977), which payment, receipt or retention of funds is of a character
required to be disclosed in the Registration Statement or the Prospectus or any Incorporated
Document;
(hh) no Subsidiary is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on such Subsidiary’s capital
stock, from repaying to the Company any loans or advances to such Subsidiary
13
from the Company or from transferring any of such Subsidiary’s property or assets to
the Company or any other Subsidiary of the Company, except as described in the Prospectus;
(ii) to the Company’s knowledge clinical trials that are described in the Registration
Statement or the Prospectus, including the documents incorporated by reference therein are
being conducted in all material respects in accordance with protocols filed with the
appropriate regulatory authorities for each such study or trial, as the case may be, and
with standard medical and scientific research procedures; the description of the results of
such tests and trials contained in the Registration Statement or the Prospectus, including
the documents incorporated by reference therein, are accurate and complete in all material
respects and fairly present the data derived from such tests and trials, and the Company and
its Subsidiaries have no knowledge of any other studies or tests the results of which are
inconsistent with, or otherwise call into question, the results described or referred to in
the Registration Statement or the Prospectus, including the documents incorporated by
reference therein; neither the Company nor any Subsidiary has received any notices or other
correspondence from the Food and Drug Administration of the U.S. Department of Health and
Human Services or any committee thereof or from any other U.S. or foreign government or drug
or medical device regulatory agency requiring the termination, suspension or modification of
any clinical trials that are described or referred to in the Registration Statement or the
Prospectus, including the documents incorporated by reference therein; and the Company and
its Subsidiaries have each operated and currently are in compliance in all material respects
with all applicable rules, regulations and policies of the U.S. Food and Drug
Administration;
(jj) immediately after the issuance and sale of the Shares as contemplated hereby, no
shares of preferred stock of the Company shall be issued or outstanding; and the issuance
and sale of the Shares as contemplated hereby will not cause any holder of any shares of
capital stock, securities convertible into or exchangeable or exercisable for capital stock
or options, warrants or other rights to purchase capital stock or any other securities of
the Company to have any right to acquire any shares of preferred stock of the Company;
(kk) the Company is in compliance with the Marketplace Rules of the Nasdaq, including,
without limitation, the requirements for continued designation of the Common Stock as a
Nasdaq National Market security, and there are no actions, suits or proceedings pending,
threatened or, to the Company’s knowledge, contemplated, and the Company has not received
any notice from the NASDAQ, regarding the revocation of such designation or otherwise
regarding the delisting of shares of Common Stock from the NASDAQ;
(ll) except pursuant to this Agreement, neither the Company nor any of its Subsidiaries
has incurred any liability for any finder’s or broker’s fee or agent’s commission in
connection with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or by the Prospectus;
14
(mm) neither the Company nor any Subsidiary nor to its knowledge have any of their
respective directors, officers, affiliates or controlling persons taken, directly or
indirectly, any action designed, or which has constituted or might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of the Shares;
and
(nn) to the Company’s knowledge after due inquiry, there are no affiliations or
associations between (i) any member of the NASD and (ii) the Company or any of the Company’s
officers, directors or 5% or greater securityholders or any beneficial owner of the
Company’s unregistered equity securities that were acquired at any time on or after the
180th day immediately preceding the date the Registration Statement was initially filed with
the Commission, except as set forth in the Registration Statement and the Prospectus.
In addition, any certificate signed by any officer of the Company or any Subsidiary and
delivered to the Underwriters or counsel for the Underwriters in connection with the offering of
the Shares shall be deemed to be a representation and warranty by the Company or any Subsidiary, as
the case may be, as to matters covered thereby, to each Underwriter.
4. Certain Covenants of the Company. The Company hereby agrees:
(a) to furnish such information as may be required and otherwise to cooperate in
qualifying the Shares for offering and sale under the securities or blue sky laws of such
states or other jurisdictions as you may designate and to maintain such qualifications in
effect so long as you may request for the distribution of the Shares; provided,
however, that the Company shall not be required to qualify as a foreign corporation
or to consent to the service of process under the laws of any such jurisdiction (except
service of process with respect to the offering and sale of the Shares); and to promptly
advise you of the receipt by the Company of any notification with respect to the suspension
of the qualification of the Shares for offer or sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose;
(b) to make available to the Underwriters in New York City and from time to time to
furnish to the Underwriters, as many copies of the Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments or supplements
thereto) as the Underwriters may request for the purposes contemplated by the Act; in case
any Underwriter is required to deliver a prospectus after the nine-month period referred to
in Section 10(a)(3) of the Act in connection with the sale of the Shares, the Company will
prepare, at its expense, promptly upon request such amendment or amendments to the
Registration Statement and the Prospectus as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act;
(c) if, at the time this Agreement is executed and delivered, it is necessary for any
post-effective amendment to the Registration Statement to be declared effective before the
Shares may be sold, the Company will use its best efforts to cause such post-
15
effective amendment to become effective as soon as possible, and the Company will
advise you promptly and, if requested by you, will confirm such advice in writing, (i) when
any such post-effective amendment thereto has become effective, and (ii) if Rule 430A under
the Act is used, when the Prospectus is filed with the Commission pursuant to Rule 424(b)
under the Act (which the Company agrees to file in a timely manner in accordance with such
Rules);
(d) to advise you promptly, confirming such advice in writing, of any request by the
Commission for amendments or supplements to the Registration Statement or the Prospectus or
for additional information with respect thereto, or of notice of institution of proceedings
for, or the entry of a stop order, suspending the effectiveness of the Registration
Statement and, if the Commission should enter a stop order suspending the effectiveness of
the Registration Statement, to use its best efforts to obtain the lifting or removal of such
order as soon as possible; to advise you promptly of any proposal to amend or supplement the
Registration Statement or the Prospectus, including by filing any documents that would be
incorporated therein by reference, and to provide you and Underwriters’ counsel copies of
any such documents for review and comment a reasonable amount of time prior to any proposed
filing and to file no such amendment or supplement to which you shall reasonably object in
writing;
(e) subject to Section 4(d) hereof, to file promptly all reports and documents and any
preliminary or definitive proxy or information statement required to be filed by the Company
with the Commission in order to comply with the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus is required in connection with
the offering or sale of the Shares; and to provide you, for your review and comment, with a
copy of such reports and statements and other documents to be filed by the Company pursuant
to Section 13, 14 or 15D of the Exchange Act during such period a reasonable amount of time
prior to any proposed filing, and to file no such report, statement or document to which you
shall reasonably object in writing; and to promptly notify you of such filing;
(f) if necessary or appropriate, to file a registration statement pursuant to, and in
accordance with, Rule 462(b) under the Act and pay the applicable fees in accordance with
the Act;
(g) to advise the Underwriters promptly of the happening of any event within the time
during which a prospectus relating to the Shares is required to be delivered under the Act
which could require the making of any change in the Prospectus then being used so that the
Prospectus would not include an untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading, and, during such time, subject to Section 4(d)
hereof, to prepare and furnish, at the Company’s expense, to the Underwriters promptly such
amendments or supplements to such Prospectus as may be necessary to reflect any such change;
(h) to make generally available to its security holders, and to deliver to you,
16
(unless such document is publicly available on the Commission’s website through the
Xxxxx database maintained by the Commission) an earnings statement of the Company (which
will satisfy the provisions of Section 11(a) of the Act) covering a period of twelve months
beginning after the effective date of the Registration Statement (as defined in Rule 158(c)
under the Act) as soon as is reasonably practicable after the termination of such
twelve-month period but in any case not later than [March 31, 2006];
(i) to furnish to its stockholders as soon as practicable after the end of each fiscal
year an annual report (including a consolidated balance sheet and statements of income,
stockholders’ equity and cash flow of the Company and its Subsidiaries for such fiscal year,
accompanied by a copy of the certificate or report thereon of nationally recognized
independent certified public accountants duly registered with the Public Company Oversight
Accounting Board);
(j) to furnish to you one copy for each Underwriter and one copy for Xxxxxxxx &
Xxxxxxxx LLP copies of the Registration Statement, as initially filed with the Commission,
and of all amendments thereto (including all exhibits thereto and documents incorporated by
reference therein);
(k) to the extent not otherwise available on Xxxxx and upon request to furnish to you
promptly for a period of five years from the date of this Agreement (i) copies of any
reports, proxy statements, or other communications which the Company shall send to its
stockholders or shall from time to time publish or publicly disseminate, (ii) copies of all
annual, quarterly, transition and current reports filed with the Commission on Forms 10-K,
10-Q or 8-K, or such other similar forms as may be designated by the Commission, (iii)
copies of documents or reports filed with any national securities exchange on which any
class of securities of the Company is listed and (iv) such other information as you may
reasonably request regarding the Company or any Subsidiary;
(l) to furnish to you as early as practicable prior to the time of purchase and any
additional time of purchase, as the case may be, but not later than two business days prior
thereto, a copy of the latest available unaudited interim and monthly consolidated financial
statements, if any, of the Company and its Subsidiaries which have been read by the
Company’s independent certified public accountants, as stated in their letter to be
furnished pursuant to Section 6(d) hereof;
(m) to apply the net proceeds from the sale of the Shares in the manner set forth under
the caption “Use of proceeds” in the Prospectus;
(n) to pay all costs, expenses, fees and taxes in connection with (i) the preparation
and filing of the Registration Statement, each Preliminary Prospectus, the Prospectus and
any amendments or supplements thereto, and the printing and furnishing of copies of each
thereof to the Underwriters and to dealers (including costs of mailing and shipment), (ii)
the registration, issue, sale and delivery of the Shares including any stock or transfer
taxes and stamp or similar duties payable upon the sale, issuance or delivery of the Shares
to the Underwriters, (iii) the producing, word processing and/or
17
printing of this Agreement, any Agreement Among Underwriters, any dealer agreements,
any Powers of Attorney and any closing documents (including compilations thereof) and the
reproduction and/or printing and furnishing of copies of each thereof to the Underwriters
and (except closing documents) to dealers (including costs of mailing and shipment), (iv)
the qualification of the Shares for offering and sale under state or foreign laws and the
determination of their eligibility for investment under state or foreign law as aforesaid
(including the legal fees and filing fees and other disbursements of counsel for the
Underwriters) and the printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriters and to dealers, (v) any listing of the Shares on any
securities exchange or qualification of the Shares for quotation on the NASDAQ and any
registration thereof under the Exchange Act, (vi) any filing for review of the public
offering of the Shares by the NASD, including the legal fees and filing fees and other
disbursements of counsel to the Underwriters relating to NASD matters, (vii) the fees and
disbursements of any transfer agent or registrar for the Shares, (viii) the costs and
expenses of the Company relating to presentations or meetings undertaken in connection with
the marketing of the offering and sale of the Shares to prospective investors and the
Underwriters’ sales forces, 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, travel, lodging and other expenses incurred by
the officers of the Company and any such consultants, and the cost of any aircraft chartered
in connection with the road show, (x) the performance of the Company’s other obligations
hereunder provided, however, that except as provided in this section 4(n) and Sections 5 and
9 herein, the Underwriters will bear all of their own costs and expenses including the fees
of their counsel;
(o) for a period of 90 days after the date hereof (the “Lock-Up Period”),
without the prior written consent of UBS, not to (i) sell, offer to sell, contract or agree
to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree
to dispose of, directly or indirectly, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section 16 of the
Exchange Act and the rules and regulations of the Commission promulgated thereunder, with
respect to, any Common Stock or securities convertible into or exchangeable or exercisable
for Common Stock or warrants or other rights to purchase Common Stock or any other
securities of the Company that are substantially similar to Common Stock, (ii) file or cause
to be declared effective a registration statement under the Act relating to the offer and
sale of any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock or warrants or other rights to purchase Common Stock or any
other securities of the Company that are substantially similar to Common Stock, (iii) enter
into any swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or warrants or other rights to purchase Common
Stock or any such securities, whether any such transaction is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise or (iv) publicly announce an
intention to effect any transaction specified in clause (i), (ii) or (iii), except, in each
case, for (A) the registration of the Shares and the sales to the Underwriters pursuant to
this Agreement, (B) issuances of
18
Common Stock upon the exercise of options or warrants disclosed as outstanding in the
Registration Statement and the Prospectus, and (C) the issuance of employee stock options
not exercisable during the Lock-Up Period pursuant to stock option plans described in the
Registration Statement and the Prospectus; provided, however, that if (a)
during the period that begins on the date that is fifteen (15) calendar days plus three (3)
business days before the last day of the Lock-Up Period and ends on the last day 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 sixteen (16) day period
beginning on the last day of the Lock-Up Period, then the restrictions imposed by this
Section 4(o) shall continue to apply until the expiration of the date that is fifteen (15)
calendar days plus three (3) business days after the date on which the issuance of the
earnings release or the material news or material event occurs;
(p) prior to the time of purchase or any additional time of purchase, as the case may
be, to issue no press release or other communication directly or indirectly and hold no
press conferences with respect to the Company or any Subsidiary, the financial condition,
results of operations, business, properties, assets, or liabilities of the Company or any
Subsidiary, or the offering of the Shares, without your prior consent;
(q) not, at any time on or after the execution of this Agreement, to distribute any
“prospectus” (within the meaning of the Act) or offering material in connection with the
offering or sale of the Shares other than the Registration Statement and the most recent
Prospectus;
(r) the Company will not, and will cause its Subsidiaries not to, take, directly or
indirectly, any action designed, or which has constituted or might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of the Shares;
(s) to use its best efforts to cause the Common Stock to be listed for quotation on the
NASDAQ and to maintain such listing; and
(t) to maintain a transfer agent and, if necessary under the jurisdiction of
incorporation of the Company, a registrar for the Common Stock.
5. Reimbursement of Underwriters’ Expenses. If the Shares are not delivered for any
reason, the Company shall, in addition to paying the amounts described in Section 4(n) hereof,
reimburse the Underwriters for all of their out-of-pocket expenses, including the fees and
disbursements of their counsel.
6. Conditions of Underwriters’ Obligations. The obligations of the Underwriters
hereunder are subject to the accuracy of the representations and warranties on the part of the
Company on the date hereof, at the time of purchase and, if applicable, at the additional time of
purchase, the performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
19
(a) The Company shall furnish to you at the time of purchase and, if applicable, at the
additional time of purchase, an opinion of Xxxxxxxxx Xxxxxxx, LLP, counsel for the Company,
addressed to the Underwriters, and dated the time of purchase or the additional time of
purchase, as the case may be, and in form and substance satisfactory to Xxxxxxxx & Xxxxxxxx
LLP, counsel for the Underwriters, in the form set forth in Exhibit B hereto.
(b) The Company shall furnish to you at the time of purchase and, if applicable, at the
additional time of purchase, an opinion of Xxxxxxxxxx Xxxxxxxx LLP, special counsel for the
Company with respect to patents and proprietary rights, addressed to the Underwriters, and
dated the time of purchase or the additional time of purchase, as the case may be, with
executed copies for each of the other Underwriters, and in form and substance satisfactory
to Xxxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters, in the form set forth in
Exhibit C hereto.
(c) The Company shall furnish to you at the time of purchase and, if applicable, at the
additional time of purchase, an opinion of Xxxxx & Xxxxxxx LLP, special counsel for the
Company with respect to regulatory matters, addressed to the Underwriters, and dated the
time of purchase or the additional time of purchase, as the case may be, and in form and
substance satisfactory to Xxxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters, in the form
set forth in Exhibit D hereto.
(d) You shall have received from BDO Xxxxxxx, LLP letters dated, respectively, the date
of this Agreement, the time of purchase and, if applicable, the additional time of purchase,
and addressed to the Underwriters (with executed copies for the Underwriters) in the forms
approved by UBS.
(e) You shall have received at the time of purchase and, if applicable, at the
additional time of purchase, the favorable opinion of Xxxxxxxx & Xxxxxxxx LLP, counsel for
the Underwriters, dated the time of purchase or the additional time of purchase, as the case
may be, in form and substance reasonably satisfactory to UBS.
(f) No Prospectus or amendment or supplement to the Registration Statement or the
Prospectus, including documents deemed to be incorporated by reference therein, shall have
been filed to which you reasonably object in writing.
(g) If Rule 430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act at or before 5:30 P.M., New York City time,
on the second full business day after the date of this Agreement and any registration
statement pursuant to Rule 462(b) under the Act required in connection with the offering and
sale of the Shares shall have been filed and become effective no later than 10:00 P.M., New
York City time, on the date of this Agreement.
(h) Prior to the time of purchase, and, if applicable, the additional time of
20
purchase, (i) no stop order with respect to the effectiveness of the Registration
Statement shall have been issued under the Act or proceedings initiated under Section 8(d)
or 8(e) of the Act; (ii) the Registration Statement and all amendments thereto shall 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 not misleading; and (iii) the
Prospectus and all amendments or supplements thereto shall 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
are made, not misleading.
(i) Between the time of execution of this Agreement and the time of purchase or the
additional time of purchase, as the case may be, (A) no material adverse change or any
development involving a prospective material adverse change in the business, properties,
management, financial condition or results of operations of the Company and its Subsidiaries
taken as a whole shall occur or become known and (B) no transaction which is material and
adverse to the Company has been entered into by the Company or any Subsidiary.
(j) The Company will, at the time of purchase and, if applicable, at the additional
time of purchase, deliver to you a certificate of its Chief Executive Officer and its Chief
Financial Officer, dated the time of purchase or the additional time of purchase, as the
case may be, in the form attached as Exhibit E hereto.
(k) You shall have received each of the signed Lock-Up Agreements referred to in
Section 3(r) hereof, and each such Lock-Up Agreement shall be in full force and effect at
the time of purchase and the additional time of purchase, as the case may be.
(l) The Company shall have furnished to you such other documents and certificates as to
the accuracy and completeness of any statement in the Registration Statement or the
Prospectus as of the time of purchase and, if applicable, the additional time of purchase,
as you may reasonably request.
(m) The Shares shall have been approved for quotation on the NASDAQ, subject only to
notice of issuance at or prior to the time of purchase or the additional time of purchase,
as the case may be.
(n) The NASD shall not have raised any objection with respect to the fairness or
reasonableness of the underwriting, or other arrangements of the transactions, contemplated
hereby.
7. Effective Date of Agreement; Termination. This Agreement shall become effective
(i) if Rule 430A under the Act is not used, when you shall have received notification of the
effectiveness of the Registration Statement, or (ii) if Rule 430A under the Act is used, when the
parties hereto have executed and delivered this Agreement.
The obligations of the Underwriters hereunder shall be subject to termination in
21
the absolute discretion of UBS, if (x) since the time of execution of this Agreement or the earlier
respective dates as of which information is given in the Registration Statement and the Prospectus,
there has been any material adverse change or any development involving a prospective material
adverse change in the business, properties, management, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole, which would, in UBS’s judgment,
make it impracticable or inadvisable to proceed with the public offering or the delivery of the
Shares on the terms and in the manner contemplated in the Registration Statement and the
Prospectus, or (y) since the time of execution of this Agreement, there shall have occurred: (i) a
suspension or material limitation in trading in securities generally on the NYSE, the American
Stock Exchange or the NASDAQ; (ii) a suspension or material limitation in trading in the Company’s
securities on the NASDAQ; (iii) a general moratorium on commercial banking activities declared by
either federal or New York State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; (iv) an outbreak or escalation of
hostilities or acts of terrorism involving the United States or a declaration by the United States
of a national emergency or war; or (v) any other calamity or crisis or any change in financial,
political or economic conditions in the United States or elsewhere, if the effect of any such event
specified in clause (iv) or (v) in UBS’s judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares on the terms and in the manner contemplated
in the Registration Statement and the Prospectus, or (z) since the time of execution of this
Agreement, there shall have occurred any downgrading, or any notice or announcement shall have been
given or made of (i) any intended or potential downgrading or (ii) any watch, review or possible
change that does not indicate an affirmation or improvement in the rating accorded any securities
of or guaranteed by the Company or any Subsidiary by any “nationally recognized statistical rating
organization,” as that term is defined in Rule 436(g)(2) under the Act.
If UBS elects to terminate this Agreement as provided in this Section 7, the Company and each
other Underwriter shall be notified promptly in writing.
If the sale to the Underwriters of the Shares, as contemplated by this Agreement, is not
carried out by the Underwriters for any reason permitted under this Agreement, or if such sale is
not carried out because the Company shall be unable to comply with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this Agreement (except
to the extent provided in Sections 4(n), 5 and 9 hereof), and the Underwriters shall be under no
obligation or liability to the Company under this Agreement (except to the extent provided in
Section 9 hereof) or to one another hereunder.
8. Increase in Underwriters’ Commitments. Subject to Sections 6 and 7 hereof, if any
Underwriter shall default in its obligation to take up and pay for the Firm Shares to be purchased
by it hereunder (otherwise than for a failure of a condition set forth in Section 6 hereof or a
reason sufficient to justify the termination of this Agreement under the provisions of Section 7
hereof) and if the number of Firm Shares which all Underwriters so defaulting shall have agreed but
failed to take up and pay for does not exceed 10% of the total number of Firm Shares, the
non-defaulting Underwriters shall take up and pay for (in addition to the aggregate number of Firm
Shares they are obligated to purchase pursuant to Section 1 hereof) the number of Firm Shares
agreed to be purchased by all such defaulting Underwriters, as hereinafter provided. Such
22
Shares shall be taken up and paid for by such non-defaulting Underwriters in such amount or
amounts as you may designate with the consent of each Underwriter so designated or, in the event no
such designation is made, such Shares shall be taken up and paid for by all non-defaulting
Underwriters pro rata in proportion to the aggregate number of Firm Shares set forth opposite the
names of such non-defaulting Underwriters in Schedule A.
Without relieving any defaulting Underwriter from its obligations hereunder, the Company
agrees with the non-defaulting Underwriters that it will not sell any Firm Shares hereunder unless
all of the Firm Shares are purchased by the Underwriters (or by substituted Underwriters selected
by you with the approval of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the Underwriters or by the Company for
a defaulting Underwriter or Underwriters in accordance with the foregoing provision, the Company or
you shall have the right to postpone the time of purchase for a period not exceeding five business
days in order that any necessary changes in the Registration Statement and the Prospectus and other
documents may be effected.
The term “Underwriter” as used in this Agreement shall refer to and include any Underwriter
substituted under this Section 8 with like effect as if such substituted Underwriter had originally
been named in Schedule A hereto.
If the aggregate number of Firm Shares which the defaulting Underwriter or Underwriters agreed
to purchase exceeds 10% of the total number of Firm Shares which all Underwriters agreed to
purchase hereunder, and if neither the non-defaulting Underwriters nor the Company shall make
arrangements within the five business day period stated above for the purchase of all the Firm
Shares which the defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall terminate without further act or deed and without any liability on the part of the
Company to any non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company. Nothing in this paragraph, and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless each Underwriter, its
partners, directors and officers, and any person who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and
assigns of all of the foregoing persons, from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which, jointly or
severally, any such Underwriter or any such person may incur under the Act, the Exchange
Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim
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 in the Registration Statement as
amended by any post-effective amendment thereof by the Company) or in a Prospectus (the term
Prospectus for the purpose of this Section 9 being
23
deemed to include any Preliminary Prospectus, the Prospectus and the Prospectus as
amended or supplemented by the Company), or arises out of or is based upon any omission or
alleged omission to state a material fact required to be stated in either such Registration
Statement or such Prospectus or necessary to make the statements made therein not
misleading, except insofar as any such loss, damage, expense, liability or claim arises out
of or is based upon any untrue statement or alleged untrue statement of a material fact
contained in, and in conformity with information concerning such Underwriter furnished in
writing by or on behalf of such Underwriter through you to the Company expressly for use in,
such Registration Statement or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such information
required to be stated in such Registration Statement or such Prospectus or necessary to make
such information not misleading, (ii) any untrue statement or alleged untrue statement made
by the Company in Section 3 hereof or the failure by the Company to perform when and as
required any agreement or covenant contained herein, or (iii) any untrue statement or
alleged untrue statement of any material fact contained in any audio or visual materials
provided by the Company or based upon written information furnished by or on behalf of the
Company including, without limitation, slides, videos, films or tape recordings used in
connection with the marketing of the Shares.
If any action, suit or proceeding (each, a “Proceeding”) is brought against an
Underwriter or any such person in respect of which indemnity may be sought against the
Company pursuant to the foregoing paragraph, such Underwriter or such person shall promptly
notify the Company in writing of the institution of such Proceeding and the Company shall
assume the defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses;
provided, however, that the omission to so notify the Company shall not
relieve the Company from any liability which the Company may have to any Underwriter or any
such person or otherwise except to the extent the company is materially prejudiced by such
omission. Such Underwriter or such person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at the expense
of such Underwriter or of such person unless the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of such Proceeding or
the Company shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense of such Proceeding or such
indemnified party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from, additional to or in conflict with those
available to the Company (in which case the Company shall not have the right to direct the
defense of such Proceeding on behalf of the indemnified party or parties), in any of which
events such fees and expenses shall be borne by the Company and paid as incurred (it being
understood, however, that the Company shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified parties who are
parties to such Proceeding). The Company shall not be liable for any settlement of any
Proceeding effected without its written consent but, if settled with the written consent of
the Company, the Company agrees to indemnify and
24
hold harmless any Underwriter and any such person from and against any loss or
liability by reason of such settlement. 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 sentence of
this paragraph, then 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 business days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have fully reimbursed the
indemnified party in accordance with such request prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying party at least 30 days’ prior
notice of its intention to settle. 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 and does not include an admission of fault or
culpability or a failure to act by or on behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and hold harmless the
Company, its directors and officers, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and
assigns of all of the foregoing persons, from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which, jointly or
severally, the Company or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability or claim arises
out of or is based upon any untrue statement or alleged untrue statement of a material fact
contained in, and in conformity with information concerning such Underwriter furnished in
writing by or on behalf of such Underwriter through you to the Company expressly for use in,
the Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Company) or in a Prospectus, or arises out of or is
based upon any omission or alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement or such Prospectus or
necessary to make such information not misleading.
If any Proceeding is brought against the Company or any such person in respect of which
indemnity may be sought against any Underwriter pursuant to the foregoing paragraph, the
Company or such person shall promptly notify such Underwriter in writing of the institution
of such Proceeding and such Underwriter shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such Underwriter shall not relieve such Underwriter from any liability which such
Underwriter may have to the Company or any such person or otherwise. The Company or such
person shall have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the
25
Company or such person unless the employment of such counsel shall have been authorized
in writing by such Underwriter in connection with the defense of such Proceeding or such
Underwriter shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to defend such Proceeding or such indemnified party or
parties shall have reasonably concluded that there may be defenses available to it or them
which are different from or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the right to direct the defense
of such Proceeding on behalf of the indemnified party or parties, but such Underwriter may
employ counsel and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), in any of which events such fees and
expenses shall be borne by such Underwriter and paid as incurred (it being understood,
however, that such Underwriter shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified parties who are
parties to such Proceeding). No Underwriter shall be liable for any settlement of any such
Proceeding effected without the written consent of such Underwriter but, if settled with the
written consent of such Underwriter, such Underwriter agrees to indemnify and hold harmless
the Company and any such person from and against any loss or liability by reason of such
settlement. 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 sentence of this paragraph, then 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
business days after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such indemnified party shall have
given the indemnifying party at least 30 days’ prior notice of its intention to settle. 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.
(c) If the indemnification provided for in this Section 9 is unavailable to an
indemnified party under subsections (a) and (b) of this Section 9 or insufficient to hold an
indemnified party harmless in respect of any losses, damages, expenses, liabilities or
claims referred to therein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such losses, damages,
expenses, liabilities or claims (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 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
Company on the one hand and of the Underwriters on the other in connection with the
26
statements or omissions which resulted in such losses, damages, expenses, liabilities
or claims, 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 shall be deemed to
be in the same respective proportions as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received by the
Company, and the total underwriting discounts and commissions received by the Underwriters,
bear to the aggregate public offering price of the Shares. The relative fault of the
Company on the one hand and of the Underwriters on the other shall be determined by
reference to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission 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 amount
paid or payable by a party as a result of the losses, damages, expenses, liabilities and
claims referred to in this subsection shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with investigating, preparing to
defend or defending any Proceeding.
(d) The Company and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 9 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
subsection (c) above. Notwithstanding the provisions of this Section 9, 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 such Underwriter and distributed to the public were
offered to the public exceeds the amount of any damage which such Underwriter has otherwise
been required to pay by reason of such untrue statement or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 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 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this Section 9 and the
covenants, warranties and representations of the Company contained in this Agreement shall
remain in full force and effect regardless of any investigation made by or on behalf of any
Underwriter, its partners, directors or officers or any person (including each partner,
officer or director of such person) who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of the Company,
its directors or officers or any person who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and shall survive any termination
of this Agreement or the issuance and delivery of the Shares. The Company and each
Underwriter agree promptly to notify each other of the commencement of any Proceeding
against it and, in the case of the Company, against any of the Company’s officers or
directors in connection with the issuance and sale of the Shares, or in connection with the
Registration Statement or the Prospectus.
27
10. Information Furnished by the Underwriters. The statements set forth in the last
paragraph on the cover page of the Prospectus and the statements set forth in the subsection
entitled “Price Stabilization, Short Position” under the caption “Underwriting” in the Prospectus,
only insofar as such statements relate to the amount of selling concession and reallowance or to
over-allotment and stabilization activities that may be undertaken by the Underwriters, constitute
the only information furnished by or on behalf of the Underwriters as such information is referred
to in Sections 3 and 8 hereof.
11. Notices. Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by telegram or facsimile and, if to the Underwriters, shall
be sufficient in all respects if delivered or sent to UBS Securities LLC, 000 Xxxx Xxxxxx, Xxx
Xxxx, XX 00000-0000, Attention: Syndicate Department and, if to the Company, shall be sufficient in
all respects if delivered or sent to the Company at the offices of the Company at Hythiam, Inc.,
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000, Attention: Xxxxxx X. Xxxxxx, Chief
Executive Officer and Chairman of the Board.
12. Governing Law; Construction. This Agreement and any claim, counterclaim or
dispute of any kind or nature whatsoever arising out of or in any way relating to this Agreement
(“Claim”), directly or indirectly, shall be governed by, and construed in accordance with,
the laws of the State of New York. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
13. Submission to Jurisdiction. Except as set forth below, no Claim may be commenced,
prosecuted or continued in any court other than the courts of the State of New York located in the
City and County of New York or in the United States District Court for the Southern District of New
York, which courts shall have jurisdiction over the adjudication of such matters, and the Company
consents to the jurisdiction of such courts and personal service with respect thereto. The Company
hereby consents to personal jurisdiction, service and venue in any court in which any Claim arising
out of or in any way relating to this Agreement is brought by any third party against any
Underwriter or any indemnified party. Each Underwriter and the Company (on its behalf and, to the
extent permitted by applicable law, on behalf of its stockholders and affiliates) waive all right
to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or
otherwise) in any way arising out of or relating to this Agreement. The Company agrees that a
final judgment in any such action, proceeding or counterclaim brought in any such court shall be
conclusive and binding upon the Company and may be enforced in any other courts to the jurisdiction
of which the Company is or may be subject, by suit upon such judgment.
14. Parties at Interest. The Agreement herein set forth has been and is made solely
for the benefit of the Underwriters and the Company and to the extent provided in Section 9 hereof
the controlling persons, partners, directors and officers referred to in such Section, and their
respective successors, assigns, heirs, personal representatives and executors and administrators.
No other person, partnership, association or corporation (including a purchaser, as such purchaser,
from the Underwriters) shall acquire or have any right under or by virtue of this Agreement.
28
The Company hereby acknowledges that the each Underwriters is acting solely as an underwriter
in connection with the purchase and sale of the Company’s securities. The Company further
acknowledges that the Underwriters are acting pursuant to a contractual relationship created solely
by this Underwriting Agreement entered into on an arm’s length basis and in no event do the parties
intend that the Underwriters act or be responsible as fiduciaries to the Company, its management,
stockholders, creditors, or any other person in connection with any activity that the Underwriters
may undertake or has undertaken in furtherance of the purchase and sale of the Company’s
securities, either before or after the date hereof. The Underwriters hereby expressly disclaim any
fiduciary or similar obligations to the Company, either in connection with the transactions
contemplated by this Underwriting Agreement or any matters leading up to such transactions, and the
Company hereby confirms its understanding and agreement to that effect. The Company and the
Underwriters agree that they are each responsible for making their own independent judgments with
respect to any such transactions, and that any opinions or views expressed by the Underwriters to
the Company regarding such transactions, including but not limited to any opinions or views with
respect to the price or market for the Company’s securities, do not constitute advice or
recommendations to the Company. The Company hereby waives and releases, to the fullest extent
permitted by law, any claims that the Company may have against the Underwriters with respect to any
breach or alleged breach of any fiduciary or similar duty to the Company in connection with the
transactions contemplated by this Underwriting Agreement or any matters leading up to such
transactions.
15. Counterparts. This Agreement may be signed by the parties in one or more
counterparts which together shall constitute one and the same agreement among the parties.
16. Successors and Assigns. This Agreement shall be binding upon the Underwriters and
the Company and their successors and assigns and any successor or assign of any substantial portion
of the Company’s and any of the Underwriters’ respective businesses and/or assets.
17. Miscellaneous. UBS, an indirect, wholly owned subsidiary of UBS AG, is not a bank
and is separate from any affiliated bank, including any U.S. branch or agency of UBS AG. Because
UBS is a separately incorporated entity, it is solely responsible for its own contractual
obligations and commitments, including obligations with respect to sales and purchases of
securities. Securities sold, offered or recommended by UBS are not deposits, are not insured by
the Federal Deposit Insurance Corporation, are not guaranteed by a branch or agency, and are not
otherwise an obligation or responsibility of a branch or agency.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
29
If the foregoing correctly sets forth the understanding between the Company and the
Underwriters, please so indicate in the space provided below for that purpose, whereupon this
Agreement and your acceptance shall constitute a binding agreement between the Company and the
Underwriters.
| Very truly yours, HYTHIAM, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
30
Accepted and agreed to as of the date
first above written, on behalf of
itself and the other several
Underwriters named in Schedule A
UBS Securities LLC
First Albany Capital
First Albany Capital
By: UBS Securities LLC
By: |
||||
| Title: | ||||
By: |
||||
| Name: |
||||
| Title: |
31
EXHIBIT A
Lock-Up Agreement
October ___, 2005
UBS Securities LLC
Together with the other Underwriter
named in Schedule A to the Underwriting Agreement
referred to herein
Together with the other Underwriter
named in Schedule A to the Underwriting Agreement
referred to herein
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
This Lock-Up Agreement is being delivered to you in connection with the proposed Underwriting
Agreement (the “Underwriting Agreement”) to be entered into by Hythiam, Inc., a Delaware
corporation (the “Company”), and you, with respect to the public offering (the
“Offering”) of common stock, par value $.0001 per share, of the Company (the “Common
Stock”).
In order to induce you to enter into the Underwriting Agreement, the undersigned agrees that,
for a period (the “Lock-Up Period”) beginning on the date hereof and ending on, and
including, the date that is 90 days after the date of the final prospectus relating to the
Offering, the undersigned will not, without the prior written consent of UBS Securities LLC, (i)
sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase
or otherwise dispose of or agree to dispose of, directly or indirectly, or file (or participate in
the filing of) a registration statement with the Securities and Exchange Commission (the
“Commission”) in respect of, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated
thereunder (the “Exchange Act”) with respect to, any Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or warrants or other rights to
purchase Common Stock or any such securities, (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 Common
Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or
warrants or other rights to purchase Common Stock or any such securities, whether any such
transaction is to be settled by delivery of Common Stock or such other securities, in cash or
otherwise or (iii) publicly announce an intention to effect any transaction specified in clause (i)
or (ii). The foregoing sentence shall not apply to (a) the registration of or sale to the
Underwriters (as defined in the Underwriting Agreement) of any Common Stock pursuant to the
Offering and the Underwriting Agreement, (b) bona fide gifts, provided the recipient thereof agrees
in writing with the Underwriters to be bound by the terms of this Lock-Up Agreement or (c)
dispositions to
A-1
any trust for the direct or indirect benefit of the undersigned and/or the immediate family of the
undersigned, provided that such trust agrees in writing with the Underwriters to be bound by the
terms of this Lock-Up Agreement. For purposes of this paragraph, “immediate family” shall mean the
undersigned and the spouse, any lineal descendent, father, mother, brother or sister of the
undersigned.
In addition, the undersigned hereby waives any rights the undersigned may have to require
registration of Common Stock in connection with the filing of a registration statement relating to
the Offering. The undersigned further agrees that, for the Lock-Up Period, the undersigned will
not, without the prior written consent of UBS Securities LLC, make any demand for, or exercise any
right with respect to, the registration of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or warrants or other rights to purchase Common Stock
or any such securities.
Notwithstanding the above, if (a) during the period that begins on the date that is fifteen
(15) calendar days plus three (3) business days before the last day of the Lock-Up Period and ends
on the last day 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 sixteen (16) day
period beginning on the last day of the Lock-Up Period, then the restrictions imposed by this
Lock-Up Agreement shall continue to apply until the expiration of the date that is fifteen (15)
calendar days plus three (3) business days after the date on which the issuance of the earnings
release or the material news or material event occurs;
The undersigned hereby confirms that the undersigned has not, directly or indirectly, taken,
and hereby covenants that the undersigned will not, directly or indirectly, take, any action
designed, or which has constituted or will constitute or might reasonably be expected to cause or
result in, under the Exchange Act or otherwise, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of shares of Common Stock.
* * *
A-2
If (i) the Company notifies you in writing that it does not intend to proceed with the
Offering, (ii) the registration statement filed with the Commission with respect to the Offering is
withdrawn or (iii) for any reason the Underwriting Agreement shall be terminated prior to the “time
of purchase” (as defined in the Underwriting Agreement), this Lock-Up Agreement shall be terminated
and the undersigned shall be released from its obligations hereunder.
| Yours very truly, |
||||
| Name: | ||||
X-0
XXXXXXX X-0
LIST OF ADDITIONAL PARTIES TO EXECUTE LOCK-UP AGREEMENTS
| Name | Position | |
1. [___]
|
[___] | |
2. [___]
|
[___] | |
3. [___]
|
[___] | |
4. [___]
|
[___] | |
5. [___]
|
[___] | |
6. [___]
|
[___] | |
7. [___]
|
[___] | |
8. [___]
|
[___] | |
9. [___]
|
[___] | |
10. [___]
|
[___] | |
11. [___]
|
[___] | |
12. [___]
|
[___] | |
13. [___]
|
[___] | |
14. [___]
|
[___] | |
15. [___]
|
[___] | |
16. [___]
|
[___] | |
17. [___]
|
[___] | |
18. [___]
|
[___] |
A-4
EXHIBIT B
OPINION OF XXXXXXXXX XXXXXXX, LLP
October [ ], 2005
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
| 1. | The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with full corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement and the Prospectus, to execute and deliver the Underwriting Agreement and to perform its obligations thereunder, including, without limitation, to issue, sell and deliver the Shares as contemplated by the Underwriting Agreement. |
| 2. | Each of the Subsidiaries have been duly incorporated and are validly existing as a corporation in good standing under the laws of its respective jurisdiction of incorporation, with full corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus. |
| 3. | The Company and its Subsidiaries are each duly qualified to do business as a foreign corporation and are in good standing in each jurisdiction where the ownership or leasing of their respective properties or the conduct of their respective businesses requires such qualification, except where the failure to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect. |
| 4. | The Underwriting Agreement has been duly authorized, executed and delivered by the Company. |
| 5. | The Registration Statement has become effective under the Act. With your consent, based solely on a telephonic confirmation by a member of the Staff of the Commission on the date hereof, no stop order suspending the effectiveness of the Registration Statement has been issued under the Act and no proceedings therefor have been initiated by the Commission. Any required filing of the Prospectus and any supplement thereto pursuant to Rule 424 under the Act has been made in the manner and within the time period required by such Rule 424 and in the manner and within the time period required by Rule 430A under the Act. |
| 6. | The Registration Statement, as of the date it was declared effective, and the Prospectus, as of its date, complied as to form in all material respects with the requirements for registration statements on Form S-3 under the Act and the rules and regulations of the Commission thereunder; it being understood, however, that we express no opinion with respect to Regulation S-T or the financial statements, schedules, or other financial data, included in, |
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| incorporated by reference in, or omitted from, the Registration Statement or the Prospectus. In passing upon the compliance as to form of the Registration Statement and the Prospectus, we have assumed that the statements made therein are correct and complete. |
| 7. | The Shares to be issued and sold by the Company pursuant to the Underwriting Agreement have been duly authorized by all necessary corporate action of the Company and, when issued to and paid for by you and the other Underwriters in accordance with the terms of the Underwriting Agreement, will be validly issued, fully paid and non-assessable and free of preemptive rights arising from the Governing Documents and, to our knowledge, contractual preemptive rights. |
| 8. | The execution, delivery and performance of the Underwriting Agreement have been duly authorized by all necessary corporate action of the Company, and the Underwriting Agreement has been duly executed and delivered by the Company. |
| 9. | The execution and delivery of the Underwriting Agreement and the issuance and sale of the Shares by the Company to you and the other Underwriters pursuant to the Underwriting Agreement on the date hereof do not: |
| (i) | violate the Company’s Governing Documents; or |
||
| (ii) | result in the breach of or a default under any of the Material Agreements; or | ||
| (iii) | violate any federal rule or regulation or the Delaware General Corporate Law or Court Order applicable to the Company; or | ||
| (iv) | require any consents, approvals, or authorization to be obtained by the Company, or any registrations, declarations or filings to be made by the Company, in each case, under any federal rule or regulation or the Delaware General Corporate Law applicable to the Company that have not been obtained or made, other than consents relating to the Lock-Up agreements listed on Exhibit A to the Underwriting Agreement. |
| 10. | With your consent based solely on a certificate of an officer of the Company as to factual matters, the Company is not, and immediately after giving effect to the sale of the Shares in accordance with the Underwriting Agreement and the application of the proceeds as described in the Prospectus under the caption “Use of Proceeds,” will not be required to be registered as an “investment company” within the meaning of the Investment Company Act of 1940, as amended. |
| 11. | To our knowledge, neither the Company nor the Subsidiary is in breach or violation of or in default under (nor has any event occurred which with notice, lapse of time, or both would result in any breach or violation of, or constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) (i) the charter or bylaws of the Company or any Subsidiary, or (ii) any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or any of their respective properties may be bound or affected, which individually or in the aggregate would have a Material Adverse Effect or (iii) any federal, state, local or foreign law, regulation or rule, or (iv) any rule or regulation of any self-regulatory |
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| organization or other non-governmental regulatory authority (including, without limitation, the rules and regulations of the NASDAQ) or (iv) any decree, judgment or order applicable to the Company or any Subsidiary or any of their respective properties. |
| 12. | To our knowledge, (i) the Company is not a party to any legal or governmental action or proceeding that challenges the validity or enforceability, or seeks to enjoin the performance, of the Underwriting Agreement; and (ii) there are no actions, suits, claims, investigations or proceedings pending, threatened or contemplated to which the Company or any Subsidiary or any of their respective directors or officers is or would be a party or to which any of their respective properties is or would be subject at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency which are required to be described in the Registration Statement or the Prospectus but are not so described as required. |
| 13. | The statements in the Registration Statement and the Prospectus under the headings “Prospectus Summary”, “Prospectus Summary Supplement”, and “Description of Common Stock,” insofar as such statements constitute summaries of documents or legal proceedings or refer to matters of law or legal conclusions, and those statements in the Registration Statement or the Prospectus that are descriptions of contracts, agreements or other legal documents or of legal proceedings, or refer to statements of law or legal conclusions, at the time such Registration Statement became effective, as of the date of the Prospectus, and as of the date hereof, are accurate and complete in all material respects and present fairly the information purported to be shown. |
| 14. | The Company has an authorized capitalization as set forth in the Prospectus under the heading “Capitalization”; all the outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; the capital stock of the Company conforms in all material respects to the description thereof contained in the Registration Statement and the Prospectus; and all the outstanding shares of capital stock or other equity interests of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable (except, in the case of any foreign subsidiary, for directors’ qualifying shares and except as otherwise described in the Prospectus. |
| 15. | To the best of our knowledge, (i) there are no legal or governmental proceedings pending relating to trade secrets, trademarks, service marks, copyrights or other proprietary information or materials of the Company or any of the Subsidiaries, and (ii) no such proceedings are threatened or contemplated by governmental authorities or others. |
| 16. | We do not know of any contracts or other documents, relating to the trade secrets, trademarks, service marks or other proprietary information or materials of the Company or any of the Subsidiaries that is of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement which have not been so described or filed as required. |
| 17. | To the best of our knowledge which is not based on any search or investigation, (i) neither |
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| the Company nor any of the Subsidiaries is infringing or otherwise violating, and, upon the commercialization and sale of the product candidates of the Company described in the Registration Statement or Prospectus neither of them would infringe or otherwise violate, trade secrets, trademarks, service marks, copyrights or other proprietary information or materials of others, and we are unaware of any facts which would form a reasonable basis for a claim of any such infringement, and (ii) there are no infringements by others of any of the trade secrets, trademarks, service marks, copyrights or other proprietary information or materials of the Company or any of the Subsidiaries, and we are unaware of any facts which would form a reasonable basis for a claim of any such infringement. |
| 18. | We are unaware of any facts which form a basis for a finding of unenforceability or invalidity of any of the other material intellectual property and assets of the Company or any of the Subsidiaries. |
| 19. | We have participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants of the Company and representatives of the Underwriter at which the contents of the Registration Statement and the Prospectus were discussed and, although we are not passing upon and do not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus on the basis of the foregoing, nothing has come to our attention that causes us to believe that the Registration Statement or any amendment thereto, at the time such Registration Statement or amendment became effective, or as of the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus or any supplement thereto, as of the date of such Prospectus or such supplement, or as of the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that we express no opinion with respect to the financial statements and schedules, and other financial data derived therefrom, included in the Registration Statement or the Prospectus). |
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XXXXXXX X
XXXXXXX XX XXXXXXXXXX XXXXXXXX XXX
October [ ], 2005
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
| 1. | We serve as special counsel to the Company with respect to patents. |
| 2. | To the best of our knowledge, the statements included in the Registration Statement and the Prospectus under the captions “Prospectus Summary- Our Business- Our Solution:PROMETA” and under the captions “Risk Factors – We may not be able to adequately protect our other intellectual property rights, which could limit our ability to compete” and “Risk Factors – We may be subject to claims that we infringe the intellectual property rights of others, and unfavorable outcomes could harm our business” relating to patents rights (collectively, the “Patent Information”), at the time such Registration Statement became effective, as of the date of the Prospectus and as of the date hereof, are accurate and complete, insofar as such statements in the above-mentioned sections of such Registration Statement or any amendment thereto constitute matters of United States patent law or legal conclusions thereunder, in all material respects and present fairly the information purported to be shown; nothing has come to our attention that causes us to believe that the Patent Information included or incorporated by reference in the Registration Statement, at the time such Registration Statement became effective, or as of the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Patent Information included in the Prospectus, as of the date of such Prospectus, or as of the date hereof, contained or contains an untrue statement of material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. |
| 3. | To the best of our knowledge, (i) there are no legal or governmental proceedings pending relating to patent rights, except for ongoing prosecution of the Company’s patent applications of the Company or any of the Subsidiaries, and (ii) no such proceedings are threatened or contemplated by governmental authorities or others. |
| 4. | We do not know of any contracts or other documents, relating to the patents of the Company or any of the Subsidiaries that is of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement which have not been so described or filed as required. |
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| 5. | To the best of our knowledge, which is not based on any search or investigation, (i) neither the Company nor any of the Subsidiaries is infringing or otherwise violating, and, upon the commercialization and sale of the product candidates of the Company described in the Registration Statement or Prospectus, neither of them would infringe or otherwise violate, any patents of others, and we are unaware of any facts which would form a reasonable basis for a claim of any such infringement, and (ii) there are no infringements by others of any of the patents of the Company or any of the Subsidiaries, and we are unaware of any facts which would form a reasonable basis for a claim of any such infringement. |
| 6. | We have no knowledge of any facts which would preclude the Company or any of the Subsidiaries from having valid license rights or clear title to the patents referenced in the Registration Statement and the Prospectus; and we are unaware of any facts which form a basis for a finding of unenforceability or invalidity of any of the patents of the Company or any of the Subsidiaries. |
| 7. | We are not aware of any fact with respect to the patent applications of the Company or any of the Subsidiaries presently on file that (i) would preclude the issuance of patents with respect to such applications, (ii) would lead us to conclude that such patents, when and if issued, would not be valid and enforceable in accordance with applicable regulations or (iii) would result in a third party having any rights in any patents issuing from such patent applications. |
Capitalized terms used herein without definition shall have the respective meanings ascribed to
them in the Underwriting Agreement.
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EXHIBIT D
OPINION OF XXXXX & XXXXXXX LLP
October [ ], 2005
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
This letter is furnished to you pursuant to Section 6(b) of the Underwriting Agreement dated
, 2005 (the “Underwriting Agreement”) between you and Hythiam, Inc. (the “Company”),
relating to the issuance and sale by the Company of ordinary shares of the Company (the
“Shares”) pursuant to the terms of the Underwriting Agreement.
This firm has acted in the limited role of regulatory counsel to the Company with respect to
U.S. Food and Drug Administration (“FDA”), healthcare fraud and abuse, certain Medicare, Medicaid
and third-party reimbursement matters, and certain health information privacy matters. In such
capacity, we have reviewed certain information under the following captions (the “Reviewed
Captions”) in the Company’s preliminary Prospectus Supplement dated , 2005 (the
“Prospectus Supplement”), forming a part of the Company’s Registration Statement on Form S-3, as
amended (Registration No. ):
“Risk Factors – The healthcare industry in which we operate is subject to substantial
regulation by state and federal authorities, which could hinder, delay or prevent us from
commercializing our protocols,”
“Risk Factors – We may be subject to regulatory and investigative proceedings, which may find
that our policies and procedures do not fully comply with complex and changing healthcare
regulations,”
“Risk Factors – The promotion of our protocols may be found to violate federal law concerning
“off-label” uses of prescription drugs, which could prevent us from marketing our protocols,”
“Risk Factors – Treatment using our protocols may be found to require review or approval,
which could delay or prevent the study or use of our protocols,”
“Risk Factors – Our business practices may be found to violate anti-kickback, self-referral or
false claims laws, which may lead to penalties and adversely affect our business,”
“Risk Factors –We may be subject to healthcare anti-fraud initiatives, which may lead to
penalties and adversely affect our business,”
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“Risk Factors – Our use and disclosure of patient information is subject to privacy
regulations, which may result in increased costs.”
We have not been retained or engaged by the Company to perform, nor have we performed, any
review of any other information in the Prospectus Supplement for purposes of this letter.
Additionally, we have not been retained or engaged to provide advice in respect of United States
securities laws or the rules or regulations of the Commission thereunder (the “Rules”), nor have we
been retained or engaged by the Company to provide advice as to whether any information or any
statement, opinion or other writing is required under the United States securities laws or the
Rules to be filed with or submitted to, or incorporated into any document that will be filed with
or submitted to, the Commission, and the matters addressed in this letter should not be construed
as such advice. Terms used in this letter that are defined in the Underwriting Agreement shall
have the respective meanings set forth in the Underwriting Agreement, unless otherwise defined in
this letter.
For purposes of our opinion, we have examined the information contained in the Prospectus
Supplement under the Reviewed Captions and a copy of a certificate of certain officers of the
Company, dated , 2005, as to certain facts relating to the Company (collectively,
“Documents”). In our examination of the Documents, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all originals of the
Documents and the conformity to authentic originals of all of the Documents submitted to us as
copies (including telecopies). Further, for purposes of our opinion, we have not independently
verified nor do we take any responsibility for nor are we addressing in any way any statements of
fact, any statements concerning state or foreign law, any legal conclusions or any statements of
belief attributable to the Company or whether or not the Company is in compliance with applicable
FDA, healthcare or other legal requirements. Our opinion is given in the context of the foregoing.
This opinion is based as to matters of law solely on (i) the Federal Food, Drug, and Cosmetic
Act, as amended (the “FDC Act”), and the regulations promulgated thereunder, (ii) the Medicare and
Medicaid reimbursement and anti-kickback provisions of the Social Security Act, as amended (the
“Social Security Act Provisions”), and the regulations promulgated thereunder, (iii) the federal
Civil False Claims Act, as amended (the “False Claims Act”), and (iv) the portions of the Health
Insurance Portability and Accountability Act of 1996 regulating health information, privacy, and
security, as amended (the “HIPAA Provisions”), and the regulations promulgated thereunder, ((i),
(ii), (iii), and (iv), collectively, the “Regulatory Law”) and we express no view as to any other
laws, statutes, regulations or ordinances, including without limitation any foreign, federal
securities, antitrust, unfair competition, or tax laws or regulations.
Nothing in this letter shall be construed to cause us to be considered “experts” within the
meaning of Section 11 of the Securities Act of 1933, as amended.
Based upon, subject to and limited by the foregoing, we are of the opinion that:
1. The Execution, delivery and performance of the Underwriting Agreement
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by the Company and the issuance and sale of the Shares by the Company and the consummation by the
Company of the transactions contemplated by the Underwriting Agreement do not and will not violate
any provisions of the Regulatory Law, and no approval, authorization, consent, order of or filing
with any public board or body is required pursuant to the Regulatory Law in connection with the
issuance and sale of the Shares or the consummation by the Company of the transactions contemplated
by the Underwriting Agreement.
2. The statements in the Prospectus Supplement under the Reviewed Captions insofar as such
statements purport to summarize applicable provisions of the FDC Act and the regulations
promulgated thereunder, the Social Security Act Provisions and the regulations promulgated
thereunder, the False Claims Act, or the HIPAA Provisions and the regulations promulgated
thereunder, are accurate summaries in all material respects of the provisions purported to be
summarized under such captions in the Prospectus.
We assume no obligation to advise you of any changes in the foregoing subsequent to the
delivery of this letter. This letter has been prepared solely for your use in connection with the
Closing under the Underwriting Agreement on the date hereof, and it should not be quoted in whole
or in part or otherwise be referred to, and neither the letter nor the contents nor any other
communication or document referring to the letter or its contents or any other advice we have given
the Company may be filed with or furnished to the Commission or any governmental agency or other
person or entity, without the prior written consent of this firm.
| Very truly yours, XXXXX & XXXXXXX L.L.P. |
||||
D-3
EXHIBIT E
OFFICERS’ CERTIFICATE
Each of the undersigned, Xxxxxx X. Xxxxxx, President and Chief Executive Officer of Hythiam,
Inc., a Delaware corporation (the “Company”), and Xxxxx Xxxxx, Chief Financial Officer of
the Company, on behalf of the Company, does hereby certify pursuant to Section 6(j) of that certain
Underwriting Agreement dated October [ ], 2005 (the “Underwriting Agreement”) between the
Company and UBS Securities LLC that as of October [ ], 2005:
| 1. | He has reviewed the Registration Statement and the Prospectus. |
| 2. | The representations and warranties of the Company as set forth in the Underwriting Agreement are true and correct as of the date hereof and as if made on the date hereof. |
| 3. | The Company has performed all of its obligations under the Underwriting Agreement as are to be performed at or before the date hereof. |
| 4. | The conditions set forth in paragraphs (h) and (i) of Section 6 of the Underwriting Agreement have been met. |
| 5. | The financial statements and other financial information included or incorporated by reference in the Registration Statement or the Prospectus fairly present the financial condition, results of operations and cash flows of the Company and the Subsidiary as of, and for, the periods therein presented. |
Capitalized terms used herein without definition shall have the respective meanings ascribed
to them in the Underwriting Agreement.
In Witness Whereof, the undersigned have hereunto set their hands on this October [
], 2005.
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | President and Chief Executive Officer | |||
| Name: | Xxxxx Xxxxx | |||
| Title: | Chief Financial Officer | |||
E-1
