Nastech Pharmaceutical Company Inc. 3,250,000 Shares Common Stock ($0.006 par value per Share) Underwriting Agreement
Exhibit 1.1
Nastech Pharmaceutical Company Inc.
3,250,000 Shares
Common Stock
($0.006 par value per Share)
($0.006 par value per Share)
January 17, 2007
January 17, 2007
UBS Securities LLC
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Ladies and Gentlemen:
Nastech Pharmaceutical Company Inc., a Delaware corporation (the “Company”), proposes
to issue and sell to UBS Securities LLC (the “Underwriter,” “you” or
“UBS”), an aggregate of 3,250,000 shares (the “Firm Shares”) of common stock,
$0.006 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 Underwriter the
option to purchase from the Company up to an additional 487,500 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. 333-111324) under the Act (the “first registration statement”). In addition,
the Company has prepared and filed with the Commission, in accordance with the provisions of the
Act, another registration statement on Form S-3 (File No. 333-138088) (the “second registration
statement” and, collectively with the first registration statement, the “registration
statements”). The registration statements incorporate by reference 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”).
Pursuant to Rule 429 under the Act, the second registration statement contains a combined
prospectus to be used in connection with both registration statements. Each registration statement
has become effective under the Act, and, pursuant to Rule 429 under the Act, the second
registration statement, upon its effectiveness under the Act, acted as a post-effective amendment
to the first registration statement.
Except where the context otherwise requires, “Registration Statement,” as used herein,
means the registration statements, as amended at the time of such registration statements’
effectiveness for purposes of Section 11 of the Act, as such section applies to the Underwriter
(the “Effective Time”), including (i) all documents filed as a part thereof or incorporated
or deemed to be incorporated by reference therein, (ii) any information contained or incorporated
by reference in a prospectus filed with the Commission pursuant to Rule 424(b) under the Act, to
the extent such information is deemed, pursuant to Rule 430B or Rule 430C under the Act, to be part
of the registration statements at the Effective Time, and (iii) any registration statement filed to
register the offer and sale of Shares pursuant to Rule 462(b) under the Act.
Except where the context otherwise requires, “Prospectus Supplement,” as used herein,
means the final prospectus supplement, relating to the Shares, 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), in the form furnished by the
Company to you for use by you and by dealers in connection with the offering of the Shares.
Except where the context otherwise requires, “Prospectus,” as used herein, means the
Prospectus Supplement together with the basic prospectus attached to or used with the Prospectus
Supplement.
Except where the context otherwise requires, “Basic Prospectus,” as used herein, means
the basic prospectus included in the Registration Statement at the time the Registration Statement
became effective under the Act.
“Permitted Free Writing Prospectuses,” as used herein, means the documents listed on
Schedule A attached hereto. The Underwriter has not offered or sold and will not offer or
sell, without the Company’s consent, any Shares by means of any “free writing prospectus” (as
defined in Rule 405 under the Act) that is required to be filed by the Underwriter with the
Commission pursuant to Rule 433 under the Act, other than a Permitted Free Writing Prospectus.
“Disclosure Package,” as used herein, means the Basic Prospectus, together with any
combination of one or more of the Permitted Free Writing Prospectuses, if any.
Any reference herein to the registration statement, the Registration Statement, the Basic
Prospectus, the Prospectus Supplement, the Prospectus or any Permitted Free Writing Prospectus
shall be deemed to refer to and include the documents, if any, incorporated by reference, or deemed
to be incorporated by reference, therein (the “Incorporated Documents”), including, unless
the context otherwise requires, the documents, if any, filed as exhibits to such Incorporated
Documents. Any reference herein to the terms “amend,” “amendment” or
“supplement” with respect to the Registration Statement, the Basic Prospectus, the
Prospectus Supplement, the Prospectus or any Permitted Free Writing 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 Basic Prospectus, the Prospectus
Supplement, the Prospectus or such Permitted Free Writing 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 term “or,” as used herein, is not exclusive.
The Company and the Underwriter 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
Underwriter, and the Underwriter agrees to purchase from the Company, 3,250,000 Firm Shares,
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at a purchase price of $12.65 per Share. The Company is advised by the Underwriter that the
Underwriter intends (i) to make a public offering of the Firm Shares as soon after the
effectiveness of this Agreement as in the Underwriter’s judgment is advisable and (ii) initially to
offer the Firm Shares upon the terms set forth in the Prospectus. The Underwriter may from time to
time increase or decrease the public offering price after the initial public offering to such
extent as the Underwriter may determine.
In addition, the Company hereby grants to the Underwriter the option (the “Over-Allotment
Option”) to purchase, and upon the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Underwriter shall have the right to purchase, from
the Company, 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 Underwriter to the Company for the Firm Shares. The Over-Allotment Option may be
exercised by UBS at any time and from time to time on or before the thirtieth day following the
date of the Prospectus Supplement, by written notice to the Company. Such notice shall set forth
the aggregate number of Additional Shares as to which the Over-Allotment 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 Over-Allotment Option shall
have been exercised nor later than the tenth business day after the date on which the
Over-Allotment Option shall have been exercised.
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 the Underwriter through the facilities of The Depository Trust Company
(“DTC”) for the account(s) of the Underwriter. Such payment and delivery shall be made at
10:00 A.M., New York City time, on January 23, 2007 (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 and time of day 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 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP 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 Underwriter that:
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(a) the Registration Statement has heretofore become effective under the Act or, with
respect to any registration statement to be filed to register the offer and sale of Shares
pursuant to Rule 462(b) under the Act, will be filed with the Commission and become
effective under the Act no later than 10:00 P.M., New York City time, on the date of
determination of the public offering price for the Shares; no stop order of the Commission
preventing or suspending the use of the Basic Prospectus, the Prospectus Supplement, the
Prospectus or any Permitted Free Writing 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, are contemplated by the Commission;
(b) the Registration Statement complied when it became effective, complies as of the
date hereof and, as amended or supplemented, at the time of purchase, each additional time
of purchase, if any, and at all times during which a prospectus is required by the Act to be
delivered (whether physically or through compliance with Rule 172 under the Act or any
similar rule) in connection with any sale of Shares, will comply, in all material respects,
with the requirements of the Act; the conditions to the use of Form S-3 in connection with
the offering and sale of the Shares as contemplated hereby have been satisfied; the
Registration Statement meets, and the offering and sale of the Shares as contemplated hereby
complies with, the requirements of Rule 415 under the Act (including, without limitation,
Rule 415(a)(5) under the Act); the Registration Statement did not, as of the Effective Time,
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; the Basic
Prospectus complied or will comply, as of its date and the date it was or will be filed with
the Commission, complies as of the date hereof (if filed with the Commission on or prior to
the date hereof) and, at the time of purchase, each additional time of purchase, if any, and
at all times during which a prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any similar rule) in
connection with any sale of Shares, will comply, in all material respects, with the
requirements of the Act; at no time during the period that begins on the earlier of the date
of the Basic Prospectus and the date the Basic Prospectus was filed with the Commission and
ends at the time of purchase did or will the Basic Prospectus, as then amended or
supplemented, include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and at no time during such period did or will
the Basic Prospectus, as then amended or supplemented, together with any combination of one
or more of the then issued Permitted Free Writing Prospectuses, if any, include an untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading; each of the Prospectus Supplement and the Prospectus will comply, as of the date
that it is filed with the Commission, the date of the Prospectus Supplement, the time of
purchase, each additional time of purchase, if any, and at all times during which a
prospectus is required by the Act to be delivered (whether physically or through compliance
with Rule 172 under the Act or any similar rule) in connection with any sale of Shares, in
all material respects, with the requirements of the Act (in the case of the Prospectus,
including,
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without limitation, Section 10(a) of the Act); at no time during the period that begins
on the earlier of the date of the Prospectus Supplement and the date the Prospectus
Supplement is filed with the Commission and ends at the later of the time of purchase, the
latest additional time of purchase, if any, and the end of the period during which a
prospectus is required by the Act to be delivered (whether physically or through compliance
with Rule 172 under the Act or any similar rule) in connection with any sale of Shares did
or will any Prospectus Supplement or the Prospectus, as then amended or supplemented,
include an untrue statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under which they
were made, not misleading; at no time during the period that begins on the date of such
Permitted Free Writing Prospectus and ends at the time of purchase did or will any Permitted
Free Writing Prospectus include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no representation or warranty in this Section 3(b) with respect to
any statement contained in the Registration Statement, the Prospectus or any Permitted Free
Writing Prospectus in reliance upon and in conformity with information concerning the
Underwriter and furnished in writing by the Underwriter to the Company expressly for use in
the Registration Statement, the Prospectus or such Permitted Free Writing Prospectus; each
Incorporated Document, at the time such document was filed, or will be filed, with the
Commission or at the time such document became or becomes effective, as applicable, complied
or will comply, in all material respects, with the requirements of the Exchange Act and did
not or will not, as applicable, include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(c) prior to the execution of this Agreement, the Company has not, directly or
indirectly, offered or sold any Shares by means of any “prospectus” (within the meaning of
the Act) or used any “prospectus” (within the meaning of the Act) in connection with the
offer or sale of the Shares, in each case other than the Basic Prospectus and the Permitted
Free Writing Prospectuses, if any; the Company has not, directly or indirectly, prepared,
used or referred to any Permitted Free Writing Prospectus except in compliance with Rules
164 and 433 under the Act; assuming that such Permitted Free Writing Prospectus is so sent
or given after the Registration Statement was filed with the Commission (and after such
Permitted Free Writing Prospectus was, if required pursuant to Rule 433(d) under the Act,
filed with the Commission), the sending or giving, by the Underwriter, of any Permitted Free
Writing Prospectus will satisfy the provisions of Rule 164 and Rule 433 (without reliance on
subsections (b), (c) and (d) of Rule 164); the conditions set forth in one or more of
subclauses (i) through (iv), inclusive, of Rule 433(b)(1) under the Act are satisfied, and
the registration statement relating to the offering of the Shares contemplated hereby, as
initially filed with the Commission, includes a prospectus that, other than by reason of
Rule 433 or Rule 431 under the Act, satisfies the requirements of Section 10 of the Act;
neither the Company nor the Underwriter is disqualified, by reason of subsection (f) or (g)
of Rule 164 under the Act, from using, in connection with the offer and sale of the Shares,
“free writing
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prospectuses” (as defined in Rule 405 under the Act) pursuant to Rules 164 and 433
under the Act; the Company is not an “ineligible issuer” (as defined in Rule 405 under the
Act) as of the eligibility determination date for purposes of Rules 164 and 433 under the
Act with respect to the offering of the Shares contemplated by the Registration Statement,
without taking into account any determination by the Commission pursuant to Rule 405 under
the Act that it is not necessary under the circumstances that the Company be considered an
“ineligible issuer”; the parties hereto agree and understand that the content of any and all
“road shows” (as defined in Rule 433 under the Act) related to the offering of the Shares
contemplated hereby is solely the property of the Company;
(d) in accordance with Rule 2710(b)(7)(C)(i) of the National Association of Securities
Dealers, Inc. (the “NASD”), the Shares have been registered with the Commission on
Form S-3 under the Act pursuant to the standards for such Form S-3 in effect prior to
October 21, 1992;
(e) as of the date of this Agreement, the Company has an authorized and outstanding
capitalization as set forth in the section of the Prospectus entitled “Capitalization” (and
any similar sections or information, if any, contained in any Permitted Free Writing
Prospectus or Incorporated Document), 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 section of the Prospectus entitled “Capitalization” (and
any similar sections or information, if any, contained in any Permitted Free Writing
Prospectus) (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
(excluding the exhibits thereto), the Basic Prospectus and the Prospectus and the grant of
options under existing stock option plans described in the Registration Statement (excluding
the exhibits thereto), the Basic Prospectus 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 applicable securities laws and were not issued in violation of any
preemptive right, resale right, right of first refusal or similar right; the Shares are duly
listed, and admitted and authorized for trading, subject to official notice of issuance, on
the NASDAQ Global Market (the “NASDAQ”);
(f) 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, the Basic Prospectus, the Prospectus and the Permitted Free
Writing Prospectuses, if any, to execute and deliver this Agreement and to issue, sell and
deliver the Shares as contemplated herein;
(g) 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
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a material adverse effect on the business, properties, financial condition, results of
operations or prospects of the Company and the Subsidiaries (as defined below) 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”);
(h) the Company has no subsidiaries (as defined under the Act) other than Atossa
HealthCare Inc., Nastech Holdings I, LLC and Nastech Holdings II, LLC (the
“Subsidiaries”); the Company owns all of the issued and outstanding capital stock of
each Subsidiary; other than the capital stock of the Subsidiaries, the Company does not own,
directly or indirectly, any shares of stock or any other equity interests or long-term debt
securities of any corporation, 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 to you, and no changes therein
will be made on or after the date hereof through and including the time of purchase or, if
later, any additional time of purchase; each Subsidiary has been duly incorporated or
organized, as the case may be, and is validly existing as a corporation or limited liability
company, as the case may be, 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, the Basic
Prospectus, the Prospectus and the Permitted Free Writing Prospectuses, if any; each
Subsidiary is duly qualified to do business as a foreign corporation or limited liability
company, as the case may be, 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; all of the outstanding
shares of capital stock or other equity interests, as the case may be, 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, 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 any Subsidiary are outstanding; each of Nastech Holdings I, LLC and Nastech Holdings II,
LLC does not own or possess any property or assets, or have any obligations or liabilities,
or possess any rights (by contract, franchise, permit or otherwise) or engage in any
operations that are, individually or in the aggregate, material to the business, properties,
financial condition, results of operations or prospects of the Company and the Subsidiaries
taken as a whole;
(i) 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; the Shares, when issued and
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delivered against payment therefor as provided herein, will be free of any restriction
upon the voting or transfer thereof pursuant to the Delaware General Corporation Law or the
Company’s charter or bylaws or any agreement or other instrument to which the Company is a
party;
(j) the capital stock of the Company, including the Shares, conforms in all material
respects to each description thereof, if any, contained or incorporated by reference in the
Registration Statement, the Basic Prospectus, the Prospectus and the Permitted Free Writing
Prospectuses, if any; and the certificates for the Shares are in due and proper form;
(k) this Agreement has been duly authorized, executed and delivered by the Company;
(l) neither the Company nor any 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, 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
charter or bylaws (or, in the case of a limited liability company, other equivalent
documents), 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 it is a party or by which it or any of its 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 it or any of its properties, except, in the case
of clauses (B) and (E), for any breaches or violations that would not, individually or in
the aggregate, have a Material Adverse Effect;
(m) 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,
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) (A) the charter or bylaws (or other equivalent documents) of the Company or any
Subsidiary, 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;
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(n) 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 (i) registration of the
Shares under the Act, which has been effected (or, with respect to any registration
statement to be filed hereunder pursuant to Rule 462(b) under the Act, will be effected in
accordance herewith), (ii) any necessary qualification under the securities or blue sky laws
of the various jurisdictions in which the Shares are being offered by the Underwriter or
(iii) under the Conduct Rules of the NASD;
(o) except as described in the Registration Statement (excluding the exhibits thereto),
the Basic Prospectus 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; 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;
(p) each of the Company and Subsidiaries has all necessary licenses, authorizations,
consents and approvals and has made all necessary filings required under any applicable law,
regulation or rule, and has obtained all necessary licenses, authorizations, consents and
approvals from other persons, in order to conduct their respective businesses, except where
the failure to make such filings or to obtain such licenses, authorizations, consents or
approvals would not, individually or in the aggregate, have a Material Adverse Effect;
neither the Company nor any Subsidiary 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
Subsidiary, except where such violation, default, revocation or modification would not,
individually or in the aggregate, have a Material Adverse Effect;
(q) 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 Subsidiary
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
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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 NASDAQ), except
any such action, suit, claim, investigation or proceeding which, if resolved adversely to
the Company or any Subsidiary, would not, individually or in the aggregate, have a Material
Adverse Effect;
(r) KPMG LLP, whose report on the consolidated financial statements of the Company is
included or incorporated by reference in the Registration Statement, the Basic Prospectus
and the Prospectus, are independent registered public accountants as required by the Act and
by the rules of the Public Company Accounting Oversight Board;
(s) the financial statements included or incorporated by reference in the Registration
Statement, the Basic Prospectus, the Prospectus and the Permitted Free Writing Prospectuses,
if any, together with the related notes and schedules, present fairly the consolidated
financial position of the Company as of the dates indicated and the consolidated results of
operations, cash flows and changes in stockholders’ equity of the Company for the periods
specified and have been prepared in compliance with the requirements of the Act and Exchange
Act and in conformity with U.S. 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, the Basic Prospectus,
the Prospectus and the Permitted Free Writing Prospectuses, if any, comply with the
requirements of the Act and the Exchange Act, 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
contained or incorporated by reference in the Registration Statement, the Basic Prospectus,
the Prospectus and the Permitted Free Writing Prospectuses, if any, 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, the
Basic Prospectus or the Prospectus that are not included or incorporated by reference as
required; neither the Company nor any Subsidiary has any material liabilities or
obligations, direct or contingent (including any off-balance sheet obligations), not
described in the Registration Statement (excluding the exhibits thereto), the Basic
Prospectus and the Prospectus; and all disclosures contained or incorporated by reference in
the Registration Statement, the Basic Prospectus, the Prospectus and the Permitted Free
Writing Prospectuses, if any, 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;
(t) subsequent to the respective dates as of which information is given in the
Registration Statement, the Basic Prospectus, the Prospectus and the Permitted Free
- 10 -
Writing Prospectuses, if any, in each case excluding any amendments or supplements to
the foregoing made after the execution of this Agreement, 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 the Subsidiaries taken as a whole, (ii) any transaction which is material to the
Company and the Subsidiaries taken as a whole, (iii) any obligation or liability, direct or
contingent (including any off-balance sheet obligations), incurred by the Company or any
Subsidiary, which is material to the Company and the 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;
(u) the Company has obtained for the benefit of the Underwriter the agreement (a
“Lock-Up Agreement”), in the form set forth as Exhibit A hereto, of each of
its directors and “officers” (within the meaning of Rule 16a-1(f) under the Exchange Act);
(v) neither the Company nor any Subsidiary is, and at no time during which a prospectus
is required by the Act to be delivered (whether physically or through compliance with Rule
172 under the Act or any similar rule) in connection with any sale of Shares will either of
them be, and, after giving effect to the offering and sale of the Shares and the application
of the proceeds thereof, 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”);
(w) the Company and the Subsidiaries each have good and marketable title to all
property (real and personal) described the Registration Statement, the Basic Prospectus, the
Prospectus and the Permitted Free Writing Prospectuses, if any, as being owned by any of
them, free and clear of all liens, claims, security interests or other encumbrances, except
where the failure to have such good and marketable title free and clear of all such liens,
claims, security interests or other encumbrances would not, individually or in the
aggregate, have a Material Adverse Effect; all the property described in the Registration
Statement, the Basic Prospectus, the Prospectus and the Permitted Free Writing Prospectuses,
if any, as being held under lease by the Company or any Subsidiary is held thereby under
valid, subsisting and enforceable leases, except where the failure to hold such property
under valid, subsisting and enforceable leases would not, individually or in the aggregate,
have a Material Adverse Effect;
(x) the Company and the Subsidiaries each own, or have obtained valid and 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, the Basic
Prospectus, the Prospectus and the Permitted Free Writing Prospectuses, if any, as being
owned or licensed by them or which are necessary for the conduct of their respective
businesses as currently conducted or as proposed to be
- 11 -
conducted (including the commercialization of products or services described in the
Registration Statement, the Basic Prospectus, the Prospectus and the Permitted Free Writing
Prospectuses, if any, as under development) (such inventions, patent applications, patents,
trademarks, tradenames, service names, copyrights, trade secrets and other proprietary
information, collectively, “Intellectual Property”), except where the failure to
own, license or have such Intellectual Property would not, individually or in the aggregate,
have a Material Adverse Effect; except as would not, individually or in the aggregate, have
a Material Adverse Effect, (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 (excluding the exhibits thereto), the Basic Prospectus and the
Prospectus disclose is licensed to the Company; (ii) 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, the Basic Prospectus, the Prospectus and
the Permitted Free Writing Prospectuses, if any, 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 the Subsidiaries
each have complied with the terms of each 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; (vii) there is no patent or patent application that contains claims that
interfere with the issued or pending claims of any of the Intellectual Property or that
challenges the validity, enforceability or scope of any of the Intellectual Property; (viii)
there is no prior art that may render any patent application within the Intellectual
Property unpatentable that has not been disclosed to the U.S. Patent and Trademark Office;
and (ix) the product candidates described in the Registration Statement, the Basic
Prospectus, the Prospectus and the Permitted Free Writing Prospectuses, if any, as under
development by the Company or any Subsidiary fall within the scope of the claims of one or
more patents owned by, or exclusively licensed to, the Company or any Subsidiary;
(y) 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, threatened against the Company or any Subsidiary before the National
Labor Relations Board, and no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending or, to the Company’s knowledge,
- 12 -
threatened, (B) no strike, labor dispute, slowdown or stoppage pending or, to the
Company’s knowledge, threatened against the Company or any Subsidiary and (C) no union
representation dispute currently existing concerning the employees of the Company or any
Subsidiary, (ii) to the Company’s knowledge, no union organizing activities are currently
taking place concerning the employees of the Company or any Subsidiary and (iii) 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;
(z) the Company and each Subsidiary and their respective properties, assets and
operations are in compliance with, and each of the Company and the Subsidiaries 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;
except as would not, individually or in the aggregate, have a Material Adverse Effect, there
are no past, present or, to the Company’s knowledge, 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 (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, to the Company’s knowledge, 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);
(aa) in the ordinary course of their business, the Company and the Subsidiaries conduct
periodic reviews of the effect of the Environmental Laws on their respective businesses,
operations and properties, in the course of which they identify and evaluate associated
costs and liabilities (including, without limitation, any capital or operating expenditures
required for cleanup, closure of properties or compliance with the Environmental Laws or any
permit, license or approval, any related constraints on operating activities and any
potential liabilities to third parties);
- 13 -
(bb) all tax returns required to be filed by the Company or any Subsidiary 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 (i) those being contested in good faith and for which adequate reserves have been
provided or (ii) as would not, individually or in the aggregate, have a Material Adverse
Effect;
(cc) the Company and the Subsidiaries maintain insurance adequately covering their
respective properties, operations, personnel and businesses, except as would not,
individually or in the aggregate, have a Material Adverse Effect; 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 the Subsidiaries and their respective
businesses; except as would not, individually or in the aggregate, have a Material Adverse
Effect, all such insurance is fully in force on the date hereof and will be fully in force
at the time of purchase and each additional time of purchase, if any; neither the Company
nor any Subsidiary has reason to believe that it will not be able to renew any such
insurance as and when such insurance expires;
(dd) 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 the Basic Prospectus, the Prospectus or any Permitted Free
Writing Prospectus, or 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, any
other party to any such contract or agreement, except as would not, individually or in the
aggregate, have a Material Adverse Effect;
(ee) the Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with generally
accepted 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;
(ff) 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
- 14 -
controls and procedures are effective to perform the functions for which they were
established; the Company’s independent auditors and the Audit Committee of the Board of
Directors of the Company have been advised of: (i) all significant deficiencies, if any, 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) all fraud, if any,
whether or not material, that involves management or other employees who have a role in the
Company’s internal controls; all material weaknesses, if any, in internal controls have been
identified to the Company’s independent auditors; since the date of the most recent
evaluation of such disclosure controls and procedures and internal controls, 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 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”) and any related rules and regulations promulgated by the Commission, and the
statements contained in each such certification are complete and correct; the Company, the
Subsidiaries and the Company’s directors and officers are each in compliance in all material
respects with all applicable effective provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules
and regulations of the Commission and the NASDAQ promulgated thereunder;
(gg) each “forward-looking statement” (within the meaning of Section 27A of the Act or
Section 21E of the Exchange Act) contained or incorporated by reference in the Registration
Statement, the Basic Prospectus, the Prospectus and the Permitted Free Writing Prospectuses,
if any, has been made or reaffirmed with a reasonable basis and in good faith;
(hh) all statistical or market-related data included or incorporated by reference in
the Registration Statement, the Basic Prospectus, the Prospectus and the Permitted Free
Writing Prospectuses, if any, are based on or derived from sources that the Company
reasonably believes to be reliable and accurate, and, except where the failure to obtain
such consent would not, individually or in the aggregate, have a Material Adverse Effect,
the Company has obtained the written consent to the use of such data from such sources to
the extent required;
(ii) neither the Company nor any Subsidiary nor, to the Company’s knowledge, 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, the Basic Prospectus or the Prospectus;
(jj) no Subsidiary is currently prohibited, directly or indirectly, from paying any
dividends to the Company or any other Subsidiary, from making any other distribution on such
Subsidiary’s capital stock, from repaying to the Company or any
- 15 -
other Subsidiary any loans or advances to such Subsidiary from the Company or another
Subsidiary or from transferring any of such Subsidiary’s property or assets to the Company
or any other Subsidiary, except as described in the Registration Statement (excluding the
exhibits thereto), the Basic Prospectus and the Prospectus;
(kk) the preclinical tests and clinical trials that are described in, or the results of
which are referred to in, the Registration Statement, the Basic Prospectus, the Prospectus
and the Permitted Free Writing Prospectuses, if any, were and, if still pending, are being
conducted in all material respects in accordance with protocols filed with the appropriate
regulatory authorities for each such test or trial, as the case may be, and with standard
medical and scientific research procedures; each description of the results of such tests
and trials contained in the Registration Statement, the Basic Prospectus, the Prospectus and
the Permitted Free Writing Prospectuses, if any, is accurate and complete in all material
respects and fairly presents the data derived from such tests and trials, and the Company
and the 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, the Basic Prospectus, the Prospectus and the Permitted Free
Writing Prospectuses, if any; 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 (collectively, the “Regulatory
Agencies”) requiring the termination, suspension or modification of any clinical trials
that are described or referred to in the Registration Statement, the Basic Prospectus, the
Prospectus and the Permitted Free Writing Prospectuses, if any; and the Company and the
Subsidiaries have each operated and currently are in compliance in all material respects
with all applicable rules, regulations and policies of the Regulatory Agencies;
(ll) 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;
(mm) the Company has not received any notice from the NASDAQ regarding the delisting of
the Common Stock from the NASDAQ;
(nn) except pursuant to this Agreement, neither the Company nor any Subsidiary 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 Registration Statement;
(oo) each of the License and Supply Agreement (the “Par License Agreement”) by
and between Par Pharmaceutical, Inc. and the Company, effective as of October 22, 2004, the
Product Development and License Agreement (the “P&G License Agreement”) by and
between the Company and Procter & ▇▇▇▇▇▇ Pharmaceuticals, Inc., dated as of
- 16 -
January 27, 2006, as amended December 4, 2006, the Supply Agreement (the “P&G
Supply Agreement”) by and between the Company and Procter & ▇▇▇▇▇▇ Pharmaceuticals,
Inc., effective as of June 2, 2006, and the Development and License Agreement (the
“Amylin License Agreement”) by and between the Company and Amylin Pharmaceuticals,
Inc., dated June 21, 2006, has been duly authorized by all necessary corporate action of the
Company, has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the other party thereto, is a legal, valid and
binding agreement of the Company, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ rights generally and general principles of equity;
(pp) neither the Company nor any Subsidiary nor any of their respective directors,
officers, affiliates or controlling persons has taken, directly or indirectly, any action
designed, or which has constituted or might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares; and
(qq) to the Company’s knowledge, 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 security holders 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
disclosed in the Registration Statement (excluding the exhibits thereto), the Basic
Prospectus and the Prospectus.
In addition, any certificate signed by any officer of the Company or any Subsidiary and
delivered to the Underwriter or counsel for the Underwriter in connection with the offering of the
Shares shall be deemed to be a representation and warranty by the Company, as to matters covered
thereby, to the 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 Underwriter in New York City, as soon as practicable after
this Agreement becomes effective, and thereafter from time to time to
- 17 -
furnish to the Underwriter, 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
after the effective date of the Registration Statement) as the Underwriter may request for
the purposes contemplated by the Act; in case the Underwriter is required to deliver
(whether physically or through compliance with Rule 172 under the Act or any similar rule),
in connection with the sale of the Shares, a prospectus after the nine-month period referred
to in Section 10(a)(3) of the Act, or after the time a post-effective amendment to the
Registration Statement is required pursuant to Item 512(a) of Regulation S-K under the Act,
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 or Item 512(a) of Regulation S-K under
the Act, as the case may be;
(c) if, at the time this Agreement is executed and delivered, it is necessary or
appropriate for a post-effective amendment to the Registration Statement, or a Registration
Statement under Rule 462(b) under the Act, to be filed with the Commission and become
effective before the Shares may be sold, the Company will use its best efforts to cause such
post-effective amendment or such Registration Statement to be filed and become effective,
and will pay any applicable fees in accordance with the Act, as soon as possible; and the
Company will advise you promptly and, if requested by you, will confirm such advice in
writing, (i) when such post-effective amendment or such Registration Statement 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) if, at any time during the period when a prospectus is required by the Act to be
delivered (whether physically or through compliance with Rule 172 under the Act or any
similar rule) in connection with any sale of Shares, the Registration Statement shall cease
to comply with the requirements of the Act with respect to eligibility for the use of the
form on which the Registration Statement was filed with the Commission, to (i) promptly
notify you, (ii) promptly file with the Commission a new registration statement under the
Act, relating to the Shares, or a post-effective amendment to the Registration Statement,
which new registration statement or post-effective amendment shall comply with the
requirements of the Act and shall be in a form satisfactory to you, (iii) use its best
efforts to cause such new registration statement or post-effective amendment to become
effective under the Act as soon as practicable, (iv) promptly notify you of such
effectiveness and (v) take all other action necessary or appropriate to permit the public
offering and sale of the Shares to continue as contemplated in the Prospectus; all
references herein to the Registration Statement shall be deemed to include each such new
registration statement or post-effective amendment, if any;
(e) if the third anniversary of the initial effective date of the Registration
Statement (within the meaning of Rule 415(a)(5) under the Act) shall occur at any time
during the period when a prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any similar rule) in
- 18 -
connection with any sale of Shares, to (i) file with the Commission, prior to such
third anniversary, a new registration statement under the Act relating to the Shares, which
new registration statement shall comply with the requirements of the Act (including, without
limitation, Rule 415(a)(6) under the Act) and shall be in a form satisfactory to you; and
(ii) use its best efforts to cause such new registration statement to become effective under
the Act as soon as practicable, but in any event within 180 days after such third
anniversary and promptly notify you of such effectiveness; the Company shall take all other
action necessary or appropriate to permit the public offering and sale of the Shares to
continue as contemplated in the Prospectus; all references herein to the Registration
Statement shall be deemed to include each such new registration statement, if any;
(f) to advise you promptly, confirming such advice in writing, of any request by the
Commission for amendments or supplements to the Registration Statement, the Basic
Prospectus, the Prospectus or any Permitted Free Writing 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, the Basic Prospectus or the Prospectus, and to provide you and Underwriter’s
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
object in writing;
(g) subject to Section 4(f) 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 for so long as a prospectus is
required by the Act to be delivered (whether physically or through compliance with Rule 172
under the Act or any similar rule) in connection with any sale of 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 15(d) 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 have objected in writing; and to
promptly notify you of such filing;
(h) to advise the Underwriter promptly of the happening of any event within the period
during which a prospectus is required by the Act to be delivered (whether physically or
through compliance with Rule 172 under the Act or any similar rule) in connection with any
sale of Shares, which event could require the making of any change in the Prospectus then
being used so that the Prospectus would not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading, and to advise the
Underwriter promptly if, during such period, it shall become necessary to amend or
supplement the Prospectus to cause the Prospectus to comply with the requirements of the
Act, and, in each case, during such time, subject to Section 4(f) hereof, to prepare and
furnish, at the Company’s expense, to the Underwriter promptly such amendments or supplements to such Prospectus as may be necessary to
reflect any such change or to effect such compliance;
- 19 -
(i) to make generally available to its security holders, and to deliver to you, 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
May 12, 2008;
(j) to furnish to you two (2) 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 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 the Subsidiaries which have been read by the
Company’s independent registered public accountants, as stated in their letter to be
furnished pursuant to Section 6(d) hereof;
(l) 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 Supplement;
(m) to pay all costs, expenses, fees and taxes in connection with (i) the preparation
and filing of the Registration Statement, the Basic Prospectus, the Prospectus Supplement,
the Prospectus, each Permitted Free Writing Prospectus and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the Underwriter 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 Underwriter, (iii) the
producing, word processing and/or printing of this Agreement, 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 Underwriter 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 (including the
legal fees and filing fees and other disbursements of counsel for the Underwriter) and the
printing and furnishing of copies of any blue sky surveys or legal investment surveys to the
Underwriter 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
Underwriter 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
- 20 -
undertaken in connection with the marketing of the offering and sale of the Shares to
prospective investors and the Underwriter’s sales forces, including, without limitation,
expenses associated with the production of road show slides and graphics, if any, fees and
expenses of any consultants engaged in connection with the road show presentations, if any,
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, if
any, and (ix) the performance of the Company’s other obligations hereunder;
(n) to comply with Rule 433(d) under the Act (without reliance on Rule 164(b) under the
Act) and with Rule 433(g) under the Act;
(o) beginning on the date hereof and ending on, and including, the date that is 45 days
after the date of the Prospectus Supplement (the “Lock-Up Period”), without the
prior written consent of UBS, not to (i) issue, 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 any other securities of the Company that are substantially
similar to Common Stock, or any securities convertible into or exchangeable or exercisable
for, or any warrants or other rights to purchase, the foregoing, (ii) file or cause to
become effective a registration statement under the Act relating to the offer and sale of
any Common Stock or any other securities of the Company that are substantially similar to
Common Stock, or any securities convertible into or exchangeable or exercisable for, or any
warrants or other rights to purchase, the foregoing, (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 other securities of the Company that are substantially
similar to Common Stock, or any securities convertible into or exchangeable or exercisable
for, or any warrants or other rights to purchase, the foregoing, 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 offer and
sale of the Shares as contemplated by this Agreement, (B) issuances of Common Stock upon the
exercise of options or warrants disclosed as outstanding in the Registration Statement
(excluding the exhibits thereto), the Basic Prospectus 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 (excluding the exhibits thereto),
the Basic Prospectus 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 (except an announcement or release by the Company of the Company’s
earnings results for the fiscal quarter and year ended December 31, 2006) occurs; or (b)
prior to the expiration of the Lock-Up Period, the Company announces that it will release
earnings results (except earnings results for the fiscal quarter and year ended December 31,
2006) during the
- 21 -
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 the
Subsidiaries, or the offering of the Shares, without your prior consent;
(q) not, at any time at or after the execution of this Agreement, to, directly or
indirectly, offer or sell any Shares by means of any “prospectus” (within the meaning of the
Act), or use any “prospectus” (within the meaning of the Act) in connection with the offer
or sale of the Shares, in each case other than the Prospectus;
(r) not to, and to cause each Subsidiary not to, take, directly or indirectly, any
action designed, or which will constitute, or has constituted, or might reasonably be
expected to cause or result in 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 Shares to be listed on NASDAQ and to maintain
the listing of the Common Stock, including the Shares, on NASDAQ;
(t) to maintain a transfer agent and, if necessary under the jurisdiction of
incorporation of the Company, a registrar for the Common Stock; and
(u) to comply with each undertaking under Item 512 of Regulation S-K under the Act that
is required to be included in the Registration Statement.
5. Reimbursement of Underwriter’s Expenses. If the Shares are not delivered for any
reason other than the default by the Underwriter in its obligations hereunder, the Company shall,
in addition to paying the amounts described in Section 4(m) hereof, reimburse the Underwriter for
all of its reasonable out-of-pocket expenses, including the fees and disbursements of its counsel.
6. Conditions of Underwriter’s Obligations. The obligations of the Underwriter
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:
(a) The Company shall furnish to you at the time of purchase and, if applicable, at the
additional time of purchase, an opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for
the Company, addressed to the Underwriter, and dated the time of purchase or the additional
time of purchase, as the case may be, and in form and substance satisfactory to UBS, in the form set forth in Exhibit B hereto.
- 22 -
(b) The Company shall furnish to you at the time of purchase and, if applicable, at the
additional time of purchase, an opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇, intellectual property counsel for
the Company, addressed to the Underwriter, and dated the time of purchase or the additional
time of purchase, as the case may be, and in form and substance satisfactory to UBS, 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 Buc & ▇▇▇▇▇▇▇▇▇, special counsel for the Company
with respect to regulatory matters, addressed to the Underwriter, and dated the time of
purchase or the additional time of purchase, as the case may be, and in form and substance
satisfactory to UBS, in the form set forth in Exhibit D hereto.
(d) You shall have received from KPMG LLP letters dated, respectively, the date of this
Agreement, the date of the Prospectus Supplement, the time of purchase and, if applicable,
the additional time of purchase, and addressed to the Underwriter in the forms satisfactory
to UBS, which letters shall cover, without limitation, the various financial disclosures
contained in the Registration Statement, the Basic Prospectus, the Prospectus and the
Permitted Free Writing Prospectuses, if any.
(e) You shall have received at the time of purchase and, if applicable, at the
additional time of purchase, the favorable opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriter, 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 shall have been filed to which you shall have objected in writing.
(g) The Registration Statement and any registration statement required to be filed,
prior to the sale of the Shares, under the Act pursuant to Rule 462(b) shall have been filed
and shall have become effective under the Act. The Prospectus Supplement 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 (or such
earlier time as may be required under the Act).
(h) Prior to and at the time of purchase, and, if applicable, the additional time of
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; (iii) none of the Basic
Prospectus or the Prospectus, and no amendment or supplement thereto, shall include an
untrue statement of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
- 23 -
are made, not misleading; (iv) no Disclosure Package, and no amendment or supplement
thereto, shall include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading; and (v) none of the Permitted Free Writing
Prospectuses, if any, shall include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(i) 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.
(j) You shall have received each of the signed Lock-Up Agreements referred to in
Section 3(u) 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.
(k) 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, the Basic
Prospectus, the Prospectus or any Permitted Free Writing Prospectus as of the time of
purchase and, if applicable, the additional time of purchase, as you may reasonably request.
(l) 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.
(m) 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
when the parties hereto have executed and delivered this Agreement.
The obligations of the Underwriter hereunder shall be subject to termination in the absolute
discretion of UBS, if (1) since the time of execution of this Agreement or the earlier respective
dates as of which information is given in the Registration Statement, the Basic Prospectus, the
Prospectus and the Permitted Free Writing Prospectuses, if any, there has been any change or any
development involving a prospective change in the business, properties, management, financial
condition or results of operations of the Company and the Subsidiaries taken as a whole, the effect
of which change or development is, in the sole judgment of UBS, so material and adverse as to make
it impractical 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, the Basic Prospectus, the
Prospectus and the Permitted Free Writing Prospectuses, if any, or (2) since the time of execution
of this Agreement, there shall have occurred: (A) a suspension or material limitation in trading in
securities generally on the NYSE, the American
- 24 -
Stock Exchange or the NASDAQ; (B) a suspension or material limitation in trading in the Company’s
securities on the NASDAQ; (C) 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; (D) 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 (E) 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 (D) or (E), in the sole judgment of UBS, makes it impractical 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, the Basic Prospectus, the Prospectus and the Permitted
Free Writing Prospectuses, if any, or (3) 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: (A) any intended or potential downgrading or (B) 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 shall be
notified promptly in writing.
If the sale to the Underwriter of the Shares, as contemplated by this Agreement, is not
carried out by the Underwriter 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(m), 5 and 8 hereof), and the Underwriter shall be under no
obligation or liability to the Company under this Agreement (except to the extent provided in
Section 8 hereof) or to one another hereunder.
8. Indemnity and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless the Underwriter, its
partners, directors, officers and “affiliates” (within the meaning of Rule 405 under the
Act), and any person who controls the 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, the 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 arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated therein or necessary to make the
statements 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
- 25 -
information concerning the Underwriter furnished in writing by the Underwriter to the
Company expressly for use in, the Registration Statement or arises out of or is based upon
any omission or alleged omission to state a material fact in the Registration Statement in
connection with such information, which material fact was not contained in such information
and which material fact was required to be stated in such Registration Statement or was
necessary to make such information not misleading or (ii) any untrue statement or alleged
untrue statement of a material fact included in any Prospectus (the term Prospectus for the
purpose of this Section 8 being deemed to include the Basic Prospectus, the Prospectus
Supplement, the Prospectus and any amendments or supplements to the foregoing), in any
Permitted Free Writing Prospectus, in any “issuer information” (as defined in Rule 433 under
the Act) of the Company or in any Prospectus together with any combination of one or more of
the Permitted Free Writing Prospectuses, if any, or arises out of or is based upon any
omission or alleged omission to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading, except, with respect to such Prospectus or Permitted Free Writing Prospectus,
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 the Underwriter furnished in writing by the
Underwriter to the Company expressly for use in, such Prospectus or Permitted Free Writing
Prospectus or arises out of or is based upon any omission or alleged omission to state a
material fact in such Prospectus or Permitted Free Writing Prospectus in connection with
such information, which material fact was not contained in such information and which
material fact was necessary in order to make the statements in such information, in the
light of the circumstances under which they were made, not misleading.
(b) The Underwriter 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 (i)
any untrue statement or alleged untrue statement of a material fact contained in, and in
conformity with information concerning the Underwriter furnished in writing by the
Underwriter 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 arises out of or is based upon any omission or alleged omission to state a material fact
in such Registration Statement in connection with such information, which material fact was
not contained in such information and which material fact was required to be stated in such
Registration Statement or was necessary to make such information not misleading or (ii) any
untrue statement or alleged untrue statement of a material fact contained in, and in
conformity with information concerning the Underwriter furnished in writing by the
Underwriter to the Company expressly for use in, a Prospectus or a Permitted Free Writing
Prospectus, or arises out of or is based upon any omission or alleged omission to state a
material fact
- 26 -
in such Prospectus or Permitted Free Writing Prospectus in connection with such
information, which material fact was not contained in such information and which material
fact was necessary in order to make the statements in such information, in the light of the
circumstances under which they were made, not misleading.
(c) If any action, suit or proceeding (each, a “Proceeding”) is brought against
a person (an “indemnified party”) in respect of which indemnity may be sought
against the Company or the Underwriter (as applicable, the “indemnifying party”)
pursuant to subsection (a) or (b), respectively, of this Section 8, such indemnified party
shall promptly notify such indemnifying party in writing of the institution of such
Proceeding and such indemnifying party 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 indemnifying party shall not relieve such indemnifying party from any liability
which such indemnifying party may have to any indemnified party or otherwise. The
indemnified party or parties 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
indemnified party or parties unless the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense of such
Proceeding or the indemnifying party 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, additional to or in conflict with those available to such
indemnifying party (in which case such indemnifying party 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 such indemnifying party and paid as
incurred (it being understood, however, that such indemnifying party 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 indemnifying party shall not
be liable for any settlement of any Proceeding effected without its written consent but, if
settled with its written consent, such indemnifying party agrees to indemnify and hold
harmless the indemnified party or parties 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 Section 8(c), 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
- 27 -
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.
(d) If the indemnification provided for in this Section 8 is unavailable to an
indemnified party under subsections (a) and (b) of this Section 8 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 Underwriter 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 Underwriter on the other in connection with the
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 Underwriter 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 Underwriter,
bear to the aggregate public offering price of the Shares. The relative fault of the
Company on the one hand and of the Underwriter 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 Underwriter 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.
(e) The Company and the Underwriter agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable considerations
referred to in subsection (d) above. Notwithstanding the provisions of this Section 8, the
Underwriter shall in no event be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by the Underwriter and distributed
to the public were offered to the public exceeds the amount of any damage which the
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.
- 28 -
(f) The indemnity and contribution agreements contained in this Section 8 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 the
Underwriter, its partners, directors or officers or any person (including each partner,
officer or director of such person) who controls the 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 the
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, the Basic Prospectus, the Prospectus or any Permitted Free Writing
Prospectus.
9. Information Furnished by the Underwriter. The statements set forth in the sixth,
fourteenth, fifteenth, sixteenth, seventeenth and eighteenth paragraphs 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 Underwriter, constitute the only information furnished by the Underwriter, as such
information is referred to in Sections 3 and 8 hereof.
10. 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 Underwriter, shall be
sufficient in all respects if delivered or sent to UBS Securities LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇, 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 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer.
11. 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.
12. 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 the
Underwriter or any indemnified party. The 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
- 29 -
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.
13. Parties at Interest. The Agreement herein set forth has been and is made solely
for the benefit of the Underwriter and the Company and to the extent provided in Section 8 hereof
the controlling persons, partners, directors, officers and affiliates 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 Underwriter) shall acquire or have any right under or by virtue of this
Agreement.
14. No Fiduciary Relationship. The Company hereby acknowledges that the Underwriter
is acting solely as an underwriter in connection with the purchase and sale of the Company’s
securities. The Company further acknowledges that the Underwriter is acting pursuant to a
contractual relationship created solely by this Agreement entered into on an arm’s length basis,
and in no event do the parties intend that the Underwriter act or be responsible as a fiduciary to
the Company, its management, stockholders or creditors or any other person in connection with any
activity that the Underwriter 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 Underwriter hereby
expressly disclaims any fiduciary or similar obligations to the Company, either in connection with
the transactions contemplated by this 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
Underwriter 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 Underwriter 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 and the Underwriter agree that the Underwriter is
acting as principal and not the agent or fiduciary of the Company and the Underwriter has not
assumed, and the Underwriter will not assume, any advisory responsibility in favor of the Company
with respect to the transactions contemplated hereby or the process leading thereto (irrespective
of whether the Underwriter has advised or is currently advising the Company on other matters). The
Company hereby waives and releases, to the fullest extent permitted by law, any claims that the
Company may have against the Underwriter with respect to any breach or alleged breach of any
fiduciary, advisory or similar duty to the Company in connection with the transactions contemplated
by this 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 Underwriter and
the Company and their successors and assigns and any successor or assign of any substantial portion
of the Company’s and the Underwriter’s respective businesses and/or assets.
- 30 -
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]
- 31 -
If the foregoing correctly sets forth the understanding between the Company and the
Underwriter, 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
Underwriter.
| Very truly yours, Nastech Pharmaceutical Company Inc. |
||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | CFO | |||
Accepted and agreed to as of the date
first above written
first above written
| UBS Securities LLC | ||||
By:
|
/s/ ▇▇▇▇ ▇▇▇▇▇ | |||
| Title: Managing Director | ||||
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: Director | ||||
SCHEDULE A
None
EXHIBIT A
Lock-Up Agreement
___________ ___, 200__
UBS Securities LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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 Nastech Pharmaceutical
Company Inc., a Delaware corporation (the “Company”), and you, with respect to the public
offering (the “Offering”) of common stock, par value $0.006 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 45 days after the date of the final prospectus supplement 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 other securities
of the Company that are substantially similar to Common Stock, or any securities convertible into
or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing,
(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 other securities of the Company
that are substantially similar to Common Stock, or any securities convertible into or exchangeable
or exercisable for, or any warrants or other rights to purchase, the foregoing, 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 the offer and sale of
Common Stock as contemplated by the Underwriting Agreement and the sale of the Common Stock to the
Underwriter (as defined in the Underwriting Agreement) in the Offering, (b) bona fide gifts,
provided the recipient thereof agrees in writing with the Underwriter to be bound by the terms of
this Lock-Up Agreement, (c) dispositions to 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 Underwriter to be bound by the terms of this Lock-Up Agreement, (d) the sale,
during the Lock-Up Period, by the undersigned of
A-1
up to an
aggregate of _____
1 shares of Common Stock pursuant to an existing Rule
10b5-1 sales plan heretofore entered into by the undersigned, as such plan is in effect on the date
hereof and without regard to any subsequent amendments or modifications thereto or reinstatements
thereof or (e) the disposition, during the Lock-Up Period, by the undersigned of up to an aggregate
of _____
2 shares of Common Stock for the purpose of raising proceeds to cover the
reasonably estimated U.S. federal or state tax liability incurred by the undersigned as a result of
the vesting, during the Lock-Up Period, of restricted shares of Common Stock heretofore granted to
the undersigned, provided each such disposition shall occur on or about the time of such vesting
and shall be of an amount of shares of Common Stock that raises gross proceeds that, as nearly as
reasonably practicable, approximate such tax liability. 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 (except an announcement or release by the Company of the
Company’s earnings results for the fiscal quarter and year ended December 31, 2006) occurs; or (b)
prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings
results (except earnings results for the fiscal quarter and year ended December 31, 2006) 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 the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of shares of Common Stock.
If (i) the Company notifies you in writing that it does not intend to proceed with
| 1 | The following maximum permitted number of shares shall apply: (1) 13,000 for ▇▇. ▇▇▇▇; (2) 10,000 for ▇▇. ▇▇▇▇▇▇; and (3) 9,000 for ▇▇. ▇▇▇▇▇. | |
| 2 | The following maximum permitted number of shares shall apply: (1) 800 for ▇▇. ▇▇▇▇▇▇; (2) 2,000 for ▇▇. ▇▇▇▇▇; and (3) 500 for ▇▇. ▇▇▇▇▇▇▇. |
A-2
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, | ||||
A-3
EXHIBIT B
Intentional Omitted
B-1
EXHIBIT C
Intentional Omitted
C-1
EXHIBIT D
Intentional Omitted
D-1
EXHIBIT E
OFFICERS’ CERTIFICATE
Each of the undersigned, ▇▇▇▇▇▇ ▇. ▇▇▇▇, Chairman of the Board, President and Chief Executive
Officer of Nastech Pharmaceutical Company Inc., a Delaware corporation (the “Company”), and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer and Secretary of the Company, on behalf of the Company,
does hereby certify pursuant to Section 6(i) of that certain Underwriting Agreement dated January
17, 2007 (the “Underwriting Agreement”) between the Company and UBS Securities LLC, that as
of [date]:
| 1. | He has reviewed the Registration Statement, the Basic Prospectus, the Prospectus and each Permitted Free Writing 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 paragraph (h) of Section 6 of the Underwriting Agreement have been met. |
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 [date].
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇ | |||
| Title: | Chairman of the Board, President and Chief Executive Officer | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Chief Financial Officer and Secretary | |||
E-1