DERMA SCIENCES, INC. UNDERWRITING AGREEMENT Dated February [ ], 2010 Rodman & Renshaw, LLC
Dated
February [ ], 2010
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLC
February
[ ], 2010
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLC
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▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Introductory. Derma
Sciences, Inc., a Pennsylvania corporation (the “Company”) proposes to
issue and sell to the several underwriters listed on Schedule A hereto (each an
“Underwriter” and collectively, the “Underwriters”) an
aggregate of _____ shares (the “Firm Shares”) of its
common stock, par value $.01 per share (“Common Stock) and
warrants (collectively, the “Firm Warrants”) to
purchase up to ______ shares of Common Stock (the “Warrant Shares”) at
any time on or before February __, 2015 (the “Warrant Expiration
Date”) for [an amount equal to 110% of the offering price of a Firm
Share]. All of the terms of the Firm Warrants are set forth in the form of
common stock purchase warrant (the “Warrant”) filed as an
exhibit to the Registration Statement (as defined below). In addition, the
Company has granted the Underwriters an option to purchase up to an additional
______ shares of Common Stock (the “Option Shares”) and
warrants to purchase ____ shares of Common Stock (the “Option Warrants” [15%
of the Firm Shares and Firm Warrants, respectively] as provided in Section 2.
Unless specified to the contrary, all references herein to (i) “Shares” shall be
deemed to include the Firm Shares and the Option Shares (to the extent the
aforementioned option has been exercised); (ii) “Warrants” shall be deemed to
include the Firm Warrants and the Option Warrants; (iii) “Warrant Shares” shall
be deemed to refer to the shares of Common Stock issuable upon exercise of the
Warrants; and (iv) “Securities” shall be deemed to include the Shares, the
Warrants and the Warrant Shares. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC is acting as
representative of the Underwriters (the “Representative”) in
connection with the offering and sale of the Securities.
In consideration of the mutual
agreements contained herein and of the interests of the parties in the
transactions contemplated hereby, the parties hereto agree as
follows:
Section
1. Representations
and Warranties of the Company.
The Company represents, warrants and
covenants to each Underwriter as follows:
(a) Filing of the Registration
Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-1 (File No. 333-163127), which contains a form
of prospectus to be used in connection with the public offering and sale of the
Securities. Such registration statement, as amended, including the financial
statements, schedules and exhibits thereto, and the documents incorporated by
reference in the prospectus contained in the registration statement at the time
such registration statement became effective, in the form in which it was
declared effective by the Commission under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (collectively, the
“Securities
Act”), and including any required information deemed to be a part thereof
at the time of effectiveness pursuant to Rule 430A, Rule 430B or Rule 430C under
the Securities Act, or pursuant to the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder (collectively, the “Exchange Act”), is
called the “Registration
Statement.” Any registration statement filed by the Company pursuant to
Rule 462(b) under the Securities Act is called the “Rule 462(b) Registration
Statement,” and from and after the date and time of filing of the Rule
462(b) Registration Statement the term “Registration
Statement” shall include the Rule 462(b) Registration Statement. The
prospectus, in the form first filed pursuant to Rule 424(b) under the Securities
Act after the date and time that this Agreement is executed and delivered by the
parties hereto (the “Execution Time”), or,
if no filing pursuant to Rule 424(b) under the Securities Act is required, the
form of final prospectus relating to the Securities included in the Registration
Statement at the effective date of the Registration Statement, is called the
“Prospectus.”
All references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, the Company’s preliminary prospectus included in the
Registration Statement (each a “Preliminary
Prospectus”), the Prospectus, or any amendments or supplements to any of
the foregoing, shall relate to the copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“▇▇▇▇▇”). Any
reference herein to any Preliminary Prospectus or the Prospectus or any
supplement or amendment to either thereof shall be deemed to refer to and
include any documents incorporated by reference therein as of the date of such
reference.
(b) Compliance with Registration
Requirements. The Registration
Statement has been declared effective by the Commission under the Securities
Act. The Company has complied, to the Commission’s satisfaction, with all
requests from the Commission for additional or supplemental information. No stop
order preventing or suspending the effectiveness of the Registration Statement
or any Rule 462(b) Registration Statement is in effect, and no proceedings for
such purpose have been instituted or are pending or, to the best knowledge of
the Company, are contemplated or threatened by the Commission.
Each
Preliminary Prospectus and the Prospectus when filed complied or will comply in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to ▇▇▇▇▇ (except as may be permitted by Regulation S-T
under the Securities Act), was identical in content to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale of
the Securities other than with respect to any artwork and graphics that were not
filed. Each of the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendment thereto, at the time it became
effective and at all subsequent times until the expiration of the prospectus
delivery period required under Section 4(3) of the Securities Act, complied and
will comply in all material respects with the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus (including any Prospectus wrapper), as
amended or supplemented, as of its date and at all subsequent times until the
Underwriters have completed their distribution of the offering of the
Securities, did not and will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two immediately
preceding sentences do not apply to statements in or omissions from the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment thereto, or the Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by the
Representative expressly for use therein, it being understood and agreed that
the only such information furnished by the Representative consists of the
information described as such in Section 8 hereof. There are no contracts or
other documents required to be described in the Prospectus or to be filed as
exhibits to the Registration Statement that have not been described or filed as
required.
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(c) Disclosure Package. The term
“Disclosure
Package” shall mean (i) a Preliminary Prospectus, as amended or
supplemented; (ii) an issuer free writing prospectus as defined in Rule 433 of
the Securities Act (each, an “Issuer Free Writing
Prospectus”), if any, identified on Schedule B hereto; (iii) the pricing
terms set forth on Schedule C hereto; and (iv) any other free writing prospectus
that the parties hereto shall hereafter expressly agree in writing to treat as
part of the Disclosure Package. As of [9:00 a.m.] (Eastern time) on the date of
this Agreement (the “Initial Sale Time”),
the Disclosure Package did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to statements in, or omissions
from, the Disclosure Package based upon and in conformity with written
information furnished to the Company by any Underwriter specifically for use
therein, it being understood and agreed that the only such information furnished
by or on behalf of an Underwriter consists of the information described as such
in Section 8(b) hereof.
(d) Company Not Ineligible
Issuer. (i) At the time of filing the Registration Statement
and (ii) as of the date of the execution and delivery of this Agreement (with
such date being used as the determination date for purposes of this clause
(ii)), the Company was not and is not an Ineligible Issuer (as defined in Rule
405 of the Securities Act), without taking account of any determination by the
Commission pursuant to Rule 405 of the Securities Act that it is not necessary
that the Company be considered an Ineligible Issuer.
(e) Issuer Free Writing
Prospectuses. No Issuer Free Writing Prospectus includes any
information that conflicts with the information contained in the Registration
Statement, including any document incorporated by reference therein that has not
been superseded or modified. The foregoing sentence does not apply to statements
in or omissions from any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by an Underwriter
specifically for use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information described
as such in Section 8 hereof.
(f) Offering Materials Furnished to
Underwriter. The Company has
delivered to the Representative one complete manually signed copy of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and Preliminary Prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representative has
reasonably requested.
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(g) Distribution of Offering Material by
the Company. The Company has
not distributed and will not distribute, prior to the later of each Subsequent
Closing Date (as defined below) and the completion of the Underwriters’
distribution of the Securities, any offering material in connection with the
offering and sale of the Securities other than a Preliminary Prospectus, the
Prospectus, any Issuer Free Writing Prospectus reviewed and consented to by the
Representative and the Registration Statement.
(h) The Underwriting
Agreement. This Agreement
has been duly authorized (to the extent applicable), executed and delivered by,
and is a valid and binding agreement of, the Company, enforceable in accordance
with its terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(i)
Authorization of the Securities;
Validity of Warrants and the Representative’s Warrants.
(i) The
Shares and the shares of Common Stock issuable upon exercise of the
Representative's Warrants described in Section 2(h)) have been duly authorized
and reserved for issuance and sale pursuant to this Agreement and, in the case
of the shares of Common Stock issuable on exercise of the Representative's
Warrants, the terms thereof and, when so issued and delivered by the Company,
will be validly issued, fully paid and nonassessable.
(ii) The
Warrants have been duly and validly authorized by all required corporate actions
and will, when issued and delivered by the Company pursuant to this Agreement,
be validly executed and delivered by, and will be valid and binding agreements
of, the Company, enforceable in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(iii) The
Representative's Warrants have been duly and validly authorized by all required
corporate actions and will, when issued and delivered by the Company pursuant to
this Agreement, be validly executed and delivered by, and will be valid and
binding agreements of, the Company, enforceable in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable
principles.
(iv) The
Warrant Shares have been duly authorized and reserved for issuance and sale
pursuant to their terms and, when issued and delivered by the Company pursuant
to their terms, will be validly issued, fully paid and
nonassessable.
(vi) The
Warrants and the Representative's Warrants will, when issued, possess rights,
privileges, and characteristics as represented in the most recent form of
Warrant Certificate or Representative's Warrants, as the case may be, filed as
an exhibit to the Registration Statement.
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(j)
No Applicable Registration or Other
Similar Rights. Except as fairly
and accurately described in the Registration Statement, there are no persons
with registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as have been duly
waived.
(k) No Material Adverse
Change. Except as
otherwise disclosed in the Disclosure Package, subsequent to the respective
dates as of which information is given in the Disclosure Package: (i)
there has been no material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business, operations or prospects,
whether or not arising from transactions in the ordinary course of business, of
the Company (any such change is called a “Material Adverse
Change”); (ii) the Company has not incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company in respect of its
capital stock.
(l)
Independent
Accountants. Ernst &
Young LLP, who has expressed its opinion with respect to the financial
statements (which term as used in this Agreement includes the related notes
thereto) filed with the Commission as a part of the Registration Statement and
included in the Disclosure Package and the Prospectus, is an independent
registered public accounting firm as required by the Securities Act and the
Exchange Act.
(m) Preparation of the Financial
Statements. Each of the
historical financial statements filed with the Commission as a part of or
incorporated by reference in the Registration Statement, and included or
incorporated by reference in the Disclosure Package and the Prospectus, presents
fairly the information provided as of and at the dates and for the periods
indicated. Such financial statements comply as to form with the applicable
accounting requirements of the Securities Act and have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules are
required to be included or incorporated by reference in the Registration
Statement. Each item of historical or pro forma financial data relating to the
operations, assets or liabilities of the Company and its predecessor set forth
in summary form in each of the Preliminary Prospectus and the Prospectus fairly
presents such information on a basis consistent with that of the complete
financial statements contained in the Registration Statement.
(n) Incorporation and Good
Standing;
Subsidiaries. The Company and each of its subsidiaries has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and has corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Disclosure Package and the Prospectus and to enter
into and perform its obligations under this Agreement. The Company and each of
its subsidiaries is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, except for such jurisdictions where the failure to so qualify or to be
in good standing would not, individually or in the aggregate, result in a
Material Adverse Change. Except as set forth in the Registration Statement, the
Company and each of its subsidiaries does not own or control, directly or
indirectly, any corporation, association or other entity.
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(o) Capitalization and Other Capital
Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in each of
the Disclosure Package and the Prospectus under the caption “Capitalization”
(other than for subsequent issuances, if any, pursuant to employee benefit plans
described in each of the Disclosure Package and the Prospectus or upon exercise
of outstanding options or warrants described in the Disclosure Package and
Prospectus, as the case may be). The Shares conform, and, when issued and
delivered as provided in this Agreement, the Warrants, the Representative’s
Warrants will comply, in all material respects, to the description thereof
contained in each of the Disclosure Package and Prospectus. All of the issued
and outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in compliance with
federal and state securities laws. None of the outstanding shares of Common
Stock were issued in violation of any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital
stock of the Company other than those accurately described in the Disclosure
Package and the Prospectus. The description of the Company’s stock option, stock
purchase and other stock plans or arrangements, and the options or other rights
granted thereunder, set forth or incorporated by reference in each of the
Disclosure Package and the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.
(p) Quotation. The
Common Stock is currently listed on the NASDAQ Stock Market and quoted under the
symbol “DSCI”. The Company has taken no action designed to, or likely
to have the effect of, causing the Common Stock to cease being quoted on the
NASDAQ Stock Market. The Company has not received any notice that the
Common Stock is no longer eligible for quotation on the NASDAQ Stock Market and
the Company has not taken any action and is not aware of any facts that would
cause the Common Stock to cease being quoted on the NASDAQ Stock
Market.
(q) Non-Contravention of Existing
Instruments; No Further Authorizations or Approvals Required. The Company is
not in violation of its charter or bylaws or in default (or, with the giving of
notice or lapse of time, would be in default) (“Default”) under any
indenture, mortgage, loan or credit agreement, note, contract, franchise, lease
or other instrument to which it is a party or by which it may be bound
(including, without limitation, such agreements and contracts filed as exhibits
to the Registration Statement or to which any of the property or assets of the
Company is subject (each, an “Existing
Instrument”)), except for such Defaults as would not, individually or in
the aggregate, result in a Material Adverse Change. The Company’s execution,
delivery and performance of this Agreement and consummation of the transactions
contemplated hereby and by the Disclosure Package and the Prospectus (i) have
been duly authorized by all necessary corporate action and will not result in
any violation of the provisions of the charter or bylaws of the Company; (ii)
will not conflict with or constitute a breach of, or Default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company pursuant to, or require the consent of any other party
to, any Existing Instrument, except for such conflicts, breaches, Defaults,
liens, charges or encumbrances as would not, individually or in the aggregate,
result in a Material Adverse Change; and (iii) will not result in any violation
of any law, administrative regulation or administrative or court decree
applicable to the Company. No consent, approval, authorization or other order
of, or registration or filing with, any court or other governmental or
regulatory authority or agency, is required for the Company’s execution,
delivery and performance of this Agreement and consummation of the transactions
contemplated hereby and by the Disclosure Package and the Prospectus, except the
registration or qualification of the Securities under the Securities Act and
applicable state securities or blue sky laws and from the Financial Industry
Regulatory Authority, Inc. (the “FINRA”).
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(r) No Material Actions or
Proceedings. Except as
otherwise disclosed in the Disclosure Package and the Prospectus, there are no
legal or governmental actions, suits or proceedings pending or, to the best of
the Company’s knowledge, threatened (i) against or affecting the Company; (ii)
which have as the subject thereof any officer or director (in such capacities)
of, or property owned or leased by, the Company; or (iii) relating to
environmental or discrimination matters, where in any such case (A) there is a
reasonable possibility that such action, suit or proceeding might be determined
adversely to the Company and (B) any such action, suit or proceeding, if so
determined adversely, would reasonably be expected to result in a Material
Adverse Change or adversely affect the consummation of the transactions
contemplated by this Agreement. No material labor dispute with the employees of
the Company exists or, to the best of the Company’s knowledge, is threatened or
imminent except for such disputes as would not, individually or in the
aggregate, result in a Material Adverse Change.
(s) Intellectual Property
Rights. The Company owns
or possesses sufficient trademarks, trade names, patent rights, copyrights,
domain names, licenses, approvals, trade secrets and other similar rights
(collectively, “Intellectual Property
Rights”) reasonably necessary to conduct its businesses as now conducted;
and the expected expiration of any of such Intellectual Property Rights would
not result in a Material Adverse Change. The Company has not received any notice
of infringement or conflict with asserted Intellectual Property Rights of
others, which infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Change. The Company is not a party
to or bound by any options, licenses or agreements with respect to the
Intellectual Property Rights of any other person or entity that are required to
be set forth in the Disclosure Package and the Prospectus and are not described
in all material respects. None of the technology employed by the Company has
been obtained or is being used by the Company in violation of any contractual
obligation binding on the Company or, to the Company’s knowledge, any of its
officers, directors or employees or otherwise in violation of the rights of any
persons.
(t)
All Necessary Permits,
etc. Except
as otherwise disclosed in the Disclosure Package and the Prospectus and except
as would not result in a Material Adverse Change, the Company possesses such
valid and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct its businesses, and the Company has not received any notice of
proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
result in a Material Adverse Change.
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(u) Title to Properties. The Company has
good and marketable title to all the properties and assets reflected as owned in
the financial statements referred to in Section 1(m) above (or elsewhere in the
Disclosure Package and the Prospectus), in each case free and clear of any
security interests, mortgages, liens, encumbrances, equities, claims and other
defects, except such as do not materially and adversely affect the value of such
property and do not materially interfere with the use made or proposed to be
made of such property by the Company. The real property, improvements, equipment
and personal property held under lease by the Company are held under valid and
enforceable leases, with such exceptions as are not material and do not
materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by the
Company.
(v) Tax Law Compliance. The Company has
filed all necessary federal, state, local and foreign income and franchise tax
returns and has paid all taxes required to be paid by it and, if due and
payable, any related or similar assessment, fine or penalty levied against it.
The Company has made adequate charges, accruals and reserves in the applicable
financial statements referred to in Section 1(m) above in respect of all
federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company has not been finally
determined.
(w) Company Not an “Investment
Company.” The Company has
been advised of the rules and requirements under the Investment Company Act of
1940, as amended (the “Investment Company
Act”). The Company is not, and after receipt of payment for the
Securities and the application of the proceeds thereof as contemplated under the
caption “Use of Proceeds” in each of the Preliminary Prospectus and the
Prospectus will not be, an “investment company” within the meaning of the
Investment Company Act and will conduct its business in a manner so that it will
not become subject to the Investment Company Act.
(x) Insurance. The Company is
insured by recognized, financially sound and reputable institutions with
policies in such amounts and with such deductibles and covering such risks as
the Company reasonably believes are adequate and customary for its business
including, but not limited to, policies covering real and personal property
owned or leased by the Company against theft, damage, destruction, acts of
vandalism and earthquakes. The Company reasonably believes that it will be able
(i) to renew its existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions as may be necessary
or appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change. The Company has not been denied any
insurance coverage which it has sought or for which it has applied.
(y) No Price Stabilization or
Manipulation. The Company has
not taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of any securities of the Company to facilitate the
sale or resale of any of the Securities. The Company acknowledges that the
Underwriters may engage in passive market making transactions in the Company’s
Common Stock in accordance with Regulation M under the Exchange
Act.
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(z) Related Person
Transactions. There are no
business relationships or related-person transactions involving the Company or
any other person required to be described in the Preliminary Prospectus or the
Prospectus that have not been described as required.
(aa) Disclosure Controls and
Procedures. The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
under the Exchange Act), which (i) are designed to ensure that material
information relating to the Company is made known to the Company’s principal
executive officer and its principal financial officer by others within those
entities, particularly during the periods in which the periodic reports required
under the Exchange Act are being prepared; (ii) will be evaluated for
effectiveness as of the end of each fiscal quarter and fiscal year of the
Company; and (iii) are effective in all material respects to perform the
functions for which they were established. The Company is not aware of (a) any
significant deficiency in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize and
report financial data or any material weaknesses in internal controls or (b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company’s internal controls.
(bb) Company’s Accounting
System. The Company maintains a system of accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(cc) No
Brokerage. There are no claims for commissions, finder’s fees
or any other payment in connection with or contingent upon the closing of
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Company, except as described
herein.
9
(dd) Compliance with Environmental
Laws. Except as would
not, individually or in the aggregate, result in a Material Adverse Change (i)
the Company is not in violation of any federal, state, local or foreign law or
regulation relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum and petroleum products
(collectively, “Materials of Environmental
Concern”), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environment Concern (collectively, “Environmental Laws”),
which violation includes, but is not limited to, noncompliance with any permits
or other governmental authorizations required for the operation of the business
of the Company under applicable Environmental Laws, or noncompliance with the
terms and conditions thereof, nor has the Company received any written
communication, whether from a governmental authority, citizens group, employee
or otherwise, that alleges that the Company is in violation of any Environmental
Law; (ii) there is no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the Company has
received written notice, and no written notice by any person or entity alleging
potential liability for investigatory costs, cleanup costs, governmental
responses costs, natural resources damages, property damages, personal injuries,
attorneys’ fees or penalties arising out of, based on or resulting from the
presence, or release into the environment, of any Material of Environmental
Concern at any location owned, leased or operated by the Company, now or in the
past (collectively, “Environmental
Claims”), pending or, to the best of the Company’s knowledge, threatened
against the Company or any person or entity whose liability for any
Environmental Claim the Company has retained or assumed either contractually or
by operation of law; and (iii) to the best of the Company’s knowledge, there are
no past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that reasonably
could result in a violation of any Environmental Law or form the basis of a
potential Environmental Claim against the Company or against any person or
entity whose liability for any Environmental Claim the Company has retained or
assumed either contractually or by operation of law.
(ee) ERISA Compliance. The Company and
any “employee benefit plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established
or maintained by the Company or its “ERISA Affiliates” (as defined below) are in
compliance in all material respects with ERISA. “ERISA Affiliate”
means, with respect to the Company, any member of any group of organizations
described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the “Code”) of
which the Company is a member. No “reportable event” (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any “employee
benefit plan” established or maintained by the Company or any of its ERISA
Affiliates. No “employee benefit plan” established or maintained by the Company
or any of its ERISA Affiliates, if such “employee benefit plan” were terminated,
would have any “amount of unfunded benefit liabilities” (as defined under
ERISA). Neither the Company nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any “employee benefit plan” or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan”
established or maintained by the Company, or any of its ERISA Affiliates that is
intended to be qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or failure to act, which would cause the
loss of such qualification.
(ff) Corporate
Governance. The Company has adopted organizational structures
and policies sufficient to comply with the requirements of NASDAQ’s corporate
governance standards in effect as of the date hereof (collectively, the “NASDAQ Corporate Governance
Standards”). Without limiting the generality of the foregoing, the
Company’s Board of Directors has validly appointed an Audit Committee, a
Nominating and Governance Committee and a Compensation Committee (collectively,
the “Committees”), whose
composition satisfies the requirements of the NASDAQ Corporate Governance
Standards. The Board of Directors and the Committees have each adopted a charter
governing the respective activities of each such Committee that satisfies the
requirements of the NASDAQ Corporate Governance Standards. The Committees have
each acted in accordance with the provisions of their respective charters, as
amended from time to time.
10
(gg) Compliance with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002. The Company and, to the best of its knowledge, its
officers and directors are in compliance with applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in
connection therewith (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”)
that are effective and are actively taking steps to ensure that they will be in
compliance with other applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act upon the
effectiveness of such provisions, including, without limitation, Section 402
related to loans, Section 404 related to management’s assessment of the
Company’s internal controls and its independent public accounting firm’s
attestation related thereto, and Sections 302 and 906 related to
certifications.
(hh) Unlawful
Payments. The Company or any other person associated with or
acting on behalf of the Company including, without limitation, any director,
officer, agent or employee of the Company, has not, directly or indirectly,
while acting on behalf of the Company (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
(ii) Compliance with Money Laundering
Laws. The operations of the Company are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the USA Patriot Act, the money laundering statutes of all
applicable jurisdictions, the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering
Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
with respect to the Money Laundering Laws is pending, or to the best knowledge
of the Company, threatened.
(jj) OFAC
Sanctions. The Company is not nor, to the knowledge of the
Company, is any director, officer, agent, employee or affiliate of the Company
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will
not directly or indirectly use the proceeds of the offering, or lend, contribute
or otherwise make available such proceeds to any subsidiary, joint venture
partner or other person or entity, for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered by
OFAC.
(kk) Offerings of
Securities. Except as described in the Registration Statement,
the Company has not sold or issued any securities during the three-year period
preceding the date of filing of the Registration Statement, including any sales
pursuant to Rules 144A or 701 under, or Regulations D or S of, the Securities
Act.
11
(ll) Offerings of Securities in this
Offering. In connection with this offering, the Company has
not offered and will not offer its Common Stock or any other securities
convertible into or exchangeable or exercisable for Common Stock in a manner in
violation of the Securities Act; and the Company has not distributed and will
not distribute any offering material in connection with the offer and sale of
the Securities, except for the Preliminary Prospectus, the Prospectus, any
Issuer Free Writing Prospectus or the Registration Statement.
(mm) Material Understandings,
Generally. Except as fairly described in the Prospectus and
the Disclosure Package, the Company has not made a determination to take any
action and is not a party to any understanding, whether or not legally binding,
with any other person with respect to the taking of any action that, if known to
prospective purchasers of the Securities, would be likely to affect their
assessment of the value or prospects of the Company or their decision to invest
in the Securities.
(nn) Blue Sky. The
Securities are qualified for sale in each jurisdiction listed on Schedule D
hereto. No state regulatory, administrative or judicial authority has
issued any order preventing the sale of the Securities in such jurisdiction or
suspended the use of the Prospectus or instituted proceedings for that
purpose.
(oo) Compliance with Government
Regulations. The Company’s disclosure in the Prospectus with
respect to the status of its products under the rules and regulations of the
United States Food and Drug Administration (“FDA”), the Federal Trade Commission
(“FTC”), Canada’s Medical Devices Bureau of the Therapeutic Products Directorate
(“MDB”) and the Health Products and Food Branch Inspectorate of Health Canada,
including the FDA’s Federal Food, Drug and Cosmetic Act, the FTC’s Federal Trade
Commission Act and the MDB’s Medical Devices Regulations, is accurate and
complete in all material respects.
(pp) Compliance with GMP Regulations.
The Company’s disclosure in the Prospectus with respect to the compliance
of the Company and its principle suppliers with GMP (as defined in the
Prospectus) is accurate and complete in all material respects.
Any certificate signed by an officer of
the Company and delivered to the Representative or to counsel for the
Underwriters shall be deemed to be a representation and warranty by the Company
to each Underwriter as to the matters set forth therein.
The
Company acknowledges that the Underwriters and, for purposes of the opinions to
be delivered pursuant to Section 5 hereof, counsel to the Company and counsel to
the Underwriters, will rely upon the accuracy and truthfulness of the foregoing
representations and hereby consents to such reliance.
Section
2. Purchase, Sale
and Delivery of the Securities.
(a) The Firm Shares and Firm
Warrants. Upon the terms herein set forth, the Company agrees
to issue and sell the Firm Shares and the Firm Warrants to the Underwriters. On
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the
Underwriters, severally and not jointly, agree to purchase, at a price of
$[____] per Share (which price reflects an Underwriter’s discount of 6.5%), the
Firm Shares and Firm Warrants from the Company.
12
(b) The First Closing Date. Delivery of the
Firm Shares to be purchased by the Underwriters and payment therefor shall be
made at 10:00 a.m. New York time on February [__], 2010, or such other time and
date as the Representative shall designate by notice to the Company (the time
and date of such closing are called the “First Closing Date”).
The Company hereby acknowledges that circumstances under which the
Representative may provide notice to postpone the First Closing Date as
originally scheduled include, but are in no way limited to, any determination by
the Company or the Representative to recirculate to the public copies of an
amended or supplemented Prospectus or Disclosure Package or a delay as
contemplated by the provisions of Section 10.
(c) The Option Shares and Warrants; Each
Subsequent Closing Date. In addition, on
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the Underwriters to purchase severally, not jointly,
the Option Shares and the Option Warrants [15% of the Firm Shares and Firm
Warrants] from the Company at the same purchase price per to be paid
by the Underwriters for the Firm Shares and the Firm Warrants solely to cover
over allotments. The option granted hereunder may be exercised at any time and
from time to time upon notice by the Representative to the Company, which notice
may be given at any time within 45 days from the date of this Agreement. Such
notice shall set forth (i) the aggregate number of Option Shares and Option
Warrants as to which the Underwriters are exercising the option; (ii) the names
and denominations in which the Option Shares and Option Warrants are to be
registered; and (iii) the time, date and place at which such Option Shares and
Option Warrants will be delivered (which time and date may be simultaneous with,
but not earlier than, the First Closing Date; and in such case the term “First
Closing Date” shall refer to the time and date of delivery of the Securities).
Each time and date of delivery, if subsequent to the First Closing Date, is
called the “Subsequent
Closing Date” and shall be determined by the Representative and shall not
be earlier than two nor later than five full business days after delivery of
such notice of exercise. The Representative may cancel the option at any time
prior to its expiration by giving written notice of such cancellation to the
Company.
(d) Public Offering of the Securities. The
Representative hereby advises the Company that it intends to offer for sale to
the public, as described in the Prospectus, the Firm Shares and Firm Warrants as
soon after this Agreement has been executed and the Registration Statement has
been declared effective as the Representative, in its sole judgment, has
determined is advisable and practicable.
(e) Payment for the Shares and
Warrants. Payment for the
Shares and Warrants to be sold by the Company shall be made at the First Closing
Date (and, if applicable, at any Subsequent Closing Date) by wire transfer of
immediately available funds to the order of the
Company.
It is
understood that the Representative has been authorized, for its own account and
the accounts of the several Underwriters, to accept delivery of and receipt for,
and make payment of the purchase price for, the Shares and Warrants the
Underwriters have agreed to purchase. The Representative,
individually and not as the Representative of the Underwriters, may (but shall
not be obligated to) make payment for any Shares or Warrants to be purchased by
any Underwriter whose funds shall not have been received by the Representative
by the First Closing Date or any Subsequent Closing Date, as the case maybe, for
the account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
13
(f) Delivery of the Shares and
Warrants. Delivery of the
Shares shall be made through the facilities of The Depository Trust Company
unless the Representative shall otherwise instruct. Time shall be of the
essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriters. Delivery of
the Warrants shall be made directly by the Company.
(g) Delivery of Prospectus to the
Underwriter. As soon as
practicable, but not later than [10:00 a.m. New York Time on the second
business] day following the date the Units are first released by the
Underwriters for sale to the public, the Company shall deliver or cause to be
delivered, copies of the Prospectus in such quantities and at such places as the
Representative shall request.
(h) Representative’s
Warrants. In addition to the sums payable to the Underwriters
as provided elsewhere herein, the Representative shall be entitled to receive at
the closing occurring on the First Closing Date, as additional compensation for
its services, warrants for the purchase of ______ shares of Common Stock [an
amount equal to 3% of the Firm Shares] at a price of $[_____] per share [125.0%
of offering price to the public] (the “Representative’s
Warrants”), upon the terms and subject to adjustment and conversion as
described in the form of Representative’s Warrants filed as an exhibit to the
Registration Statement.
Section
3. Covenants
of the Company.
The
Company covenants and agrees with the Underwriter as follows:
(a) Representative’s Review of Proposed
Amendments and Supplements. During the
period beginning at the Initial Sale Time and ending on the later of the First
Closing Date or such date as, in the opinion of counsel for the Underwriters,
the Prospectus is no longer required by law to be delivered in connection with
sales by an Underwriter or any dealer, including under circumstances where such
requirement may be satisfied pursuant to Rule 172 under the Securities Act (the
“Prospectus Delivery
Period”), prior to amending or supplementing the Registration Statement
or the Prospectus, including any amendment or supplement through incorporation
by reference of any report filed under the Exchange Act, the Company shall
furnish to the Representative for review a copy of each such proposed amendment
or supplement, and the Company shall not file any such proposed amendment or
supplement to which the Representative reasonably objects.
14
(b) Securities Act
Compliance. After the date
of this Agreement, the Company shall promptly advise the Representative in
writing (i) when the Registration Statement, if not effective at the Execution
Time, shall have become effective; (ii) of the receipt of any comments of, or
requests for additional or supplemental information from, the Commission or any
regulatory or administrative authority in a state where the Underwriters propose
to offer and sell the Securities; (iii) of the time and date of any filing of
any post-effective amendment to the Registration Statement or any amendment or
supplement to any Preliminary Prospectus or the Prospectus; (iv) of the time and
date that any post-effective amendment to the Registration Statement becomes
effective; and (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or of any order or notice preventing or suspending the use of
the Registration Statement, any Preliminary Prospectus or the Prospectus, or of
any proceedings to remove, suspend or terminate the Common Stock from being
quoted on the OTCBB or from being listed on any securities exchange upon which
it is listed for trading, or of the threatening or initiation of any proceedings
for any of such purposes. The Company shall use its best efforts to prevent the
issuance of any such stop order or prevention or suspension of such use. If the
Commission shall enter any such stop order or order or notice of prevention or
suspension at any time, the Company will use its best efforts to obtain the
lifting of such order at the earliest possible moment, or will file a new
registration statement and use its best efforts to have such new registration
statement declared effective as soon as practicable. Additionally, the Company
agrees that it shall comply with the provisions of Rules 424(b) and 430A, as
applicable, under the Securities Act, including with respect to the timely
filing of documents thereunder, and will use its reasonable efforts to confirm
that any filings made by the Company under such Rule 424(b) were received in a
timely manner by the Commission.
(c) Exchange Act
Compliance. During the Prospectus Delivery Period, the Company
will file all documents required to be filed with the Commission pursuant to
Section 13, 14 or 15 of the Exchange Act in the manner and within the time
periods required by the Exchange Act.
(d) Amendments and Supplements to the
Registration Statement, Prospectus and Other Securities Act Matters. If, during the
Prospectus Delivery Period, any event or development shall occur or condition
exist as a result of which the Disclosure Package or the Prospectus as then
amended or supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein in the light of the circumstances under which they were made, as the
case may be, not misleading, or if it shall be necessary to amend or supplement
the Disclosure Package or the Prospectus, or to file under the Exchange Act any
document incorporated by reference in the Disclosure Package or the Prospectus,
in order to make the statements therein, in the light of the circumstances under
which they were made, as the case may be, not misleading, or if in the opinion
of the Representative it is otherwise necessary to amend or supplement the
Registration Statement, the Disclosure Package or the Prospectus, or to file
under the Exchange Act any document incorporated by reference in the Disclosure
Package or the Prospectus, or to file a new registration statement containing
the Prospectus, in order to comply with law, including in connection with the
delivery of the Prospectus, the Company agrees to (i) notify the Representative
of any such event or condition (unless such event or condition was previously
brought to the Company’s attention by the Representative during the Prospectus
Delivery Period) and (ii) promptly prepare (subject to Sections 3(a) and 3(e)
hereof), file with the Commission (and use its best efforts to have any
amendment to the Registration Statement or any new registration statement to be
declared effective) and furnish at its own expense to the Underwriters and to
dealers, amendments or supplements to the Registration Statement, the Disclosure
Package or the Prospectus, or any new registration statement, necessary in order
to make the statements in the Disclosure Package or the Prospectus as so amended
or supplemented, in the light of the circumstances under which they were made,
as the case may be, not misleading or so that the Registration Statement, the
Disclosure Package or the Prospectus, as amended or supplemented, will comply
with applicable law. (e)Permitted Free Writing
Prospectuses. The Company represents that it has not made, and
agrees that, unless it obtains the prior written consent of the Representative,
it will not make, any offer relating to the Securities that would constitute an
Issuer Free Writing Prospectus or that would otherwise constitute a “free writing
prospectus” (as defined in Rule 405 of the Securities Act) required to be
filed by the Company with the Commission or retained by the Company under Rule
433 of the Securities Act; provided that the prior written consent of the
Representative hereto shall be deemed to have been given in respect of the Free
Writing Prospectuses included in Schedule B hereto. Any such free writing
prospectus consented to by the Representative is hereinafter referred to as a
“Permitted Free
Writing Prospectus.” The Company agrees that (i) it has treated and will
treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer
Free Writing Prospectus, and (ii) has complied and will comply, as the case may
be, with the requirements of Rules 164 and 433 of the Securities Act applicable
to any Permitted Free Writing Prospectus, including in respect of timely filing
with the Commission, legending and record keeping.
15
(f) Copies of any Amendments and
Supplements to the Prospectus. The Company
agrees to furnish the Representative, without charge, during the Prospectus
Delivery Period, as many copies of each of the Preliminary Prospectus, the
Prospectus and the Disclosure Package and any amendments and supplements thereto
(including any documents incorporated or deemed incorporated by reference
therein) as the Representative may reasonably request.
(g) Blue Sky Compliance. The Company
shall retain Underwriters’ counsel as the Company’s “Blue Sky Counsel” in
connection with the qualification or registration of the Securities for sale
under (or obtain exemptions from the application of) the state securities or
blue sky laws of those jurisdictions designated by the Representative, shall
comply with such laws and shall continue such qualifications, registrations and
exemptions in effect so long as required for the distribution of the Securities.
The Company shall not be required to qualify as a foreign corporation or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise the Representative
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Securities for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment. The Company will, from time
to time, prepare and file such statements, reports, certificates, notices and
other forms and documents as are or may be required to continue such
qualifications in effect for so long as the Representative may request for the
distribution of the Securities. In addition, within seven (7)
business days of the Effective Date, the Company shall be included in Standard
& Poor’s Market Access Program and shall maintain such inclusion for a
period of not less than three (3) years.
(h) Use of Proceeds. The Company
shall apply the net proceeds from the sale of the Securities sold by it in the
manner described under the caption “Use of Proceeds” in the Disclosure Package
and the Prospectus.
(i)
Transfer Agent. The Company will
maintain a transfer agent and, if necessary under the jurisdiction of
incorporation of the Company, a registrar for the Common Stock.
16
(j)
Earnings Statement. As soon as
practicable and in any event no later than 15 months after the effective date of
the Registration Statement, the Company will make generally available to its
security holders and to the Representative an earnings statement (which need not
be audited) covering a period of at least twelve months beginning after the
effective date of the Registration Statement that satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 under the Securities
Act.
(k) Periodic Reporting
Obligations. During the
Prospectus Delivery Period the Company shall file, on a timely basis, with the
Commission all reports and documents required to be filed under the Exchange
Act. Additionally, the Company shall report the use of proceeds from the
issuance of the Securities as may be required under Rule 463 under the
Securities Act.
(l) Company to Provide Interim Financial
Statements. Prior to the First Closing Date and, if
applicable, each Subsequent Closing Date, the Company will furnish the
Representative, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the
Prospectus.
(m) Quotation. The
Company will take all action required or necessary to cause the Common Stock to
be listed on the NASDAQ Global Market or NASDAQ Capital Market as of the
Effective Date.
(n) Agreement Not to Offer or Sell
Additional Securities. During the period
commencing on the date hereof and ending on the 90th day following the date of
the Prospectus, the Company will not, without the prior written consent of the
Representative (which consent may be withheld in the Representative’s sole and
absolute discretion), directly or indirectly, sell, offer, contract or grant any
option to sell, pledge, transfer or establish an open “put equivalent
position” within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act (except as contemplated by the
Prospectus) in respect of, any shares of Common Stock, options or warrants to
acquire shares of the Common Stock or securities exchangeable or exercisable for
or convertible into shares of Common Stock (other than as contemplated by this
Agreement with respect to the Securities); provided, however, that the
Company may issue shares of its Common Stock or options to purchase its Common
Stock, or shares of Common Stock upon exercise of options, in each case,
pursuant to any stock option, stock bonus or other stock plan, arrangement or
contractual obligation described in the Prospectus.
(o) Future Reports to the Representative. During the five
year period from and after the date hereof the Company will furnish, if not
otherwise available on IDEA (▇▇▇▇▇), to the Representative at 1251 Avenue of the
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate
Department: (i) as soon as practicable after the end of each fiscal
year, copies of the Annual Report of the Company containing the balance sheet of
the Company as of the close of such fiscal year and statements of income,
stockholders’ equity and cash flows for the year then ended and the opinion
thereon of the Company’s independent registered public accounting firm; (ii) as
soon as practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on
Form 8-K or other report filed by the Company with the Commission, FINRA or any
securities exchange; and (iii) as soon as available, copies of any report or
communication of the Company mailed generally to holders of its capital
stock.
17
(p) Investment Limitation. The Company
shall not invest, or otherwise use the proceeds received by the Company from its
sale of the Securities in such a manner as would require the Company to register
as an investment company under the Investment Company Act.
(q) No Manipulation of Price. The Company will
not take, directly or indirectly, any action designed to cause or result in, or
that has constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the
Company.
(r) Lock-up Agreements in Connection
with this Offering. The Company has caused each and all of its
officers and directors and 5% shareholders to furnish to the Underwriters, on or
prior to the date of this Agreement, a letter or letters, in form and substance
satisfactory to the Representative (“Lock-Up Agreements”),
pursuant to which each such person has agreed not to offer, sell, sell short or
otherwise dispose of any shares of Common Stock or other capital stock of the
Company, or any other securities convertible, exchangeable or exercisable for
Common Stock or derivatives of Common Stock owned by such person, directly or
indirectly, or request the registration for the offer or sale of any of the
foregoing (or as to which such person has the right to direct the disposition)
for a period of 180 days after the date of this Agreement, except with the prior
written consent of the Representative.
(s) Existing Lock-Up
Agreements. Except as
described in the Prospectus, there are no existing agreements between the
Company and its security holders that prohibit the sale, transfer, assignment,
pledge or hypothecation of any of the Company’s securities. The Company will
direct the transfer agent to place stop transfer restrictions upon the
securities of the Company that are bound by such “lock-up” agreements for the
duration of the periods contemplated therein.
Section
4. Payment of
Expenses.
(a) The
Representative shall be entitled to payment from the Company of a
non-accountable expense allowance equal to one half of one percent (0.50%) of
the aggregate initial public offering price of the Firm Shares and Firm Warrants
(but not the Option Shares and Option Warrants) purchased by the Underwriters,
of which $50,000 has been previously paid. The Representative shall be entitled
to withhold this allowance on the Closing Date related to the purchase of the
Firm Shares and firm Warrants.
18
(b) In
addition to the payment described in Paragraph (a) of this Section 4, the
Company agrees to pay all costs, fees and expenses incurred in connection with
the performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including without limitation (i) all expenses
incident to the issuance and delivery of the Securities (including all printing
and engraving costs, if any); (ii) all fees and expenses of the registrar and
transfer agent of the Common Stock; (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Securities to
the Underwriters; (iv) all fees and expenses of the Company’s counsel,
independent registered public accounting firm and other advisors; (v) all costs
and expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of the Registration Statement (including financial
statements, exhibits, schedules, consents and certificates of experts), each
Issuer Free Writing Prospectus, each Preliminary Prospectus and the Prospectus,
and all amendments and supplements thereto, and this Agreement; (vi) all filing
fees, attorneys’ fees (including Blue Sky Counsel fees) and expenses incurred in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Securities for offer
and sale under the state securities or blue sky laws, and, if requested by the
Representative, preparing and printing a “Blue Sky Survey” or memorandum, and
any supplements thereto, advising the Underwriters of such qualifications,
registrations and exemptions; (vii) the filing fees incident to FINRA’s review
and approval of the Underwriters’ participation in the offering and distribution
of the Securities; (viii) the fees and expenses associated with having the
Common Stock listed; (ix) all other fees, costs and expenses referred to in Item
13 of Part II of the Registration Statement; (x) all fees, expenses and
disbursements relating to background checks of the Company’s officers and
directors in an amount not to exceed $3,500 in the aggregate; (xi) the costs
associated with post-Closing advertising the Offering in the national editions
of the Wall Street Journal and New York Times; (xii) the costs associated with
bound volumes of the public offering materials as well as commemorative mementos
and lucite tombstones, each of which the Company or its designee will provide
within a reasonable time after the Closing in such quantities as ▇▇▇▇▇▇ may
reasonably request; (xiii) the $16,000 cost associated with ▇▇▇▇▇▇’▇ use of
i-Deal’s book-building, prospectus tracking and compliance software for the
Offering; and (xiv) up to $10,000 of ▇▇▇▇▇▇’▇ actual accountable “road show”
expenses. Provided, however, the Company’s responsibility for the fees and
expenses set forth in Section 4(a) and in Section 4(b)(x), (xi), (xii), (xiii)
and (xiv) shall in no event exceed the sum of $100,000 in the aggregate. Except
as provided in this Section 4, Section 6, Section 8 and Section 9 hereof, each
Underwriter shall pay its own expenses, including the fees and disbursements of
its counsel.
Section
5. Conditions of
the Obligations of the Underwriters. The obligations
of the Underwriters to purchase and pay for the Firm Shares and the Firm
Warrants as provided herein on the First Closing Date and, with respect to the
Option Shares and the Option Warrants, each Subsequent Closing Date, shall be
subject to (i) the accuracy of the representations and warranties on the part of
the Company set forth in Section 1 hereof as of the date hereof and as of the
First Closing Date and each Subsequent Closing Date as though then made; (ii)
the timely performance by the Company of its covenants and other obligations
hereunder; and (iii) each of the following additional conditions:
(a) Accountants’ Comfort
Letter. On the date
hereof, the Representative shall have received from Ernst & Young LLP,
independent registered public accounting firm of the Company, a letter dated the
date hereof addressed to the Underwriters, in form and substance satisfactory to
the Representative, containing statements and information of the type ordinarily
included in accountant’s “comfort letters” to underwriters, delivered according
to Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaudited financial statements and certain financial
information contained in the Registration Statement and the
Prospectus.
(b) Effectiveness of Registration
Statement; Compliance with Registration Requirements; No Stop Order. For the period
from and after effectiveness of this Agreement and prior to the First Closing
Date and, with respect to the Option Shares and Option Warrants, any Subsequent
Closing Date:
19
(i) the
Company shall have filed the Prospectus with the Commission (including the
information required by Rule 430A under the Securities Act) in the manner and
within the time period required by Rule 424(b) under the Securities Act; or the
Company shall have filed a post-effective amendment to the Registration
Statement containing the information required by such Rule 430A, and such
post-effective amendment shall have become effective; and
(ii) no
stop order suspending the effectiveness of the Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and
no proceedings for such purpose shall have been instituted or threatened by the
Commission.
(c) No Material Adverse
Change. For the period
from and after the date of this Agreement and prior to the First Closing Date
and, with respect to the Option Shares and Option Warrants, each Subsequent
Closing Date, in the judgment of the Representative there shall not have
occurred any Material Adverse Change.
(d) Opinion of Counsel for the
Company. On each of the
First Closing Date and each Subsequent Closing Date, the Underwriters shall have
received the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the Company, dated as
of the First Closing Date or the Subsequent Closing Date, as applicable,
substantially in the form attached as Exhibit A.
With respect to factual matters,
counsel for the Company may rely on (i) certificates issued by governmental
agencies; (ii) certificates executed and delivered by an executive officer
of the Company; and (iii) the representations and warranties of the Company
as set forth herein, provided that such counsel shall not have actual knowledge
that any information or statements set forth in such certificates or any
representations and warranties contained herein are untrue, inaccurate, wrong or
misleading and such counsel shall specifically state that they believe that the
Underwriters and Underwriters’ counsel may rely on the same.
In addition to the matters set forth
above, the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ shall also state that such counsel has
participated in conferences with officers and other representatives of the
Company, the Representative and representatives of the Company’s independent
registered public accounting firm, at which conferences the contents of the
Registration Statement, the Prospectus and the Disclosure Package and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus, on the
basis of the foregoing, no facts have come to the attention of such counsel
which lead such counsel to believe that (i) the Registration Statement at the
time it became effective contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; (ii) that the Prospectus as amended
or supplemented (except with respect to the financial statements and notes
thereto and other financial data, as to which such counsel need make no
statement) on the date thereof, the Closing Date or any Option Closing Date, as
the case may be; or (iii) the Disclosure Package as of the Initial Sale Time
contained any untrue statement of a material fact or omitted 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 (it being understood
that such counsel need express no belief as to the financial statements and
notes thereto and other financial data derived therefrom included in the
Registration Statement, the Prospectus or the Disclosure Package.
20
(e) Opinion of Counsel for the
Underwriters. On each of the
First Closing Date and each Subsequent Closing Date, the Underwriters shall have
received the opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the
Underwriters, dated as of the First Closing Date or the Subsequent Closing Date,
as applicable, in substance and form satisfactory to the
Representative.
(f) Officers’ Certificate. On each of the
First Closing Date and each Subsequent Closing Date, the Underwriters shall have
received a written certificate, in form and substance satisfactory to the
Representative, executed by the Chairman of the Board, Chief Executive Officer
or President of the Company, on the one hand, and the Chief Financial Officer or
Chief Accounting Officer of the Company, on the other hand, dated as of such
Closing Date, to the effect that the signers of such certificate have reviewed
the Registration Statement, the Prospectus and any amendment or supplement
thereto, any Issuer Free Writing Prospectus and any amendment or supplement
thereto and this Agreement, to the effect set forth in subsection (b)(ii) of
this Section 5, and further to the effect that:
(i) for
the period from and after the date of this Agreement and prior to such Closing
Date, there has not occurred any Material Adverse Change;
(ii) the
representations, warranties and covenants of the Company set forth in Section 1
of this Agreement are true and correct with the same force and effect as though
expressly made on and as of such Closing Date; and
(iii)
the Company has complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date.
(g) Chief Financial Officer’s
Certificate. On each of the First Closing Date and each
Subsequent Closing Date, the Underwriters shall have received a written
certificate, in form and substance satisfactory to the Representative, executed
by the Chief Financial Officer or Chief Accounting Officer of the Company, dated
as of such Closing Date, confirming the capitalization of the Company and
verifying that all required income taxes have been paid, tax returns filed and
any such other customary matters as the Representative shall deem reasonably
appropriate.
(h) Secretary’s
Certificate. On each of the First Closing Date and each
Subsequent Closing Date, the Underwriters shall have received a written
certificate, in form and substance satisfactory to the Representative, executed
by the Secretary of the Company, dated as of such Closing Date, with respect to
such customary matters as the Representative shall deem reasonably
appropriate.
21
(i) Bring-down Comfort
Letter. On each of the
First Closing Date and each Subsequent Closing Date, the Underwriters shall have
received from Ernst & Young LLP, independent public or certified public
accountants for the Company, a letter dated such date, in form and substance
satisfactory to the Representative, to the effect that it reaffirms the
statements made in the letter furnished by it pursuant to subsection (a) of this
Section 5, except that the specified date referred to therein for the carrying
out of procedures shall be no more than three business days prior to the First
Closing Date or Subsequent Closing Date, as the case may be.
(j) Lock-Up Agreement from Officers,
Directors and 5% Shareholders of the Company. On or prior to
the date hereof, the Company shall have furnished to the Representative an
agreement in the form of Exhibit B hereto from each officer and director of the
Company, and any person who beneficially owns 5% or more of the outstanding
shares of capital stock of the Company and such agreement shall be in full force
and effect on each of the First Closing Date and each Subsequent Closing
Date.
(k) The
Shares shall have been listed on the NASDAQ Global Market or NASDAQ Capital
Market.
(l)
Additional Documents. On or before
each of the First Closing Date and each Subsequent Closing Date, the
Representative and counsel for the Underwriters shall have received such
information, documents, certificates and opinions as they may reasonably require
for the purposes of enabling them to pass upon the issuance and sale of the
Securities as contemplated herein, or in order to evidence the accuracy of any
of the representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.
(m) Right of First
Refusal. Company has granted to the Underwriter a right of
first refusal to conduct future offerings for the Company during the six months
following the date of the prospectus. The compensation value for this
right of first refusal shall be 1% of the offering proceeds.
If any
condition specified in this Section 5 is not satisfied when and as required to
be satisfied, this Agreement may be terminated by the Representative by notice
to the Company at any time on or prior to the First Closing Date and, with
respect to the Option Shares and Option Warrants, at any time prior to each
Subsequent Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Section 4, Section 6, Section
8 and Section 9 shall at all times be effective and shall survive such
termination.
Section
6. Reimbursement of
Underwriters’ Expenses. If this
Agreement is terminated by the Representative pursuant to Section 5, Section 10,
or Section 11, or by the Company pursuant to Section 7, or if the sale to the
Underwriters of the Securities on the First Closing Date or Subsequent Closing
Date is not consummated because of any refusal, inability or failure on the part
of the Company to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse the Underwriters upon demand for all
out-of-pocket accountable expenses that shall have been actually incurred by the
Underwriters in connection with the proposed offering of the Securities,
provided, however, the Company’s responsibility for the foregoing fees and
expenses shall in no event exceed the sum of $75,000.
22
Section
7. Effectiveness of
this Agreement. This Agreement
shall not become effective until the later of (i) the execution of this
Agreement by the parties hereto and (ii) notification (including by way of oral
notification from the reviewer at the Commission) by the Commission to the
Company of the effectiveness of the Registration Statement under the Securities
Act; provided that
Sections 4, 6, 8 and 9 shall at all times be effective.
Prior to
such effectiveness, this Agreement may be terminated by any party by notice to
each of the other parties hereto, and any such termination shall be without
liability on the part of (a) the Company to any Underwriter, except that (solely
in the case where the Company has terminated this Agreement pursuant to this
Section 7) the Company shall be obligated to reimburse the expenses of the
Underwriters pursuant to Sections 4 and 6 hereof, or (b) any Underwriter to the
Company except that the provisions of Section 8 and Section 9 shall at all times
be effective and shall survive such termination.
Section
8. Indemnification.
(a) Indemnification of the
Underwriters.
The
Company agrees to indemnify and hold harmless each Underwriter, its respective
officers and employees, and each person, if any, who controls such Underwriter
within the meaning of the Securities Act and the Exchange Act against any loss,
claim, damage, liability or expense, as incurred, to which such Underwriter or
such controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation or at common
law or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A, Rule 430B and Rule 430C under the Securities
Act, or the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not misleading;
or (ii) upon any untrue statement or alleged untrue statement of a material fact
contained in any Issuer Free Writing Prospectus, any Preliminary Prospectus or
the Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; or (iii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iv) in whole
or in part upon any failure of the Company to perform its obligations hereunder
or under law; or (v) upon any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Common Stock or the offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon any matter covered by clause (i) or (ii) above,
provided that the Company shall not be liable under this clause (v) to the
extent that a court of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or action resulted directly
from any such acts or failures to act undertaken or omitted to be taken by an
Underwriter through its gross negligence or willful misconduct; and to reimburse
the Underwriters and each such controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by the Underwriters) as
such expenses are reasonably incurred by the Underwriters or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representative expressly for use in
the Registration Statement, any Issuer Free Writing Prospectus, any Preliminary
Prospectus or the Prospectus (or any amendment or supplement
thereto). The indemnity agreement set forth in this Section 8(a)
shall be in addition to any liabilities that the Company may otherwise
have.
23
(b) Indemnification of the Company, its
Directors and Officers. Each Underwriter
agrees to indemnify and hold harmless the Company, each of its directors, each
of its officers who signed the Registration Statement and each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer, or controlling
person may become subject, under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based upon any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Issuer Free Writing
Prospectus, any Preliminary Prospectus or the Prospectus (or any amendment or
supplement thereto), or arises out of or is based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Issuer Free Writing Prospectus, any Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by the
Representative expressly for use therein; and to reimburse the Company, or any
such director, officer, or controlling person for all expenses reasonably
incurred by the Company (including attorneys fees), or any such director,
officer, or controlling person, in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The Company hereby acknowledges that the only information
that the Representative has furnished to the Company expressly for use in the
Registration Statement, any Issuer Free Writing Prospectus, any Preliminary
Prospectus or the Prospectus (or any amendment or supplement thereto) are the
statements in the table in the first paragraph, in the third and fourth
paragraphs (relating to concessions, reallowances and confirmations) and in the
sixth and seventh paragraphs (relating to stabilization and market making
activities) under the caption “Underwriting” in the Preliminary Prospectus. The
indemnity agreement set forth in this Section 8(b) shall be in addition to any
liabilities that the Underwriters may otherwise have.
24
(c) Notifications and Other
Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such
action is brought against any indemnified party and such indemnified party seeks
or intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (in addition to local counsel), approved by the
indemnifying party (the Representative in the case of Section 8(b) and Section
9), representing the indemnified parties who are parties to such action) or (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying
party.
(d) Settlements. The indemnifying
party under this Section 8 shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 8(c) hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
25
Section
9. Contribution. If the
indemnification provided for in Section 8 is for any reason held to be
unavailable to or otherwise insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
paid or payable by such indemnified party, as incurred, as a result of any
losses, claims, damages, liabilities or expenses referred to therein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying parties on the one hand, and the indemnified parties, on the other
hand, from the offering of the Securities pursuant to this Agreement or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the indemnifying
parties, on the one hand, and the indemnified parties, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the indemnifying parties, on
the one hand, and the indemnified parties, on the other hand, in connection with
the offering of the Securities pursuant to this Agreement shall be deemed to be
in the same respective proportions as the total net proceeds from the offering
of the Securities pursuant to this Agreement (before deducting expenses)
received by the indemnifying parties, and the total underwriting discount
received by the indemnified parties, in each case as set forth on the front
cover page of the Prospectus bear to the aggregate initial public offering price
of the Securities as set forth on such cover. The relative fault of the
indemnifying parties, on the one hand, and the indemnified parties, on the other
hand, shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by indemnifying
parties, on the one hand, or the indemnified parties, on the other hand, 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, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 8(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in Section
8(c) with respect to notice of commencement of any action shall apply if a claim
for contribution is to be made under this Section 9; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 8(c) for purposes of indemnification.
The
Company and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
(even if the Underwriters was treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in this Section 9.
26
Section
10. Default of One
or More of the Several Underwriters. If, on the First Closing
Date or each Subsequent Closing Date, as the case may be, any one or more of the
several Underwriters shall fail or refuse to purchase Securities that it or they
have agreed to purchase hereunder on such date, and the aggregate number of
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase does not exceed 10% of the aggregate number of the
Securities to be purchased on such date, the other Underwriters shall be
obligated, severally, in the proportions that the number of Firm Shares and firm
Warrants set forth opposite their respective names on Schedule A bears to the
aggregate number of Firm Shares and Firm Warrants set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representative with the consent of the non-defaulting
Underwriters, to purchase the Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such
date. If, on the First Closing Date or each Subsequent Closing Date,
as the case may be, any one or more of the Underwriters shall fail or refuse to
purchase Securities and the aggregate number of Securities with respect to which
such default occurs exceeds 10% of the aggregate number of Securities to be
purchased on such date, and arrangements satisfactory to the Representative and
the Company for the purchase of such Securities are not made within 48 hours
after such default, this Agreement shall terminate without liability of any
party to any other party except that the provisions of Section 4, Section 6,
Section 8 and Section 9 shall at all times be effective and shall survive such
termination. In any such case either the Representative or the
Company shall have the right to postpone the First Closing Date or each
Subsequent Closing Date, as the case may be, but in no event for longer than
seven days in order that the required changes, if any, to the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected.
Section
11. Termination of
this Agreement. Prior to the
First Closing Date and, with respect to the Option Shares and Option Warrants,
each Subsequent Closing Date, whether before or after notification by the
Commission to the Company of the effectiveness of the Registration Statement
under the Securities Act, this Agreement may be terminated by the Representative
by notice given to the Company if at any time (i) trading in any of the
Company’s securities shall have been suspended or limited by the Commission or
by the NASDAQ Stock Market, Inc. or trading in securities generally on either
the NASDAQ Stock Market, Inc. or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or FINRA; (ii) a
general banking moratorium shall have been declared by any of federal or State
of New York authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity,
or any change in the United States or international financial markets, or any
substantial change or development involving a prospective substantial change in
United States’ or international political, financial or economic conditions
that, in the judgment of the Representative is material and adverse and makes it
impracticable to market the Securities in the manner and on the terms described
in the Prospectus or to enforce contracts for the sale of securities or (iv) in
the judgment of the Representative there shall have occurred any Material
Adverse Change (regardless of whether any loss associated with such Material
Adverse Change shall have been insured). Any termination pursuant to this
Section 11 shall be without liability on the part of (a) the Company to the
Underwriters, except that the Company shall be obligated to reimburse the actual
out-of-pocket accountable expenses of the Underwriters pursuant to Sections 4
and 6 hereof, (b) any Underwriter to the Company or (c) of any party hereto to
any other party except that the provisions of Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
27
Section
12. No Advisory or
Fiduciary Responsibility. The Company acknowledges and agrees
that: (i) the purchase and sale of the Securities pursuant to this Agreement,
including the determination of the public offering price of the Securities and
any related discounts and commissions, is an arm’s-length commercial transaction
between the Company, on the one hand, and the Underwriters, on the other hand,
and the Company is capable of evaluating and understanding and understands and
accepts the terms, risks and conditions of the transactions contemplated by this
Agreement; (ii) in connection with each transaction contemplated hereby and the
process leading to such transaction each Underwriter is and has been acting
solely as a principal and is not the financial advisor, agent or fiduciary of
the Company or its affiliates, stockholders, creditors or employees or any other
party; (iii) no Underwriter has assumed or will assume an advisory, agency or
fiduciary responsibility in favor of the Company with respect to any of the
transactions contemplated hereby or the process leading thereto (irrespective of
whether such Underwriter has advised or is currently advising the Company on
other matters) and no Underwriter has any obligation to the Company with respect
to the offering contemplated hereby except the obligations expressly set forth
in this Agreement; (iv) the Underwriters and their respective affiliates may be
engaged in a broad range of transactions that involve interests that differ from
those of the Company and that the Underwriters have no obligation to disclose
any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (v) no Underwriter has provided any legal, accounting,
regulatory or tax advice with respect to the offering contemplated hereby and
the Company has consulted its own legal, accounting, regulatory and tax advisors
to the extent it deemed appropriate. The Company hereby waives and releases, to
the fullest extent permitted by law, any claims that the Company may have
against any Underwriter with respect to any breach or alleged breach of agency
or fiduciary duty.
This
Agreement supersedes all prior agreements and understandings (whether written or
oral) between the Company and any Underwriter with respect to the subject matter
hereof.
Section
13. Representations
and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, of its officers, and of the Underwriter set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
its or their partners, officers or directors or any controlling person, as the
case may be, and will survive delivery of and payment for the Securities sold
hereunder and any termination of this Agreement.
28
Section
14. Notices. All
communications hereunder shall be in writing and shall be mailed, hand delivered
or telecopied and confirmed to the parties hereto as follows:
If to the
Underwriters:
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLC
1251
Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: Syndicate
Department
with
a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇
LLP
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇, Esq.
If to the
Company:
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: Chief
Executive Officer
with
a copy to:
▇▇▇▇▇▇
& ▇▇▇▇▇▇
▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇
▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇., Esq.
Any party
hereto may change the address for receipt of communications by giving written
notice to the others.
Section
15. Successors. This Agreement
will inure to the benefit of and be binding upon the parties hereto and to the
benefit of the employees, officers and directors and controlling persons
referred to in Section 8 and Section 9, and in each case their respective
successors, and personal representatives and no other person will have any right
or obligation hereunder. The term “successors” shall not
include any purchaser of the Securities as such from any of the Underwriters
merely by reason of such purchase.
Section
16. Partial Unenforceability. The invalidity
or unenforceability of any section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other section, paragraph
or provision hereof. If any section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
29
Section
17. Governing Law Provisions. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH
STATE.
Section
18. Consent
to Jurisdiction. Any legal suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby (“Related Proceedings”)
may be instituted in the federal courts of the United States of America located
in New York, New York or the courts of New York in each case located in New
York, New York (collectively, the “Specified Courts”),
and each party irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court (a “Related
Judgment”), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. Service of any process, summons,
notice or document by mail to such party’s address set forth above shall be
effective service of process for any suit, action or other proceeding brought in
any such court. The parties irrevocably and unconditionally waive any objection
to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such suit, action or other proceeding brought in any
such court has been brought in an inconvenient forum.
Section
19. General
Provisions. This Agreement
constitutes the entire agreement of the parties to this Agreement and supersedes
all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein (express
or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Section headings herein are for
the convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
Each of
the parties hereto acknowledges that it is a sophisticated business person who
was adequately represented by counsel during negotiations regarding the
provisions hereof, including, without limitation, the indemnification provisions
of Section 8 and the contribution provisions of Section 9, and is fully informed
regarding said provisions. Each of the parties hereto further acknowledges that
the provisions of Sections 8 and 9 hereto fairly allocate the risks in light of
the ability of the parties to investigate the Company, its affairs and its
business in order to assure that adequate disclosure has been made in the
Registration Statement, any Preliminary Prospectus and the Prospectus (and any
amendments and supplements thereto), as required by the Securities Act and the
Exchange Act.
The
respective indemnities, contribution agreements, representations, warranties and
other statements of the Company and the Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the officers or employees of any
Underwriter, any person controlling any Underwriter, the Company, the officers
or employees of the Company, or any person controlling the Company; (ii)
acceptance of the Securities and payment for them hereunder; and (iii)
termination of this Agreement.
30
Except as
otherwise provided, this Agreement has been and is made solely for the benefit
of and shall be binding upon the Company, the Underwriters, the Underwriters’
officers and employees, any controlling persons referred to herein, the
Company’s directors and the Company’s officers who sign the Registration
Statement and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term “successors and
assigns” shall not include a purchaser of any Securities from any
Underwriter merely because of such purchase.
This
Underwriting Agreement may be executed in counterparts (including facsimile or
..pdf counterparts), each of which shall be deemed an original but all of which
together shall constitute one and the same instrument
If the foregoing is in accordance with
your understanding of our agreement, kindly sign and return to the Company the
enclosed copies hereof, whereupon this instrument, along with all counterparts
hereof, shall become a binding agreement in accordance with its
terms.
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Very
truly yours,
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By:
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Name:
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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Title:
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President
and Chief Executive
Officer
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The
foregoing Underwriting Agreement is hereby confirmed and accepted by the
Representative, for itself and on behalf of the several Underwriters, as of the
date first above written.
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLC
Acting as
Representative of the several
Underwriters
named in the attached Schedule A.
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By:
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Name:
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Title:
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31
SCHEDULE
A
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Underwriters
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Number of Firm
Shares to be
Purchased
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Number of Firm
Warrants to be
Purchased
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▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLC
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Total
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SCH.
A-1
SCHEDULE
B
Issuer Free Writing
Prospectus
SCH. B-1
SCHEDULE
C
Pricing
Terms
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Price
per Share and Warrant to public:
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$________
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Underwriting
discounts and commissions per Share and Warrant:
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$________
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Offering
proceeds to the Company, before expenses:
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$________
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Closing
Date: February [ ], 2010
SCH.
C-1
SCHEDULE
D
States
in which Offering has been Qualified
SCH.
D-1
EXHIBIT
A
OPINION
OF COUNSEL FOR THE COMPANY
TO
BE DELIVERED PURSUANT TO SECTION 5(d)
OF
THE UNDERWRITING AGREEMENT
(i) The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Pennsylvania.
(ii) The
Company has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Disclosure Package
and the Prospectus and to enter into and perform its obligations under this
Agreement.
(iii) The
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each other jurisdiction in which such qualification is
required, except for such jurisdictions where the failure to so qualify or to be
in good standing would not, individually or in the aggregate, result in a
Material Adverse Change.
(iv) To
the best of counsel’s knowledge, the Company does not own an equity interest in
any other entity.
(v) The
Company has authorized and outstanding capital stock as set forth under the
caption “Capitalization” in the Prospectus and the Disclosure Package; the
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable and, to the best of counsel’s knowledge,
have been issued in compliance with the registration and qualification
requirements of federal and state securities laws; the Shares and Warrants to be
sold by the Company, including the shares underlying the Warrants, have been
duly authorized and, when issued and delivered in accordance with the terms of
this Agreement and the Warrants, will be validly issued, fully paid and
non-assessable; all of the securities of the Company conform to the description
thereof contained in the Prospectus and the Disclosure Package; the certificates
for the Common Stock are in due and proper form under Pennsylvania law and
comply in all material respects with the requirements of the NASDAQ Stock
Market, Inc.; no preemptive rights of stockholders exist with respect to any of
the Common Stock or the issuance or sale thereof pursuant to any applicable
statute or the provisions of the Company’s Certificate of Incorporation or
Bylaws or, to the best of counsel’s knowledge, pursuant to any contractual
obligation.
(vi) Except
as described in or contemplated by the Prospectus and the Disclosure Package, to
the knowledge of such counsel (a) there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and (b) there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus and the Disclosure Package, to the knowledge of such counsel, no
holder of any securities of the Company or any other person has the right,
contractual or otherwise, which has not been satisfied or effectively waived, to
cause the Company to sell or otherwise issue to them, or to permit them to
underwrite the sale of, any of the Shares or the right to have any Common Stock
or other securities of the Company included in the Registration Statement or the
right, as a result of the filing of the Registration Statement, to require
registration under the Securities Act of any shares of Common Stock or other
securities of the Company.
EXH.
A-1
(vii) No
stockholder of the Company or any other person has any preemptive right, right
of first refusal or other similar right to subscribe for or purchase securities
of the Company arising (i) by operation of the Certificate of Incorporation or
Bylaws of the Company or the Business Corporation Law of the State of
Pennsylvania or (ii) to the best of counsel’s knowledge, otherwise.
(viii) The
Company has all necessary material licenses, authorizations, consents and
approvals and has made all necessary filings required under any federal, state
or local law, regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons (including federal, state and local
regulators), required to conduct their respective businesses, as described in
both the Prospectus and the Disclosure Package; the Company is not in violation
of, in default under, nor has it received any notice regarding a possible
violation, default or revocation of any such material license, authorization,
consent or approval or any federal, state, local or foreign law, regulation or
decree, order or judgment applicable to the Company.
(ix) The
Underwriting Agreement has been duly authorized, executed and delivered by the
Company as contemplated in the Registration Statement, the Prospectus and the
Disclosure Package. The Underwriting Agreement constitutes a legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors’
rights and to general equity principles.
(x) The
Common Stock to be purchased by the Underwriter from the Company, including the
Option Shares, has been duly authorized and reserved for issuance and sale
pursuant to the Underwriting Agreement and, when so issued and delivered by the
Company, will be validly issued, fully paid and nonassessable.
(xi) The
Registration Statement and the Rule 462(b) Registration Statement, if any, has
been declared effective by the Commission under the Securities Act. To the best
of counsel’s knowledge, no stop order suspending the effectiveness of either of
the Registration Statement or the Rule 462(b) Registration Statement, if any,
has been issued under the Securities Act, and no proceedings for such purpose
have been instituted or are pending or are contemplated or threatened by the
Commission. Any required filing of the Disclosure Package and the Prospectus and
any supplement thereto pursuant to Rule 424(b) under the Securities Act has been
made in the manner and within the time period required by such Rule
424(b).
EXH.
A-2
(xii) The
Underwriter’s Warrants have been duly authorized by the Company. When duly
executed, issued and delivered by the Company as contemplated in this Agreement
and the Registration Statement, the Prospectus and the Disclosure Package, the
Underwriter’s Warrants will constitute the legally binding obligation of the
Company, enforceable against the Company in accordance with their terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles. The shares of Common Stock issuable upon exercise
of the Underwriter’s Warrants have been duly authorized and reserved for
issuance and sale and when so issued and delivered by the Company, will be
validly issued, fully paid and non-assessable.
(xiii) The
Registration Statement has become effective under the Securities Act and, to the
best of the knowledge of such counsel, no stop order proceedings with respect
thereto have been instituted or are pending or threatened under the Securities
Act.
(xiv) The
Registration Statement, including any Rule 462(b) Registration Statement, the
Prospectus, and each amendment or supplement to the Registration Statement and
the Prospectus, and each document deemed to be part of the Disclosure Package,
as of their respective effective or issue dates (other than the financial
statements and supporting schedules included therein or in exhibits to or
excluded from the Registration Statement, as to which no opinion need be
rendered), comply as to form in all material respects with the applicable
requirements of the Securities Act; such counsel does not know of any contracts
or documents required to be filed as exhibits to the Registration Statement or
described or summarized in the Registration Statement, the Prospectus and the
Disclosure Package, which have not been so filed, summarized or described as
required, and all such summaries and descriptions, in all material respects,
fairly and accurately set forth the material provisions of such contracts and
documents.
(xv) The
Shares and the shares underlying the Warrants and the Underwriter’s Warrants
have been approved for listing on the NASDAQ Global Market or the NASDAQ Capital
Market.
(xvi) The
statements (i) in each of the Disclosure Package and the Prospectus under the
captions “Related Party Transactions,” “Description of Securities” and “Shares
Eligible for Future Sale,” (ii) under the caption “Indemnification of Officers
and Directors” in Item 14 of the Registration Statement, and (iii) under the
caption “Recent Sales of Unregistered Securities” in Item 15 of the Registration
Statement, insofar as such statements constitute matters of law, legal
conclusions or summaries of legal matters or documents or the Company’s
Certificate of Incorporation or Bylaw provisions, have been reviewed by us and
fairly present and summarize, in all material respects, the matters referred to
therein.
(xvii) Except
as described in or contemplated by the Registration Statement, the Prospectus
and the Disclosure Package, there are no material actions, suits or proceedings,
inquiries, or investigations pending or, to the best of such counsel’s
knowledge, threatened against the Company or any of its respective officers and
directors or to which the properties, assets or rights of any such entity are
subject, at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitral panel or
agency which are required to be described in the Registration Statement, the
Prospectus or the Disclosure Package but are not so described.
EXH.
A-3
(xviii) To
the best of such counsel’s knowledge, the Company each owns or possesses
adequate licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively “Intangibles”) necessary to entitle the Company to conduct its
business as described in both the Prospectus and the Disclosure Package, and the
Company has not received notice of infringement of or conflict with (and knows
of no such infringement of or conflict with) asserted rights of others with
respect to any Intangibles which could materially and adversely affect the
business, prospects, properties, assets, results of operations or condition
(financial or otherwise) of the Company.
(xix) No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental authority or agency, is required for the
Company’s execution, delivery and performance of this Agreement and consummation
of the transactions contemplated thereby and by the Prospectus, except as
required under the Securities Act, the applicable laws of any foreign
jurisdiction, applicable state securities or blue sky laws and from
FINRA.
(xx) The
execution and delivery of this Agreement by the Company and the performance by
the Company of its obligations thereunder (other than performance by the Company
of its obligations under the indemnification section of this Agreement, as to
which we express no opinion) (i) have been duly authorized by all necessary
corporate action on the part of the Company; (ii) will not result in any
violation of the provisions of the charter or bylaws of the Company; (iii) will
not (A) constitute a breach of, or Default under any Existing Instrument, or (B)
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, in the case of each of clauses
(A) and (B), any Existing Instrument filed as an exhibit to the Registration
Statement or, to the best of counsel’s knowledge, any other material Existing
Instrument; or (iv) to the best of counsel’s knowledge, will not result in any
violation of any law, administrative regulation or administrative or court
decree applicable to the Company.
(xxi) The
Company is not, and after receipt of payment for the Securities and the
application of the proceeds thereof as contemplated under the caption “Use of
Proceeds” in the Prospectus and in the Disclosure Package will not be, an
“investment company” within the meaning of the Investment Company
Act.
(xxii) To
the best of counsel’s knowledge, there are no persons with registration or other
similar rights to have any equity or debt securities registered for sale under
the Registration Statement or included in the offering contemplated by this
Agreement, except for such rights as have been duly waived.
(xxiii) To
the best of counsel’s knowledge, the Company is not in violation of its
Certificate of Incorporation or Bylaws or any law, administrative regulation or
administrative or court decree applicable to the Company or is in Default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any material Existing Instrument, except in each such case for such
violations or Defaults as would not, individually or in the aggregate, result in
a Material Adverse Change.
EXH.
A-4
(xxiv)
To the best of counsel’s knowledge, there are no claims for commissions,
finder’s fees or any other payment in connection with or contingent upon the
closing of transactions contemplated by this Agreement based on any arrangement
or agreement made by or on behalf of the Company, except as described
herein.
(xxv)
To the best of counsel’s knowledge, the Company’s disclosure in the Prospectus
with respect to the status of its products under the rules and regulations of
the United States Food and Drug Administration (“FDA”), the Federal Trade
Commission (“FTC”), Canada’s Medical Devices Bureau of the Therapeutic Products
Directorate (“MDB”) and the Health Products and Food Branch Inspectorate of
Health Canada, including the FDA’s Federal Food, Drug and Cosmetic Act, the
FTC’s Federal Trade Commission Act and the MDB’s Medical Devices Regulations, is
accurate and complete in all material respects.
(xxvi) To
the best of counsel’s knowledge, the Company’s disclosure in the Prospectus with
respect to the compliance of the Company and its principal suppliers with GMP
(as defined in the Prospectus) is accurate and complete in all material
respects.
EXH.
A-5
EXHIBIT
B
LOCK-UP
AGREEMENT
_________________,
2009
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Re: Derma
Sciences, Inc. (the “Company”)
Ladies
and Gentlemen:
The
undersigned owns of record or beneficially certain shares of common stock, par
value $0.01 per share (“Common Stock”), of the Company or securities convertible
into or exchangeable or exercisable for Common Stock.
This
letter is being delivered to you in connection with a follow-on public offering
of Common Stock (the “Offering”) for which you will act as
underwriter. The undersigned recognizes that the Offering will be of
benefit to the undersigned and will benefit the Company by, among other things,
raising additional capital for the Company’s operations. The
undersigned acknowledges that you are relying on the representations and
agreements of the undersigned contained in this letter in carrying out the
Offering.
In
consideration of the foregoing, and as a condition of the closing of the
Offering, the undersigned hereby agrees that the undersigned will not (and will
cause any spouse or minor child or immediate family member of the spouse or the
undersigned living in the undersigned’s household not to), without your prior
written consent, directly or indirectly, sell, offer, contract or grant any
option to sell (including without limitation any short sale), pledge, transfer,
or otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock, or securities exchangeable or exercisable for or
convertible into shares of Common Stock currently or hereafter owned either of
record or beneficially (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended) by the undersigned (or such spouse or minor child or
family member) (collectively, the “Undersigned’s Shares”), or publicly announce
an intention to do any of the foregoing, for a period commencing on the date
hereof and continuing though the date that is one hundred eighty (180) days from
the closing date of the Offering. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company’s transfer
agent and registrar against the transfer of the Undersigned’s Shares except in
compliance with the foregoing restrictions.
EXH.
B-1
Notwithstanding
the foregoing, the undersigned may transfer the Undersigned’s Shares (i) as a
bona fide gift or gifts, provided that the donee or donees thereof agree in
writing to be bound by the restrictions set forth herein; or (ii) to any trust
for the direct or indirect benefit of the undersigned or the immediate family of
the undersigned, provided that the trustee of the trust agrees in writing to be
bound by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value. For purposes of the
foregoing, “immediate family” shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin.
This
agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
|
Printed
Name of Holder
|
|
Signature
of Holder
|
EXH.
B-2