UNDERWRITING AGREEMENT dated , 2007 Paulson Investment Company, Inc.
, 2007
▇▇▇▇▇▇▇ Investment Company, Inc.
[As representative of the several underwriters listed on Schedule A hereto.]
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
[As representative of the several underwriters listed on Schedule A hereto.]
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Introductory. NitroSecurity, Inc., a Delaware corporation (the “Company”), proposes
to issue and sell to the several underwriters named in Schedule A (the “Underwriters”) an
aggregate of 1,750,000 units (each a “Unit” and, collectively, the “Firm Units”),
each Unit consisting of (i) one share of the Company’s common stock (“Common Stock”), and
(ii) one redeemable common stock purchase warrant to purchase one share of Common Stock (each a
“Warrant” and, collectively, the “Warrants”). The Warrants are to be issued under
the terms of a Warrant Agreement (the “Warrant Agreement”) by and between the Company and
[NITRO TO APPOINT WARRANT AGENT REASONABLY ACCEPTABLE TO ▇▇▇▇▇▇▇], as warrant agent (the
“Warrant Agent”), substantially in the form most recently filed as an exhibit to the
Registration Statement (hereinafter defined). In addition, the Company has granted to the
Underwriters an option to purchase up to an additional 262,500 Units (the “Optional
Units”), solely to cover over-allotments, as provided in Section 2. The Firm Units and, if and
to the extent such option is exercised, the Optional Units are collectively called the
“Units”. Any references in this Agreement to the Warrants shall be deemed to refer to the
Warrants includable in the Optional Units. ▇▇▇▇▇▇▇ Investment Company, Inc. has agreed to act as
representative of the several Underwriters (in such capacity, the “Representative”) in
connection with the offering and sale of the Units.
The Company confirms its agreement with the Underwriters as follows:
Section 1. Representations and Warranties of the Company.
As an inducement to the Underwriters to enter into this Agreement and to purchase the Units on
the terms and conditions set forth herein, 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 SB-2
(File No. 333-145304), which contains a form of prospectus to be used in connection with the public
offering and sale of the Units. Such registration statement, as amended, including the financial
statements, exhibits and schedules thereto, and the documents incorporated by reference in the
prospectus contained in the registration statement at the time such registration
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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 Units 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 dated ___, 2007 included in the Registration Statement (the “Preliminary
Prospectus”), the Prospectus, or any amendments or supplements to any of the foregoing, shall
include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System (“▇▇▇▇▇”). 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 with all requests
of the Commission for additional or supplemental information to the Commission’s satisfaction. 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 knowledge of the Company, after due inquiry by its officers, 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 Units 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 Units, 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
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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 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 7 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.
(c) Disclosure Package. The term “Disclosure Package” shall mean (i) each Preliminary
Prospectus, as amended or supplemented, (ii) the issuer free writing prospectuses as defined in
Rule 433 of the Securities Act (each, an “Issuer Free Writing Prospectus”), if any,
identified in Schedule B hereto, (iii) the pricing terms set forth in Schedule C to this Agreement,
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 ___.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 through the Representative specifically for use therein, it being understood and
agreed that the only such information furnished by or on behalf of any Underwriter consists of the
information described as such in Section 7 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 any
Underwriter through the Representative 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 7 hereof.
(f) Offering Materials Furnished to Underwriters. The Company has delivered to the
Representative (A) complete manually signed copies of (i) the Registration Statement; (ii) Rule
462(b) Registration Statement; and (iii) each consent and certificate of experts filed as a part
thereof, and (B) such number of Preliminary Prospectuses and the Prospectus, at such time and
places, as the Representative has requested for each of the Underwriters.
3
(h) Distribution of Offering Material by the Company. The Company has not distributed any
offering material in connection with the offering and sale of the Units other than a Preliminary
Prospectus, the Prospectus, the pricing terms as set forth on Schedule C hereto, any Issuer Free
Writing Prospectus listed on Schedule B hereto, and the Registration Statement.
(i) The Underwriting Agreement. This Agreement has been duly authorized, executed and
delivered by, and is a valid and, assuming payment for the Units as set forth in Section 2, 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.
(j) Authorization of the Units and the Common Stock; Validity of the Warrants, the
Underwriters’ Warrants and the Warrant Agreement.
(A) The Units to be purchased by the Underwriters from the Company (including the Firm
Units and the Optional Units and the units issuable upon exercise of the Underwriters’
Warrants described in Section 2(h)) have been duly authorized and, in the case of the units
issuable upon exercise of the Underwriters’ Warrants, reserved for issuance and sale
pursuant to this Agreement and when so issued and delivered by the Company (in the case of
the units issuable upon exercise of the Underwriters’ Warrants, in accordance with the terms
hereof and thereof, respectively) will be valid and binding instruments 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.
(B) The Common Stock included in the Units to be purchased by the Underwriters from the
Company and the Common Stock included in the units issuable upon exercise of the
Underwriters’ Warrants described in Section 2(h), has been duly authorized and reserved for
issuance and, in the case of the Common Stock included in the Units, sale pursuant to this
Agreement and when so issued and delivered by the Company, will be validly issued, fully
paid and nonassessable.
(C) The Warrants included in the Units to be purchased by the Underwriters from the Company
have been duly and properly 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.
(D) The Underwriters’ Warrants have been duly and properly 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
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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.
(E) The Common Stock issuable on exercise of the Warrants, the Underwriters’ Warrants and
the warrants underlying the Underwriters’ Warrants has been duly authorized and reserved for
issuance and sale pursuant to their terms and, when issued and delivered by the Company
pursuant to such warrants, will be validly issued, fully paid and nonassessable.
(F) The Warrant Agreement has been duly and properly authorized by all required corporate
actions of the Company and will, when executed and delivered (and assuming due and valid
execution by the Warrant Agent) constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its 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.
(G) Each Warrant and each Underwriter’s Warrant will, when issued, possess rights,
privileges, and characteristics as represented in the most recent form of Warrant Agreement
or Underwriters’ Warrants, as the case may be, filed as an exhibit to the Registration
Statement.
(k) No Applicable Registration or Other Similar Rights. Except as described in the Disclosure
Package and the Prospectus, no contract or agreement to which the Company is a party or by which
the Company is bound grants any person a right to require the Company to (i) include any equity or
debt securities of the Company in the Registration Statement or in the offering contemplated by
this Agreement or (ii) at any time during the period ending one year from the date of this
Agreement, file a registration statement that includes any equity or debt securities of the
Company.
(l) No Material Adverse Change. Except as otherwise disclosed in the Disclosure Package and
the Prospectus, 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.
(m) Independent Accountants. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, 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
5
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.
(n) Preparation of the Financial Statements. Each of the historical financial statements
filed with the Commission as a part of the Registration Statement, and included or incorporated by
reference in the Disclosure Package and the Prospectus, presents fairly the information provided as
of 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
United States 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 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.
(o) Incorporation and Good Standing; Subsidiaries. The Company 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 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.
The Company does not own or control, directly or indirectly, any corporation, association or other
entity.
(p) Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding
capital stock of the Company is as set forth in the 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 Common Stock conforms, and, when issued and delivered as
provided for in this Agreement, the Warrants, the Underwriters’ Warrants and the warrants issuable
upon exercise of the Underwriters’ Warrants will comply in all material respects to the description
thereof contained in the 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 bonus
and other stock
6
plans or arrangements, and the options or other rights granted thereunder, set forth or
incorporated by reference in 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 in all material respects.
(q) Quotation. The Units, the Common Stock, and the Warrants have been approved for quotation
on the NASDAQ Capital Market under the symbols “NITRU,” “NITR,” and “NITRW,” respectively.
(r) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required. The Company is not in violation of its charter, as amended from time to time, or
by-laws, as amended from time to time, 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 by-laws of the
Company, as in effect, (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, except for such violation as would not, individually or in the aggregate, result in a
Material Adverse Change. No consent, approval, authorization or other order of, or registration or
filing with, any court or other governmental or regulatory authority or agency, is required for the
Company’s execution, delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by the Disclosure Package and the Prospectus, except the
registration or qualification of the Units under the Securities Act and applicable state securities
or blue sky laws and from the Financial Industry Regulatory Authority, Inc. (the “FINRA”).
(s) 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 Company’s knowledge after due investigation by its officers, 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, which, in the case of
property, is material to the Company’s business 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. Except as described in the Disclosure Package, no material
7
labor dispute with the employees of the Company exists or, to the Company’s knowledge after due
investigation by its officers, is threatened or imminent except for such disputes as would not,
individually or in the aggregate, result in a Material Adverse Change.
(t) Intellectual Property Rights. Except as described in the Disclosure Package, the Company
owns or possesses the rights to use all 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 or as
proposed to be conducted as described in the Disclosure Package and the Prospectus; 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, after due inquiry by the
Company’s officers, any of its officers, directors or employees or otherwise in violation of the
rights of any persons.
(u) All Necessary Permits, etc. Except as otherwise disclosed in the Disclosure Package and
the Prospectus or 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 local,
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, would be reasonably likely
to result in a Material Adverse Change.
(v) Title to Properties. Except as described in the Disclosure Package, 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(n) above, 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.
(w) Tax Law Compliance. The Company has filed all necessary federal, state, local and foreign
income and franchise tax returns and, except for amounts not yet due or contested by the Company in
good faith, 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
8
Section 1(n) 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.
(x) 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 Units and the application of
the proceeds thereof as contemplated under the caption “Use of Proceeds” in the Disclosure Package
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.
(y) Insurance. Except as described in the Disclosure Package, 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.
(z) 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 the Units or the underlying securities. The Company acknowledges that the
Underwriters may engage in passive market making transactions in the Units on the NASDAQ Capital
Market in accordance with Regulation M under the Exchange Act.
(aa) Related Party Transactions. There are no business relationships or related-party
transactions involving the Company or any of its officers, directors or any stockholders who
beneficially owns (as determined under the rules and regulations promulgated by the Commission
pursuant to the Securities Act) 5% or more of the Company’s voting securities (assuming the
conversion of all outstanding equity and debt securities) (“5% Stockholders”) required to
be described in the Preliminary Prospectus or the Prospectus that have not been described as
required
(bb) Disclosure Controls and Procedures. The Company’s disclosure controls and procedures (as
such term is defined in Rule 13a-15(e) under the Exchange Act), are (i) 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, 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) except
as set forth on page ___of the Preliminary Prospectus, are effective in all material respects to
perform the functions for which they were established. Except as described on page ___of the
Preliminary Prospectus, the Company is not aware of (a) any significant deficiency in the design or
operation of internal controls which could adversely affect the
9
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.
(cc) Company’s Accounting System. The Company maintains a system of accounting controls
designed 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.
(dd) No Unlawful Contributions or Other Payments. Neither the Company nor, to the Company’s
knowledge, after due investigation by its officers, any employee or agent of the Company has made
any contribution or other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required to be disclosed in the
Disclosure Package and the Prospectus.
(ee) Compliance with Environmental Laws. Except as described in the Disclosure Package, or
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 Environmental 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 Company’s knowledge, after due inquiry by its officers, 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 Company’s knowledge, after
due inquiry by its officers, 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
10
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.
(ff) 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.
(gg) Compliance with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002. There is and has been no failure on the part
of the Company and any of the Company’s directors, or officers, in their capacities as such, to
comply with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations
promulgated in connection therewith (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”) including Section 402
related to loans and Sections 302 and 906 related to certifications, to the extent that the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act is applicable to the Company.
(hh) Restated Certificate of Incorporation; Amendment to Amended and Restated Stockholders
Agreement. The Company has filed the Restated Certificate of Incorporation in the form attached to
the Registration Statement as Exhibit 3.2. Stockholders owning an aggregate of 3,059,245 shares of
Common Stock are subject to a one-year lock-up agreement pursuant to and as set forth in the
Amended and Restated Stockholders Agreement, dated as of January 12, 2006, among the Company and
such stockholders, as amended.
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.
11
Section 2. Purchase, Sale and Delivery of the Units.
(a) The Firm Units. Upon the terms herein set forth, the Company agrees to issue and sell the
Firm Units to the several 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 agree, severally and not jointly, to purchase the Firm Units from the Company. The
purchase price per Firm Unit to be paid by the several Underwriters to the Company shall be
$ per Unit.
(b) The First Closing Date. Delivery of the Firm Units to be purchased by the Underwriters
and payment therefor shall be made at ___:___.m. Eastern time on ___, 2007, or such
other time and date (but not later than the seventh business day following the date of this
Agreement) 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 9 or Section 18.
(c) The Optional Units; 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, solely to
cover over-allotments, to purchase up to an aggregate of 262,500 Optional Units from the Company at
the purchase price per share to be paid by the Underwriters for the Firm Units. 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 the Prospectus.
Such notice shall set forth (i) the aggregate number of Optional Units as to which the Underwriters
are exercising the option, (ii) the names and denominations in which the Optional Units are to be
registered and (iii) the time, date and place at which such Optional Units 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 Firm Units
and the Optional Units). 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 three nor later than five full business days after delivery of such
notice of exercise.
(d) Public Offering of the Units. The Representative hereby advises the Company that the
Underwriters intend to offer for sale to the public, as described in the Prospectus, their
respective portions of the Units 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 Units. Payment for the Units 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.
12
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 Firm Units and any Optional Units 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 Units 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 may be, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations under this Agreement.
(f) Delivery of the Units. Delivery of the Firm Units and the Optional Units 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.
(g) Delivery of Prospectus to the Underwriters. Not later than 9:00 a.m. Eastern 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) Underwriters’ Warrants. In addition to the sums payable to the Underwriters (including
amount payable to the Representative in its capacity as such and not on behalf of the Underwriters)
as provided elsewhere herein, the Underwriters, or such officers or partners of an Underwriter as
such Underwriter may direct, shall be entitled to receive at the closing occurring on the First
Closing Date, as additional compensation for their services, warrants (the “Underwriters’
Warrants”) for the purchase, in the aggregate, up to 175,000 units identical to the Units at an
exercise price of $ per unit [one-hundred and twenty percent (120%) of the initial public
offering price of the Units], upon the terms and subject to adjustment and conversion as described
in the form of Underwriters’ Warrant filed as an exhibit to the Registration Statement.
Section 3. Covenants of the Company
As a further inducement to the Underwriters to enter into this Agreement and to purchase the
Units as provided for in Section 2, the Company covenants and agrees with each 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 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
13
supplement, and the Company shall not file any such proposed amendment or supplement to which
the Representative reasonably objects.
(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, (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 from listing or quotation the Common Stock from any securities exchange upon which it
is listed for trading or included or designated for quotation, 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 reasonable 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
14
brought to the Company’s attention by the Representative during the Prospectus Delivery
Period) and (ii) promptly prepare (subject to Section 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 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 Units 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.
(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 cooperate with the Representative and counsel for
the Underwriters to qualify or register the Units 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 Units. 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 Units 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.
15
(h) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Units 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 shall engage and maintain, at its expense, a registrar and
transfer agent for the Common Stock and warrant agent for the Warrants, which will be reasonably
acceptable to Representative, for the Common Stock.
(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 and the NASDAQ Capital Market 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 Units 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 Underwriters, 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 use its best efforts to include, subject to notice of
issuance, the Units on the NASDAQ Capital Market.
(n) Agreement Not to Offer or Sell Additional Securities. During the period commencing on the
date of this Agreement and ending on the 365th day thereafter, the Company: (A) will not
and will not permit any of its officers and directors, and will use commercially reasonable
efforts to not permit any of its stockholders who are subject to the Amended and Restated
Stockholders Agreement, dated as of January 12, 2006, as amended, without the prior written consent
of the Representative (which consent may be withheld at the Representative’s sole discretion),
directly or indirectly, to 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 Units and any shares of Common Stock (or
options, warrants or convertible securities in respect thereof) issued in connection with a bona
fide merger or acquisition transaction or strategic partnership approved by the Company’s Board of
Directors (the “Board”)); provided, however, that the Company may issue shares of its Common Stock
or options to purchase shares of its Common Stock, or shares of Common Stock upon exercise of
16
options, in each case, pursuant to any stock option, stock bonus or other stock plan,
arrangement or contractual obligation that has been approved by the Board and ratified by the
Company’s stockholders; and (B) will not issue any shares of its Common Stock or grant options to
purchase shares of its Common Stock or other stock-based awards pursuant to its 2005 Stock
Incentive Plan (other than issuances of Common Stock upon exercise of
options outstanding as of September 30, 2007 as described in the
Disclosure Package and Prospectus, as the case may be). In addition,
the Company will not engage Mirus Capital Advisors, Inc. to provide
any financial advisory or other services to the Company during the ninety (90) day period
immediately following the date on which the Registration Statement is declared effective.
(o) Future Reports to the Representative. During the five year period beginning on the date
of this Agreement, the Company will furnish, if not otherwise available on ▇▇▇▇▇, to the
Representative at ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ 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 public or certified public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement, Annual Report on Form 10-K or
10-KSB, whichever is applicable, Quarterly Report on Form 10-Q or 10-QSB, whichever is applicable,
Current Report on Form 8-K or other report filed by the Company with the Commission, the 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.
(p) Investment Limitation. The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Units 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) Existing Lock-Up Agreements. Except as described in the Disclosure Package and 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.
(s) Restated Certificate of Incorporation. Prior to the First Closing Date, the Company will
file the Restated Certificate of Incorporation in the form attached and included in the
Registration Statement as Exhibit 3.3.
Section 4. Payment of Expenses.
(a) The Representative shall be entitled to reimbursement from the Company, for itself alone
and not as Representative of the Underwriters, to a non-accountable expense allowance equal to 2%
of the aggregate initial public offering price of the Firm Units purchased at closing, provided
that the first amount so withheld will be reduced by the retainer amount advanced against
Representative’s expenses. If this Agreement is terminated by the
17
Representative pursuant to Section 5, or Section 10, or by the Company pursuant to Section 6,
or if the sale to the Underwriters of the Units 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 Representative shall be
entitled, upon presentation of a written accounting therefor in reasonable detail (but without the
need to include the underlying statements or evidence of payment), to prompt reimbursement from the
Company of the excess amount over the retainer of the Representative’s actual, out-of-pocket
expenses related to the offering of the Units pursuant to this Agreement, including, but not
limited to, fees and expenses of its investment banking staff, legal counsel, travel expenses, and
the fees and expenses of outside experts, if any, (collectively, the “Representative’s
Expenses”) retained to assist us with due diligence. In the event the Representative’s Expenses
are less than the retainer amount, the difference shall be returned to the Company.
(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 Units (including
all printing and engraving costs, if any), (ii) all fees and expenses of the registrar and transfer
agent of the Common Stock and the Warrant Agent, (iii) all necessary issue, transfer and other
stamp taxes in connection with the issuance and sale of the Units to the Underwriters, (iv) all
fees and expenses of the Company’s counsel, independent public or certified public accountants and
other advisors, (v) all costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), each Issuer Free Writing Prospectus,
each Preliminary Prospectus and the Prospectus, and all amendments and supplements thereto, and
this Agreement, (vi) the costs and expenses relating to presentations or meetings undertaken in
connection with the marketing of the offering and sale of the shares to prospective investors and
the Underwriter’s sales forces, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations, travel, lodging and other expenses, and the cost of
any aircraft chartered in connection with the road show, (vii) all filing fees, attorneys’ fees and
expenses incurred by the Company or the Underwriters in connection with qualifying or registering
(or obtaining exemptions from the qualification or registration of) all or any part of the Units
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, (viii) the
filing fees incident to the FINRA’s review and approval of the Underwriters’ participation in the
offering and distribution of the Units, (ix) the fees and expenses associated with including the
Units on the NASDAQ Capital Market, and (x) all other fees, costs and expenses referred to in Item
25 of Part II of the Registration Statement. Except as provided in this Section 4(b) and Sections
7 and 8 hereof, the Underwriters shall pay their own expenses, including the fees and disbursements
of their counsel.
Section 5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Units as provided herein on the First
Closing Date and, with respect to the Optional Units, each Subsequent Closing Date, shall be
subject to (1) the accuracy of the representations and warranties on the part of the Company set
18
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; (2) the timely performance by the Company of its
covenants and other obligations hereunder; and (3) each of the following additional conditions:
(a) Accountants’ Comfort Letter. On the date hereof, the Representative shall have received
from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, 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 (and the Representative shall have received an additional four conformed copies of such
accountants’ letter for the several Underwriters).
(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 Optional Units, any Subsequent Closing Date:
(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 Optional Units, each Subsequent Closing
Date, in the reasonable 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 Representative shall have received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and
▇▇▇▇ LLP, 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 (and the Representative shall
have received an additional four conformed copies of such counsel’s legal opinion for the several
Underwriters).
(e) Opinion of Counsel for the Underwriters. On each of the First Closing Date and each
Subsequent Closing Date the Representative shall have received the opinion of Morse, Zelnick, Rose
& Lander, LLP, counsel for the Underwriters, dated as of the First Closing Date or
19
the Subsequent Closing Date, as applicable, in a form satisfactory to the Representative (and
the Representative shall have received an additional four conformed copies of such counsel’s legal
opinion for the several Underwriters).
(f) Officers’ Certificate. On each of the First Closing Date and each Subsequent Closing Date
the Representative shall have received a written certificate executed by the Chairman of the Board,
Chief Executive Officer or President of the Company and the Chief Financial Officer or Chief
Accounting Officer of the Company, 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) Bring-down Comfort Letter. On each of the First Closing Date and each Subsequent Closing
Date, the Representative shall have received from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, 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 they reaffirm the statements made in the
letter furnished by them 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 (and the
Representative shall have received an additional four conformed copies of such accountants’ letter
for the several Underwriters).
(h) Lock-Up Agreement from Certain Securityholders 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, director, director-nominee and 5% Stockholder 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.
(i) 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 and opinions as they may reasonably require for the purposes of enabling
them to pass upon the issuance and sale of the Units 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.
20
(j) Restated Certificate of Incorporation. The Company shall have filed the Restated
Certificate of Incorporation, in the form attached and included in the Registration Statement as
Exhibit 3.2.
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 Optional Units, 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 7 and Section 8 shall at all times be
effective and shall survive such termination.
Section 6. 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, 7 and 8 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 6) the Company shall be obligated to reimburse the expenses
of the Representative and the Underwriters pursuant to Section 4, or (b) any Underwriter to the
Company except that the provisions of Section 7 and Section 8 shall at all times be effective and
shall survive such termination.
Section 7. Indemnification.
(a) Indemnification of the Underwriters.
The Company agrees to indemnify and hold harmless each Underwriter, its officers and
employees, and each person, if any, who controls any Underwriter within the meaning of the
Securities Act 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; and to reimburse each Underwriter and each such
controlling person for any and all expenses (including the fees
21
and disbursements of counsel chosen by the Representative) as such expenses are reasonably
incurred by such Underwriter 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 7(a) shall be in addition to any liabilities that the
Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each Underwriter agrees,
severally and not jointly, to indemnify and hold harmless the Company, each of its directors, 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 any legal and other expense reasonably incurred by the Company, or any such director, officer,
or controlling person in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action. The Company hereby acknowledges that
the only information that the Underwriters have 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 set forth in the table in
the first paragraph and in the sixth and seventh paragraphs (relating to stabilization and market
making activities) under the caption “Underwriting” in the Preliminary Prospectus and the
Prospectus; and the Underwriters confirm that such statements are correct. The indemnity agreement
set forth in this Section 7(b) shall be in addition to any liabilities that each Underwriter may
otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 7 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
22
under this Section 7, 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 7 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 7
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 (together
with local counsel), approved by the indemnifying party (the Representative in the case of Section
7(b) and Section 8), 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 7 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 7(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,
23
unless such settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such action, suit or
proceeding.
Section 8. Contribution. If the indemnification provided for in Section 7 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 Units 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 Units pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Units 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 Units 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 7(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 7(c) with
respect to notice of commencement of any action shall apply if a claim for contribution is to be
made under this Section 8; provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under Section 7(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 8 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 8.
24
Notwithstanding the provisions of this Section 8, no Underwriter shall be required to
contribute any amount in excess of the underwriting commissions received by such Underwriter in
connection with the Units underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters’ obligations to contribute pursuant to this Section 8 are several, and not joint,
in proportion to their respective underwriting commitments as set forth opposite their names in
Schedule A. For purposes of this Section 8, each officer and employee of an Underwriter and each
person, if any, who controls an Underwriter within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as such Underwriter; and each director of
the Company, each officer of the Company who signed the Registration Statement, and each person, if
any, who controls the Company within the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as the Company.
Section 9. 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 Units that it or they have agreed to purchase
hereunder on such date, and the aggregate number of Units which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the aggregate number
of the Units to be purchased on such date, the other Underwriters shall be obligated, severally, in
the proportions that the number of Firm Units set forth opposite their respective names on Schedule
A bears to the aggregate number of Firm Units 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 Units 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 Units and the aggregate number of Units with respect
to which such default occurs exceeds 10% of the aggregate number of Units to be purchased on such
date, and arrangements satisfactory to the Representative and the Company for the purchase of such
Units 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(b), Section 7 and
Section 8 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.
As used in this Agreement, the term “Underwriter” shall be deemed to include any
person substituted for a defaulting Underwriter under this Section 9. Any action taken under this
Section 9 shall not relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
Section 10. Termination of this Agreement. Prior to the First Closing Date and,
with respect to Optional Units, 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 or quotation in any of the Company’s securities shall have
25
been suspended or limited by the Commission or by the NASDAQ Capital Market, or trading in
securities generally on either the NASDAQ Capital Market 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 the FINRA; (ii) a general banking moratorium shall
have been declared by any of federal or New York or Delaware 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 Units in the manner and on the terms described
in the Prospectus or to enforce contracts for the sale of securities; or (iv) in the reasonable
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 10 shall be without liability on the part of (a) the Company
to any Underwriter, except that the Company shall be obligated to reimburse the expenses of the
Representative and the Underwriters pursuant to Section 4(b), (b) any Underwriter to the Company,
or (c) of any party hereto to any other party except that the provisions of Section 7 and Section 8
shall at all times be effective and shall survive such termination.
Section 11. No Advisory or Fiduciary Responsibility. The Company acknowledges and
agrees that: (i) the purchase and sale of the Units pursuant to this Agreement, including the
determination of the public offering price of the Units and any related discounts and commissions,
is an arm’s-length commercial transaction between the Company, on the one hand, and the several
Underwriters, on the other hand, 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 several 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 several Underwriters have no obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Underwriters
have not provided any legal, accounting, regulatory or tax advice with respect to the offering
contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax
advisors to the extent it deemed appropriate. The Company hereby waives and releases, to the
fullest extent permitted by law, any claims that the Company may have against the several
Underwriters with respect to any breach or alleged breach of agency or fiduciary duty.
26
This Agreement supersedes all prior agreements and understandings (whether written or oral)
between the Company and the several Underwriters, or any of them, with respect to the subject
matter hereof.
Section 12. Representations and Indemnities to Survive Delivery. The respective
indemnities, rights of contribution, agreements, representations, warranties, covenants and other
statements of the Company, of its officers, and of the several 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) delivery of
and payment for the Units sold hereunder; and (iii) termination of this Agreement.
Section 13. Notices. All communications hereunder shall be in writing and shall be
mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representative:
▇▇▇▇▇▇▇ Investment Company, Inc.
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Syndicate Department
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Syndicate Department
with a copy to:
Morse, Zelnick, Rose & Lander, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
If to the Company:
NitroSecurity, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇, LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Any party hereto may change the address for receipt of communications by giving written notice
to the others.
27
Section 14. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto, including any substitute Underwriters pursuant to Section 9 hereof, and to
the benefit of the employees, officers and directors and controlling persons referred to in Section
7 and Section 8, 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 Units as such from any of the Underwriters merely by reason of such
purchase.
Section 15. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity or enforceability
of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable.
Section 16. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF OREGON APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SUCH STATE.
Section 17. 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 Portland, Oregon or the courts of the Oregon in each case located in Portland, Oregon
(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 18. 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.
28
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 7 and the contribution provisions of
Section 8, and is fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 7 and 8 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.
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 of the Units from any of the several Underwriters merely because of such purchase.
29
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.
| Very truly yours, NITROSECURITY, INC. |
||||
| By: | ||||
| Name: | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Title: | President and Chief Executive Officer | |||
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representative as
of the date first above written.
▇▇▇▇▇▇▇ INVESTMENT COMPANY, INC.
Acting as Representative of the several
Underwriters named in the attached Schedule A.
Acting as Representative of the several
Underwriters named in the attached Schedule A.
| By: | Title: |
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