Common Stock (no par value) Underwriting Agreement
Exhibit
1.1
4,482,609 Shares1
Common
Stock
(no par
value)
October
6, 2009
ThinkEquity
LLC
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Ladies
and Gentlemen:
Introductory.
AspenBio Pharma, Inc., a Colorado corporation (the “Company”), proposes to issue
and sell (the “Offering”) to ThinkEquity LLC
(the “Underwriter”) an
aggregate of 4,482,609 shares (the “Underwritten Securities”) of the
Company’s common stock, no par value per share (the “Common Stock”). The
Company also proposes to issue and sell at the Underwriter’s option, solely to
cover over-allotments, an aggregate of up to 672,391 additional shares of Common
Stock (the “Option
Securities”, and together with the Underwritten Securities, the “Securities”) as set forth
below.
In consideration of the mutual
agreements contained herein and of the interests of the parties in the
transactions contemplated hereby, the parties hereto agree as
follows:
1. Representations and Warranties of
the Company. The Company represents and warrants to, and
agrees with, the Underwriter that:
(a) Filing and Effectiveness of
Registration Statement; Certain Defined Terms. The Company has
filed with the Commission a registration statement on Form S-3 (No. 333-159249),
including a related prospectus or prospectuses, covering the registration of the
Securities under the Act, which has become effective. “Registration Statement” at any
particular time means such registration statement in the form then filed with
the Commission, including any amendment thereto, any document incorporated by
reference therein (collectively, the “Incorporated Documents”) and
all 430B Information and all 430C Information with respect to such registration
statement, that in any case has not been superseded or
modified. “Registration Statement”
without reference to a time means the Registration Statement as of the Effective
Time. For purposes of this definition, 430B Information shall be
considered to be included in the Registration Statement as of the time specified
in Rule 430B. The Commission has not issued an order preventing or
suspending the use of any preliminary prospectus, any Issuer Free Writing
Prospectus or the Final Prospectus relating to the proposed offering of the
Securities, and no proceeding for that purpose or pursuant to Section 8A of the
Act has been instituted or, to the Company’s knowledge, threatened by the
Commission.
For
purposes of this Agreement:
“430B Information” means
information included in a prospectus then deemed to be a part of the
Registration Statement pursuant to Rule 430B(e) or retroactively deemed to be a
part of the Registration Statement pursuant to Rule 430B(f).
“430C Information” means
information included in a prospectus then deemed to be a part of the
Registration Statement pursuant to Rule 430C.
“Act” means the United States
Securities Act of 1933, as amended.
“Applicable Time”
means 7:00 pm (Eastern time) on the date of this Agreement.
“Closing Date” has the meaning
defined in Section
2 hereof.
“Commission” means the United
States Securities and Exchange Commission.
“Effective Time” of the
Registration Statement relating to the Securities means the time of execution of
this Agreement.
“Exchange Act” means the United
States Securities Exchange Act of 1934, as amended.
“Final Prospectus” means the
Statutory Prospectus that discloses the public offering price, other 430B
Information and other final terms of the Securities and otherwise satisfies
Section 10(a) of the Act.
“General Use Issuer Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is intended for
general distribution to prospective investors, as evidenced by its being so
specified in Schedule
I to this Agreement.
“Issuer Free Writing
Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433, relating to the Securities in the form filed or required to be
filed with the Commission or, if not required to be filed, in the form retained
in the Company’s records pursuant to Rule 433(g).
“Limited Use Issuer Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is not a
General Use Issuer Free Writing Prospectus.
“Option Closing Date” has the
meaning defined in Section 2
hereof.
“Rules and Regulations” means
the rules and regulations of the Commission.
“Securities Laws” means,
collectively, the United States ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (“▇▇▇▇▇▇▇▇-▇▇▇▇▇”), the Act, the
Exchange Act, the Rules and Regulations, the auditing principles, rules,
standards and practices applicable to auditors of “issuers” (as defined in
▇▇▇▇▇▇▇▇-▇▇▇▇▇) promulgated or approved by the Public Company Accounting
Oversight Board and, as applicable, the rules of The NASDAQ Stock Market (“Exchange Rules”).
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“Statutory Prospectus” with
reference to any particular time means the prospectus relating to the Securities
that is included in the Registration Statement immediately prior to that time,
including all 430B Information and all 430C Information with respect
to the Registration Statement and all documents incorporated by reference
therein. For purposes of the foregoing definition,
430B Information shall be considered to be included in the Statutory
Prospectus only as of the actual time that form of prospectus (including a
prospectus supplement) is filed with the Commission pursuant to Rule 424(b)
and not retroactively.
Unless
otherwise specified, a reference to a “Rule” is to the indicated rule
under the Act.
(b) Compliance with Securities Act
Requirements. (i) (A) At the Effective Time
relating to the Securities and (B) on the Closing Date and the Option
Closing Date, as the case may be, the Registration Statement conformed and will
conform in all material respects to the requirements of the Act and the Rules
and Regulations, and it did not and will not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) (A) on
the date of the Final Prospectus and (B) on the Closing Date and the Option
Closing Date, as the case may be, the Final Prospectus will conform in all
material respects to the requirements of the Act and the Rules and Regulations,
and will not 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, not
misleading. The preceding sentence does not apply to statements in or
omissions from any such document based upon written information furnished to the
Company by the Underwriter specifically for use therein, it being understood and
agreed that the only such information is that described as such in Section
7(b).
(c) Shelf Registration
Statement. The date of this Agreement is not more than three
years subsequent to the initial effective time of the Registration
Statement. The aggregate market value of securities sold by or on
behalf of the Company under the Registration Statement during the 12 month
period immediately prior to, and including, the sale of Securities pursuant to
this Agreement is no more than one-third of the aggregate market value of the
voting and non-voting common equity held by non-affiliates of the Company, as
determined pursuant to General Instruction I.B.6 of Form S-3.
(d) Ineligible Issuer
Status. (i) At the earliest time after the filing
of the Registration Statement that the Company or another offering participant
made a bona fide offer (within the meaning of Rule 164(h)(2)) of the Securities
and (ii) at the date of this Agreement, the Company was not and is not an
“ineligible issuer,” as defined in Rule 405, including (x) the Company in the
preceding three years not having been convicted of a felony or misdemeanor or
having been made the subject of a judicial or administrative decree or order as
described in Rule 405 and (y) the Company in the preceding three years not
having been the subject of a bankruptcy petition or insolvency or similar
proceeding, not having had a registration statement be the subject of a
proceeding under Section 8 of the Act and not being the subject of a proceeding
under Section 8A of the Act in connection with the offering of the Securities,
all as described in Rule 405. The Company is eligible to use Form S-3 for the
Offering.
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(e) General Disclosure
Package. As of the Applicable Time, neither (i) the General
Use Issuer Free Writing Prospectus(es) issued at or prior to the Applicable Time
and any preliminary prospectus supplement, including the base prospectus, dated
June 4, 2009 (which is the most recent Statutory Prospectus distributed to
investors generally), and the other information, if any, stated in Schedule II to this
Agreement to be included in the General Disclosure Package, all considered
together (collectively, the “General Disclosure Package”),
nor (ii) any individual Limited Use Issuer Free Writing Prospectus, when
considered together with the General Disclosure Package, included any untrue
statement of a material fact or omitted 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 any Statutory Prospectus or any Issuer
Free Writing Prospectus in reliance upon and in conformity with written
information furnished to the Company by the Underwriter specifically for use
therein, it being understood and agreed that the only such information is that
described as such in Section
7(b).
(f) Issuer Free Writing
Prospectuses. Each Issuer Free Writing Prospectus, as of its
issue date did not include any information that conflicted with the information
then contained in the Registration Statement. If, at any time
following issuance of an Issuer Free Writing Prospectus through the completion
of the offer and sale of the Securities, there occurred or occurs an event or
development as a result of which such Issuer Free Writing Prospectus conflicted
or would conflict with the information then contained in the Registration
Statement or as a result of which such Issuer Free Writing Prospectus, if
republished immediately following such event or development, would include an
untrue statement of a material fact or omitted or would omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (i) the Company
has promptly notified or will promptly notify the Underwriter and (ii) the
Company has promptly amended or will promptly amend or supplement such Issuer
Free Writing Prospectus to eliminate or correct such conflict, untrue statement
or omission. The Company has not, directly or indirectly, distributed
and will not distribute any offering material in connection with the offering
and sale of the Securities other than any preliminary prospectus, the Final
Prospectus and other materials, if any, permitted under the Act and consistent
with Section 5
below. The Company will file with the Commission all Issuer Free Writing
Prospectuses in the time required under Rule 433(d) under the
Act. The Company has satisfied or will satisfy the conditions in Rule
433 under the Act to avoid a requirement to file with the Commission any
electronic road show.
(g) Good Standing of the
Company. The Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Colorado, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement, the General Disclosure
Package and the Final Prospectus; and the Company is not currently required to
qualify as a foreign corporation in any other jurisdiction.
(h) Subsidiaries. The
Company has no subsidiaries, and the Company does not own or control, directly
or indirectly, any shares of capital stock of any other corporation or any
interest in any partnership, trust, joint venture, limited liability company,
association or other business entity.
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(i) Securities. The
Securities and all other outstanding shares of capital stock of the Company have
been duly authorized; the authorized equity capitalization of the Company is as
set forth in the Registration Statement, the General Disclosure Package and the
Final Prospectus; all outstanding shares of capital stock of the Company are,
and, when the Securities have been delivered and paid for in accordance with
this Agreement on the Closing Date and the Option Closing Date, as the case may
be, the Securities will have been, validly issued, fully paid and nonassessable,
will conform to the information (including the description of the Securities)
contained in the Registration Statement, the General Disclosure Package and the
Final Prospectus; and no preemptive rights of shareholders exist with respect to
the Securities or the issue or sale thereof; and none of the outstanding shares
of capital stock of the Company have been issued in violation of any preemptive
or similar rights of any security holder. Neither the filing of the
Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any shares
of Common Stock.
(j) No Finder’s
Fee. Except as disclosed in the Registration Statement, the
General Disclosure Package and the Final Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would give
rise to a claim against the Company or the Underwriter for a brokerage
commission, finder’s fee or other like payment in connection with this
Offering.
(k) Registration
Rights. Except as disclosed in the Registration Statement, the
General Disclosure Package and the Final Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to include securities held by such
person in this Offering.
(l) Listing. The Company’s Common
Stock is registered under Section 12(b) of the Exchange Act and listed on The
NASDAQ Capital Market.
(m) Absence of Further
Requirements. No consent, approval, authorization, or order
of, or filing or registration with, any person (including any governmental
agency or body or any court) is required for the consummation by the Company of
the transactions contemplated by this Agreement in connection with the Offering,
except such as have been obtained, or made and such as may be required under
state securities or Blue Sky laws or the bylaws and rules of the Financial
Industry Regulatory Authority, Inc. (“FINRA”) in connection with the
Offering.
(n) Title to
Property. Except as disclosed in the Registration Statement,
the General Disclosure Package and the Final Prospectus, the Company has good
and marketable title to all properties and assets reflected in the financial
statements described herein or described in the Registration Statement, the
General Disclosure Package and the Final Prospectus, in each case free from
liens, mortgages, pledges, charges, encumbrances and defects of any kind, except
as disclosed in the Registration Statement, the General Disclosure Package and
the Final Prospectus, and the Company holds any leased real or personal property
under valid and enforceable leases with no terms or provisions that would
interfere with the aggregate use made or to be made thereof by it.
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(o) Absence of Defaults and Conflicts
Resulting from Transaction. The execution, delivery and
performance of this Agreement and the issuance and sale of the Securities will
not result in a breach or violation of any of the terms and provisions of, or
constitute a default or a Debt Repayment Triggering Event (as defined below)
under, or result in the imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, (i) the Articles of
Incorporation, as amended or Amended and Restated Bylaws of the Company, (ii)
any statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or any of its
properties, or (iii) any agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the properties of the
Company is subject, except in the cases of clauses (ii) and (iii), any breach,
violation, default, lien, charge or encumbrance that would not, individually or
in the aggregate, result in a material adverse effect on the condition
(financial or otherwise), results of operations, business, prospects or
properties of the Company taken as a whole (a “Material Adverse Effect”); a
“Debt Repayment Triggering
Event” means any event or condition that gives, or with the giving of
notice or lapse of time would give, the holder of any note, debenture, or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company.
(p) Absence of Existing Defaults and
Conflicts. The Company is not in violation of
its Articles of Incorporation, as amended, or Amended and Restated
Bylaws or in default (or with the giving of notice or lapse of time would be in
default) under any existing obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or other agreement
or instrument to which it is a party or by which it is bound or to which any of
its properties is subject, except such defaults that would not, individually or
in the aggregate, result in a Material Adverse Effect.
(q) Authorization of
Agreements. The execution, delivery of and the performance by
the Company of its obligations under this Agreement has been duly and validly
authorized by all necessary corporate action on the part of the Company and
constitutes a valid and binding obligation of the Company enforceable in
accordance with its terms.
(r) Possession of Licenses and
Permits. The Company possesses all certificates,
authorizations, franchises, licenses and permits (“Licenses”) necessary to the
conduct of the business in all material respects as now conducted by it and is
not in violation of, and has not received any notice of, proceedings relating to
the revocation or modification of, any Licenses except where such violation
would or such proceedings if determined adversely to the Company would, in each
case, individually or in the aggregate, have a Material Adverse
Effect.
(s) Absence of Labor
Dispute. No labor dispute with the employees of the Company
exists or, to the knowledge of the Company, is imminent that could have a
Material Adverse Effect.
(t) ERISA Laws. The
Company is in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder (“ERISA”); and the Company has
no "pension plan" (as defined in ERISA).
(u) Possession of Intellectual
Property. The Company holds all material licenses,
certificates and permits from governmental authorities which are necessary to
the conduct of its business; the Company owns or possesses the right to use all
patents, patent rights, trademarks, trade names, service marks, service names,
copyrights, license rights, know-how (including trade secrets and other
unpatented and unpatentable proprietary or confidential information, systems or
procedures) and other intellectual property rights (“Intellectual Property”)
necessary to carry on its business in all material respects; the Company has not
infringed nor received notice of conflict with any Intellectual Property of any
other person or entity. The Company has taken all reasonable steps
necessary to secure interests in such Intellectual Property from its
contractors. There are no outstanding options, licenses or agreements
of any kind relating to the Intellectual Property of the Company that are
required to be described in the Registration Statement, the General Disclosure
Package and the Final Prospectus and are not described in all material
respects. The Company is not a party to or bound by any options,
licenses or agreements with respect to the Intellectual Property of any other
person or entity that are required to be set forth in the Registration
Statement, the General Disclosure Package and the Final 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 any of its officers,
directors or employees or otherwise in violation of the rights of any persons;
the Company has not received any written or oral communications alleging that
the Company has violated, infringed or conflicted with, or, by conducting its
business as set forth in the Registration Statement, the General Disclosure
Package and the Final Prospectus, would violate, infringe or conflict with, any
of the Intellectual Property of any other person or entity. The
Company knows of no infringement by others of Intellectual Property owned by or
licensed to the Company.
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(v) Environmental
Laws. Except as disclosed in the Registration Statement, the
General Disclosure Package and the Final Prospectus and in each case as would
not individually or in the aggregate have a Material Adverse Effect,
(a)(i) the Company is not in violation of, and does not have any liability
under, any federal, state, local or non-U.S. statute, law, rule, regulation,
ordinance, code, other requirement or rule of law (including common law), or
decision or order of any governmental agency, governmental body or court,
relating to pollution, to the use, handling, transportation, treatment, storage,
discharge, disposal or release of Hazardous Substances, to the protection or
restoration of the environment or natural resources (including biota), to health
and safety including as such relates to exposure to Hazardous Substances, and to
natural resource damages (collectively, “Environmental Laws”),
(ii) the Company does not own, occupy, operate or use any real property
contaminated with Hazardous Substances, (iii) the Company is not conducting
or funding any investigation, remediation, remedial action or monitoring of
actual or suspected Hazardous Substances in the environment, (iv) the
Company is not liable or allegedly liable for any release or threatened release
of Hazardous Substances, including at any off-site treatment, storage or
disposal site, (v) the Company is not subject to any claim by any
governmental agency or governmental body or person relating to Environmental
Laws or Hazardous Substances, and (vi) the Company has received and is in
compliance with all, and has no liability under any, permits, licenses,
authorizations, identification numbers or other approvals required under
applicable Environmental Laws to conduct its business; and (b) there are no
facts or circumstances that would reasonably be expected to result in a
violation of, liability under, or claim pursuant to any Environmental
Law. For purposes of this Section 1(v) “Hazardous Substances” means
(A) petroleum and petroleum products, by-products or breakdown products,
radioactive materials, asbestos-containing materials, polychlorinated biphenyls
and mold, and (B) any other chemical, material or substance defined or regulated
as toxic or hazardous or as a pollutant, contaminant or waste under
Environmental Laws.
(w) Accurate
Disclosure. The statements in the Registration Statement, the
General Disclosure Package and the Final Prospectus under the headings
“Description of Capital Stock” and “Legal Proceedings,” insofar as such
statements summarize agreements, documents or proceedings discussed therein, are
fair summaries of such agreements, documents or proceedings.
(x) Offering Material. The
Company has not distributed, and will not distribute prior to the Closing Date
and the Option Closing Date, as the case may be, any offering material in
connection with the Offering other than any preliminary prospectuses, any Issuer
Free Writing Prospectus, the Final Prospectus and the Registration
Statement.
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(y) Absence of
Manipulation. Neither the Company, nor any of the Company’s
affiliates, has taken, directly or indirectly, any action that is designed to or
that has constituted or that would reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(z) Internal Controls and Compliance
with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. Except as set forth in the
Registration Statement, the General Disclosure Package and the Final Prospectus,
the Company and the Company’s Board of Directors (the “Board”) are in compliance in
all material respects with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ and all applicable Exchange
Rules. The Company maintains internal controls over financial
reporting and disclosure controls and procedures, each as defined in
Rule 13a-15 under the Exchange Act and a system of internal controls over
accounting matters (collectively, “Internal Controls”) that are
designed to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
of the United States (“GAAP”) 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 the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Internal Controls are overseen by the Audit Committee (the
“Audit Committee”) of
the Board in accordance with Exchange Rules. Since the date of the latest
audited financial statements included in the Registration Statement, the General
Disclosure Package and the Final Prospectus, the Company has not identified (i)
any material weakness in the Company’s internal control over financial reporting
(whether or not remediated) or (ii) any change in the Company’s internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting. The Company has not determined that its disclosure
controls and procedures are ineffective to perform the functions for which they
were established.
(aa) Statistical
Data. The statistical, industry-related and market-related
data included in the Registration Statement, the General Disclosure Package and
the Final Prospectus are based on or derived from sources which the Company
reasonably and in good faith believes are reliable and accurate, and such data
agree with the sources from which they are derived.
(bb) Litigation. Except
as disclosed in the Registration Statement, the General Disclosure Package and
the Final Prospectus, there are no pending or, to the knowledge of the Company,
threatened actions, suits, claims or proceedings (including any inquiries or
investigations by any court or governmental agency or body) against or affecting
the Company or any of its properties that, if determined adversely to the
Company, would individually or in the aggregate have a Material Adverse Effect,
or would materially and adversely affect the ability of the Company to perform
its obligations under this Agreement.
(cc) Financial
Statements. The financial statements included or incorporated
by reference in the Registration Statement, the General Disclosure Package and
the Final Prospectus present fairly in all material respects the financial
position of the Company as of the dates shown and its results of operations and
cash flows for the periods shown, and such financial statements have been
prepared in conformity with GAAP applied on a consistent basis. The
summary and selected consolidated financial and statistical data included or
incorporated by reference in the Registration Statement, the General Disclosure
Package and the Final Prospectus presents fairly the information shown therein
and such data has been compiled on a basis consistent with the financial
statements presented therein and the books and records of the
Company. There are no financial statements (historical or pro forma)
that are required to be included in the Registration Statement, the General
Disclosure Package and the Final Prospectus that are not included as
required.
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(dd) Independent
Auditor. GHP ▇▇▇▇▇▇▇, P.C., who has certified certain of the
financial statements filed with the Commission as part of or incorporated by
reference in the Registration Statement, the General Disclosure Package and the
Final Prospectus, is an independent registered public accounting firm with
respect to the Company within the meaning of the Act and the applicable Rules
and Regulations and the Public Company Accounting Oversight Board (United
States) (the “PCAOB”).
(ee) No Material Adverse Change in
Business. Except as disclosed in the Registration Statement,
the General Disclosure Package and the Final Prospectus, since the end of the
period covered by the latest audited financial statements included or
incorporated by reference in the Registration Statement, the General Disclosure
Package and the Final Prospectus (i) there has been no material adverse
change in the condition (financial or otherwise), results of operations,
business, prospects or properties of the Company, taken as a whole,
(ii) there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock, and (iii) there
has been no material adverse change in the capital stock, short-term
indebtedness, long-term indebtedness, net current assets or net assets of the
Company; and there has not been any transaction entered into or any transaction
that is probable of being entered into by the Company, other than transactions
in the ordinary course of business and changes and transactions described in the
Registration Statement, the General Disclosure Package and the Final Prospectus,
as each may be amended or supplemented. The Company has no material
contingent obligations which are not disclosed in the Company’s financial
statements which are included or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Final Prospectus.
(ff) Investment Company
Act. The Company is not or, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Registration Statement, the General Disclosure Package and
the Final Prospectus, will not be an “investment company” as defined in the
Investment Company Act of 1940, as amended (the “Investment Company
Act”).
(gg) FCPA; Anti-Money Laundering.
Each of the Company and its officers, directors, agents, or employees has not
violated and its participation in the Offering will not violate any of the
following laws: (a) anti-bribery laws, including but not limited to, any
applicable law, rule, or regulation of any locality, including but not limited
to any law, rule, or regulation promulgated to implement the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions, signed December 17, 1997, including the U.S. Foreign Corrupt
Practices Act of 1977 or any other law, rule or regulation of similar purpose
and scope, (b) anti-money laundering laws, including but not limited to,
applicable federal, state, international, foreign or other laws, regulations or
government guidance regarding anti-money laundering, including, without
limitation, Title 18 U.S. Code section 1956 and 1957, the Patriot Act, the Bank
Secrecy Act, and international anti-money laundering principals or procedures by
an intergovernmental group or organization, such as the Financial Action Task
Force on Money Laundering, of which the United States is a member and with which
designation the United States representative to the group or organization
continues to concur, all as amended, and any Executive order, directive, or
regulation pursuant to the authority of any of the foregoing, or any orders or
licenses issued thereunder, or (c) laws and regulations imposing U.S. economic
sanctions measures, including, but not limited to, the International Emergency
Economic Powers Act, the Trading with the Enemy Act, the United Nations
Participation Act, and the Syria Accountability and Lebanese Sovereignty Act,
all as amended, and any Executive order, directive, or regulation pursuant to
the authority of any of the foregoing, including the regulations of the United
States Treasury Department set forth under 31 CFR, Subtitle B, Chapter V, as
amended, or any orders or licenses issued thereunder.
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(hh) Tax Returns. The Company has
filed all U.S. federal, state, local and non-U.S. tax returns that are required
to be filed or has requested extensions thereof (except in any case in which the
failure so to file would not have a Material Adverse Effect); and the Company
has paid all taxes (including any assessments, fines or penalties) required to
be paid by it.
(ii) Insurance. The
Company is insured by insurers against such losses and risks and in such amounts
as is adequate for the conduct of its business and the value of its properties
and as is customary for companies engaged in similar businesses; all policies of
insurance and fidelity or surety bonds insuring the Company or its business,
assets, employees, officers and directors are in full force and effect; and the
Company is in compliance with the terms of such policies and instruments in all
respects.
(jj) Listing. The
Securities have been approved for listing subject to notice of issuance on The
NASDAQ Capital Market.
(kk) Related Person
Transactions. There are no relationships or related-person
transactions involving the Company or any other person required to be described
in the Registration Statement, the General Disclosure Package and the Final
Prospectus which have not been described as required.
(ll) FINRA
Affiliations. To the Company’s knowledge, there are no
affiliations or associations between any member of FINRA and any of the
Company’s officers, directors or 5% or greater shareholders, except as set forth
in the Registration Statement.
2. Purchase,
Sale and Delivery of the Securities.
(a) On the
basis of the representations, warranties and covenants herein contained, and
subject to the conditions herein set forth, the Company agrees to sell to the
Underwriter and the Underwriter agrees to purchase, at a price of $1.641
per share, the Underwritten Securities.
(b) Payment
for the Underwritten Securities to be sold hereunder is to be made in Federal
(same day) funds against delivery of certificates therefor to the
Underwriter. Such payment and delivery are to be made through the
facilities of The Depository Trust Company, New York, New York at 10:00 am
(Eastern time), on the fourth business day after the date of this Agreement or
at such other time and date not later than five business days thereafter as the
Underwriter and the Company shall agree upon, such time and date being herein
referred to as the “Closing
Date.” As used herein, “business day” means a day on
which the New York Stock Exchange and The NASDAQ Stock Market are open for
trading and on which banks in New York are open for business and are not
permitted by law or Executive order to be closed.
10
(c)
In
addition, on the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company hereby
grants an option to the Underwriter to purchase the Option Securities at the
price per share as set forth in paragraph (a) of this Section
2. The option granted hereby may be exercised at any time and
from time to time, in whole or in part, within 30 days after the date of this
Agreement, upon written notice by the Underwriter to the Company setting forth
the number of Option Securities as to which the Underwriter is exercising the
option and the time and date at which such certificates are to be
delivered. The time and date at which certificates for Option
Securities are to be delivered shall be determined by the Underwriter but shall
not be earlier than three nor later than 10 full business days after the
exercise of such option, nor in any event prior to the Closing Date (each such
time and date being herein referred to as an “Option Closing
Date”). If the date of exercise of the option is three or more
days before the Closing Date, the notice of exercise shall set the Closing Date
as the Option Closing Date. The option with respect to the Option
Securities granted hereunder may be exercised only to cover over-allotments in
the sale of the Underwritten Securities by the Underwriter. The
Underwriter may cancel such option at any time prior to its expiration by giving
written notice of such cancellation to the Company. To the extent, if
any, that the option is exercised, payment for the Option Securities shall be
made on the Option Closing Date in Federal (same day funds) through the
facilities of The Depository Trust Company in New York, New York drawn to the
order of the Company.
3. Offering by the
Underwriter. It is understood that the Underwriter is to make
a public offering of the Underwritten Securities as soon as the Underwriter
deems it advisable to do so. The Underwritten Securities are to be
initially offered to the public at the initial public offering price set forth
in the Final Prospectus. The Underwriter may from time to time
thereafter change the public offering price and other selling
terms.
4. Certain Agreements of the
Company. The Company agrees with the Underwriter
that:
(a) Filing of
Prospectuses. The Company has filed or will file each
Statutory Prospectus (including the Final Prospectus) pursuant to and in
accordance with Rule 424(b)(2) (or, if applicable and consented to by the
Underwriter, subparagraph (5)) not later than the second business day following
the earlier of the date it is first used and the execution and delivery of this
Agreement. The Company has complied and will comply with
Rule 433 with respect to a prospectus relating to the
Securities.
(b) Filing of Amendments; Response to
Commission Requests. During the period beginning on the date
hereof and ending on the later of the Option Closing Date and such date, as in
the opinion of counsel for the Underwriter, the Final Prospectus is no longer
required by law to be delivered (assuming the absence of Rule 172 under the Act)
in connection with sales by an underwriter or dealer, the Company will promptly
advise the Underwriter of any proposal to amend or supplement the Registration
Statement or any Statutory Prospectus (including by incorporation by reference
of any report filed under the Exchange Act) and will offer the Underwriter a
reasonable opportunity to comment on any such amendment or supplement; and the
Company will also advise the Underwriter promptly of (i) the filing of any
such amendment or supplement, (ii) any request by the Commission or its
staff for any amendment to the Registration Statement, for any supplement to any
Statutory Prospectus or for any additional information, (iii) the
institution by the Commission of any stop order proceedings in respect of the
Registration Statement or the threatening of any proceeding for that purpose,
and (iv) the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities in any jurisdiction or the
institution or threatening of any proceedings for such purpose. The
Company will use reasonable best efforts to prevent the issuance of any such
stop order or the suspension of any such qualification and, if issued, to obtain
as soon as possible the withdrawal thereof.
11
(c) Continued Compliance with Securities
Laws. If, at any time when a prospectus relating to the
Securities is (or but for the exemption in Rule 172 would be) required to
be delivered under the Act by the Underwriter or any dealer, any event occurs as
a result of which the Final Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend the Registration Statement or supplement the Final Prospectus to comply
with the Act, the Company will promptly notify the Underwriter of such event and
will promptly prepare and file with the Commission and furnish, at its own
expense, to the Underwriter and any dealers upon request of the Underwriter, an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither the
Underwriter’s consent to, nor the Underwriter’s delivery of, any such amendment
or supplement shall constitute a waiver of any of the conditions set forth in
Section 6 hereof.
(d) Rule 158. As
soon as practicable, but not later than 16 months, after the date of this
Agreement, the Company will make generally available to its securityholders an
earnings statement covering a period of at least 12 months beginning after the
date of this Agreement and satisfying the provisions of Section 11(a) of the Act
and Rule 158.
(e) Furnishing of
Prospectuses. The Company will furnish to the Underwriter
copies of the Registration Statement, including all exhibits, any Statutory
Prospectus, the Final Prospectus and all amendments and supplements to such
documents, in each case as soon as available and in such quantities
as the Underwriter requests. The Company will pay the expenses of
printing and distributing to the Underwriter all such documents.
(f) Blue Sky
Qualifications. The Company will arrange for the qualification
of the Securities for sale under the laws of such jurisdictions as the
Underwriter designates and will continue such qualifications in effect so long
as required for the distribution; provided that the Company
will not be required to qualify as a foreign corporation or to file a general
consent to service of process in any such jurisdiction or take any action that
would subject it to taxation in any such jurisdiction where it is not then so
subject.
(g) Reporting Requirements.
During the period of three years hereafter, the Company will furnish to the
Underwriter as soon as practicable after the end of each fiscal year, a copy of
its annual report to shareholders for such year; and the Company will furnish to
the Underwriter (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Exchange Act or mailed to shareholders, and (ii) from time to time, such
other information concerning the Company as the Underwriter may reasonably
request. However, so long as the Company is subject to the reporting
requirements of either Section 13 or Section 15(d) of the Exchange Act and is
timely filing reports with the Commission on its Interactive Data Electronic
Applications system, it is not required to furnish such reports or statements to
the Underwriter.
12
(h) Payment of
Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including but not limited
to (i) any filing fees and other expenses (including reasonable fees and
disbursements of counsel to the Underwriter) incurred in connection with
qualification of the Securities for sale under the state securities or blue sky
laws as the Underwriter designates and the preparation and printing of memoranda
relating thereto, (ii) Company costs and expenses relating to investor
presentations or any “road show” in connection with the offering and sale of the
Securities including, without limitation, any travel expenses of the Company’s
officers and employees and any other expenses of the Company, (iii) fees and
expenses incident to listing the Securities on The NASDAQ Capital Market, (iv)
fees and expenses in connection with the registration of the Securities under
the Exchange Act, (v) expenses incurred in distributing preliminary prospectuses
and the Final Prospectus (including any amendments and supplements thereto) to
the Underwriter, (vi) any filing fees and other expenses (including reasonable
fees and disbursements of counsel to the Underwriter) incurred in connection
with any required review by FINRA of the terms of the sale of the Securities;
(vii) expenses incurred for preparing, printing and distributing any Issuer Free
Writing Prospectuses to investors or prospective investors; (viii) the costs and
expenses of the Company and the Underwriter in connection with the marketing of
the offering and the sale of the Securities to prospective investors including,
but not limited to, those related to any presentations or meetings undertaken in
connection therewith including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged with the written consent of the Company in connection with
the road show presentations, travel, lodging and other expenses incurred by the
officers of the Company and any such consultants, and the cost of any aircraft
or other transportation chartered in connection with the road show; and (ix) the
reasonable fees and disbursements of counsel for the Underwriters (in addition
to clauses (i) and (vi) above). Notwithstanding the foregoing, in no
event shall the Company be obligated to reimburse the Underwriter pursuant to
this Section
4(h) in an amount in excess of $80,000 in the aggregate without the
Company’s prior written consent. Notwithstanding anything to the
contrary contained in this Agreement, in the event this Agreement is terminated,
the Company shall only be obligated to reimburse the Underwriter for its
out-of-pocket expenses actually incurred in connection with the
Offering.
(i) Use of
Proceeds. The Company will use the net proceeds received in
connection with this Offering in the manner described in the “Use of Proceeds”
section of the Registration Statement, the General Disclosure Package and the
Final Prospectus.
(j) Absence of
Manipulation. The Company will not take, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be 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 Securities.
13
(k) Restriction on Sale of
Securities. For the period specified below (the “Lock-Up Period”), the Company
will not, directly or indirectly, take any of the following actions with respect
to its Common Stock, or any securities convertible into or exchangeable or
exercisable for any of its Common Stock (“Lock-Up
Securities”): (i) offer, sell, issue, contract to sell,
pledge or otherwise dispose of Lock-Up Securities, (ii) offer, sell, issue,
contract to sell, contract to purchase or grant any option, right or warrant to
purchase Lock-Up Securities, (iii) enter into any swap, hedge or any other
agreement that transfers, in whole or in part, the economic consequences of
ownership of Lock-Up Securities, (iv) establish or increase a put
equivalent position or liquidate or decrease a call equivalent position in
Lock-Up Securities within the meaning of Section 16 of the Exchange Act or
(v) file with the Commission a registration statement under the Act
relating to Lock-Up Securities, or publicly disclose the intention to take any
such action, without the prior written consent of the Underwriter, except award
grants, including the grant of employee stock options, restricted stock,
restricted stock units, and stock appreciation rights, pursuant to the terms of
a plan in effect on the date hereof and disclosed in the Registration Statement,
the General Disclosure Package and the Final Prospectus, or issuances of Lock-Up
Securities pursuant to the exercise of such options. The initial
Lock-Up Period will commence on the date hereof and continue for 90 days after
the date hereof or such earlier date that the Underwriter consents to in
writing; provided, however, that if (1) during the last 17 days of the initial
Lock-Up Period, the Company releases earnings results or material news or a
material event relating to the Company occurs or (2) prior to the expiration of
the initial Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the initial
Lock-Up Period, then in each case the Lock-Up Period will be extended until the
expiration of the 18-day period beginning on the date of release of the earnings
results or the occurrence of the material news or material event, as applicable,
unless the Underwriter waives, in writing, such extension, provided further,
that if at the time of any such release or announcement, the Company qualifies
as a company with “actively traded securities” as defined in Rule 101(c)(1) of
Regulation M under the Exchange Act, clauses (1) and (2) shall not
apply. The Company will provide the Underwriter with notice of any
announcement described in clause (2) of the preceding sentence that gives rise
to an extension of the Lock-Up Period.
(l) Investment Company
Act. The Company shall not invest or otherwise use the
proceeds received by the Company from the Offering in such a manner as would
require the Company to register as an investment company under the Investment
Company Act.
5. Free
Writing Prospectuses. The
Company represents and agrees that, unless it obtains the prior consent of the
Underwriter, and the Underwriter represents and agrees that, unless it obtains
the prior consent of the Company, it has not made and will not make any offer
relating to the Securities that would constitute an Issuer Free Writing
Prospectus, or that would otherwise constitute a “free writing prospectus,” as
defined in Rule 405, required to be filed with the Commission. Any
such free writing prospectus consented to by the Company and the Underwriter is
hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents that it has treated and
agrees that it will treat each Permitted Free Writing Prospectus as an “issuer
free writing prospectus,” as defined in Rule 433,
and has complied and will comply with the requirements of Rules 164
and 433 applicable to any Permitted Free Writing Prospectus, including
timely Commission filing where required, legending and record
keeping.
14
6. Conditions of the Obligations of the
Underwriter. The obligations of the Underwriter hereunder will
be subject to the accuracy of the representations and warranties of the Company
herein (as though made on the Closing Date and the Option Closing Date, as the
case may be), to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions
precedent:
(a) Auditors’ Comfort
Letter. The Underwriter shall have received letters, dated,
respectively, the date hereof and the Closing Date and the Option Closing Date,
as the case may be, of GHP ▇▇▇▇▇▇▇, P.C. confirming that they are a registered
public accounting firm and independent public accountants within the meaning of
the Securities Laws in form and substance satisfactory to the Underwriter
(except that, in any letter dated the Closing Date and the Option Closing Date,
as the case may be, the specified date of such letter shall be a date no more
than three days prior to the Closing Date and the Option Closing Date, as the
case may be).
(b) Filing of
Prospectus. The Final Prospectus shall have been filed with
the Commission in accordance with the Rules and Regulations and Section 4(a) of
this Agreement. No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the Company or
the Underwriter, shall be threatened by the Commission.
(c) No Material Adverse
Change. Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change in the condition
(financial or otherwise), results of operations, business, prospects or
properties of the Company taken as a whole which, in the judgment of the
Underwriter, is material and adverse and makes it impractical or inadvisable to
proceed with completion of the sale of, and payment by the Underwriter for, the
Securities; (ii) any downgrading in the rating of any debt securities of
the Company by any “nationally recognized statistical rating organization” (as
defined for purposes of Rule 436(g)), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive implications
of a possible upgrading, and no implication of a possible downgrading, of such
rating) or any announcement that the Company has been placed on negative
outlook; (iii) any change in U.S. or international financial, political or
economic conditions or currency exchange rates or exchange controls the effect
of which is such as to make it, in the judgment of the Underwriter, impractical
to market or to enforce contracts for the sale of the Securities, whether in the
primary market or in respect of dealings in the secondary market; (iv) any
suspension or material limitation of trading in securities generally on the New
York Stock Exchange or The NASDAQ Stock Market, or any setting of minimum or
maximum prices for trading on such exchange; (v) any suspension of trading
of any securities of the Company on any exchange or in the over-the-counter
market; (vi) any banking moratorium declared by any U.S. federal or New
York authorities; (vii) any major disruption of settlements of securities,
payment, or clearance services in the United States or any other country where
such securities are listed; or (viii) any attack on, outbreak or escalation
of hostilities or act of terrorism involving the United States, any declaration
of war by Congress or any other national or international calamity or emergency
if, in the judgment of the Underwriter, the effect of any such attack, outbreak,
escalation, act, declaration, calamity or emergency is such as to make it
impractical or inadvisable to market the Securities or to enforce contracts for
the sale of the Securities.
15
(d) Opinion of Counsel for
Company. The Underwriter shall have received an opinion, dated
the Closing Date and the Option Closing Date, as the case may be, of ▇▇▇▇▇▇▇
▇▇▇▇▇ LLP, counsel for the Company, addressed to the Underwriter and in
substantially the form attached as Exhibit C
hereto.
(e) Opinion of Counsel for the
Underwriter. The Underwriter shall
have received from ▇▇▇▇▇▇▇ Procter LLP, counsel for the Underwriter, such
opinion or opinions, dated the Closing Date and the Option Closing Date, as the
case may be, with respect to such matters as the Underwriter may require, and
the Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(f) Officers’
Certificate. The Underwriter shall have received a
certificate, dated the Closing Date and the Option Closing Date, as the case may
be, of an executive officer of the Company and a principal financial or
accounting officer of the Company in which such officers shall state that: (i)
the representations and warranties of the Company in this Agreement are true and
correct in all material respects, except those already qualified by materiality
or Material Adverse Effect, which representations and warranties shall be true
and correct in all respects, and the Company has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date and the Option Closing Date, as the case may be;
(ii) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted or, to
their knowledge, are threatened by the Commission; and (iii) subsequent to the
date of the most recent financial statements in the Registration Statement, the
General Disclosure Package and the Final Prospectus, there has been no material
adverse change in the condition (financial or otherwise), results of operations,
business, prospects or properties of the Company except as set forth in the
Registration Statement, the General Disclosure Package and the Final Prospectus
or as described in such certificate.
(g) Lock-up
Agreements. As of the date of this Agreement, the Underwriter
shall have received lock-up agreements in substantially the form attached hereto
as Exhibit A
from each of the persons listed on Exhibit B
hereto.
(h) Listing. The Securities shall
have been approved for listing on The NASDAQ Capital Market, subject to notice
of issuance.
(i) Secretary’s
Certificate. The Underwriter shall have received a
certificate, dated the Closing Date and the Option Closing Date, as the case may
be, of the secretary of the Company, in form and substance reasonably
satisfactory to counsel for the Underwriter.
(j) FINRA
Compliance. FINRA shall not have raised any objection with
respect to the fairness or reasonableness of the underwriting, or other
arrangements of the transactions, contemplated hereby.
16
The
Company will furnish the Underwriter with such conformed copies of such
opinions, certificates, letters and documents as the Underwriter reasonably
requests. The Underwriter may in its sole discretion waive compliance
with any conditions to the obligations of the Underwriter
hereunder.
7. Indemnification
and Contribution.
(a) Indemnification of
Underwriter. The Company will indemnify and hold harmless the
Underwriter, its partners, members, directors, officers, employees, agents,
affiliates and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act (each, an
“Indemnified Party”),
against any and all losses, claims, damages or liabilities, joint or several, to
which such Indemnified Party may become subject, under the Act, the Exchange
Act, other Federal or state statutory law or regulation or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any part of the Registration
Statement at any time, or arise out of or are based upon the omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein, not misleading, or (ii) any untrue statement or alleged
untrue statement of any material fact contained in any Statutory Prospectus as
of any time, the Final Prospectus or any Issuer Free Writing Prospectus, or
arise out of or are based upon the omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and will reimburse each Indemnified Party for any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending against any loss, claim, damage, liability, action, litigation,
investigation or proceeding whatsoever (whether or not such Indemnified Party is
a party thereto), whether threatened or commenced, and in connection with the
enforcement of this provision with respect to any of the above as such expenses
are incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by the Underwriter
specifically for use therein, it being understood and agreed that the only such
information furnished by the Underwriter consists of the information described
as such in Section
7(b) below.
(b) Indemnification of
Company. The Underwriter will indemnify and hold harmless the
Company, each of its directors and each of its officers who signs a Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act (each, an “Underwriter Indemnified
Party”), against any losses, claims, damages or liabilities to which such
Underwriter Indemnified Party may become subject, under the Act, the Exchange
Act, other Federal or state statutory law or regulation or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any part of the Registration Statement at any
time, any Statutory Prospectus as of any time, the Final Prospectus, or any
Issuer Free Writing Prospectus, or arise out of or are based upon the omission
or the alleged omission of 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 reliance upon and in
conformity with written information furnished to the Company by such Underwriter
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by such Underwriter Indemnified Party in connection with
investigating or defending against any such loss, claim, damage, liability,
action, litigation, investigation or proceeding whatsoever (whether or not such
Underwriter Indemnified Party is a party thereto), whether threatened or
commenced, based upon any such untrue statement or omission, or any such alleged
untrue statement or omission as such expenses are incurred, it being understood
and agreed that the only such information by the Underwriter is the third
paragraph and the twelfth through sixteenth paragraphs under
“Underwriting” in the Final Prospectus.
17
(c) Actions against Parties;
Notification. 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 the indemnifying party
under Section
7(a) or 7(b) above, notify
the indemnifying party of the commencement thereof; but the failure to notify
the indemnifying party shall not relieve it from any liability that it may have
under Section
7(a) or 7(b) above except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided further that the
failure to notify the indemnifying party shall not relieve it from any liability
that it may have to an indemnified party otherwise than under Section 7(a) or 7(b)
above. In case any such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, 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 other than reasonable costs of
investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action and (ii) does not include a statement as to, or an admission
of, fault, culpability or a failure to act by or on behalf of an indemnified
party.
(d) Contribution. If
the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under Section 7(a) or 7(b) above, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in Section
7(a) or 7(b) above
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriter on the other from
the offering of the Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and
the Underwriter on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriter on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriter. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriter and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this Section 7(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this Section 7(d).
Notwithstanding the provisions of this Section 7(d), the
Underwriter shall not be required to contribute in excess of the amount by which
the total compensation received by the Underwriter exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Company
and the Underwriter agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in this Section 7(d).
18
8. Survival of Certain Representations
and Obligations. The respective indemnities, agreements,
representations, warranties and other statements of the Company or its officers
and of the Underwriter set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation, or statement
as to the results thereof, made by or on behalf of the Underwriter, the Company
or any of their respective representatives, officers or directors or any
controlling person, and will survive delivery of and payment for the
Securities. If the sale of the Securities to the Underwriter is not
consummated because the conditions in Section 6 hereof are
not satisfied, or by reason of any failure, refusal or inability on the part of
the Company to perform any undertaking of this Agreement or to comply with any
of the terms hereof on its part to be performed, unless such failure, refusal or
inability is due primarily to the default or omission of the Underwriter, the
Company will reimburse the Underwriter for all out-of-pocket expenses (including
fees and disbursements of counsel) actually incurred by it in connection with
the offering of the Securities, and the respective obligations of the Company
and the Underwriter pursuant to Section 7 hereof
shall remain in effect. In addition, if any Securities have been
purchased hereunder, the representations and warranties in Section 1 and
all obligations under Section 4 shall also remain in effect.
9. Notices. All communications
hereunder will be in writing and, if sent to the Underwriter, will be mailed or
delivered and confirmed to the Underwriter at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel,
or, if sent to the Company, will be mailed or delivered and confirmed to it at
AspenBio Pharma, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Financial Officer.
10. Successors. This Agreement
will inure to the benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and controlling persons
referred to in Section 7, and
no other person will have any right or obligation hereunder.
11. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same Agreement.
19
12. Absence of Fiduciary
Relationship. The Company acknowledges and agrees
that:
(a) No Other
Relationship. The Underwriter has been retained solely to act
as underwriter in connection with the sale of Securities and that no fiduciary,
advisory or agency relationship between the Company and the Underwriter has been
created in respect of any of the transactions contemplated by this Agreement or
the Final Prospectus, irrespective of whether the Underwriter has advised or is
advising the Company on other matters;
(b) Arms’ Length
Negotiations. The price of the Securities set forth in this
Agreement and the Final Prospectus was established by the Company following
discussions and arms-length negotiations with the Underwriter 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;
(c) Absence of Obligation to
Disclose. The Company has been advised that the Underwriter
and its affiliates are engaged in a broad range of transactions which may
involve interests that differ from those of the Company and that the Underwriter
has no obligation to disclose such interests and transactions to the Company by
virtue of any fiduciary, advisory or agency relationship; and
(d) Waiver. The
Company waives, to the fullest extent permitted by law, any claims it may have
against the Underwriter for breach of fiduciary duty or alleged breach of
fiduciary duty and agrees that the Underwriter shall have no liability (whether
direct or indirect) to the Company in respect of such a fiduciary duty claim or
to any person asserting a fiduciary duty claim on behalf of or in right of the
Company, including shareholders, employees or creditors of the
Company.
13. Applicable Law. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York.
The
Company hereby submits to the non-exclusive jurisdiction of the Federal and
state courts in the Borough of Manhattan in The City of New York in any suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company irrevocably and unconditionally
waives any objection to the laying of venue of any suit or proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby in
Federal and state courts in the Borough of Manhattan in The City of New York and
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such suit or proceeding in any such court has been brought
in an inconvenient forum.
20
If the
foregoing is in accordance with the Underwriter’s understanding of our
agreement, kindly sign and return to the Company one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the
Underwriter in accordance with its terms.
|
Very
truly yours,
|
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|
|
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||
| Title: Chief Executive Officer | |||
The
foregoing Underwriting Agreement is hereby confirmed and accepted as of the date
first above written.
THINKEQUITY
LLC
By: /s/ ▇▇▇
▇▇▇▇▇▇▇▇
Name: ▇▇▇
▇▇▇▇▇▇▇▇
Title: Partner
21
SCHEDULE I
General
Use Issuer Free Writing Prospectuses
None.
SCHEDULE II
Pricing
Information
Number of
shares offered: 4,482,609
Purchase
price to the public: $1.70 per share
Underwriting
discounts and commissions: 3.5%
Net
proceeds to the Company (excluding estimated offering
expenses): $7.35 million
EXHIBIT
A
Form
of Lock-Up Agreement
______,
2009
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▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ThinkEquity
LLC
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Ladies
and Gentlemen:
As an
inducement to ThinkEquity LLC to execute the Underwriting Agreement, pursuant to
which ThinkEquity LLC will purchase shares of common stock, no par value per
share (the “Common
Stock”) of AspenBio Pharma, Inc., and any successor (by merger or
otherwise) thereto, (the “Company”), the undersigned
hereby agrees that during the period specified in the following paragraph (the
“Lock-Up Period”), the
undersigned will not offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, any Common Stock or securities convertible into or
exchangeable or exercisable for any Common Stock (collectively, the “Company Securities”), enter
into a transaction which would have the same effect, or enter into any swap,
hedge or other arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
aforementioned transaction is to be settled by delivery of the Common Stock or
such other securities, in cash or otherwise, or publicly disclose the intention
to make any such offer, sale, pledge or disposition, or to enter into any such
transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of ThinkEquity LLC. In addition, the undersigned
agrees that, without the prior written consent of ThinkEquity LLC, it will not,
during the Lock-Up Period, make any demand for or exercise any right with
respect to, the registration of any Common Stock or any security convertible
into or exercisable or exchangeable for the Common Stock. Capitalized
terms used herein not otherwise defined will have the meanings ascribed to them
in the Underwriting Agreement. [Note: To be included in ▇▇▇▇▇▇▇
▇▇▇▇▇▇’▇ Lock-Up Agreement: Notwithstanding the foregoing, during the
period beginning on the date that is 46 days after the Public Offering Date and
ending on the last day of the Lock-Up Period, the restrictions set forth in this
paragraph shall no longer apply with respect to sales of up to 15,000 of Company
Securities held by the undersigned as of the date hereof.]
The initial Lock-Up Period will
commence on the date of this Lock-Up Agreement and continue and include the date
90 days after the public offering date set forth on the final prospectus used to
sell the Securities (the “Public Offering Date”)
pursuant to the Underwriting Agreement, to which you are or expect to become
parties; provided, however, that if (1) during the last 17 days of the initial
Lock-Up Period, the Company releases earnings results or material news or a
material event relating to the Company occurs or (2) prior to the expiration of
the initial Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the initial
Lock-Up Period, then in each case the Lock-Up Period will be extended until the
expiration of the 18-day period beginning on the date of release of the earnings
results or the occurrence of the material news or material event, as applicable,
unless ThinkEquity LLC waives, in writing, such extension, provided further,
that if at the time of any such release or announcement, the Company qualifies
as a company with “actively traded securities” as defined in Rule 101(c)(1) of
Regulation M under the Exchange Act, clauses (1) and (2) shall not
apply.
The undersigned agrees that, prior to
engaging in any transaction or taking any other action that is subject to the
terms of this Lock-Up Agreement during the period from the date of this Lock-Up
Agreement to and including the 34th day
following the expiration of the initial Lock-Up Period, it will give notice
thereof to the Company and will not consummate such transaction or take any such
action unless it has received written confirmation from the Company that the
Lock-Up Period (as may have been extended pursuant to the previous paragraph)
has expired.
Nothing
contained above shall prohibit the undersigned’s (A) exercise of any option or
warrant outstanding on the date hereof to acquire Common Stock, exercise or
settlement of any stock-settled stock appreciation rights, restricted stock or
restricted stock units, or conversion of any convertible security into Common
Stock, provided, that any Common Stock received upon exercise of options granted
to the undersigned will also be subject to this Lock-Up Agreement, or (B)
transfer of Common Stock to a family member or trust, provided, that any
transferee agrees to be bound in writing by the terms of this Lock-Up Agreement
prior to such transfer and such transfer shall not involve a disposition for
value and, in the case of clauses (A) and (B), no filing by any party (donor,
donee, transferor or transferee) under the Securities Exchange Act of 1934 (the
“Exchange Act”) shall be
required or shall be voluntarily made in connection with such transfer (other
than a filing on a Form 5 made after the expiration of the Lock-Up Period). Any
Common Stock acquired by the undersigned in the open market will not be subject
to this Lock-Up Agreement.
In
furtherance of the foregoing, the Company and its transfer agent and registrar
are hereby authorized to decline to make any transfer of shares of Common Stock
if such transfer would constitute a violation or breach of this Lock-Up
Agreement.
This
Lock-Up Agreement shall be binding on the undersigned and the successors, heirs,
personal representatives and assigns of the undersigned. This Lock-Up
Agreement shall lapse and become null and void if the Public Offering Date shall
not have occurred on or before November 30, 2009.
This
Lock-Up Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
[SIGNATURE
PAGE FOLLOWS]
Very
truly yours,
Name:
EXHIBIT
B
Directors
and Executive Officers Executing Lock-Up Agreements
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Ratain
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EXHIBIT
C
Form
of Company Counsel Opinion
(i) The
Company is a corporation validly existing under the laws of the State of
Colorado, with corporate power to own its properties and assets and to carry on
its business as described in the Registration Statement, the General Disclosure
Package and the Final Prospectus;
(ii) The
Securities have been duly authorized by all necessary corporate action on the
part of the Company, and upon payment for and delivery of the Securities in
accordance with the Agreement and the book-entry of the Securities by the
transfer agent for the Common Stock in the name of The Depositary Trust Company
or its nominee, the Securities will be validly issued, fully paid and
nonassessable;
(iii) The
holders of capital stock of the Company are not entitled to any preemptive right
to subscribe to any additional shares of the Company’s capital stock under the
Company’s Articles of Incorporation, as amended, or Amended and Restated Bylaws
or the Colorado Business Corporation Act;
(iv) The
authorized capital stock of the Company consists of 60,000,000 shares of Common
Stock, no par value per share;
(v) The
Company is not, or after receipt of payment for the Securities and the
application of the proceeds therefrom as described in the Final Prospectus will
be, required to register as an “investment company” under the Investment Company
Act of 1940, as amended;
(vi) No order,
consent, permit or approval of any Colorado, New York or federal governmental
authority that such counsel has, in the exercise of customary professional
diligence, recognized as applicable to the Company or to transactions of the
type contemplated by the Agreement, is required on the part of the Company for
the execution and delivery of the Agreement or for the issuance and sale of the
Securities, except such as have been obtained under the Securities Act or the
rules and regulations thereunder and such as may be required under state
securities or Blue Sky laws or the bylaws and rules of FINRA;
(vii) The
execution and delivery by the Company of the Agreement does not, and the
Company’s performance of its obligations under the Agreement will not, violate
current Colorado or New York law or any federal statute, rule or regulation that
such counsel has, in the exercise of customary professional diligence,
recognized as applicable to the Company or to transactions of the type
contemplated by the Agreement except that they express no opinion regarding any
federal securities laws or Blue Sky or state securities laws except as otherwise
expressly stated therein;
(viii) The
execution and delivery by the Company of the Agreement does not, and the
Company’s performance of its obligations under the Agreement (other than
performance under the indemnification section of the Agreement, as to which no
opinion need be rendered) will not, (i) violate the Articles of Incorporation,
as amended, or the Amended and Restated Bylaws, (ii) violate, breach, or result
in a default under, any existing obligation of or restriction on the Company
under or result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company under any other agreement (the “Other Agreements”) listed in
an exhibit to the Company’s most recent Annual Report on Form 10-K, as amended,
the Company’s Quarterly Report on Form 10-Q for the fiscal quarters ended
March 31, 2009 and June 30, 2009 or (iii) breach or otherwise violate
any existing obligation of or restriction on the Company under any order,
judgment or decree of any Colorado or federal court or governmental authority
binding on the Company of which such counsel is aware;
(ix) The
Registration Statement has been declared effective under the Act, and, to our
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued or threatened by the Commission;
(x) The
statements in the Registration Statement, the General Disclosure Package and the
Final Prospectus under the caption “Description of Capital Stock—Common Stock”
insofar as they summarize provisions of the Articles of Incorporation, as
amended, the Amended and Restated Bylaws and the Colorado Business Corporation
Act fairly present the information required by Form S-3;
(xi) The
execution, delivery and performance of the Agreement has been duly authorized by
all necessary corporate action on the part of the Company and the Agreement has
been duly executed and delivered by the Company;
(xii) The
Registration Statement, on the date it was filed, appeared on its face to comply
in all material respects with the requirements as to form for registration
statements on Form S-3 under the Act and the related rules and regulations in
effect at the date of filing, except that such counsel need not express any
opinion concerning the financial statements and other financial information
contained or incorporated by reference therein;
(xiii) The
Incorporated Documents, on the respective dates they were filed, appeared on
their face to comply in all material respects with the requirements as to form
for reports on Form 10-K, Form 10-Q and Form 8-K, as the case may be, under the
Exchange Act and the related rules and regulations in effect at the respective
dates of their filing, except that such counsel need not express any opinion
concerning the financial statements, financial schedules, statistical data,
other financial information derived therefrom or internal controls disclosure
contained or incorporated by reference therein.
As counsel to the Company, such counsel
has reviewed the Registration Statement, the General Disclosure Package, the
Final Prospectus and the Incorporated Documents and participated in discussions
with the Underwriter, including its counsel, and representatives of the Company
and its independent public accountants at which the contents of the Registration
Statement, the General Disclosure Package, the Final Prospectus and the
Incorporated Documents and related matters were discussed. On the
basis of the information we gained in the course of performing the services
referred to above, nothing came to our attention that caused us to believe that
(i) the Registration Statement, including the information deemed to be part of
the Registration Statement as of the Effective Time pursuant to Rule 430B
promulgated under the Act, as of such time, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; (ii) the General
Disclosure Package considered as a whole at the Applicable Time, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) the Final
Prospectus and the Incorporated Documents, considered as a whole as of the date
of the Final Prospectus and as of the date of the opinion, contained or contains
any untrue statement of a material fact or omitted or omits 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 (it being
understood that such counsel need express no belief as to the financial
statements, financial schedules, statistical data or other financial information
derived therefrom, or internal controls disclosures included or incorporated by
reference in the Registration Statement, the General Disclosure Package and the
Final Prospectus).