KIT DIGITAL, INC. 2,980,000 Shares of Common Stock (Plus an Option to Purchase up to 447,000 Shares to Cover Overallotments) UNDERWRITING AGREEMENT
EXHIBIT
1.1
2,980,000
Shares
of
Common Stock
(Plus
an Option to Purchase up to 447,000 Shares to Cover Overallotments)
|
January 20,
2010
|
▇▇▇▇
Capital Partners, LLC
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
KIT
digital, Inc., a Delaware corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and sell to ▇▇▇▇
Capital Partners, LLC ("RCP") and each of the
other Underwriters named in Schedule I hereto (collectively with RCP, the “Underwriters”) an
aggregate of 2,980,000 authorized but unissued shares (the “Underwritten Shares”)
of Common Stock, par value $0.0001 per share (the “Common Stock”), of
the Company. The Company has granted the Underwriters the option to
purchase an aggregate of up to 447,000 additional shares of Common Stock (the
“Additional
Shares”) as may be necessary to cover over-allotments made in connection
with the offering. The Underwritten Shares and Additional Shares are
collectively referred to as the “Shares.” ▇▇▇▇
Capital Partners, LLC shall act as the representative (the “Representative”) of
the several Underwriters.
The
Company and the
Underwriters hereby confirm their agreement as follows:
1. Registration
Statement and Prospectus. The Company has prepared and filed
with the United States Securities and Exchange Commission (the “Commission”) a shelf
registration statement on Form S-3 (File No. 333-162325) under the Securities
Act of 1933, as amended (the “Securities Act”), and
the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder, and such amendments to such
registration statement (including post effective amendments) as may have been
required to the date of this Agreement and will file such amendments thereto as
may be required. Such registration statement, as amended (including
any post effective amendments) has been declared effective by the
Commission. Such registration statement, at any given time, including
the amendments thereto (including post effective amendments thereto) to such
time, the exhibits and any schedules thereto at such time, the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act at such time and the documents and information otherwise deemed
to be a part thereof or included therein by Rule 430B under the Securities Act
or otherwise pursuant to the Rules and Regulations at such time, is herein
called the “Registration
Statement.” If the Company has filed or files an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the
“Rule 462 Registration
Statement”), then any reference herein to the term Registration Statement
shall include such Rule 462 Registration Statement.
The
Company is filing with the Commission pursuant to Rule 424 under the Securities
Act a final prospectus relating to the Shares and supplementing the base
prospectus, dated October 5, 2009, included in the Registration
Statement, in the form heretofore delivered to the
Underwriters. Such base prospectus in the form in which it appears in
the Registration Statement is hereinafter called the “Base Prospectus,” and
such final prospectus as filed, together with the Base Prospectus, is
hereinafter called the “Final
Prospectus.” Such Final Prospectus and any preliminary
prospectus supplement or “red ▇▇▇▇▇▇▇,” in the form in which they shall be filed
with the Commission pursuant to Rule 424(b) under the Securities Act (including
the Base Prospectus as so supplemented) is hereinafter called a “Prospectus.” Any
reference herein to the Base Prospectus, the Final Prospectus or a Prospectus
shall be deemed to include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act as of the date of such
Prospectus.
For
purposes of this Agreement, all references to the Registration Statement, the
Rule 462 Registration Statement, the Base Prospectus, the Final Prospectus, the
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System (“▇▇▇▇▇”). All
references in this Agreement to financial statements and schedules and other
information which is “described,” “contained,” “included” or “stated” in the
Registration Statement, the Rule 462 Registration Statement, the Base
Prospectus, the Final Prospectus or the Prospectus (or other references of like
import) shall be deemed to mean and include all such financial statements, pro
forma financial information and schedules and other information which is
incorporated by reference in or otherwise deemed by the Rules and Regulations to
be a part of or included in the Registration Statement, the Rule 462
Registration Statement, the Base Prospectus or the Prospectus, as the case may
be; and all references in this Agreement to amendments or supplements to the
Registration Statement, the Rule 462 Registration Statement, the Base
Prospectus, the Final Prospectus or the Prospectus shall be deemed to mean and
include the subsequent filing of any document under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), that
is deemed to be incorporated therein by reference therein or otherwise deemed by
the Rules and Regulations to be a part thereof.
2. Representations
and Warranties of the Company Regarding the Offering.
(a) The
Company represents and warrants to, and agrees with, the Underwriters, as of the
date hereof and as of each Closing Date (as defined in Section 4(c) below),
except as otherwise specified, as follows:
(i) At
each time of effectiveness, at the date hereof and at each Closing Date, the
Registration Statement and any post-effective amendment thereto complied or will
comply (as applicable) in all material respects with the requirements of the
Securities Act and the Rules and Regulations 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, in
light of the circumstances under which they were made, not
misleading. The Time of Sale Disclosure Package (as defined in
Section 2(a)(iii) below) as of the date hereof and at each Closing Date, and the
Final Prospectus, as amended or supplemented, at the time of filing pursuant to
Rule 424(b) under the Securities Act and at each Closing Date, 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,
in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two
immediately preceding sentences shall not apply to statements in or omissions
from the Registration Statement or any Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by the
Underwriters specifically for use in the preparation thereof. The
Registration Statement (including each document incorporated by reference
therein) contains all exhibits and schedules required to be filed by the
Securities Act or the Rules and Regulations. No order preventing or
suspending the effectiveness or use of the Registration Statement or any
Prospectus has been issued by the Commission and no proceedings for such purpose
have been instituted or are pending, or, to the knowledge of the Company, are
contemplated or threatened. The Company has complied with all
requests of the Commission for additional or supplemental
information.
2
(ii) The
documents incorporated by reference in the Registration Statement, the Time of
Sale Disclosure Package and any Prospectus, when they became or become effective
or were or will be filed with the Commission, as the case may be, conformed in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable and were filed on a timely basis with the
Commission. Any further documents so filed and incorporated by
reference in the Registration Statement, the Time of Sale Disclosure Package or
the Final Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange Act, and
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iii) (A)
The Company has provided a copy to the Underwriters of each Issuer Free Writing
Prospectus (as defined below) used in the sale of Shares. The Company has
filed all Issuer Free Writing Prospectuses required to be so filed with the
Commission, and no order preventing or suspending the effectiveness or use of
any Issuer Free Writing Prospectus is in effect and no proceedings for such
purpose have been instituted or are pending, or, to the knowledge of the
Company, are contemplated or threatened. When taken together with the rest
of the Time of Sale Disclosure Package or the Final Prospectus, since its
first use and at all relevant times since then, no Issuer Free Writing
Prospectus has, does or will include (1) any untrue statement of a material
fact or omission 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, or (2) information that conflicted, conflicts or will
conflict with the information contained in the Registration Statement or the
Final Prospectus. The representations and warranties set forth in the
immediately preceding sentence shall not apply to statements in or omissions
from the Time of Sale Disclosure Package, the Final 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. As used in this paragraph and elsewhere in this
Agreement:
3
(1) “Time of Sale Disclosure
Package” means the Base Prospectus, the Prospectus most recently
filed with the Commission before the time of this Agreement, including any
preliminary prospectus deemed to be a part thereof, each Issuer Free Writing
Prospectus, and any description of the transaction provided by the
Underwriter included on Schedule II hereto.
(2) “Issuer Free Writing
Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 under the Securities Act, relating to the Shares that (A) is required
to be filed with the Commission by the Company, or (B) is exempt from filing
pursuant to Rule 433(d)(5)(i) or (d)(8) under the Securities Act because it
contains a description of the Shares that does not reflect the final terms, in
each case 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) under the Securities Act.
(B) At
the time of filing of the Registration Statement and at the date hereof, the
Company was not and is not an “ineligible issuer,” as defined in Rule 405 under
the Securities Act or an “excluded issuer” as defined in Rule 164 under the
Securities Act.
(C) Each
Issuer Free Writing Prospectus satisfied, as of its issue date and at all
subsequent times through the Prospectus Delivery Period (as defined below), all
other conditions as may be applicable to its use as set forth in Rules 164 and
433 under the Securities Act, including any legend, record-keeping or other
requirements.
(iv) The
financial statements of the Company, together with the related notes, included
or incorporated by reference in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus comply in all material respects with
the requirements of the Securities Act and the Exchange Act and fairly present
the financial condition of the Company as of the dates indicated and the results
of operations and changes in cash flows for the periods therein specified in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved; and the supporting schedules included or
incorporated in the Registration Statement present fairly the information
required to be stated therein. The financial information set forth in
the time of Sale Disclosure Package and in the Final Prospectus under “Selected
Consolidated Financial Date” presents fairly, on the basis set forth in the time
of Sale Disclosure Package and Final Prospectus, the information set forth
therein as of the respective dates and for the respective periods set forth
therein. No other financial statements, pro forma financial
information or schedules are required to be included or incorporated by
reference in the Registration Statement, the Time of Sale Disclosure Package or
the Final Prospectus. To the Company’s knowledge, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
P.C., which has expressed its opinion with respect to the financial statements
and schedules filed as a part of or incorporated by reference in the
Registration Statement and included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus, and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, which has performed certain procedures and
reviewed certain financial statements incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus, are independent registered public accounting firms with respect to
the Company within the meaning of the Securities Act and the Rules and
Regulations and such accountants are not in violation of the auditor
independence requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act").
4
(v) The
Company had a reasonable basis for, and made in good faith, each
“forward-looking statement” (within the meaning of Section 27A of the Act or
Section 21E of the Exchange Act) contained or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus.
(vi) All
statistical or market-related data, including any industry forecasts, included
in the Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus are based on or derived from industry publications and sources that
the Company reasonably believes to be reliable and accurate, and the Company has
obtained the written consent to the use of such data from such sources, to the
extent required, and no such sources are or were at any time under the Company's
control.
(vii) The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is
included or approved for inclusion on the Nasdaq Global Market. There
is no action pending to delist the Common Stock from the Nasdaq Global Market,
nor has the Company received any notification that the Nasdaq Global Market is contemplating
terminating such listing. When issued, the Shares will be listed on
the Nasdaq Global Market.
(viii) The
Company has not 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 Shares.
(ix) The
Company is not and, after giving effect to the offering and sale of the Shares,
will not be an “investment company,” as such term is defined in the Investment
Company Act of 1940, as amended.
(x) The
Company was at the time of filing the Registration Statement, and at the date
hereof, remains eligible to use Form S-3 for under the Securities Act for
primary offerings of the Shares. The conditions for use of Form S-3 set
forth in the General Instructions, including those set forth in Instruction 3 to
General Instruction I.B.6., thereto have been satisfied in connection with the
Registration Statement and offer and sale of the Shares
thereunder. In connection therewith, Zivar Investments Ltd. is not an
“affiliate” of the Company as determined in accordance with Form
S-3.
5
(xi) The
offer and sale of Common Stock in connection with the Regulation S offering
described in the Prospectus has complied and will comply with the requirements
of Regulation S under the Securities Act and the Rules and Regulations and is
exempt from the registration requirements of the Securities Act.
(b) Any
certificate signed by any officer of the Company and delivered to the
Underwriters or counsel for the Underwriters shall be deemed a representation
and warranty by the Company to the Underwriters as to the matters covered
thereby.
3. Representations
and Warranties Regarding the Company.
The
Company represents and warrants to and agrees with, the Underwriters, except as
set forth in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus, as follows:
(i) Each
of the Company and its subsidiaries has been duly organized and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its subsidiaries has the corporate power
and authority to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would have or is
reasonably likely to result in a material adverse effect upon the business,
prospects, properties, operations, condition (financial or otherwise) or results
of operations of the Company and its subsidiaries, taken as a whole, or in its
ability to perform its obligations under this Agreement (“Material Adverse
Effect”).
(ii) The
Company has the power and authority to enter into this Agreement and to
authorize, issue and sell the Underwritten Shares as contemplated by this
Agreement. This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding obligation
of the Company, enforceable in accordance with its terms, subject to (A)
applicable bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or other similar laws of general application relating to or
affecting the enforcement of creditors' rights generally, (B) general principles
of equity and (C) with respect to the enforcement of any rights to indemnity and
contribution, securities laws and principles of public policy.
(iii) The
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not (A) result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any law, rule or regulation to which the Company or any subsidiary is subject,
or by which any property or asset of the Company or any subsidiary is bound or
affected, (B) conflict with, result in any violation or breach of, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, lease, credit facility, debt, note, bond, mortgage, indenture or
other instrument (the “Contracts”) or
obligation or other understanding to which the Company or any subsidiary is a
party of by which any property or asset of the Company or any subsidiary is
bound or affected, except to the extent for such conflicts, defaults,
terminations, amendments, accelerations or cancellation rights as would not,
individually or in the aggregate, reasonably be expected to have or result in a
Material Adverse Effect, or (C) result in a breach or violation of any of the
terms and provisions of, or constitute a default under, the Company’s charter or
by-laws.
6
(iv) Neither
the Company nor any of its subsidiaries is in violation, breach or default under
its certificate of incorporation, by-laws or other equivalent organizational or
governing documents.
(v) All
consents, approvals, orders, authorizations and filings required on the part of
the Company and its subsidiaries in connection with the execution, delivery or
performance of this Agreement have been obtained or made, other than such
consents, approvals, orders and authorizations the failure of which to make or
obtain would not reasonably be expected, individually or in the aggregate, to
have or result in a Material Adverse Effect.
(vi) All
of the issued and outstanding shares of capital stock of the Company are duly
authorized and validly issued, fully paid and nonassessable, and have been
issued in compliance with all applicable securities laws, and conform to the
description thereof in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus. There are no shares of the company’s
Capital Stock outstanding except as set forth in the Section of the Prospectus
titled “The Securities We May Offer” and “Description of Common
Stock”. Except for the issuances of options or restricted stock in
the ordinary course of business, since the respective dates as of which
information is provided in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus, the Company has not entered into or
granted any convertible or exchangeable securities, options, warrants,
agreements, contracts or other rights in existence to purchase or acquire from
the Company any shares of the capital stock of the Company. The
Shares have been duly authorized and when issued, will have been validly issued,
fully paid and nonassessable, will be issued in compliance with all applicable
securities laws, and will be free of preemptive, rights to subscribe for or
purchase securities, registration or similar rights.
(vii) Each
of the Company and its subsidiaries has filed all returns (as hereinafter
defined) required to be filed with taxing authorities prior to the date hereof
or has duly obtained extensions of time for the filing thereof. Each
of the Company and its subsidiaries has paid all taxes (as hereinafter defined)
shown as due on such returns that were filed and has paid all taxes imposed on
or assessed against the Company or such respective subsidiary. The
provisions for taxes payable, if any, shown on the financial statements filed
with or incorporated into the Registration Statement are sufficient for all
accrued and unpaid taxes, whether or not disputed, and for all periods to and
including the dates of such consolidated financial statements. Except
as disclosed in writing to the Underwriters, (i) no issues have been raised (and
are currently pending) by any taxing authority in connection with any of the
returns or taxes asserted as due from the Company or its subsidiaries, and (ii)
no waivers of statutes of limitation with respect to the returns or collection
of taxes have been given by or requested from or on behalf of the Company or its
subsidiaries. The term “taxes” mean all
federal, state, local, foreign, and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties or other
taxes, fees, assessments, or charges of any kind whatever, together with any
interest and any penalties, additions to tax, or additional amounts with respect
thereto. The term “returns” means all
returns, declarations, reports, statements, and other documents required to be
filed in respect to taxes.
7
(viii) Since
the respective dates as of which information is given in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus, (a) neither
the Company nor any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions,
(b) the Company has not declared or paid any dividends or made any distribution
of any kind with respect to its capital stock; (c) there has not been any change
in the capital stock of the Company or any of its subsidiaries (other than a
change in the number of outstanding shares of Common Stock due to the issuance
of shares upon the exercise of outstanding options or warrants or the issuance of restricted stock awards or
restricted stock units under the Company’s existing stock awards plan,
(d) there has not been any material change in the Company’s long-term or
short-term debt, and (e) there has not been the occurrence of any Material
Adverse Effect.
(ix) There
is not pending or, to the knowledge of the Company, threatened, any action, suit
or proceeding to which the Company or any of its subsidiaries is a party or of
which any property or assets of the Company is the subject before or by any
court or governmental agency, authority or body, or any arbitrator or mediator,
which individually or in the aggregate, might reasonably be expected to result
in a Material Adverse Effect.
(x) The
Company and each of its subsidiaries holds, and is in compliance with, all
material franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders (“Permits”) of all
governmental or self-regulatory agencies, authorities or bodies required for the
conduct of its business, except where the failure to possess or comply with any
such Permits is not reasonably likely to result in a Material Adverse Effect,
and all such Permits are in full force and effect.
(xi) The
Company and its subsidiaries have good and marketable title to all property
(whether real or personal) described in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus as being owned by them that are
material to the business of the Company, in each case free and clear of all
material liens, claims, security interests, other material encumbrances or
material defects. The property held under lease by the Company and
its subsidiaries is held by them under valid, subsisting and enforceable leases
with only such exceptions with respect to any particular lease as do not
interfere in any material respect with the conduct of the business of the
Company and its subsidiaries.
8
(xii) The
Company and each of its subsidiaries owns or possesses or has valid right to use
all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service ▇▇▇▇ registrations, copyrights, licenses,
inventions, trade secrets and rights necessary for the conduct of the business
of the Company and its subsidiaries as currently carried on and as described in
or incorporated by reference into the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus; except as stated in the Registration
Statement, in the Time of Sale Disclosure Package or in the Prospectus, to the knowledge of the
Company, no name which the Company or any of its subsidiaries uses and no other
aspect of the business of the Company or any of its subsidiaries will involve or
give rise to any infringement of, or license or similar fees for, any patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses, inventions,
trade secrets or other similar rights of others material to the business or
prospects of the Company and neither the Company nor any of its subsidiaries has
received any written notice alleging any such infringement or fee.
(xiii) The
Company or its subsidiaries are the exclusive owners of the entire right, title
and interest in and to the intellectual property owned by the Company or any of
its subsidiaries and material to their business (the “Owned Intellectual
Property”), and have a valid license to use the intellectual property
that is licensed or sublicensed to the Company or any of its subsidiaries and
material to their business (the “Licensed Intellectual
Property”). The
Company or its subsidiaries are entitled to use all Owned Intellectual Property
and Licensed Intellectual Property in the continued operation of their business
without limitation, subject only to the terms of the licenses relating to the
Licensed Intellectual Property. The Owned Intellectual Property and,
to the best of the Company’s knowledge, the Licensed Intellectual Property have
not been adjudged invalid or unenforceable in whole or in part, and are valid
and enforceable. The expiration of any patents, patent rights,
trademarks, service marks, trade names or copyrights would not result in a
Material Adverse Effect that is not otherwise disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus.
To the Company’s knowledge, the conduct
of the Company’s or its subsidiaries’ business as currently conducted or
proposed to be conducted does not infringe or misappropriate the intellectual
property of any third party. No actions or proceedings alleging any
of the foregoing are pending, and no claim has been threatened or asserted
against the Company or any of its subsidiaries alleging any of the
foregoing. To the Company’s knowledge, no person is engaging in any
activity that infringes the Owned Intellectual Property that would result in a
Material Adverse Effect.
No Owned
Intellectual Property is subject to any outstanding decree, order, injunction,
judgment or ruling restricting the Owned Intellectual Property or that would
impair the validity or enforceability of the Owned Intellectual Property, except
for any such decree, order, injunction, judgment or writing that would not
result in a Material Adverse Effect.
(xiv) The
Company and each of its subsidiaries has complied with, is not in violation of,
and has not received any notice of violation relating to any law, rule or
regulation relating to the conduct of its business, or the ownership or
operation of its property and assets, including, without limitation, (A) the
Currency and Foreign Transactions Reporting Act of 1970, as amended, or any
money laundering laws, rules or regulations, (B) any laws, rules or regulations
related to health, safety or the environment, including those relating to the
regulation of hazardous substances, (C) the currently applicable provisions of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations of the Commission
thereunder, (D) the Foreign Corrupt Practices Act of 1977 and the rules and
regulations thereunder, and (E) the Employment Retirement Income Security Act of
1974 and the rules and regulations thereunder, in each case except where the
failure to be in compliance is not reasonably likely to result in a Material
Adverse Effect.
9
(xv) Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, employee, representative, agent or affiliate of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the offering of the
Shares contemplated hereby, or lend, contribute or otherwise make available such
proceeds to any person or entity, for the purpose of financing the activities of
any person currently subject to any U.S. sanctions administered by
OFAC.
(xvi) The
Company carries, or is covered by, insurance in such amounts and covering such
risks as is reasonable for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries.
(xvii) No
labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company, is imminent that is reasonably
likely to result in a Material Adverse Effect.
(xviii) Neither
the Company nor, to its knowledge, any other party is in violation, breach
or default of any Contract that is reasonably likely to result in a Material
Adverse Effect.
(xix) No
customer of the Company has notified the Company that it intends
to discontinue or decrease the rate of business
done with the Company, except where such decrease is not reasonably
likely to result in a Material Adverse Effect.
(xx) There
are no claims, payments, issuances, liabilities, arrangements or understandings
for services in the nature of a finder’s, consulting or origination fee with
respect to the introduction of the Company to any Underwriter or the sale of the
Shares hereunder or any other arrangements, agreements, understandings, payments
or issuances with respect to the Company that may affect the Underwriter’s
compensation, as determined by the Financial Industry Regulatory Authority
(“FINRA”).
(xxi) Except
as disclosed to the Underwriters in writing, the Company has not made any direct
or indirect payments (in cash, securities or otherwise) to (i) any person, as a
finder’s fee, investing fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company persons who
provided capital to the Company, (ii) any FINRA member, or (iii) any person or
entity that has any direct or indirect affiliation or association with any FINRA
member within the 12-month period prior to the date on which the Registration
Statement was filed with the Commission (“Filing Date”) or
thereafter, except as contemplated by this Agreement.
10
(xxii) None
of the net proceeds of the offering will be paid by the Company to any
participating FINRA member or any affiliate or associate of any participating
FINRA member, except as specifically authorized herein.
(xxiii) To
the Company’s knowledge, no (i) officer or director of the Company or its
subsidiaries, (ii) owner of 5% or more of the Company’s unregistered securities
or that of its subsidiaries or (iii) owner of any amount of the Company’s
unregistered securities acquired within the 180-day period prior to the Filing
Date, has any direct or indirect affiliation or association with any FINRA
member. The Company will advise the Underwriter and its counsel if it
becomes aware that any officer, director or 5% or more stockholder of the
Company or its subsidiaries is or becomes an affiliate or associated person of a
FINRA member participating in the offering.
(xxiv) Other
than the Underwriters, no person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the transactions
contemplated hereby.
(xxv) The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that: (1)
transactions are executed in accordance with management’s general or specific
authorization; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with United States generally accepted
accounting principles and to maintain accountability for assets; (3) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Time of Sale
Disclosure Package and the Prospectus, since the end of the Company’s most
recent audited fiscal year, there has been (I) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated)
and (II) no 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.
(xxvi) The
Company and its consolidated subsidiaries employ disclosure controls and
procedures that are designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms, and is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
principal financial officer or officers, as appropriate, to allow timely
decisions regarding disclosure.
11
(xxvii) No
event has occurred which, with notice or lapse of time or both, would constitute
such a default, in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note, indenture, loan agreement or
any other material contract, lease or other instrument to which it is subject or
by which any of them may be bound, or to which any of the material property or
assets of the Company or any of its subsidiaries is subject.
(xxviii) Other
than the subsidiaries of the Company listed in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus, the Company, directly or
indirectly, owns no capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust or other
entity.
(xxix) There
are no business relationships or related-party transactions involving the
Company or any subsidiary or any other person required to be described in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
that have not been described as required.
(xxx) The
Company has not distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the Securities
other than any Preliminary Prospectus, the Time of Sale Disclosure Package or
the Prospectus or other materials permitted by the Securities Act to be
distributed by the Company; provided, however, that, except as
set forth on Schedule II, the Company has not made and will not make any offer
relating to the Securities that would constitute a “free writing prospectus” as
defined in Rule 405 under the Securities Act, except in accordance with the
provisions of Section 5(a)(viii) of this Agreement.
4. Purchase,
Sale and Delivery of Shares.
(a) On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Underwriters the Underwritten Shares, and the
Underwriters, severally and not jointly, agree to purchase the Underwritten
Shares. The purchase price for each Underwritten Share shall be $9.9225 per
share (the “Per Share
Price”). Notwithstanding the foregoing, the Underwriters
hereby acknowledge that they are not being paid a fee for the Underwritten
Shares sold to any entity affiliated with Kaleil ▇▇▇▇▇ ▇▇▇▇▇▇, however, all such
Underwritten Shares being sold to any entity affiliated with Kaleil ▇▇▇▇▇ Tuzman
are being underwritten by the Underwriters. The Company agrees to pay
the Underwriters’ compensation as set forth in Schedule II hereto.
12
Payment of the purchase price for and
delivery of the Additional Shares shall be made at the Option Closing Date in
the same manner and at the same office as the payment for the Underwritten
Shares as set forth in subparagraph (c) below. For the purpose of
expediting the checking of the certificate for the Additional Shares by the
Underwriters, the Company agrees to make a form of such certificate available to
the Underwriters for such purpose at least one full business day preceding the
Option Closing Date.
(c) The
Underwritten Shares will be delivered by the Company to the Underwriters
against payment of the purchase price therefor by wire transfer of immediately
available or same day funds payable to the order of the Company at the offices
of ▇▇▇▇ Capital Partners, LLC, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or
such other location as may be mutually acceptable, at approximately 7:00 a.m.
Pacific Time, on the third (or if the Underwritten Shares are priced, as
contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m. Eastern
time, the fourth) full business day following the date hereof, or at such other
time and date as the Underwriter and the Company determine pursuant to Rule
15c6-1(a) under the Exchange Act, or, in the case of the Additional Shares, at
such date and time set forth in the Option Notice. The time and date
of delivery of the Underwritten Shares or the Additional Shares, as applicable,
is referred to herein as the “Closing
Date.” If an Underwriter so elects, delivery of the
Underwritten Shares and Additional Shares
may be made by credit through full fast transfer to the account at The
Depository Trust Company designated by such Underwriter. Certificates
representing the Shares, in definitive form and in such denominations and
registered in such names as the Underwriters may request upon at least two
business days’ prior notice to the Company, will be made available for checking
and packaging not later than 10:30 a.m. Pacific Time on the business day next
preceding the Closing Date at the above addresses, or such other location as may
be mutually acceptable.
(d) The
Underwriters shall endeavor to sell the Shares to both retail and institutional
investors.
5. Covenants.
The
Company covenants and agrees with the Underwriters as follows:
(i) During
the period beginning on the date hereof and ending on the later of the Closing
Date or such date as determined by the Underwriters that the Prospectus is no
longer required by law to be delivered in connection with sales by an
underwriter or dealer (the “Prospectus Delivery
Period”), prior to amending or supplementing the Registration Statement,
including any Rule 462 Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, the Company shall furnish to the Representative for
review and comment a copy of each such proposed amendment or supplement, and the
Company shall not file any such proposed amendment or supplement to which the
Representative reasonably objects.
13
(ii) From
the date of this Agreement until the end of the Prospectus Delivery Period, the
Company shall promptly advise the Underwriters in writing (A) of the receipt of
any comments of, or requests for additional or supplemental information from,
the Commission, (B) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to the
Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, (C) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (D) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending its use or the use of the
Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
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. If the Commission shall enter any such stop order at any
time during the Prospectus Delivery Period, the Company will use its reasonable
efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with
the provisions of Rules 424(b), 430A and 430B, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any filings
made by the Company under Rule 424(b) or Rule 433 were received in a timely
manner by the Commission (without reliance on Rule 424(b)(8) or 164(b) of the
Securities Act).
(iii) (A)
During the Prospectus Delivery Period, the Company will comply with all
requirements imposed upon it by the Securities Act, as now and hereafter
amended, and by the Rules and Regulations, as from time to time in force, and by
the Exchange Act, as now and hereafter amended, so far as necessary to permit
the continuance of sales of or dealings in the Shares as contemplated by the
provisions hereof, the Time of Sale Disclosure Package, the Registration
Statement and the Prospectus. If during such period any event occurs
the result of which the Prospectus (or if the Prospectus is not yet available to
prospective purchasers, the Time of Sale Disclosure Package ) would include an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances then existing,
not misleading, or if during such period it is necessary or appropriate in the
opinion of the Company or its counsel or the Representative or its counsel to
amend the Registration Statement or supplement the Prospectus (or if the
Prospectus is not yet available to prospective purchasers, the Time of Sale
Disclosure Package ) to comply with the Securities Act or to file under the
Exchange Act any document that would be deemed to be incorporated by reference
in the Prospectus in order to comply with the Securities Act or the Exchange
Act, the Company will promptly notify the Underwriter and will amend the
Registration Statement or supplement the Prospectus (or if the Prospectus is not
yet available to prospective purchasers, the Time of Sale Disclosure Package) or
file such document (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.
14
(B) If
at any time following the issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development the result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information contained
in the Registration Statement or any Prospectus or included or 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 prevailing at that subsequent time, not misleading, the Company
has promptly notified or promptly will notify the Underwriter and has promptly
amended or will promptly amend or supplement, at its own expense, such Issuer
Free Writing Prospectus to eliminate or correct such conflict, untrue statement
or omission.
(iv) The
Company shall use reasonable efforts to qualify the Shares for sale under the
securities laws of such jurisdictions as the Underwriters reasonably designate
and to continue such qualifications in effect so long as required for the
distribution of the Shares, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified, to execute a
general consent to service of process in any state or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise subject.
(v) The
Company will furnish to the Underwriters and counsel for the Underwriters copies
of the Registration Statement, each Prospectus, any Issuer Free Writing
Prospectus, and all amendments and supplements to such documents, in each case
as soon as available and in such quantities as the Underwriters may from time to
time reasonably request.
(vi) The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period that shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Rules and
Regulations.
(vii) The
Company will pay or cause to be paid (A) all expenses (including
transfer taxes allocated to the respective transferees) incurred in connection
with the delivery to the Underwriters of the Shares, (B) all expenses and fees
(including, without limitation, fees and expenses of the Company’s counsel) in
connection with the preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein and all
amendments, schedules, and exhibits thereto), the Shares, the Time of Sale
Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus and any
amendment thereof or supplement thereto, and the printing, delivery, and
shipping of this Agreement and other underwriting documents, including Blue Sky
Memoranda (covering the states and other applicable jurisdictions) (C) all
filing fees and fees and disbursements of counsel for the Underwriters incurred
in connection with the qualification of the Shares for offering and sale by the
Underwriters or by dealers under the securities or blue sky laws of the states
and other jurisdictions that the Underwriters shall designate, (D) the fees and
expenses of any transfer agent or registrar, (E) listing fees, if any, (F) all
other costs and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for herein. In
addition to the foregoing, the Company will provide the Underwriter with an (i)
accountable expense reimbursement of a maximum of $100,000 for its pre-approved
expenses incurred in connection with the purchase and sale of the Shares
contemplated hereby, it being agreed and understood that those expenses
described in Schedule
5(a)(vii) attached hereto have been pre-approved by the Company (the “Underwriter’s
Expenses”) and (ii) non-accountable expense reimbursement equal to 1.0%
of the gross proceeds (not including proceeds subject to the Underwriters'
over-allotment option) received from the sale of securities issued in the
offering to entities affiliated with Kaleil ▇▇▇▇▇ ▇▇▇▇▇▇. If this
Agreement is terminated by the Representative in accordance with the provisions
of Section 6 or Section 9 or if the sale of the Shares provided for herein is
not consummated by reason of any failure, refusal or inability on the part of
the Company to perform any, agreement on its part to be performed, or because
any other condition of the Underwriters’ obligations hereunder required to be
fulfilled by the Company is not fulfilled, the Company will reimburse the
Underwriters for all out-of-pocket disbursements (including, but not limited to,
fees and disbursements of counsel, travel expenses, postage, facsimile and
telephone charges) incurred by the Underwriters in connection with their
respective investigation, preparing to market and marketing the Shares or in
contemplation of performing their respective obligations
hereunder. Notwithstanding anything contained herein, the maximum
amount payable by the Company for the fees of counsel for the Underwriters,
disbursements and other out-of-pocket expenses pursuant to this Section
5(a)(vii) exclusive of the Underwriter’s Expenses shall be
$100,000.
15
(viii) The
Company represents and agrees that, unless it obtains the prior written consent
of the Representative, and each of the Underwriters represents and agrees that,
unless it obtains the prior written consent of the Company, it has not made and
will not make any offer relating to the Shares that would constitute an Issuer
Free Writing Prospectus; provided, that the
prior consent of the parties hereto shall be deemed to have been given in
respect of the free writing prospectuses included in Schedule II. Any
such free writing prospectus consented to by the Company and the Representative
is hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents that it has treated or
agrees that it will treat each Permitted Free Writing Prospectus as an “issuer
free writing prospectus,” as defined in Rule 433, and has complied or will
comply with the requirements of Rule 433 applicable to any Permitted Free
Writing Prospectus, including timely Commission filing where required, legending
and record-keeping.
(ix) The
Company hereby agrees that, without the prior written consent of the
Representative, it will not, during the period ending 120 days after the date
hereof (“Lock-Up
Period”), (i) offer, pledge, issue, sell (including through any hedging
transactions or short sales), contract to sell, purchase, contract to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any options,
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock; or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise; or (iii) file any registration statement
with the Commission relating to the offering of any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common
Stock. The restrictions contained in the preceding sentence shall not
apply to (1) the Shares to be sold hereunder, (2) the issuance of
Common Stock upon the exercise of options or warrants disclosed as
outstanding in the Registration Statement (excluding exhibits thereto) or the
Prospectus, (3) the issuance of employee/consultant stock options or warrants
not exercisable during the Lock-Up Period and the grant of restricted stock
awards or restricted stock units pursuant to equity incentive plans described in
the Registration Statement (excluding exhibits thereto) and the Prospectus, (4)
the issuance of Common Stock, warrants, stock options or other securities in
connection with investor relations and similar services, or (5) the issuance of
Common Stock, warrants, stock options or other securities in connection with
acquisitions and acquisition financing. Notwithstanding the
foregoing, if (x) the Company issues an earnings release or material news, or a
material event relating to the Company occurs, during the last 17 days of the
Lock-Up Period, or (y) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the Lock-Up Period, the restrictions imposed by
this clause shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event, unless the Representative waives such extension
in writing.
16
(x) The
Company shall cause each stockholder, officer and director of the Company listed
on Schedule IV to furnish to the Underwriters, on or prior to the date of this
Agreement, a lock-up agreement substantially in the form of Exhibit A attached
hereto.
(xi) The
Company intends to apply the net proceeds from the sale of the Shares to be sold
by it hereunder for the purposes set forth in the Time of Sale Disclosure
Package and in the Prospectus.
(xii) The
Company has not taken and will not take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result in, or
which has constituted, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares.
(xiii) The
Company will not incur any liability for any finder’s or broker’s fee or agent’s
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
(xiv) The
Company and its subsidiaries will maintain such controls and other procedures,
including without limitation those applicable to the Company and required by
Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the applicable regulations
thereunder, that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms, including without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure, to ensure that material information
relating to Company, including its subsidiaries, is made known to them by others
within those entities.
17
(xv) The
Company shall not invest, or otherwise use the proceeds received by the Company
from its sale of the Shares in such a manner as would require the Company to
register as an investment company under the Investment Company Act of 1940, as
amended.
(xvi) The
Company and its subsidiaries will substantially comply with all effective
applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(xvii) During
the Prospectus Delivery Period, the Company will file on a timely basis with the
Commission such periodic and current reports as required by the Rules and
Regulations.
(xviii) Prior
to the Closing Date, the Company will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company, its condition, financial or otherwise, or the earnings,
business, operations or prospects of any of them, or the offering of the Shares,
without the prior written consent of the Representative, unless in the
reasonable judgment of the Company and its counsel, and after notification to
the Representative, such press release or communication is required by law, in
which case the Company shall use its reasonable best efforts to allow the
Representative reasonable time to comment on such release or other communication
in advance of such issuance.
6. Conditions of the
Underwriter’s Obligations. The obligations of the Underwriters
hereunder to purchase the Shares are subject to the accuracy, as of the date
hereof and at the Closing Date and any Option Closing Date (as if made at such
date), of and compliance with all representations, warranties and agreements of
the Company contained herein, the performance by the Company of its obligations
hereunder and the following additional conditions:
(a) The
Registration Statement shall have become effective and prior to the Closing Date
or Option Closing Date, as the case may be, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or,
to the knowledge of the Company or you, shall be contemplated by the
Commission.
(b) If
the Company has elected to rely upon Rule 430B, the information concerning the
public offering price of the Shares and price-related information, and such
other information omitted from the Prospectus in reliance on Rule 430B, shall
have been filed with the Commission pursuant to Rule 424(b) in the manner and
within the prescribed time period (without reliance on Rule 424(b)(8)) and the
Company will provide evidence satisfactory to the Representative of such timely
filing (or a post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of Rules 430B
and 424(b)).
18
(c) If
a Rule 462(b) Registration Statement is required, such Registration Statement
shall have been transmitted to the Commission for filing and become effective
within the prescribed time period and, prior to the Closing Date, the Company
shall have provided evidence of such filing and effectiveness in accordance with
Rule 462(b).
(d) The
Representative shall not have reasonably
determined, and advised the Company, that the Registration Statement, the
Time of Sale Disclosure Package or the Prospectus, or any amendment thereof or
supplement thereto, or any Issuer Free Writing Prospectus, contains an untrue
statement of fact which, in the Representative's reasonable opinion, is
material, or omits to state a fact which, in the Representative's reasonable
opinion, is material and is required to be stated therein or necessary to make
the statements therein not misleading.
(e) On
or after the date hereof (i) no downgrading shall have occurred in the rating
accorded any of the Company’s securities by any “nationally recognized
statistical organization,” as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company’s
securities.
(f) Except
as contemplated in the Time of Sale Disclosure Package or in the Prospectus, subsequent to the
respective dates as of which information is given in the Time of Sale Disclosure
Package, neither the Company nor any of its subsidiaries shall have incurred any
material liabilities or obligations, direct or contingent, or entered into any
material transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and there shall not
have been any change in the capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants), or any material change in the
short-term or long-term debt of the Company, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital stock
of the Company or any of its subsidiaries, or any Material Adverse Effect
(whether or not arising in the ordinary course of business), or any loss by
strike, fire, flood, earthquake, accident or other calamity, whether or not
covered by insurance, incurred by the Company or any subsidiary, the effect of
which, in any such case described above, in the Representative’s judgment, makes
it impractical or inadvisable to offer or deliver the Shares or the Additional
Shares, as applicable, on the terms and in the manner contemplated in the Time
of Sale Disclosure Package, the Registration Statement and in the
Prospectus.
(g) On
the Closing Date and any Option Closing Date, there shall have been furnished to
the Underwriters the opinion, including the negative assurance opinion, of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, counsel to the Company, dated the Closing Date and
Option Closing Date, as applicable, and addressed to the Underwriters, in form
and substance reasonably satisfactory to the Representative, to the effect set
forth in Schedule III.
19
(h) On
the Closing Date and any Option Closing Date, the Underwriters shall have
received the letters of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.C. and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, each dated
the Closing Date and addressed to the Underwriters, confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualifications of
accountants under Rule 2-01 of Regulation S-X of the Commission, and confirming,
as of the date of such letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Time of Sale Disclosure Package, as of a date not
prior to the date hereof or more than five days prior to the date of such
letter), the conclusions and findings of said firm with respect to the financial
information and other matters covered by its letter delivered to the
Representative concurrently with the execution of this Agreement, and the effect
of the letter so to be delivered on the Closing Date and any Option Closing Date
shall be to confirm the conclusions and findings set forth in such prior
letter.
(i) On
each of the Closing Date and each Option Closing Date, there shall have been
furnished to the Underwriters a certificate, dated the Closing Date and
addressed to the Underwriters, signed by the chief executive officer and the
chief financial officer of the Company, in their capacity as officers of the
Company, to the effect that:
(i) The
representations and warranties of the Company in this Agreement are true and
correct, in all material respects, as if made at and as of the Closing Date or
Option Closing Date, as the case may be, and the Company has complied with all
the agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date or Option Closing Date, as the case
may be;
(ii) No
stop order or other order (A) suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof, (B) suspending the
qualification of the Shares for offering or sale, or (C) suspending or
preventing the use of the Time of Sale Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus, has been issued, and no proceeding for that
purpose has been instituted or, to their knowledge, is contemplated by the
Commission or any state or regulatory body; and
(iii) There
has been no occurrence of any event resulting or reasonably likely to result in
a Material Adverse Effect during the period from and after the date of this
Agreement and prior to the Closing Date or Option Closing Date, as the case may
be.
(j) The
“lock-up” agreements between the Representative and the stockholders, officers
and directors of the Company listed on Schedule IV, delivered to the
Representative on or before the date hereof, shall be in full force and effect
on the Closing Date or such Option Closing Date, as applicable.
(k) The
Company shall have furnished to the Underwriters and their counsel such
additional documents, certificates and evidence customary under the
circumstances as the Underwriters or their counsel may have reasonably
requested.
If any condition specified in this
Section 6 shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Representative by notice to the Company
at any time at or prior to the Closing Date and such termination shall be
without liability of any party to any other party, except that Section
5(a)(vii), Section 7 and Section 8 shall survive any such termination and remain
in full force and effect.
20
7. Indemnification
and Contribution.
(a) The
Company agrees to indemnify, defend and hold harmless each Underwriter, its
respective affiliates, directors and officers and employees, and each person, if
any, who controls the Underwriters within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any losses,
claims, damages or liabilities to which the Underwriters or such person may
become subject, under the Securities Act or otherwise (including in settlement
of any litigation if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, including the information deemed to be a part of the Registration
Statement at the time of effectiveness and at any subsequent time pursuant to
Rules 430A and 430B of the Rules and Regulations, the Time of Sale Disclosure
Package, the Prospectus, or any amendment or supplement thereto (including any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Registration Statement or the Prospectus), or any Issuer Free
Writing Prospectus, or in any materials or information provided to investors by,
or with the approval of, the Company in connection with the marketing of the
offering of the Common Stock, including any roadshow or investor presentations
made to investors by the Company (whether in person or electronically), or arise
out of or are 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, in light of the circumstances under which they were made, not
misleading, (ii) in whole or in part, any inaccuracy in the representations and
warranties of the Company contained herein, or (iii) in whole or in part, any
failure of the Company to perform its obligations hereunder or under law, and
will reimburse the Underwriters for any documented legal or other expenses
reasonably incurred by them in connection with evaluating, investigating or
defending against such loss, claim, damage, liability or action; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Time of Sale Disclosure Package, the Prospectus, or
any amendment or supplement thereto or any Issuer Free Writing Prospectus, in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter specifically for use in the preparation
thereof.
(b) Each
Underwriter will, severally and not jointly, indemnify, defend and hold harmless
the Company, its affiliates, directors, officers and employees, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any losses,
claims, damages or liabilities to which the Company may become subject, under
the Securities Act or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of such Underwriters),
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the Time
of Sale Disclosure Package, the Prospectus, or any amendment or supplement
thereto or any Issuer Free Writing Prospectus, or arise out of or are 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, the Time of Sale Disclosure Package, the Prospectus, or
any amendment or supplement thereto or any Issuer Free Writing Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter specifically for use in the preparation thereof, and
will reimburse the Company for any legal or other expenses reasonably incurred
by the Company in
connection with defending against any such loss, claim, damage, liability or
action.
21
(c) Promptly
after receipt by an indemnified party under subsection (a) or (b) above of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof; but the failure to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to any indemnified party
except to the extent such indemnifying party has been materially prejudiced by
such failure. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party’s election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof; provided,
however, that if (i)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(ii) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party), or (iii) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, the indemnified party
shall have the right to employ a single counsel to represent it in any claim in
respect of which indemnity may be sought under subsection (a) or (b) of this
Section 7, in which event the reasonable and documented fees and expenses of
such separate counsel shall be borne by the indemnifying party or parties and
reimbursed to the indemnified party as incurred; it being understood, however,
that the indemnifying party shall not be liable for the expenses of more than
one separate counsel (plus local counsel).
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. 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 a party or could be named and indemnity was or would be
sought hereunder by such indemnified party, unless such settlement, compromise
or consent (a) includes an unconditional release of such indemnified party from
all liability for claims that are the subject matter of such action, suit or
proceeding and (b) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified
party.
22
(d) If
the indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (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 subsection (a) or (b) above, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one
hand and the Underwriters on the other from the offering and sale of the
Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Underwriters on the other in connection with the statements
or omissions that 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 Underwriters 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 Underwriters, in each
case as set forth in the table on the cover page of the Final
Prospectus. 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 Underwriters and
the parties’ relevant intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were to be determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the first sentence of this
subsection (d). 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 subsection (d) shall be deemed to include any documented legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim that is the subject of
this subsection (d). Notwithstanding the provisions of this
subsection (d), the
Underwriters shall not be required to contribute any amount in excess of the
amount of the Underwriters' commissions referenced in Section 4(a) actually
received by the Underwriters pursuant to this Agreement. 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.
(e) The
obligations of the Company under this Section 7
shall be in addition to any liability that the Company may otherwise have and
the benefits of such obligations shall extend, upon the same terms and
conditions, to each person, if any, who controls the Underwriters within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act;
and the obligations of the Underwriter under this Section 7 shall be in addition
to any liability that the Underwriters may otherwise have and the benefits of
such obligations shall extend, upon the same terms and conditions, to the
Company and its officers, directors and each person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act.
23
(f) For
purposes of this Agreement, the Underwriters confirm, and the Company
acknowledges, that there is no information concerning the Underwriters furnished
in writing to the Company by the Underwriters specifically for preparation of or
inclusion in the Registration Statement, the Time of Sale Disclosure Package,
the Prospectus or any Issuer Free Writing Prospectus, other than the statements
set forth in the last paragraph on the cover page of the Prospectus and the
statements set forth in the “Underwriting” section of the Prospectus and Time of
Sale Disclosure Package, and then only insofar as such statements relate to the
amount of selling concession and re-allowance or to over-allotment and related
activities that may be undertaken by the Underwriters and prior relationships
with Underwriters.
8. Representations
and Agreements to Survive Delivery. All representations,
warranties, and agreements of the Company herein or in certificates delivered
pursuant hereto, including, but not limited to, the agreements of the
Underwriters and the Company contained in Section 5(a)(vii) and Section 7
hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Underwriters or any controlling person
thereof, or the Company or any of its officers, directors, or controlling
persons, and shall survive delivery of, and payment for, the Shares to and by
the Underwriters hereunder.
9. Termination of
this Agreement.
(a) In
addition to the provisions of Section 6, the Representative shall have the right
to terminate this Agreement by giving notice to the Company as hereinafter
specified at any time at or prior to the Closing Date, if (i) trading in the
Company’s Common Stock shall have been suspended by the Commission or the Nasdaq
Global Market or trading in securities generally on Nasdaq, New York Stock
Exchange or NYSE Amex shall have been suspended, (ii) minimum or maximum prices
for trading shall have been fixed, or maximum ranges for prices for securities
shall have been required, on Nasdaq, New York Stock Exchange or NYSE Amex, by
such exchange or by order of the Commission or any other governmental authority
having jurisdiction, (iii) a banking moratorium shall have been declared by
federal or state authorities, (iv) there shall have occurred any attack on,
outbreak or escalation of hostilities or act of terrorism involving the United
States, any declaration by the United States of a national emergency or war, any
change in financial markets, any substantial change or development involving a
prospective substantial change in United States or international political,
financial or economic conditions or any other calamity or crisis, or (v) the
Company suffers any loss by strike, fire, flood, earthquake, accident or other
calamity, whether or not covered by insurance, the effect of which, in each case
described in this subsection (a), in the Representative’s judgment is material
and adverse and makes it impractical or inadvisable to proceed with the
completion of the sale of and payment for the Shares. Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 5(a)(vii) and Section 8 hereof shall at all times
be effective and shall survive such termination.
(b) If
the Representative elects to terminate this Agreement as provided in this
Section, the Company shall be notified promptly by the Representative by
telephone, confirmed by letter.
24
10. Notices. Except
as otherwise provided herein, all communications hereunder shall be in writing
and, if to ▇▇▇▇, shall be mailed, delivered or telecopied to ▇▇▇▇ Capital
Partners, LLC, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy number:
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇; and if to the
Company, shall be mailed, delivered or telecopied to it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy number: (▇▇▇)-▇▇▇-▇▇▇▇, Attention: Mr.
Kaleil ▇▇▇▇▇ Tuzman, Chairman and Chief Executive Officer, with a copy to
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, MetLife Bldg., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.; or in each case to such other
address as the person to be notified may have requested in
writing. Any party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a new
address for such purpose.
11. Persons Entitled
to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers and directors
referred to in Section 7. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term “successors and assigns” as herein used
shall not include any purchaser, as such purchaser, of any of the Shares from
the Underwriters.
12. Absence of
Fiduciary Relationship. The Company acknowledges and agrees
that: (a) the Underwriters have been retained solely to act as underwriter in
connection with the sale of the Shares and that no fiduciary, advisory or agency
relationship between the Company and the Underwriters have been created in
respect of any of the transactions contemplated by this Agreement, irrespective
of whether the Underwriters have advised or is advising the Company on other matters; (b)
the price and other terms of the Shares set forth in this Agreement were
established by the Company following discussions
and arms-length negotiations with the Underwriters and the Company are capable of
evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement; (c) it has been
advised that each of the Underwriters and its affiliates are engaged in a broad
range of transactions that may involve interests that differ from those of the
Company and that the Underwriters have no obligation to disclose such interest
and transactions to the Company by virtue of any
fiduciary, advisory or agency relationship; (d) it has been advised that each
Underwriter is acting, in respect of the transactions contemplated by this
Agreement, solely for the benefit of such Underwriter, and not on behalf of the
Company.
13. Amendments and
Waivers. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. The failure of a party to exercise any right or remedy shall
not be deemed or constitute a waiver of such right or remedy in the
future. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (regardless of
whether similar), nor shall any such waiver be deemed or constitute a continuing
waiver unless otherwise expressly provided.
14. Partial
Unenforceability. The invalidity or unenforceability of any
section, paragraph, clause or provision of this Agreement shall not affect the
validity or enforceability of any other section, paragraph, clause or
provision.
25
15. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. Counterparts. This
Agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an
original and all such counterparts shall together constitute one and the same
instrument.
[SIGNATURE
PAGE FOLLOWS]
26
Please
sign and return to the Company the enclosed duplicates of this letter whereupon
this letter will become a binding agreement between the Company and
the Underwriters in accordance with its terms.
|
Very
truly yours,
|
|||
|
|
By:
|
/s/ Kaleil ▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Name: | Kaleil ▇▇▇▇▇ Tuzman | ||
| Title: | Chief Executive Officer | ||
Confirmed
as of the date first above-
mentioned
by the Underwriter.
▇▇▇▇
CAPITAL PARTNERS, LLC
| By: |
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
|
|||
| Name: |
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
|
|||
| Title: |
Head
of Equity Capital Markets
|
|