Shares of Common Stock EYETEL IMAGING, INC. UNDERWRITING AGREEMENT
___________________
Shares of Common Stock
EYETEL
IMAGING, INC.
__________
__, 2007
MAXIM
GROUP LLC
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
As
Representative of the Underwriters
named
on Schedule
A
hereto
Ladies
and Gentlemen:
EyeTel
Imaging, Inc., a corporation organized and existing under the laws of Delaware
(the “Company”),
confirms its agreement, subject to the terms and conditions set forth herein,
with each of the underwriters listed on Schedule
A hereto
(collectively, the “Underwriters”),
for
whom Maxim Group LLC is acting as representative (in such capacity, the
“Representative”),
to
sell and issue to the Underwriters an aggregate of _______________ shares
(the
“Firm
Shares”)
of its
common stock, $0.001 par value per share (the “Common
Stock”).
In
addition, the Company proposes to sell to the Underwriters, upon the terms
and
conditions set forth in Section 2 hereof, an aggregate additional amount
of
__________ shares of Common Stock, representing up to 15% of the Firm Shares
(the “Additional
Shares”).
The
Firm Shares and any Additional Shares purchased by the Underwriters are referred
to herein as the “Shares.”
The
Shares are more fully described in the Registration Statement and Prospectus
referred to below.
In
addition, the Company shall, at the Closing (as defined herein) issue to
the
Representative a warrant (the “Representative’s
Warrant”)
to
purchase up to an aggregate amount of ________ shares of Common Stock
(representing 10% of the number of Shares sold in the Offering). The Shares
and
the Representative’s Warrant are more fully described in the Registration
Statement and Prospectus referred to below. The offering and sale of the
Shares
contemplated by this underwriting agreement (this “Agreement”)
is
referred to herein as the “Offering.”
1. Representations
and Warranties of the Company.
The
Company represents, warrants and covenants to, and agrees with, each of the
Underwriters that, as of the date hereof:
(a) The
Company has filed with the Securities and Exchange Commission (the “Commission”)
a
registration statement on Form SB-2 (Registration No. 333-142649), and
amendments thereto, and related preliminary prospectuses for the registration
under the Securities Act of 1933, as amended (the “Securities
Act”),
of
the Shares, which registration statement, as so amended (including
post-effective amendments, if any), has been declared effective by the
Commission and copies of which have heretofore been delivered to the
Underwriters. Promptly after execution and delivery of this Agreement, the
Company will prepare and file a prospectus in accordance with the provisions
of
Rule 430A (“Rule
430A”)
of the
rules and regulations of the Commission (the “Rules
and Regulations”)
and
paragraph (b) of Rule 424 (“Rule
424(b)”)
of the
Regulations. The information included in such prospectus that was omitted
from
such registration statement at the time it became effective but that is deemed
to be part of such registration statement at the time it became effective
pursuant to paragraph (b) of Rule 430A is referred to as “Rule
430A Information.”
Each
prospectus used before such registration statement became effective, and
any
prospectus that omitted the Rule 430A Information that was used after such
effectiveness and prior to the execution and delivery of this Agreement,
is
referred to herein as a “Preliminary
Prospectus.”
Such
registration statement, including the amendments thereto, the exhibits and
any
schedules thereto, at the time it became effective, and including the Rule
430A
Information, is herein called the “Registration
Statement.”
The
Preliminary Prospectus dated ________________, 2007, that was included in
the
Registration Statement at the Time of Sale is referred to herein as the
“Sale
Preliminary Prospectus”,
except
that if any revised prospectus or prospectus supplement shall be provided
to the
Underwriters by the Company for use in connection with the Offering which
differs from the Sale Preliminary Prospectus (whether or not such revised
prospectus or prospectus supplement is required to be filed by the Company
pursuant to Rule 424(b)), the term “Prospectus” shall also refer to such revised
prospectus or prospectus supplement, as the case may be, from and after the
time
it is first provided to the Underwriters for such use. For purposes of this
Agreement and the Securities Act, “Time
of Sale”,
means
___________, New York City time, on the date of this Agreement.
The
final prospectus in the form first furnished to the Underwriters for use
in
connection with the Offering is referred to herein as the “Prospectus.”
If
the
Company has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Securities Act
registering additional shares of Common Stock (a “Rule
462(b) Registration Statement”),
then,
unless otherwise specified, any reference herein to the term “Registration
Statement” shall be deemed to include such Rule 462(b) Registration Statement.
Other than a Rule 462(b) Registration Statement, which, if filed, becomes
effective upon filing, no other document with respect to the Registration
Statement has heretofore been filed with the Commission. All of the Shares
have
been registered under the Securities Act pursuant to the Registration Statement
or, if any Rule 462(b) Registration Statement is filed, will be duly registered
under the Securities Act with the filing of such Rule 462(b) Registration
Statement. Based on communications from the Commission, no stop order suspending
the effectiveness of either the Registration Statement or the Rule 462(b)
Registration Statement, if any, has been issued and, to the Company’s knowledge,
no proceeding for that purpose has been initiated or threatened by the
Commission. Any reference herein to the Registration Statement, any Preliminary
Prospectus, the Sale Preliminary Prospectus or the Prospectus shall be deemed
to
refer to and include the exhibits incorporated by reference therein pursuant
to
the Rules and Regulations on or before the effective date of the Registration
Statement, the date of such Preliminary Prospectus, the Sale Preliminary
Prospectus or the date of the Prospectus, as the case may be. Any reference
herein to the terms “amend”, “amendment” or “supplement” with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall
be
deemed to refer to and include: (i) the filing of any document under the
Securities Exchange Act of 1934, as amended, and together with the Rules
and
Regulations promulgated thereunder (the “Exchange
Act”)
after
the effective date of the Registration Statement, the date of such Preliminary
Prospectus, the Sale Preliminary Prospectus or the date of the Prospectus,
as
the case may be, which is incorporated therein by reference, and (ii) any
such
document so filed. All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a Preliminary Prospectus,
the
Sale Preliminary Prospectus and the Prospectus, or any amendments or supplements
to any of the foregoing shall be deemed to include any copy thereof filed
with
the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System (“XXXXX”).
The
Sale Preliminary Prospectus and the Prospectus delivered to the Underwriters
for
use in connection with the Offering were or will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant
to
XXXXX, except to the extent permitted by Regulation S-T. If, subsequent to
the date of this Agreement, the Company or the Representative determine that,
at
the Time of Sale, the Sale Preliminary Prospectus included an untrue statement
of a material fact or omitted a statement of material fact necessary to make
the
statements therein, in the light of the circumstances under which they were
made, not misleading and have agreed to provide an opportunity to purchasers
of
the Firm Shares to terminate their old purchase contracts and enter into
new
purchase contracts, then the Sale Preliminary Prospectus will be deemed to
include any additional information made available by or on behalf of the
Company
to purchasers at the time of entry into the first such new purchase
contract.
Maxim
Group LLC
_________________,
2007
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37
(b) At
the
time of the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement or the effectiveness of any post-effective amendment
to
the Registration Statement, when the Prospectus is first filed with the
Commission pursuant to Rule 424(b), when any supplement to or amendment of
the
Prospectus is filed with the Commission, when any document filed under the
Exchange Act was or is filed and at the Closing Date and the Additional Closing
Date (as hereinafter respectively defined), if any, the Registration Statement,
the Sale Preliminary Prospectus and the Prospectus and any amendments thereof
and supplements or exhibits thereto complied or will comply in all material
respects with the applicable provisions of the Securities Act, the Exchange
Act
and the Rules and Regulations, and did not and will not contain an untrue
statement of a material fact and did not and will not omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein: (i) in the case of the Registration Statement, not misleading, and
(ii)
in the case of the Sale Preliminary Prospectus or the Prospectus in light
of the
circumstances under which they were made, not misleading. When any Preliminary
Prospectus (including the Sale Preliminary Prospectus) was first filed with
the
Commission (whether filed as part of the registration statement for the
registration of the Shares or any amendment thereto or pursuant to Rule 424(a)
under the Securities Act), and when any amendment thereof or supplement thereto
was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied in all material respects
with the applicable provisions of the Securities Act, the Exchange Act and
the
Rules and Regulations and did not contain an untrue statement of a material
fact
and did not omit to state any material fact required to be stated therein
or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. No representation and warranty
is
made in this subsection (b), however, with respect to any information contained
in or omitted from the Registration Statement or the Prospectus or any related
Preliminary Prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to
the
Company by or on behalf of any Underwriter through the Representative
specifically for use therein. The parties acknowledge and agree that such
information provided by or on behalf of any Underwriter consists solely of:
(i)
the names of the Underwriters appearing in the “Underwriting” section of the
Prospectus, (ii) the contents of the fourth paragraph under the heading entitled
“Nature of Underwriting Commitment” in the “Underwriting” section of the
Prospectus, (iii) the contents of second paragraph under the heading entitled
“Lock-Ups” in the “Underwriting” section of the Prospectus, (iv) the contents of
final paragraph under the heading entitled “Stabilization” in the “Underwriting”
section of the Prospectus and (v) the paragraphs under the heading entitled
“Foreign Regulatory Restrictions on Purchase of Shares” in the “Underwriting”
section of the Prospectus
(the
“Underwriters’
Information”).
Maxim
Group LLC
_________________,
2007
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37
(c) The
Company has filed with the Commission a Form 8-A (File Number___ - ________)
providing for the registration under the Exchange Act of the Common Stock.
The
registration of the Common Stock under the Exchange Act has been declared
effective by the Commission on the date hereof.
(d) There
are
no contracts or other documents (including, without limitation, any voting
agreement), which are required to be described in the Registration Statement,
the Sale Preliminary Prospectus and the Prospectus or filed as exhibits to
the
Registration Statement by the Securities Act, the Exchange Act or the Rules
and
Regulations and which have not been so described, filed or incorporated by
reference.
(e) PricewaterhouseCoopers
LLP (“PwC”),
whose
reports relating to the Company are included in the Registration Statement,
are
independent public accountants as required by the Securities Act, the Exchange
Act, the Rules and Regulations and the rules and regulations promulgated
by the
Public Company Accounting Oversight Board (the “PCAOB”).
PwC
is duly registered and in good standing with the PCAOB. PwC has not, during
the
periods covered by the financial statements included in the Registration
Statement, the Preliminary Prospectus and the Prospectus, provided to the
Company any non-audit services, as such term is used in Section 10A(g) of
the
Exchange Act.
(f) The
Shares have been authorized for listing on the American Stock Exchange
(“AMEX”)
and,
to the Company’s knowledge, no proceedings have been instituted or threatened
which would effect, and no event or circumstance has occurred which is
reasonably likely to effect, the listing of the Shares on the AMEX.
(g) The
Company has no direct or indirect subsidiaries and owns no equity interest
in
any other foreign or domestic individual, corporation, trust, general or
limited
partnership, joint venture, limited liability company or other entity (each,
a
“Person”).
(h) Subsequent
to the respective dates as of which information is presented in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, and except
as
disclosed in the Registration Statement, the Sale Preliminary Prospectus
and the
Prospectus: (i) the Company has not declared, paid or made any dividends
or
other distributions of any kind on or in respect of its capital stock, and
(ii)
there has been no material adverse change (or any development which has a
high
probability of involving a material adverse change in the future), whether
or
not arising from transactions in the ordinary course of business, in or
affecting: (A) the business, condition (financial or otherwise), results
of
operations, stockholders’ equity, properties or prospects (as such prospects are
described in the Registration Statement, the Sale Preliminary Prospectus
and the
Prospectus) of the Company; (B) the long-term debt or capital stock of the
Company; or (C) the Offering or consummation of any of the other transactions
contemplated by this Agreement, the Registration Statement or the Prospectus
(a
“Material
Adverse Change”).
Since
the date of the latest balance sheet presented in the Registration Statement,
the Sale Preliminary Prospectus and the Prospectus, the Company has not incurred
or undertaken any liabilities or obligations, whether direct or indirect,
liquidated or contingent, matured or unmatured, or entered into any
transactions, including any acquisition or disposition of any business or
asset,
which are material to the Company, except for liabilities, obligations and
transactions which are disclosed in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus.
Maxim
Group LLC
_________________,
2007
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37
(i) As
of the
dates indicated in the Sale Preliminary Prospectus and the Prospectus, the
authorized, issued and outstanding shares of capital stock of the Company
were
as set forth therein in the column headed “Actual” under the section thereof
captioned “Capitalization” and, after giving effect to the Offering and the
other transactions contemplated by this Agreement and the Registration
Statement, will be as set forth in the column headed “As Adjusted” in such
section. All of the issued and outstanding shares of capital stock of the
Company are fully paid and non-assessable (and those shares of Common Stock
issuable upon conversion of the Company’s notes and warrants as described in the
Registration Statement and the Prospectus, upon conversion thereof as described
in the Registration Statement, will be fully paid and non-assessable) and
have
been duly and validly authorized and issued, in compliance with all applicable
state and federal securities laws, rules and regulations and not in violation
of
or subject to any preemptive or similar right that does or will entitle any
Person (as defined below), upon the issuance or sale of any security, to
acquire
any Relevant Security from the Company. As used herein, the term “Relevant
Security”
means
any Common Stock or other security of the Company that is convertible into,
or
exercisable or exchangeable for Common Stock or equity securities, or that
holds
the right to acquire any Common Stock or equity securities of the Company
or any
other such Relevant Security, except for such rights as may have been fully
satisfied or waived prior to the effectiveness of the Registration Statement.
(j) The
Shares have been duly and validly authorized and, when issued,
delivered
and
paid
for in
accordance with this Agreement
and as
described in the Sale Preliminary Prospectus and the Prospectus on each of
the
Closing Date and the Additional Closing Date, as applicable, will
be
duly and validly issued, fully paid and non-assessable, will have been issued
in
compliance with all applicable state, federal and foreign securities laws,
rules
and regulations and will not have been issued in violation of or subject
to any
preemptive or similar right that does or will entitle any Person to acquire
any
Relevant Security from the Company upon issuance or sale of Shares in the
Offering. The shares of Common Stock representing the Shares conform in all
material respects to the descriptions thereof contained in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus. Except as
disclosed in the Registration Statement, the Sale Preliminary Prospectus
and the
Prospectus, the Company has no outstanding warrants, options to purchase,
or any
preemptive rights or other rights to subscribe for or to purchase, or any
contracts or commitments to issue or sell, any Relevant Security.
Maxim
Group LLC
_________________,
2007
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37
(k) The
Company has been duly incorporated, and validly exists as a corporation in
good
standing under the laws of the State of Delaware. The Company has all requisite
power and authority to carry on its business as it is currently being conducted
and as described in the Sale Preliminary Prospectus and the Prospectus, and
to
own, lease and operate its properties. The Company is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the character or location of its properties (owned, leased or licensed)
or the nature or conduct of its business makes such qualification necessary,
except, in each case, for those failures to be so qualified or in good standing
which (individually and in the aggregate) could not reasonably be expected
to
have a material adverse effect on: (i) the business, condition (financial
or
otherwise), results of operations, stockholders’ equity, properties or prospects
(as such prospects are described in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus) of the Company; (ii) the long-term
debt or capital stock of the Company; or (iii) the Offering or consummation
of
any of the other transactions contemplated by this Agreement, the Registration
Statement or the Prospectus (any such effect being a “Material
Adverse Effect”).
(l) The
Company is not: (i) in violation of its certificate of incorporation, by-laws
or
other organizational documents (including stockholders’, voting or similar
agreements), (ii) in default under, and no event has occurred which, with
notice
or lapse of time or both, would constitute a default under or result in the
creation or imposition of any lien, charge, mortgage, pledge, security interest,
claim, equity, trust or other encumbrance, preferential arrangement, defect
or
restriction of any kind whatsoever (“Lien”)
upon
any of its property or assets pursuant to, any indenture, mortgage, deed
of
trust, loan agreement or other agreement or instrument to which it is a party
or
by which it is bound or to which any of its property or assets is subject
or
(iii) is in violation in any respect of any law, rule, regulation, ordinance,
directive, judgment, decree or order of any judicial, regulatory or other
legal
or governmental agency or body, foreign or domestic, except, in the case
of
clauses (ii) and (iii) above, for any default, Lien or violation disclosed
in
the Registration Statement, the Sale Preliminary Prospectus and the Prospectus
and any default, Lien or violation that do not or would not have a Material
Adverse Effect.
(m) The
Company has full corporate power and authority to execute and deliver this
Agreement, the Representative’s Warrant and all other agreements, documents,
certificates and instruments required to be delivered pursuant to this Agreement
(collectively, the “Transaction
Documents”)
and to
perform its obligations hereunder and thereunder and to consummate each of
the
transactions contemplated by each of the Transaction Documents. The Company
has
duly and validly authorized each of the Transaction Documents and each of
the
transactions contemplated by the Transaction Documents. This Agreement has
been,
and the Representative’s Warrant and each other Transaction Document delivered
by the Company or its representatives at the Closing will be, duly and validly
executed and delivered by the Company or its representatives, and this Agreement
and the Representative’s Warrant constitutes or will constitute the legal, valid
and binding obligation of the Company and is enforceable against the Company
in
accordance with its terms, except as enforceability may be limited by: (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws
affecting creditors’ rights generally, (ii) subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law) and (iii) federal and state securities laws and public
policy regarding rights to indemnification and contribution.
Maxim
Group LLC
_________________,
2007
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37
(n) The
execution, delivery, and performance of the Transaction Documents and the
consummation of the transactions contemplated thereby do not and will not:
(i)
conflict with, require consent under or result in a breach of any of the
terms
and provisions of, or constitute a default (or an event which with notice
or
lapse of time, or both, would constitute a default) under, or result in the
creation or imposition of any Lien upon any property or assets of the Company
pursuant to any indenture, mortgage, deed of trust, loan agreement or other
agreement, instrument, franchise, license or permit to which the Company
is a
party or by which the Company or its properties, operations or assets may
be
bound or (ii) violate or conflict with any provision of the certificate of
incorporation, by-laws or other organizational documents of the Company,
or
(iii) violate or conflict with any law, rule, regulation, ordinance, directive,
judgment, decree or order of any judicial, regulatory or other legal or
governmental agency or body, domestic or foreign, except, in the case of
each of
clauses (i) and (iii), for any default, violation or event that do not or
would
not, individually or in the aggregate, have a Material Adverse
Effect.
(o) The
Company has all material consents, approvals, authorizations, orders,
registrations, qualifications, licenses, filings and permits of, with and
from
all judicial, regulatory and other legal or governmental agencies and bodies
and
all third parties, foreign and domestic (collectively, the “Consents”),
to
own, lease and operate its properties and conduct its business as it is now
being conducted and as disclosed in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus, and each such Consent is valid
and in
full force and effect.
The
Company has not received notice of any investigation or proceedings which
results in or, if decided adversely to the Company, could reasonably be expected
to have a Material Adverse Effect (including, in this context, a revocation
of,
or the imposition of a material restriction on, any Consent). No
Consent contains a materially burdensome restriction not adequately disclosed
in
the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus.
(p) The
Company is in compliance with all applicable laws, rules, regulations,
ordinances, directives, judgments, decrees and orders, foreign and domestic,
including those relating to transactions with its “affiliates” (as such term is
defined in Rule 144 under the Securities Act, “Affiliates”),
the
non-compliance with which does not or would not have a Material Adverse
Effect.
(q) The
Representative’s Warrant will conform in all material respects to the
description thereof in the Registration Statement and in the Prospectus and,
when sold to and paid for by the Representative in accordance with the
Representative’s Warrant, will have been duly authorized and validly issued and
will constitute valid and binding obligations of the Company entitled to
the
benefits of the Representative’s Warrant. The shares of Common Stock issuable
upon exercise of the Representative’s Warrant (the “Representative’s
Warrant Shares”)
have
been duly authorized and reserved for issuance upon exercise of the
Representative’s Warrant by all necessary corporate action on the part of the
Company and, when issued and delivered and paid for upon such exercise in
accordance with the terms of the Representative’s Warrant, will be validly
issued, fully paid, nonassessable and free of preemptive rights and will
conform
all material respects to the description thereof in the Sale Preliminary
Prospectus.
Maxim
Group LLC
_________________,
2007
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37
(r) No
Consent is required for the execution, delivery and performance of this
Agreement and the Representative’s Warrant or consummation of each of the
transactions contemplated by this Agreement and the Representative’s Warrant,
including the issuance, sale and delivery of the Shares and the Representative’s
Warrant Shares to be issued, sold and delivered hereunder and thereunder,
except: (i) the registration under the Securities Act of the Shares and the
Representative’s Warrant Shares and the approval for listing of the Shares and
the Representative’s Warrant Shares on AMEX, each of which has become effective,
(ii) such Consents as may be required under state securities or blue sky
laws,
any foreign securities laws, the National Association of Securities Dealers,
Inc. (the “NASD”)
or
NASD Regulation, Inc. in connection with the purchase and distribution of
the
Shares by the Underwriters and (iii) such other Consents as are required,
each
of which has been obtained and is in full force and effect.
(s) Except
as
disclosed in the Registration Statement, the Sale Preliminary Prospectus
and the
Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or foreign,
pending to which the Company is a party or of which any property, operations
or
assets of the Company is the subject which, either individually or in the
aggregate, is having or could reasonably be expected to have a Material Adverse
Effect. To the Company’s knowledge, no such proceeding, litigation or
arbitration is threatened or contemplated.
(t) The
financial statements, including the notes thereto, included in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus present fairly
in
all material respects the financial position as of the dates indicated and
the
cash flows and results of operations for the periods specified of the Company.
Except as otherwise stated in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus, said financial statements have been prepared
in
conformity with United States generally accepted accounting principles applied
on a consistent basis throughout the periods involved. No other financial
statements or supporting schedules are required to be included or incorporated
by reference in the Registration Statement. The other financial information
included in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus present fairly the information included therein and have been
prepared on a basis consistent with that of the financial statements that
are
included in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus and the books and records of the respective entities presented
therein.
(u) There
are
no pro forma or as adjusted financial statements which are required to be
included in
the
Registration Statement, the
Sale
Preliminary Prospectus
and
the
Prospectus in accordance with Regulation
S-X under the Securities Act which have not been included as so required.
The
pro forma and/or as adjusted financial information included in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus has been properly
compiled and prepared in accordance with the applicable requirements of the
Securities Act and the Rules and Regulations and include all adjustments
necessary to present fairly, in accordance with generally accepted accounting
principles and in all material respects, the pro forma and as adjusted financial
position of the respective entity or entities presented therein at the
respective dates indicated and their cash flows and the results of operations
for the respective periods specified. The assumptions used in preparing the
pro
forma and as adjusted financial information included in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus provide a
reasonable basis for presenting the significant effects directly attributable
to
the transactions or events described therein. The related pro forma and pro
forma as adjusted adjustments give appropriate effect to those assumptions;
and
the pro forma and pro forma as adjusted financial information reflect the
proper
application of those adjustments to the corresponding historical financial
statement amounts.
Maxim
Group LLC
_________________,
2007
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(v) The
statistical, industry-related and market-related data included in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus
are
based on or derived from sources which the Company reasonably and in good
faith
believes are reliable and, in all material respects, accurate. Such data
agree
with the sources from which they are derived.
(w) Except
as
disclosed in the Registration Statement, the Sale Preliminary Prospectus
and the
Prospectus, the Company maintains a system of internal accounting and other
controls sufficient 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 United States generally accepted accounting
principles and to maintain accountability for assets, (iii) access to assets
is
permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accounting for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(x) The
Company’s Board of Directors has validly appointed an audit committee whose
composition satisfies the requirements of the rules and regulations of the
AMEX
and the Company’s Board of Directors and/or audit committee has each adopted a
charter that satisfies the requirements of AMEX. Except as disclosed in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus,
neither the Company’s Board of Directors nor the audit committee thereof has
been informed, nor is any director of the Company aware, of: (i) any significant
deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely
affect
the Company’s ability to record, process, summarize and report financial
information; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal control over financial reporting.
(y) The
Company is in material compliance with the provisions of the Xxxxxxxx-Xxxxx
Act
of 2002, as amended (“Sarb-Ox”),
applicable to the Company, and the rules and regulations promulgated thereunder
and related or similar rules and regulations promulgated by AMEX or any other
governmental or self regulatory entity or agency, except for violations which,
singly or in the aggregate, would not have a Material Adverse Effect. Without
limiting the generality of the foregoing, as of the effective date of the
Registration Statement: (i) the Company’s Board of Directors satisfies all
“independence” requirements (as that term is defined under applicable laws,
rules and regulations), including, without limitation, all members of the
audit
committee of the Company’s Board of Directors, meet the qualifications of
independence as set forth under applicable laws, rules and regulations and
(ii)
immediately following the Closing, the audit committee of the Company’s Board of
Directors will have at least one member who is an “audit committee financial
expert” (as that term is defined under applicable laws, rules and
regulations).
Maxim
Group LLC
_________________,
2007
Page 9
of
37
(z) Except
as
disclosed in the Registration Statement, the Sale Preliminary Prospectus
and the
Prospectus: (i) no director, officer or key employee of the Company holds
any
direct equity, debt or other pecuniary interest in any Person with whom the
Company does business or is in privity of contract with, other than, in each
case, indirectly through the ownership by such individuals of shares of Common
Stock and (ii) no other relationship, direct or indirect, exists between
or
among any of the Company or, to the Company’s knowledge, any Affiliate of the
Company, on the one hand, and any director, officer, key employee, stockholder,
customer or supplier of the Company or to the Company’s knowledge, any Affiliate
of the Company, on the other hand, which is required by the Securities Act,
the
Exchange Act or the Rules and Regulations to be described in the Registration
Statement, the Sale Preliminary Prospectus or the Prospectus which is not
so
described as required. Except as disclosed in the Registration Statement,
the
Sale Preliminary Prospectus and the Prospectus, there are no outstanding
loans,
advances (except normal advances for business expenses in the ordinary course
of
business) or guarantees of indebtedness by the Company to or for the benefit
of
any of the officers or directors of the Company or any of their respective
family members, except as disclosed in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus. The Company has not, in violation
of
Sarb-Ox, directly or indirectly, including through any Affiliate of the Company
(other than as permitted under the Sarb-Ox for depositary institutions),
extended or maintained credit, arranged for the extension of credit, or renewed
an extension of credit, in the form of a personal loan to or for any director
or
executive officer of the Company.
(aa) Except
as
disclosed in the Registration Statement, the Sale Preliminary Prospectus
and the
Prospectus:
(i) There
are
no claims, payments, arrangements, agreements or understandings relating
to the
payment of a finder’s, consulting or origination fee by the Company with respect
to the sale of the Shares hereunder or any other arrangements, agreements
or
understandings of the Company or, to the Company’s knowledge, the Company’s
officers, directors and employees that may affect the Underwriters’
compensation, as determined by the NASD.
(ii) No
officer, director, or beneficial owner of more than ten percent (10%) of
any
class of the Company’s securities (whether debt or equity, registered or
unregistered, regardless of the time acquired or the source from which derived)
or any other Affiliate is a member or a person associated, or affiliated
with a
member of the NASD.
Maxim
Group LLC
_________________,
2007
Page 10
of
37
(iii) No
proceeds from the sale of the Shares (excluding underwriting compensation)
will
be paid to any NASD member, or any persons associated or affiliated with
a
member of the NASD, except as specifically contemplated herein.
(iv) To
the
Company’s knowledge, no person to whom securities of the Company have been
privately issued within the 180-day period prior to the initial filing date
of
the Registration Statement has any relationship or affiliation or association
with any member of the NASD.
(bb)
(i)Except
as
would not have a Material Adverse Effect, the Company owns or possesses
sufficient rights to use trademarks, trade names, patents, patent rights,
copyrights, domain names, licenses, approvals, trade secrets, inventions,
technology, know-how and other similar intellectual property rights, including
applications for the same (collectively, “Intellectual
Property Rights”)
as are
necessary: (A) to conduct its business as now conducted and (B) in connection
with the commercialization of the medical technologies described in the
Registration Statement, the Sale Preliminary Prospectus and Prospectus as
being
under development by the Company.
(ii) Except
as
disclosed in the Registration Statement, the Sale Preliminary Prospectus
and
Prospectus: (A) there is no pending or, to the Company’s knowledge, threatened,
action, suit, proceeding, or claim by others challenging the Company’s rights in
or to any Intellectual Property Rights, and the Company is unaware of any
facts
which would form a reasonable basis for any such claim; (B) there is no pending
or, to the Company’s knowledge, threatened, action, suit, proceeding, or claim
by others that the Company infringes, misappropriates, or otherwise violates
any
Intellectual Property Rights of others, and the Company is unaware of any
facts
which would form a reasonable basis for any such claim; (C) there is no pending
or, to the Company’s knowledge, threatened, action, suit, proceeding, or claim
by others challenging the validity or scope of any such Intellectual Property
Rights owned by the Company and the Company is unaware of any facts which
would
form a reasonable basis for any such claim; (D) the operation of Company’s
business as now conducted and in connection with the development and
commercialization of the medical technology described in the Registration
Statement, the Sale Preliminary Prospectus and Prospectus, as being under
development by the Company (either independently or in collaboration with
third
parties), does not infringe any claim of any patent or published patent
application; (E) there is no prior art of which the Company is aware that
may
render any patent owned or licensed by the Company invalid or any patent
application owned or licensed by the Company unpatentable which has not been
disclosed to the applicable government patent office; and (F) the patents,
trademarks, and copyrights granted, issued or licensed to the Company have
been
duly maintained and are in full force and in effect, and none of such patents,
trademarks and copyrights have been adjudged invalid or unenforceable in
whole
or in part. The Company is not a party to or bound by any options, licenses
or
agreements with respect to the Intellectual Property Rights of any other
person
or entity that are required to be described in the Registration Statement,
the
Sale Preliminary Prospectus and Prospectus and are not described therein
in all
material respects. Other than The Xxxxx Xxxxxxx University, to the Company’s
knowledge, no third party possesses rights to the Company’s Intellectual
Property Rights that, if exercised, could enable such party to develop products
competitive to those the Company intends to develop as described in the Sale
Preliminary Prospectus and the Prospectus.
Maxim
Group LLC
_________________,
2007
Page 11
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37
(iii) Neither
the Company nor any individual acting on the Company’s behalf or who is an
assignee of Intellectual Property Rights to the Company has filed or caused
to
be filed with the U. S. Patent and Trademark Office (the “PTO”)
or any
foreign patent office any patent, trademark or copyright applications.
(iv) Other
than as disclosed in the Registration Statement, the Sale Preliminary Prospectus
and Prospectus, there are no rulemaking or similar proceedings before the
U.S.
Food and Drug Administration (“FDA”)
or PTO
which affect or involve the Company or any of the processes or medical
technologies that the Company has developed, is developing or proposes to
develop or uses or proposes to use which has or would not have a Material
Adverse Effect.
(v) The
Company has obtained legally binding written agreements from all employees
and
third parties with whom the Company has shared confidential proprietary
information: (A) of the Company, or (B) received from others which the Company
is obligated to treat as confidential, which agreements require such employees
and third parties to keep such information confidential.
(cc) Neither
the Company nor any of the Company’s directors, officers or employees has
violated: (i) the Bank Secrecy Act, as amended, (ii) the Money Laundering
Control Act of 1986, as amended, (iii) the Foreign Corrupt Practices Act,
or
(iv) the Uniting and Strengthening of America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001,
and/or the rules and regulations promulgated under any such law, or any
successor law, except
for such violations which, singly or in the aggregate, would not have a Material
Adverse Effect.
(dd) Neither
the Company nor any of its Affiliates has, prior to the date hereof, made
any
offer or sale of any securities which are required to be “integrated” pursuant
to the Securities Act or the Rules and Regulations with the offer and sale
of
the Shares pursuant to the Registration Statement.
(ee) Except
as
disclosed in the Registration Statement, the Sale Preliminary Prospectus
and the
Prospectus, no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise
in
connection with, the offer and sale of the Shares contemplated hereby, and
any
such rights so disclosed have either been fully complied with by the Company
or
effectively waived by the holders thereof, and any such waivers remain in
full
force and effect.
(ff) The
Company is not and, at all times up to and including consummation of the
transactions contemplated by this Agreement, and after giving effect to
application of the net proceeds of the Offering, will not be, subject to
registration as an “investment company” under the Investment Company Act of
1940, as amended, and is not and will not be an entity “controlled” by an
“investment company” within the meaning of such act.
Maxim
Group LLC
_________________,
2007
Page 12
of
37
(gg) Except
as
disclosed in the Registration Statement, the Sale Preliminary Prospectus
and the
Prospectus, there are no contracts, agreements or understandings between
the
Company and any Person that would give rise to a valid claim against the
Company
or any Underwriter for a brokerage commission, finder’s fee or other like
payment in connection with the transactions contemplated by this Agreement
or
any arrangements, agreements, understandings, payments or issuance with respect
to the Company or any of its officers, directors, stockholders, partners,
employees or Affiliates that may affect the Underwriters’ compensation as
determined by the NASD.
(hh) The
Company owns or leases all such properties as are necessary to the conduct
of
its business as presently operated and as proposed to be operated as described
in the Registration, the Sale Preliminary Prospectus and the Prospectus.
The
Company has good and marketable title in fee simple to all real property
and
good and marketable title to all personal property owned by it, in each case
free and clear of all Liens except such as are described in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus or such as
do not,
or are will not have, a Material Adverse Effect. Any real property and buildings
held under lease or sublease by the Company is held by under valid, subsisting
and enforceable leases with such exceptions as are not material to, and do
not
interfere with, the use made and proposed to be made of such property and
buildings by the Company. The Company has not received any notice of any
claim
adverse to its ownership of any real or personal property or of any claim
against the continued possession of any real property, whether owned or held
under lease or sublease by the Company.
(ii) The
Company maintains insurance of the types and in the amounts which are
customary
for companies engaged in similar businesses,
including, but not limited to: (i) directors’ and officers’ insurance (including
insurance
covering the Company, its directors and officers for liabilities or losses
arising in connection with this Offering, including, without limitation,
liabilities or losses arising under the Securities Act, the Exchange Act,
the
Rules and Regulations and applicable foreign securities laws), (ii)
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, (iii) business interruption insurance and (iv)
product liability insurance. Effective as of the Closing Date, the
Company will maintain insurance (of which the Company is the beneficiary)
with
at least $1,000,000 of coverage of the life of Xxxx Xxxxxxxxx for a period
of
three (3) years from the Closing Date with an
insurer rated at least AA or better in the most recent addition of “Best’s Life
Reports”.
There
are no claims by the Company under any policy or instrument described in
this
paragraph as to which any insurance company is denying liability or defending
under a reservation of rights clause. All
of the
insurance policies described in this paragraph are in full force and
effect.
The
Company has not been refused any insurance coverage sought or applied for,
and
the Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
Maxim
Group LLC
_________________,
2007
Page 13
of
37
(jj) Except
as
would not have a Material Adverse Effect, the Company has accurately prepared
and timely filed all federal, state, foreign and other tax returns that are
required to be filed by it and has paid or made provision for the payment
of all
taxes, assessments, governmental or other similar charges, including without
limitation, all sales and use taxes and all taxes which the Company is obligated
to withhold from amounts owing to employees, creditors and third parties,
with
respect to the periods covered by such tax returns (whether or not such amounts
are shown as due on any tax return). No deficiency assessment with respect
to a
proposed adjustment of the Company’s federal, state, local or foreign taxes is
presently in effect or is pending or, to the Company’s knowledge, threatened.
The accruals and reserves on the books and records of the Company in respect
of
tax liabilities for any taxable period not finally determined are adequate
in
all material respects to meet any assessments and related liabilities for
any
such period and, since the date of the Company’s most recent audited financial
statements, the Company has not incurred any material liability for taxes
other
than in the ordinary course of its business. There is no tax lien, whether
imposed by any federal, state, foreign or other taxing authority, outstanding
against the assets, properties or business of the Company.
(kk) No
labor
disturbance by the employees of the Company currently exists or, to the
knowledge of the Company, is reasonably likely to occur.
(ll) The
Company has at all times operated its business in material compliance with
all
Environmental Laws, and no material expenditures are or will be required
in
order to comply therewith. The Company has not received any notice or
communication that relates to or alleges any actual or potential violation
or
failure to comply with any Environmental Laws that will result in a Material
Adverse Effect. As used herein, the term “Environmental
Laws”
means
all applicable laws and regulations, including any licensing, permits or
reporting requirements, and any action by a Federal state or local government
entity pertaining to the protection of the environment, protection of public
health, protection of worker health and safety, or the handling of hazardous
materials, including without limitation, the Clean Air Act, 42 U.S.C. § 7401, et
seq., the Comprehensive Environmental Response, Compensation and Liability
Act
of 1980, 42 U.S.C. § 9601, et seq., the Federal Water Pollution Control Act, 33
U.S.C. § 1321, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. §
1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 690-1, et
seq., and the Toxic Substances Control Act, 15 U.S.C. § 2601, et
seq.
(mm) The
Company is not a party to, and does not maintain or administer, any “employee
benefit plan,” as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 (“ERISA”)
which
is subject to any provision of Title IV of ERISA and covers any officer,
director, employee or former employee of the Company or any ERISA Affiliate
(as
defined hereafter). These plans are referred to collectively herein as the
“Employee
Plans.”
For
purposes of this paragraph, “ERISA
Affiliate”
of
any
person or entity means any other person or entity which, together with that
person or entity, could be treated as a single employer under Section 414(m)
of
the Internal Revenue Code of 1986, as amended (the “Code”),
or is
an “affiliate,” whether or not incorporated, as defined in Section 407(d)(7) of
ERISA, of the person or entity.
Maxim
Group LLC
_________________,
2007
Page 14
of
37
(nn) The
Registration Statement, the Sale Preliminary Prospectus and the Prospectus
identify each employment, severance or other similar arrangement or policy
and
each material plan or arrangement providing for insurance coverage (including
any self-insured arrangements), workers’ compensation, disability benefits,
severance benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing, bonuses,
stock
options, stock appreciation or other forms of incentive compensation, or
post-retirement insurance, compensation or benefits which: (i) is not an
Employee Plan, (ii) is entered into, maintained or contributed to, as the
case
may be, by the Company or any of their respective ERISA Affiliates, (iii)
covers
any employee or former employee of the Company or any of their respective
ERISA
Affiliates and (iv) are required by the Rules and Regulations to be identified
in the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus. The foregoing contracts, plans and arrangements are referred
to
collectively in this Agreement as the “Benefit
Arrangements.”
The
Company has disclosed to the Representative in writing all Benefit Arrangements
affecting the Company or to which the Company is a party, and each such Benefit
Arrangement has been maintained in substantial compliance with its terms
and
with requirements prescribed by any and all statutes, orders, rules and
regulations that are applicable to that Benefit Arrangement.
(oo) There
is
no liability in respect of post-retirement health and medical benefits for
retired employees of the Company or any of their respective ERISA Affiliates
other than medical benefits required to be continued under applicable law,
determined using assumptions that are reasonable in the aggregate, over the
fair
market value of any fund, reserve or other assets segregated for the purpose
of
satisfying such liability (including for such purposes any fund established
pursuant to Section 401(h) of the Code). With respect to any of the Company’s
Employee Plans which are “group health plans” under Section 4980B of the Code
and Section 607(1) of ERISA, there has been material compliance with all
requirements imposed there under such that the Company or their respective
ERISA
Affiliates have no (and will not incur any) loss, assessment, tax penalty,
or
other sanction with respect to any such plan.
(pp) Except
as
disclosed in the Registration Statement, the Sale Preliminary Prospectus
and the
Prospectus or as disclosed in writing to the Representative, the Company
is not
a party to or subject to any employment contract or arrangement providing
for
annual future compensation, or the opportunity to earn annual future
compensation (whether through fixed salary, bonus, commission, options or
otherwise) of more than $60,000 to any officer, consultant, director or
employee.
(qq) The
execution of this Agreement, the Representative’s Warrant or any other
Transaction Document and consummation of the transactions contemplated hereby
and thereby does not constitute a triggering event under any employment
agreement or arrangement, whether or not legally enforceable, which (either
alone or upon the occurrence of any additional or subsequent event) will
or may
result in any material payment (of severance pay or otherwise), acceleration,
increase in vesting, or increase in benefits to any current or former officer,
employee or director of the Company.
Maxim
Group LLC
_________________,
2007
Page 15
of
37
(rr) No
“prohibited transaction” (as defined in either Section 406 of the ERISA or
Section 4975 of Code), “accumulated funding deficiency” (as defined in Section
302 of ERISA) or other event of the kind described in Section 4043(b) of
ERISA
(other than events with respect to which the 30-day notice requirement under
Section 4043 of ERISA has been waived) has occurred with respect to any employee
benefit plan for which the Company would have any material liability; each
employee benefit plan of the Company is in compliance in all material respects
with applicable law, including (without limitation) ERISA and the Code; the
Company has not incurred and does not expect to incur liability under Title
IV
of ERISA with respect to the termination of, or withdrawal from any “pension
plan”; and each employee benefit plan of the Company that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or by failure to act, which could cause the loss
of
such qualification.
(ss) Neither
the Company nor, to the Company’s knowledge, any of the Company’s officers,
directors, employees or agents has at any time during the last five (5) years:
(i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made
any
payment to any federal or state governmental officer or official, or other
Person charged with similar public or quasi-public duties, other than payments
that are not prohibited by the laws of the United States of any jurisdiction
thereof.
(tt) The
Company has not offered, or caused the Underwriters to offer, the Firm Shares
to
any Person or entity with the intention of unlawfully influencing: (i) a
customer or supplier of the Company or its Affiliates to alter the customer’s or
supplier’s level or type of business with the Company or any of its Affiliates
or (ii) a journalist or publication to write or publish favorable information
about the Company, any Affiliate or their respective products or
services.
(uu) Except
as
described in the Registration, the Sale Preliminary Prospectus and the
Prospectus, and except as would not have a Material Adverse Effect, the Company:
(i) is and at all times has been in full compliance with all federal, state
and
local statutes, rules, regulations or guidance applicable to the ownership,
testing, development, manufacture, packaging, processing, use, distribution,
marketing, labeling, promotion, sale, offer for sale, storage, import, export
or
disposal of or insurance reimbursement relating to any product manufactured
or
distributed by the Company or any component thereof (“Applicable
Laws”);
(ii)
has not received any FDA Form 483, notice of adverse finding, warning letter,
untitled letter or other correspondence or notice from the FDA or any other
federal, state, local or foreign governmental authority having authority
over
the Company (“Governmental
Authority”)
alleging or asserting noncompliance with any Applicable Laws or any licenses,
certificates, approvals, clearances, authorizations, permits and supplements
or
amendments thereto required by any such Applicable Laws (“Authorizations”);
(iii)
possesses all Authorizations and such Authorizations are valid and in full
force
and effect and are not in violation of any term of any such Authorizations;
(iv)
has not received notice of any claim, suit, proceeding, hearing, enforcement,
audit, investigation, arbitration or other action from any Governmental
Authority or third party alleging that any product operation or activity
is in
violation of any Applicable Laws or Authorizations and has no knowledge that
any
such Governmental Authority or third party is considering any such claim,
suit,
proceeding, hearing, enforcement, audit, investigation, arbitration or other
action; (v) has not received notice that any Governmental Authority has taken,
is taking or intends to take action to limit, suspend, modify or revoke any
Authorizations and has no knowledge that any such Governmental Authority
is
considering such action; (vi) has filed, obtained, maintained or submitted
all
reports, documents, forms, notices, applications, records, claims, submissions
and supplements or amendments as required by any Applicable Laws or
Authorizations and that all such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments
were
complete and correct on the date filed (or were corrected or supplemented
by a
subsequent submission); and (vii) has not, either voluntarily or involuntarily,
initiated, conducted, or issued or caused to be initiated, conducted or issued,
any recall, market withdrawal or replacement, safety alert, post sale warning,
“dear doctor” letter, or other notice or action relating to the alleged lack of
safety or efficacy of any product or any alleged product defect or violation
and
the Company does not have any knowledge that any third party has initiated,
conducted or intends to initiate any such notice or action.
Maxim
Group LLC
_________________,
2007
Page 16
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37
(vv) The
studies, tests and preclinical and clinical trials conducted or sponsored
by or
on behalf of the Company that are described or referred to in the Sale
Preliminary Prospectus, the Prospectus and the Registration Statement were
and,
if still pending, are being conducted in accordance with experimental protocols,
procedures and controls pursuant to accepted professional scientific standards
and all Applicable Laws and Authorizations; the descriptions of the results
of
such studies, tests and trials contained in the Sale Preliminary Prospectus,
the
Prospectus and the Registration Statement are accurate and complete in all
material respects and fairly present the data derived from such studies,
tests
and trials; except to the extent disclosed in the Sale Preliminary Prospectus,
Prospectus and the Registration Statement, the Company is not aware of any
studies, tests or trials the results of which the Company believes reasonably
call into question the study, test, or trial results described or referred
to in
the Sale Preliminary Prospectus, the Prospectus and the Registration Statement
when viewed in the context in which such results are described and the clinical
state of development; and the Company has not received any notices or
correspondence from any Governmental Authority requiring the termination,
suspension or material modification of any studies, tests or preclinical
or
clinical trials conducted or sponsored by or on behalf of the
Company.
(ww) As
used
in this Agreement, references to matters being “material”
with
respect to the Company shall mean a material event, change, condition, status
or
effect related to the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business, prospects (as such
prospects are described in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus), operations or results of operations of the
Company.
Maxim
Group LLC
_________________,
2007
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of
37
(xx) As
used
in this Agreement, the term “knowledge
of the Company”
(or
similar language) shall mean the actual knowledge of the officers and directors
of the Company who are named in the Sale Preliminary Prospectus and the
Prospectus, with the assumption that such officers and directors shall have
made
reasonable and diligent inquiry of the matters presented.
(yy) Any
certificate signed by or on behalf of the Company and delivered to the
Representative or to Ellenoff Xxxxxxxx & Schole LLP, counsel for the
Representative (“Underwriters’
Counsel”),
shall
be deemed to be a representation and warranty by the Company to each Underwriter
listed on Schedule
A
hereto
as to the matters covered thereby.
2. Purchase,
Sale and Delivery of the Shares.
(a) On
the
basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, the
Company
agrees to sell to each Underwriter and each Underwriter, severally and not
jointly, agrees to purchase from the Company, at a purchase price per share
of
$______, the number of Firm Shares set forth opposite their respective names
on
Schedule
A
hereto
together with any additional number of Shares which such Underwriter may
become
obligated to purchase pursuant to the provisions of Section 9 hereof.
(b) Payment
of the purchase price for, and delivery of certificates representing, the
Firm
Shares shall be made at the offices of the Underwriters’ Counsel, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as shall be agreed
upon
by the Representative and the Company, at 10:00 A.M., New York City time,
on the
third (3rd) or, as permitted under Rule 15c6-1 under the Exchange Act, fourth
(4th) business day (unless postponed in accordance with the provisions of
Section 9 hereof) following the date of the effectiveness of the Registration
Statement, or such other time not later than ten (10) business days after
such
date as shall be agreed upon by the Representative and the Company as permitted
under Rule 15c6-1 under the Exchange Act (such time and date of payment and
delivery being herein called the “Closing
Date”).
The
closing of the payment of the purchase price for, and delivery of certificates
representing, the Firm Shares is referred to herein as the “Closing.”
(c) Payment
of the purchase price for the Firm Shares shall be made by wire transfer
in
immediately available funds to or as directed by the Company upon delivery
of
certificates for the Firm Shares to the Representative through the facilities
of
The Depository Trust Company for the respective accounts of the several
Underwriters. Certificates for the Firm Shares shall be registered in such
name
or names and shall be in such denominations as the Representative may request
at
least two (2) business days before the Closing Date.
(d) In
addition, on the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein
set
forth, the Company hereby grants to the Underwriters an option to purchase
up to
an aggregate of ___________ Additional Shares at the same purchase price
per
share to be paid by the Underwriters for the Firm Shares as set forth in
Section
2(a) above, for the sole purpose of covering over-allotments in the sale
of Firm
Shares by the Underwriters. This option may be exercised at any time and
from
time to time on or before the forty-fifth (45th)
day
following the final date of the Prospectus, by written notice from the
Representative to the Company. Such notice shall set forth the aggregate
number
of Additional Shares as to which the option is being exercised and the date
and
time, as reasonably determined by the Representative, when the Additional
Shares
are to be delivered (any such date and time being herein sometimes referred
to
as the “Additional
Closing Date”);
provided,
however,
that no
Additional Closing Date shall occur earlier than the Closing Date or earlier
than the second (2nd) full business day after the date on which the option
shall
have been exercised nor later than the eighth (8th) full business day after
the
date on which the option shall have been exercised (unless such time and
date
are postponed in accordance with the provisions of Section 9 hereof). Upon
any
exercise of the option as to all or any portion of the Additional Shares,
each
Underwriter, acting severally and not jointly, agrees to purchase from the
Company the number of Additional Shares that bears the same proportion of
the
total number of Additional Shares then being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter on Schedule
A
hereto
(or such number increased as set forth in Section 9 hereof) bears to the
total
number of Firm Shares that the Underwriters have agreed to purchase hereunder,
subject, however, to such adjustments to eliminate fractional shares as the
Representative in its sole discretion shall make.
Maxim
Group LLC
_________________,
2007
Page 18
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37
(e) Payment
of the purchase price for, and delivery of certificates representing, the
Additional Shares shall be made at the office of Underwriters’ Counsel, or at
such other place as shall be agreed upon by the Representative and the Company,
at 10:00 A.M., New York City time, on the Additional Closing Date (unless
postponed in accordance with the provisions of Section 9 hereof), or such
other
time as shall be agreed upon by the Representative and the Company.
(f) Payment
of the purchase price for the Additional Shares shall be made by wire transfer
in immediately available funds to or as directed by the Company upon delivery
of
certificates for the Additional Shares to the Representative through the
facilities of The Depository Trust Company for the respective accounts of
the
several Underwriters. Certificates for the Additional Shares shall be registered
in such name or names and shall be in such denominations as the Representative
may request at least two (2) business days before the Additional Closing
Date.
The Company will permit the Representative to examine and package such
certificates for delivery at least one full business day prior to the Additional
Closing Date.
(g) On
the
Closing Date, the Company will further issue and sell to the Representative
or,
at the direction of the Representative, to other Underwriters or selling
group
members or bona fide officers of the Underwriters or selling group members,
for
an aggregate purchase price of $100, warrants to purchase Common Stock (the
“Representative’s
Warrant”)
entitling the holders thereof to purchase an aggregate of _______ shares
of
Common Stock (representing 10% of the total number of Firm Shares being sold
in
the Offering), plus an aggregate number of shares of Common Stock equal to
10%
of the total number of Additional Shares sold in the Offering, for a period
of
five years from the effective date of the Registration Statement commencing
on
the six-month anniversary of the effective date of the Registration Statement.
The Representative’s Warrant shall be exercisable at a price equal to 120% of
the initial public offering price of the Common Stock and shall contain terms
and provisions more fully described herein below and as set forth more
particularly in the Representative’s Warrant to be executed by the Company on
the effective date of the Registration Statement, including, but not limited
to:
(i) one demand and unlimited piggyback registration rights for a period of
seven
years from the effective date of the Registration Statement, (ii) cashless
exercise; (iii) customary anti-dilution provisions in the event of stock
dividends, splits, mergers, sales of all or substantially all of the Company’s
assets and other similar events; and (iv) customary terms requiring the Company
to make adequate provisions to preserve, in substance, the rights and powers
incidental to the Representative’s Warrant in the event mergers, consolidations
or other reorganizations of or by the Company during the five-year period
following the effective date of the Registration Statement. The Representative’s
Warrant shall not be redeemable. As provided in the Representative’s Warrant,
the Representative may designate that the Representative’s Warrant be issued in
varying amounts directly to other Underwriters and selling group members
and to
bona fide officers of the Underwriters and selling group members. As further
provided, no sale, transfer, assignment, pledge or hypothecation of the
Representative’s Warrant shall be made for a period of 6 months from the
effective date of the Registration Statement, except: (a) by operation of
law or
reorganization of the Company, or (b) to the Underwriters and bona fide
partners, officers of the Underwriters and selling group members.
Maxim
Group LLC
_________________,
2007
Page 19
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37
3. Offering.
Upon
authorization of the release of the Firm Shares or, as the case may be, the
Additional Shares, by the Representative, the Underwriters propose to offer
the
Shares for sale to the public upon the terms and conditions set forth in
the
Prospectus.
4. Covenants
of the Company.
The
Company acknowledges, covenants and agrees with the Underwriters
that:
(a) The
Registration Statement and any amendments thereto have been declared effective,
and if Rule 430A is used or the filing of the Prospectus is otherwise required
under Rule 424(b), the Company will file the Prospectus (properly completed
if
Rule 430A has been used) pursuant to Rule 424(b) within the prescribed time
period and will provide evidence satisfactory to the Representative of such
timely filing.
(b) The
Company will promptly notify the Representative (and, if requested by the
Representative, will confirm such notice in writing): (i) when the Registration
Statement and any amendments thereto become effective, (ii) of any request
by
the Commission for any amendment of or supplement to the Registration Statement,
the Sale Preliminary Prospectus or the Prospectus or for any additional
information, (iii) of the Company’s intention to file or prepare any supplement
or amendment to the Registration Statement or the Prospectus, (iv) of the
mailing or the delivery to the Commission for filing of any amendment of
or
supplement to the Registration Statement, the Sale Preliminary Prospectus
or the
Prospectus, including but not limited to Rule 462(b) under the Securities
Act,
(v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of the initiation, or the threatening, of any proceedings therefor,
it being understood that the Company shall make every effort to avoid the
issuance of any such stop order, (vi) of the receipt of any comments from
the
Commission, and (vii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in
any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time,
the
Company will use its best efforts to prevent the issuance of any such stop
order
and, if issued, to obtain the lifting of such order as promptly as is reasonably
practicable. The Company will not file any amendment to the Registration
Statement or any amendment of or supplement to the Sale Preliminary Prospectus
or the Prospectus (including the prospectus required to be filed pursuant
to
Rule 424(b)) that differs from the prospectus on file at the time of the
effectiveness of the Registration Statement or file any document under the
Exchange Act if such document would be deemed to be incorporated by reference
into the Prospectus to which the Representative shall reasonably object in
writing after being timely furnished in advance a copy thereof. The Company
will
provide the Representative with copies of all such amendments, filings and
other
documents a sufficient time prior to any filing or other publication thereof
to
permit and afford the Representative a reasonable opportunity and time to
review
and comment thereon.
Maxim
Group LLC
_________________,
2007
Page 20
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37
(c) The
Company shall comply with the Securities Act, the Exchange Act and all
applicable Rules and Regulations to permit completion of the distribution
as
contemplated in this Agreement, the Registration Statement and the Prospectus.
If, at any time when a prospectus relating to the Shares is required to be
delivered under the Securities Act, the Exchange Act and all applicable Rules
and Regulations in connection with the sales of Shares, any event shall have
occurred as a result of which the Prospectus as then amended or supplemented
would, in the judgment of the Underwriters or the Company, include an 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, in the light
of the
circumstances existing at the time of delivery to the purchaser, not misleading,
or if, to comply with the Securities Act, the Exchange Act or the Rules and
Regulations, it shall be necessary at any time to amend or supplement the
Prospectus or Registration Statement, or to file any document which is an
exhibit to the Registration Statement or the Prospectus or in any amendment
thereof or supplement thereto, the Company will notify the Representative
promptly and prepare and file with the Commission, subject to Section 4(a)
hereof, an appropriate amendment or supplement (in form and substance reasonably
satisfactory to the Representative) which will correct such statement or
omission or which will effect such compliance and will use its best efforts
to
have any amendment to the Registration Statement declared effective as promptly
as is reasonably possible.
(d) The
Company will promptly deliver to the Underwriters and Underwriters’ Counsel a
signed copy of the Registration Statement, as initially filed and all amendments
thereto, including all consents and exhibits filed therewith, and will maintain
in the Company’s files manually signed copies of such documents for at least
five (5) years after the date of filing thereof. The Company will promptly
deliver to each of the Underwriters such number of copies of the Sale
Preliminary Prospectus, the Prospectus, the Registration Statement, and all
amendments of and supplements to such documents, if any, and all documents
which
are exhibits to the Registration Statement and Prospectus or any amendment
thereof or supplement thereto, as the Underwriters may reasonably request.
On
the business day next succeeding the date of this Agreement and from time
to
time thereafter, the Company will furnish the Underwriters with copies of
the
Prospectus in New York City in such quantities as the Underwriters may
reasonably request.
Maxim
Group LLC
_________________,
2007
Page 21
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37
(e) The
Company consents to the use and delivery of the Sale Preliminary Prospectus
by
the Underwriters in accordance with Rule 430 and Section 4(b) of the Securities
Act.
(f) If
the
Company elects to rely on Rule 462(b) under the Securities Act, the Company
shall both file a Rule 462(b) Registration Statement with the Commission
in
compliance with Rule 462(b) and pay the applicable fees in accordance with
Rule
111 under Securities Act by the earlier of: (i) 10:00 p.m., New York City
time,
on the date of this Agreement, and (ii) the time that confirmations are given
or
sent, as specified by Rule 462(b)(2).
(g) During
the period of 180 days after the effective date of the Registration Statement,
the Company will not, and will cause its Affiliates not to, directly or
indirectly, take any action which constitutes or is designed to cause or
result
in, or which could reasonably be expected to constitute, cause or result
in, the
stabilization or manipulation of the price of any security to facilitate
the
sale or resale of the Shares.
(h) The
Company will use its reasonable best efforts, in cooperation with the
Representative, at or prior to the time of effectiveness of the Registration
Statement, to qualify the Shares for offering and sale under the securities
laws
relating to the offering or sale of the Shares of such jurisdictions, domestic
or foreign, as the Representative may reasonably designate and to maintain
such
qualification in effect for so long as required for the distribution thereof;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation or to execute a general consent to service
of process.
(i) The
Company will make generally available to its security holders and to the
Underwriters as soon as practicable, but in any event not later than twelve
(12)
months after the effective date of the Registration Statement (as defined
in
Rule 158(c) under the Securities Act), an audited earnings statement of the
Company complying with Section 11(a) of the Securities Act and the Rules
and
Regulations (including, at the option of the Company, Rule 158).
(j) During
the twelve (12) months following the Closing Date, without the consent of
the
Representative which shall not be unreasonably withheld, the Company will
not
file any registration statement relating to the offer or sale of any of the
Company’s securities, including any Registration Statement on Form S-8, except:
a Form S-8 filed with the Commission in connection with the Company’s 2002
Equity Incentive Plan, 2004 Equity Incentive Plan and 2007 Equity Incentive
Plan.
(k) Prior
to
the Closing Date, each
of
the Company’s officers and directors and stockholders (the “Lock-Up
Parties”)
who
own any of the Company’s outstanding shares of Common Stock, or warrants or
options to purchase Common Stock or other securities convertible into Common
Stock shall enter into a written “lock-up” agreement in the form attached hereto
as Annex
IV.
Maxim
Group LLC
_________________,
2007
Page
22
of
37
(l) During
the twelve (12) month period following the Closing Date, the Company shall
not,
without the prior written consent of the Representative, offer, sell or
distribute any of its equity securities or securities convertible into or
exercisable for equity securities, other than: (i) pursuant the Company’s 2007
Equity Incentive Plan or (ii) pursuant to the terms of any securities
exercisable or convertible into shares of the Company’s capital stock that are
outstanding at the Closing Date. The foregoing shall not preclude the Company
from undertaking bank or other similar loans or debt financing which do not
contain an equity component.
(m) During
the twelve (12) months following the Closing, the Company shall not offer,
sell
or distribute any convertible securities convertible at a price that may,
at the
time of conversion, be less than the Fair Market Value of the Common Stock
on
the date of the original sale, without the consent of the Representative,
which
consent shall not be unreasonably withheld. For purposes of this Section
4, the
term “Fair
Market Value”
shall
mean the greater of: (i) the average of the volume weighted average price
of the
Company’s common stock for each of the 30 trading days prior to the date of the
original sale; and (ii) the last sale price of the Common Stock, during normal
operating hours, as reported on the AMEX, or any other exchange or electronic
quotation system on which the Common Stock is then listed.
(n) For
a
period of three (3) years from the effective date of the Registration Statement,
the Company, at its expense, shall use its commercially reasonable best efforts
to keep
current a listing in the Standard & Poors or Mergent Manuals (it being
agreed that the Company shall obtain such listing prior to Closing);
(o) The
Company will not issue press releases or engage in any other publicity, without
the Representative’s prior written consent for a period ending at 5:00 p.m.
Eastern time on the first business day following the thirtieth (30th) day
following the Closing Date.
(p) The
Company will use commercially reasonable best efforts to maintain its key
person
life insurance with a insurer rated at least AA or better in the most recent
addition of “Best’s Life Reports” in the amount of $1,000,000 on the life of
Xxxx Xxxxxxxxx in full force and effect for a period of three (3) years from
the
Closing Date. The Company shall be the sole beneficiary of such
policy.
(q) Upon
conclusion of the Offering, the Company will engage (for no less than two
(2)
years from the Closing Date) a financial public relations firm mutually
acceptable to the Company and the Representative.
(r) The
Company has retained a transfer agent reasonably acceptable to the
Representative for the Shares and shall continue to retain such transfer
agent
(or another transfer agent reasonably acceptable to the Representative) for
a
period of two (2) years following the Closing Date.
Maxim
Group LLC
_________________,
2007
Page 23
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37
(s) The
Company will apply the net proceeds from the sale of the Shares as set forth
(and subject to the qualifications described) under the caption “Use of
Proceeds” in the Prospectus. Without
the written consent of the Representative, no proceeds of the Offering will
be
used to pay outstanding loans from officers, directors or stockholders or
to pay
any accrued salaries or bonuses to any employees or former employees, except
as
disclosed in the Prospectus and except for payments of accrued salaries to
any
employees in the ordinary course of business consistent with the Company’s past
payroll practices.
(t) The
Company will use its commercially reasonable best efforts to effect and maintain
the listing of the Shares on the AMEX.
(u) The
Company, during the period when the Prospectus is required to be delivered
under
the Securities Act or the Exchange Act, will file all documents required
to be
filed with the Commission pursuant to the Securities Act, the Exchange Act
and
the Rules and Regulations within the time periods required thereby.
(v) The
Company will do and perform all things set forth herein or reasonably required
to be done or performed under this Agreement by the Company prior to the
Closing
Date or the Additional Closing Date, as the case may be, and satisfy all
conditions precedent to the delivery of the Firm Shares and the Additional
Shares.
(w) The
Company shall cause to be prepared and delivered to the Representative, at
its
expense, within one (1) business day from the effective date of this Agreement,
an Electronic Prospectus
to be used by the Underwriters in connection with the Offering. As used herein,
the term “Electronic
Prospectus”
means
a
form of prospectus, and any amendment or supplement thereto, that meets each
of
the following conditions: (i) it shall be encoded in an electronic format,
reasonably satisfactory to the Representative, that may be transmitted
electronically by the other Underwriters to offerees and purchasers of the
Shares for at least the period during which a Prospectus relating to the
Shares
is required to be delivered under the Securities Act; (ii) it shall disclose
the
same information as the paper prospectus and prospectus filed pursuant to
XXXXX,
except to the extent that graphic and image material cannot be disseminated
electronically, in which case such graphic and image material shall be replaced
in the electronic prospectus with a fair and accurate narrative description
or
tabular representation of such material, as appropriate; and (iii) it shall
be
in or convertible into a paper format or an electronic format, satisfactory
to
the Representative, that will allow recipients thereof to store and have
continuously ready access to the prospectus at any future time, without charge
to such recipients (other than any fee charged for subscription to the Internet
as a whole and for on-line time). The Company hereby confirms that it has
included or will include in the Prospectus filed pursuant to XXXXX or otherwise
with the Commission and in the Registration Statement at the time it was
declared effective an undertaking that, upon receipt
of a request by an investor or his or her representative within the period
when
a prospectus relating to the Shares is required to be delivered under the
Securities Act, the Company shall transmit or cause to be transmitted promptly,
without charge, a paper copy of the Prospectus.
Maxim
Group LLC
_________________,
2007
Page
24
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37
(x) The
Company represents and agrees that, unless it obtains the prior consent of
Representative, it has not made and will not make any offer relating to the
Shares that would constitute an “issuer free writing prospectus,” as defined in
Rule 433 promulgated under the Securities Act, or that would otherwise
constitute a “free writing prospectus,” as defined in Rule 405 promulgated
under the Securities Act, required to be filed with the Commission. Any such
free writing prospectus consented to by 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 promulgated under the Securities Act, and has complied
and will comply with the requirements said Rule 433 applicable to any
Permitted Free Writing Prospectus, including timely filing with the Commission
where required, legending and record keeping.
5. Consideration;
Payment of Expenses.
(a) In
consideration of the services to be provided for hereunder, the Company shall
pay to the Underwriters or their respective designees their pro rata portion
(based on the Shares purchased) of the following compensation:
(i) An
underwriting discount of seven percent (7%) of the gross proceeds of the
Offering; and
(ii) a
non-accountable expense allowance equal to two percent (2%) of the gross
proceeds of the Offering (exclusive of proceeds from the sale of Additional
Shares), less $50,000 previously paid.
(b) The
Representative reserves the right to reduce any item of its compensation
or
adjust the terms thereof as specified herein in the event that a determination
shall be made by the NASD to the effect that the Underwriters’ aggregate
compensation is in excess of NASD rules or that the terms thereof require
adjustment.
(c) Whether
or not: (i) the transactions are contemplated by this Agreement, (ii) the
Registration Statement and the Prospectus are consummated or (iii) this
Agreement is terminated, the Company hereby agrees to pay all costs and expenses
incident to the performance of its obligations hereunder, including the
following:
(i) all
expenses in connection with the preparation, printing, “edgarization” and filing
of the Registration Statement, any Preliminary Prospectus and the Prospectus
and
any and all amendments and supplements thereto and the mailing and delivering
of
copies thereof to the Underwriters and dealers;
(ii) the
fees,
disbursements and expenses of the Company’s counsel and accountants in
connection with the registration of the Shares under the Securities Act and
the
Offering;
Maxim
Group LLC
_________________,
2007
Page
25
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37
(iii) the
cost
of producing this Agreement and any agreement among Underwriters, blue sky
survey, closing documents and other instruments, agreements or documents
(including any compilations thereof) in connection with the
Offering;
(iv) all
expenses in connection with the qualification of the Shares for offering
and
sale under state or foreign securities or blue sky laws, including the fees
and
disbursements of Underwriters’ Counsel as set forth in Section 5(d) hereof in
connection with such qualification and in connection with any blue sky survey
undertaken by such counsel;
(v) the
filing fees incident to securing any required review by the NASD of the terms
of
the Offering;
(vi) all
fees
and expenses in connection with listing the Shares on the AMEX;
(vii) all
expenses of the Company and its representatives incurred in connection with
attending or hosting meetings with prospective purchasers of the Shares
(“Road
Show Expenses”);
(viii) any
stock
transfer taxes incurred in connection with this Agreement or the
Offering;
(ix) the
cost
of preparing stock certificates representing the Shares;
(x) the
cost
and charges of any transfer agent or registrar for the Shares;
and
(xi) all
other
costs and expenses incident to the performance of the Company obligations
hereunder which are not otherwise specifically provided for in this Section
5.
(d) At
the
Closing,
the
Company shall issue a payment of $5,000 to Underwriters’
Counsel in consideration of “Blue Sky” services rendered
if the
Common Stock sold in this Offering is listed on the AMEX or Nasdaq Global
Market. The
Company shall also
pay,
as due, state registration, qualification and filing fees, NASD filing fees
and
accountable out-of-pocket disbursements in connection with such registration,
qualification or filing.
(e) It
is
understood, however, that except as provided in this Section, and Sections
6, 7
and 10 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel. Notwithstanding anything to the contrary
in
this Section 5, in the event that this Agreement is terminated pursuant to
Section 5 or 11(b) hereof, or subsequent to a Material Adverse Change, the
Company will pay all out-of-pocket accountable expenses of the Underwriters
(including but not limited to the reasonable fees and disbursements of counsel
to the Underwriters) incurred in connection herewith, less any amounts
previously advanced to the Representative.
Maxim
Group LLC
_________________,
2007
Page
26
of
37
6. Conditions
of Underwriters’ Obligations.
The
obligations of the Underwriters to purchase and pay for the Firm Shares and
the
Additional Shares as provided herein shall be subject to: (i) the accuracy,
in
all material respects, of the representations and warranties of the Company
herein contained, as of the date hereof and as of the Closing Date, (ii)
the
absence from any certificates, opinions, written statements or letters furnished
to the Representative or to Underwriters’ Counsel pursuant to this Section 6 of
any material misstatement or omission, (iii) the performance by the Company
of
its obligations hereunder, and (iv) each of the following additional conditions.
For purposes of this Section 6, the terms “Closing Date” and “Closing” shall
refer to the Closing Date for the Firm Shares and any Additional Closing
Date,
if different, for the Additional Shares, and each of the foregoing and following
conditions must be satisfied as of each Closing.
(a) The
Registration Statement shall have become effective and all necessary regulatory
or listing approvals shall have been received not later than 5:30 P.M., New
York
time, on the date of this Agreement, or at such later time and date as shall
have been consented to in writing by the Representative. If the Company shall
have elected to rely upon Rule 430A under the Securities Act, the Prospectus
shall have been filed with the Commission in a timely fashion in accordance
with
the terms hereof and a form of the Prospectus containing information relating
to
the description of the Shares and the method of distribution and similar
matters
shall have been filed with the Commission pursuant to Rule 424(b) within
the
applicable time period; and, at or prior to the Closing Date or the actual
time
of the Closing, no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof shall have been issued
and no
proceedings therefor shall have been initiated or threatened by the Commission.
(b) The
Representative shall have received the favorable written opinion of Fulbright
& Xxxxxxxx L.L.P., legal counsel for the Company, dated as of the Closing
Date addressed to the Underwriters substantially in the form attached hereto
as
Annex
I.
(c) The
Representative shall have received the favorable written opinion of Xxxxx
&
Xxxxxxx LLP, special FDA regulatory counsel for the Company, dated as of
the
Closing Date addressed to the Underwriters substantially in the form attached
hereto as Annex
II.
(d) The
Representative shall have received the favorable written opinion of Roylance,
Abrams, Berdo & Xxxxxxx, L.L.P., special intellectual property counsel for
the Company, dated as of the Closing Date addressed to the Underwriters
substantially in the form attached hereto as Annex
III.
(e) All
corporate action and regulatory proceedings taken in connection with the
sale of
the Firm Shares and the Additional Shares as herein contemplated shall be
reasonably satisfactory in form and substance in all material respects to
the
Representative and to Underwriters’ Counsel.
(f) The
Representative shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of the Company, dated as of the Closing Date
to the
effect that: (i) the condition set forth in subsection (a) of this Section
6 has
been satisfied, (ii) as of the date hereof and as of the applicable Closing
Date, the representations and warranties of the Company set forth in Section
1
hereof are accurate in all material respects, (iii) as of the applicable
Closing
Date, all agreements, conditions and obligations of the Company to be performed
or complied with hereunder on or prior thereto have been duly performed or
complied with, (iv) the Company has not sustained any Material Adverse Change
subsequent to the respective dates as of which information is given in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus,
(v)
no stop order suspending the effectiveness of the Registration Statement
or any
post-effective amendment thereof has been issued and no proceedings therefor
have been initiated or threatened by the Commission and (vi) there are no
pro
forma or as adjusted financial statements that are required to be included
in
the Registration Statement, the Sale Preliminary Prospectus and the Prospectus
pursuant to the Rules and Regulations which are not so included.
Maxim
Group LLC
_________________,
2007
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27
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37
(g) On
the
date of this Agreement, on the Closing Date and, as the case may be, on each
Additional Closing Date, the Representative shall have received a “cold comfort”
letter from PwC
dated,
respectively, as of the date of the date of delivery and addressed to the
Underwriters and in form and substance reasonably satisfactory to the
Representative and Underwriters’ Counsel,
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Securities Act and the Rules and
Regulations, and stating, as of the date of delivery (or, with respect to
matters involving changes or developments since the respective dates as of
which
specified financial information is given in the Prospectus,
as of a date not more than five (5) days prior to the date of such letter),
the
conclusions and findings of such firm with respect to the financial information
and other matters relating to the Registration Statement covered by such
letter
and, with respect to letters issued as of Additional Closing Dates, confirming
the conclusions and findings set forth in such prior letter.
(h) Subsequent
to the execution and delivery of this Agreement or, if earlier, the dates
as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been any change in the capital stock or long-term debt
of
the Company or any change or development involving a change, whether or not
arising from transactions in the ordinary course of business, in the business,
condition (financial or otherwise), results of operations, stockholders’ equity,
properties or prospects (as such prospects are described in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus) of the Company,
including but not limited to the occurrence of any fire, flood, storm,
explosion, accident, act of war or terrorism or other calamity, the effect
of
which, in any such case described above, is, in the reasonable judgment of
the
Representative, so material and adverse as to make it impracticable or
inadvisable to proceed with the Offering on the terms and in the manner
contemplated in the Prospectus (exclusive of any supplement).
(i) The
Representative shall have received a lock-up agreement from each Lock-Up
Party,
duly executed by the applicable Lock-Up Party, in each case substantially
in the
form attached hereto as Annex
IV.
Maxim
Group LLC
_________________,
2007
Page
28
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37
(j) The
Shares shall have been approved for listing on the AMEX.
(k) The
NASD
shall have confirmed that it has not raised any objection with respect to
the
fairness and reasonableness of the underwriting terms and arrangements.
(l) No
action
shall have been taken and no statute, rule, regulation or order shall have
been
enacted, adopted or issued by any federal, state or foreign governmental
or
regulatory authority that would, as of the Closing Date, prevent the issuance
or
sale of the Shares; and no injunction or order of any federal, state or foreign
court shall have been issued that would, as of the Closing Date, prevent
the
issuance or sale of the Shares.
(m) The
Company shall have furnished the Underwriters and Underwriters’ Counsel with
such other certificates, opinions or other documents (including a customary
certificate of the Company’s Secretary) as they may have reasonably
requested.
If
any of
the conditions specified in this Section 6 shall not have been fulfilled
when
and as required by this Agreement, or if any of the certificates, opinions,
written statements or letters furnished to the Representative or to
Underwriters’ Counsel pursuant to this Section 6 shall not be reasonably
satisfactory in form and substance to the Representative and to Underwriters’
Counsel, all obligations of the Underwriters hereunder may be cancelled by
the
Representative at, or at any time prior to, the consummation of the Closing,
and
the obligations of the Underwriters to purchase the Additional Shares may
be
cancelled by the Representative at, or at any time prior to, the Additional
Closing Date. Notice of such cancellation shall be given to the Company in
writing, or by telephone. Any such telephone notice shall be confirmed promptly
thereafter in writing.
7. Indemnification.
(a) The
Company shall indemnify and hold harmless each Underwriter and each Person,
if
any, who controls each Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including,
but
not limited to, reasonable attorneys’ fees and any and all reasonable,
out-of-pocket expenses incurred in investigating, preparing or defending
against
any litigation, commenced or threatened, or any claim whatsoever, and any
and
all amounts paid in settlement of any claim or litigation), joint or several,
to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon
any
untrue statement or alleged untrue statement of a material fact made by such
party contained in the Registration Statement, as originally filed or any
amendment thereof, or any related Preliminary Prospectus (including the Sale
Preliminary Prospectus) or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or alleged
omission made by such party to state therein a material fact required to
be
stated therein or necessary to make the statements therein not misleading;
provided,
however,
that the
Company will not be liable in any such case to the extent but only to the
extent
that any such loss, liability, claim, damage or expense arises out of or
is
based upon any such untrue statement or alleged untrue statement or omission
or
alleged omission made therein in reliance upon and in conformity with the
Underwriters’ Information. This indemnity agreement will be in addition to any
liability, which the Company may otherwise have, including but not limited
to
other liability under this Agreement.
Maxim
Group LLC
_________________,
2007
Page
29
of
37
(b) Each
Underwriter, severally and not jointly, shall indemnify and hold harmless
the
Company, each of the directors of the Company (including any Person who,
with
his or her consent, is named in the Registration Statement as about to become
a
director of the Company), each of the officers of the Company who shall have
signed the Registration Statement, and each other Person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section
20
of the Exchange Act, against any losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to reasonable
attorneys’ fees and reasonable out-of-pocket expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them
may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, as
originally filed or any amendment thereof, or any related Preliminary Prospectus
(including the Sale Preliminary Prospectus) or the Prospectus, or in any
amendment thereof or supplement thereto, 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 any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with the Underwriters’ Information;
provided,
however,
that in
no case shall any Underwriter be liable or responsible for any amount in
excess
of the underwriting discount applicable to the Shares to be purchased by
such
Underwriter hereunder. This indemnity agreement will be in addition to any
liability, which the Underwriters may otherwise have, including but not limited
to other liability under this Agreement.
(c) Promptly
after receipt by an indemnified party under subsection (a) or (b) above of
notice of any claims or 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 each party against whom indemnification
is
to be sought in writing of the claim or the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve the indemnifying
party from any liability which it may have under this Section 7 to the extent
that it is not materially prejudiced as a result thereof and in any event
shall
not relieve it from any liability that such indemnifying party may have
otherwise than on account of the indemnity agreement hereunder). In case
any
such claim or action is brought against any indemnified party, and it notifies
an indemnifying party of the commencement thereof, the indemnifying party
will
be entitled to participate, at its own expense in the defense of such action,
and to the extent it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party,
to assume the defense thereof with counsel satisfactory to such indemnified
party; provided however, that counsel to the indemnifying party shall not
(except with the written consent of the indemnified party) also be counsel
to
the indemnified party. Notwithstanding the foregoing, the indemnified party
or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of
such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not
have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, (iii) the
indemnifying party does not diligently defend the action after assumption
of the
defense, or (iv) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct
the
defense of such action on behalf of the indemnified party or parties), in
any of
which events such fees and expenses of one (1) such counsel shall be borne
by
the indemnifying parties. No indemnifying party shall, without the prior
written
consent of the indemnified parties, effect any settlement or compromise of,
or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity
or
contribution may be or could have been sought by an indemnified party under
this
Section 7 or Section 8 hereof (whether or not the indemnified party is an
actual
or potential party thereto), unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding
and
(ii) does not include a statement as to or an admission of fault, culpability
or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.
Maxim
Group LLC
_________________,
2007
Page 30
of
37
8. Contribution.
In
order to provide for contribution in circumstances in which the indemnification
provided for in Section 7 hereof is for any reason held to be unavailable
from
any indemnifying party or is insufficient to hold harmless a party indemnified
thereunder, the Company
and the
Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred
in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company, any
contribution received by the Company from Persons, other than the Underwriters,
who may also be liable for contribution, including Persons who control the
Company within the meaning of Section 15 of the Securities Act or Section
20 of
the Exchange Act, officers of the Company who signed the Registration Statement
and directors of the Company) as incurred to which the Company and one or
more
of the Underwriters may be subject, in such proportions as is appropriate
to
reflect the relative benefits received by the Company
and the
Underwriters from the Offering or, if such allocation is not permitted by
applicable law, in such proportions as are appropriate to reflect not only
the
relative benefits referred to above but also the relative fault of the
Company and
the
Underwriters in connection with the statements or omissions which resulted
in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company
and the
Underwriters shall be deemed to be in the same proportion as: (x) the total
proceeds from the Offering (net of underwriting discounts and commissions
but
before deducting expenses) received by the Company bears
to
(y) the underwriting discount or commissions received by the Underwriters,
in
each case as set forth in the table on the cover page of the Prospectus.
The
relative fault of each of the Company
and of
the Underwriters 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’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Company
and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if
the
Underwriters were treated as one entity for such purpose) or by any other
method
of allocation which does not take account of the equitable considerations
referred to above in this Section. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred
to
above in this Section 8 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing
or
defending against any litigation, or any investigation or proceeding by any
judicial, regulatory or other legal or governmental agency or body, commenced
or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue
statement or omission or alleged omission. Notwithstanding the provisions
of
this Section 8: (i) no Underwriter shall be required to contribute any amount
in
excess of the amount by which the discounts and commissions applicable to
the
Shares underwritten by it and distributed to the public 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
and
(ii) 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. For purposes
of
this Section 8, each Person, if any, who controls an Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act
shall have the same rights to contribution as such Underwriter, 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, each officer of the Company
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject
in
each case to clauses (i) and (ii) of the immediately preceding sentence.
Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect
of
which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they
may
have under this Section 8 or otherwise. The obligations of the Underwriters
to
contribute pursuant to this Section 8 are several in proportion to the
respective number of Shares to be purchased by each of the Underwriters
hereunder and not joint.
Maxim
Group LLC
_________________,
2007
Page 31
of
37
9. Underwriter
Default.
(a) If
any
Underwriter or Underwriters shall default in its or their obligation to purchase
Firm Shares or Additional Shares hereunder, and if the Firm Shares or Additional
Shares with respect to which such default relates (the “Default
Shares”)
do not
(after giving effect to arrangements, if any, made by the Representative
pursuant to subsection (b) below) exceed in the aggregate 10% of the number
of
Firm Shares or Additional Shares, each non-defaulting Underwriter, acting
severally and not jointly, agrees to purchase from the Company that number
of
Default Shares that bears the same proportion of the total number of Default
Shares then being purchased as the number of Firm Shares set forth opposite
the
name of such Underwriter on Schedule
A
hereto
bears to the aggregate number of Firm Shares set forth opposite the names
of the
non-defaulting Underwriters, subject, however, to such adjustments to eliminate
fractional shares as the Representative in its sole discretion shall make.
Maxim
Group LLC
_________________,
2007
Page 32
of
37
(b) In
the
event that the aggregate number of Default Shares exceeds 10% of the number
of
Firm Shares or Additional Shares, as the case may be, the Representative
may in
its discretion arrange for itself or for another party or parties (including
any
non-defaulting Underwriter or Underwriters who so agree) to purchase the
Default
Shares on the terms contained herein. In the event that within five calendar
days after such a default the Representative does not arrange for the purchase
of the Default Shares as provided in this Section 9, this Agreement or, in
the
case of a default with respect to the Additional Shares, the obligations
of the
Underwriters to purchase and of the Company to sell the Additional Shares
shall
thereupon terminate, without liability on the part of the Company with respect
thereto (except in each case as provided in Sections 5, 7, 8, 10 and 11(d))
or
the Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(c) In
the
event that any Default Shares are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
the Representative or the Company shall have the right to postpone the Closing
Date or Additional Closing Date, as the case may be for a period, not exceeding
five (5) business days, in order to effect whatever changes may thereby be
made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the reasonable opinion of Underwriters’ Counsel, may thereby be made
necessary or advisable. The term “Underwriter” as used in this Agreement shall
include any party substituted under this Section 9 with like effect as if
it had
originally been a party to this Agreement with
respect
to such Firm Shares and Additional Shares.
10. Survival
of Representations and Agreements.
All
representations and warranties, covenants and agreements of the Company and
the
Underwriters contained in this Agreement or in certificates of officers of
the
Company submitted pursuant hereto, including the agreements contained in
Section
5, the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of
any
Underwriter or any controlling Person thereof or by or on behalf of the Company,
any of its officers and directors or any controlling Person thereof, and
shall
survive delivery of and payment for the Shares to and by the Underwriters.
The
covenants and agreements contained in Sections 5, 7, 8, this Section 10 and
Sections 14 and 15 hereof shall survive any termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
Maxim
Group LLC
_________________,
2007
Page 33
of
37
11. Effective
Date of Agreement; Termination.
(a) This
Agreement shall become effective upon the later of: (i) receipt by the
Representative and the Company of notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. Notwithstanding
any termination of this Agreement, the provisions of this Section 11 and
of
Sections 1, 4, 6, 7 and 11 through 16, inclusive, shall remain in full force
and
effect at all times after the execution hereof.
(b) The
Representative shall have the right to terminate this Agreement at any time
prior to the consummation
of the Closing
or
to
terminate the obligations of the Underwriters to purchase the Additional
Shares
at any time prior to the
consummation of any closing to occur on an Additional
Closing Date, as the case may be, if: (i) a Material Adverse Change with
respect
to the Company shall have occurred; or (ii) any domestic or international
event
or act or occurrence has materially disrupted, or in the reasonable opinion
of
the Representative will in the immediate future materially disrupt, the market
for the Company’s securities or securities in general; or (iii) trading on the
New York Stock Exchange, The NASDAQ Global Market, the NASDAQ Capital Market
or
the AMEX shall
have been suspended or been made subject to material limitations, or minimum
or
maximum prices for trading shall have been fixed, or maximum ranges for prices
for securities shall have been required, on the New York Stock Exchange,
The
NASDAQ Global
Market,
the
NASDAQ Capital Market or
the AMEX
or by order of the Commission or any other governmental authority having
jurisdiction; or (iv) a banking moratorium has been declared by any state
or
federal authority or if any material disruption in commercial banking or
securities settlement or clearance services shall have occurred; or (v) (A)
there shall have occurred any outbreak or escalation of hostilities or acts
of
terrorism involving the United States or there is a declaration of a national
emergency or war by the United States or (B) there shall have been any other
calamity or crisis or any change in political, financial or economic conditions
if the effect of any such event in (A) or (B), in the reasonable
judgment
of the Representative, makes it impracticable or inadvisable to proceed with
the
offering, sale and delivery of the Firm Shares or the Additional Shares,
as the
case may be, on the terms and in the manner contemplated by the
Prospectus.
(c) Any
notice of termination pursuant to this Section 11 shall be in
writing.
(d) If
this
Agreement shall be terminated pursuant to any of the provisions hereof (other
than pursuant to Section 9(b) hereof), or if the sale of the Shares provided
for
herein is not consummated because any condition to the obligations of the
Underwriters set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement
herein
or comply with any provision hereof, the Company will, subject to demand
by the
Representative, reimburse the Underwriters for all out-of-pocket expenses
(including the fees and expenses of their counsel), incurred by the Underwriters
in connection herewith.
Maxim
Group LLC
_________________,
2007
Page 34
of
37
(e) If
the
Company elects to terminate the Offering for any reason and the Representative
was prepared to proceed with the Offering reasonably within the intent of
this
Agreement and, thereafter, the Company engages a different lead or managing
underwriter to conduct an initial public offering within one year of the
date of
termination of this Agreement by the Company, the Company will agree to exercise
its commercially reasonable best efforts to recommend to the lead underwriter
or
managing underwriter that the Representative be permitted to participate
in such
initial public offering up to 33% of such offering upon such terms as the
parties may mutually agree, such terms to be set forth in a separate engagement
letter or other agreement between the parties, but in no event on less favorable
terms than offered by the lead or managing underwriter to any other investment
bank retained in such initial public offering. Furthermore, if the lead or
managing underwriter chooses not to provide the Representative with any right
of
participation in such initial public offering, and the Company completes
an
initial public offering of its Common Stock using a different lead or managing
underwriter within one year from the date of termination, the Company shall
pay
to the Reprehensive at the closing of such initial public offering the sum
of
$50,000 in cash.
12. Notices.
All
communications hereunder, except as may be otherwise specifically provided
herein, shall be in writing, and:
(a) if
sent
to the Representative or any Underwriter, shall be mailed, delivered, or
faxed
and confirmed in writing, to Maxim Group LLC, 000 Xxxxxxxxx, Xxx Xxxx, Xxx
Xxxx
00000, Attention: Xxxxxxxx X. Xxxxxx, Director of Investment Banking, in
each
case, with a copy to Underwriters’ Counsel at Ellenoff Xxxxxxxx & Schole
LLP, 000 Xxxxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000, Attention: Xxxxxxx X. Xxxxxxxx, Esq.;
and
(b) if
sent
to the Company shall be mailed, delivered, or faxed and confirmed in writing
to
the Company at the addresses set forth in the Registration Statement, with
a
copy to Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxx Xxxxxx, Esq.;
provided,
however,
that any
notice to an Underwriter pursuant to Section 7 shall be delivered or sent
by
mail or facsimile transmission to such Underwriter at its address set forth
in
its acceptance facsimile to the Representative, which address will be supplied
to any other party hereto by the Representative upon request. Any such notices
and other communications shall take effect at the time of receipt thereof.
13. Parties.
This
Agreement shall inure solely to the benefit of, and shall be binding upon,
the
Underwriters, the Company and the controlling Persons, directors, officers,
employees and agents referred to in Sections 6 and 7 hereof, and their
respective successors and assigns, and no other Person shall have or be
construed to have any legal or equitable right, remedy or claim under or
in
respect of or by virtue of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be
for
the sole and exclusive benefit of the parties hereto and said controlling
Persons and their respective successors, officers, directors, heirs and legal
representatives, and it is not for the benefit of any other Person. The term
“successors and assigns” shall not include a purchaser, in its capacity as such,
of Shares from any of the Underwriters.
Maxim
Group LLC
_________________,
2007
Page 35
of
37
14. Governing
Law.
This
Agreement shall be deemed to have been executed and delivered in New York
and
both this Agreement and the transactions contemplated hereby shall be governed
as to validity, interpretation, construction, effect, and in all other respects
by the laws of the State of New York, without regard to the conflicts of
laws
principals thereof (other than Section 5-1401 of The New York General
Obligations Law). Each of the Underwriters and the Company: (a) agrees that
any
legal suit, action or proceeding arising out of or relating to this Agreement
and/or the transactions contemplated hereby shall be instituted exclusively
in
the Supreme Court of the State of New York, New York County, or in the United
States District Court for the Southern District of New York, (b) waives any
objection which it may have or hereafter to the venue of any such suit, action
or proceeding, and (c) irrevocably consents to the jurisdiction of Supreme
Court
of the State of New York, New York County, or in the United States District
Court for the Southern District of New York in any such suit, action or
proceeding. Each of the Underwriters and the Company further agrees to accept
and acknowledge service of any and all process which may be served in any
such
suit, action or proceeding in the Supreme Court of the State of New York,
New
York County, or in the United States District Court for the Southern District
of
New York and agrees that service of process upon the Company mailed by certified
mail to the Company’s address or delivered by Federal Express via overnight
delivery shall be deemed in every respect effective service of process upon
the
Company, in any such suit, action or proceeding, and service of process upon
the
Underwriters mailed by certified mail to the Underwriters’ address or delivered
by Federal Express via overnight delivery shall be deemed in every respect
effective service process upon the Underwriter, in any such suit, action
or
proceeding. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT
PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS)
HEREBY WAIVES ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
CLAIM
BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT,
THE
SALE PRELIMINARY PROSPECTUS AND THE PROSPECTUS.
15. No
Fiduciary Relationship.
The
Company hereby acknowledges that the Underwriters are acting solely as
underwriters in connection with the offering of the Company’s securities. The
Company further acknowledges that the Underwriters are acting pursuant to
a
contractual relationship created solely by this Agreement entered into on
an
arm’s length basis and in no event do the parties intend the Underwriters act
or
be responsible as a fiduciary to the Company, their respective management,
stockholders, equity holders, creditors or any other person in connection
with
any activity the Underwriters may undertake or have undertaken in furtherance
of
the offering of the Company’s securities, either before or after the date
hereof. The Underwriters hereby expressly disclaim any fiduciary or similar
obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions,
and the Company hereby confirms its understanding and agreement to that effect.
The Company and the Underwriters agree they are each responsible for making
their own independent judgments with respect to any such transactions, and
any
opinions or views expressed by the Underwriters to the Company regarding
such
transactions, including but not limited to any opinions or views with respect
to
the price or market for the Company’s securities, do not constitute advice or
recommendations to the Company. The Company hereby waives and releases, to
the
fullest extent permitted by law, any claims the Company or their Affiliates
may
have against the Underwriters with respect to any breach or alleged breach
of
any fiduciary or similar duty to the Company in connection with the transactions
contemplated by this Agreement or any matters involving such
transactions.
Maxim
Group LLC
_________________,
2007
Page 36
of
37
16. Entire
Agreement.
This
Agreement, together with the schedule and exhibits attached hereto and as
the
same may be amended from time to time in accordance with the terms hereof,
contains the entire agreement among the parties hereto relating to the subject
matter hereof and there are no other or further agreements outstanding not
specifically mentioned herein.
17. Severability.
If any
term or provision of this Agreement or the performance thereof shall be invalid
or unenforceable to any extent, such invalidity or unenforceability shall
not
affect or render invalid or unenforceable any other provision of this Agreement
and this Agreement shall be valid and enforced to the fullest extent permitted
by law.
18. 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 instrument. Delivery of a signed counterpart of this Agreement
by facsimile transmission shall constitute valid and sufficient delivery
thereof.
19. Headings.
The
headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
20. Time
is of the Essence.
Time
shall be of the essence of this Agreement. As used herein, the term “business
day” shall mean any day when the Commission’s office in Washington, D.C. is open
for business.
[Signature
Page Follows]
Maxim
Group LLC
_________________,
2007
Page 37
of
37
If
the
foregoing correctly sets forth your understanding, please so indicate in
the
space provided below for that purpose, whereupon this letter shall constitute
a
binding agreement among us.
Very
truly yours,
EYETEL
IMAGING, INC.
By:
________________________________
Name:
Title:
Accepted
by the Representative, acting for itself and as
Representative
of the Underwriters named on Schedule
A
attached hereto,
as
of the date first written above:
MAXIM
GROUP LLC
By:
_______________________________________
Name:
Title:
[Signature
Page to Underwriting Agreement]
SCHEDULE
A
Underwriters
|
Underwriter
|
Total
Number of Firm Shares to be Purchased
|
Number
of Additional Shares to be Purchased if Option is Fully
Exercised
|
|
Maxim
Group LLC
|
||
|
TOTAL
|
ANNEX
I
Form
of Opinion of Company Counsel
I-1
ANNEX
II
Form
of Opinion of Company Regulatory Counsel
II-1
ANNEX
III
Form
of Opinion of Intellectual Property Counsel
III-1
ANNEX
IV
Form
of Lock-Up Agreement
_____________,
2007
MAXIM
GROUP LLC
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
As
Representative of the Underwriters
Re:
EyeTel
Imaging, Inc. Lock-Up Agreement
Ladies
and Gentlemen:
This
letter agreement (this “Agreement”)
relates to the proposed public offering (the “Offering”)
by
EyeTel Imaging, Inc., a Delaware corporation (the “Company”),
of
its common stock, $0.001 par value per share (the “Stock”).
The
Offering is governed by the certain Underwriting Agreement, dated as of
_______________, 2007 (the “Underwriting
Agreement”),
by
and between the Company and Maxim Group LLC (the “Representative”),
as
representative of the several underwriters named therein.
In
order
to induce the Representative to underwrite the Offering, the undersigned
hereby
agrees that, without the prior written consent of the Representative during
the
period from the date hereof until twelve (12) months from the date of the
final
prospectus for the Offering (the “Lock-Up
Period”),
the
undersigned: (a) will not, directly or indirectly, offer, sell, agree to
offer
or sell, solicit offers to purchase, grant any call option or purchase any
put
option with respect to, pledge, borrow or otherwise dispose of any Relevant
Security (as defined below), and (b) will not establish or increase any “put
equivalent position” or liquidate or decrease any “call equivalent position”
with respect to any Relevant Security (in each case within the meaning of
Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and
regulations promulgated thereunder), or otherwise enter into any swap,
derivative or other transaction or arrangement that transfers to another,
in
whole or in part, any economic consequence of ownership of a Relevant Security,
whether or not such transaction is to be settled by delivery of Relevant
Securities, other securities, cash or other consideration. As used herein
“Relevant
Security”
means
any common stock or other security of the Company or any Affiliate thereof
that
is convertible into, or exercisable or exchangeable for common stock or equity
securities or that holds the right to acquire any common stock or equity
securities of the Company or any Affiliate or any other such Relevant Security,
except for such rights as may have been fully satisfied or waived prior to
the
effectiveness of the Registration Statement.
The
undersigned hereby further agrees that, without the prior written consent
of the
Representative during the Lock-Up Period, the undersigned will not: (x) file
or
participate in the filing with the Securities and Exchange Commission of
any
registration statement, or circulate or participate in the circulation of
any
preliminary or final prospectus or other disclosure document with respect
to any
proposed offering or sale of a Relevant Security and (y) exercise any rights
the
undersigned may have to require registration with the Securities and Exchange
Commission of any proposed offering or sale of a Relevant Security.
IV-1
The
undersigned hereby authorizes the Company during the Lock-Up Period to cause
any
transfer agent for the Relevant Securities to decline to transfer, and to
note
stop transfer restrictions on the stock register and other records relating
to,
Relevant Securities for which the undersigned is the record holder and, in
the
case of Relevant Securities for which the undersigned is the beneficial but
not
the record holder, agrees during the Lock-Up Period to cause the record holder
to cause the relevant transfer agent to decline to transfer, and to note
stop
transfer restrictions on the stock register and other records relating to,
such
Relevant Securities.
The
undersigned hereby represents and warrants that the undersigned has full
power
and authority to enter into this Agreement and that this Agreement constitutes
the legal, valid and binding obligation of the undersigned, enforceable in
accordance with its terms. Upon request, the undersigned will execute any
additional documents necessary in connection with enforcement hereof. Any
obligations of the undersigned shall be binding upon the successors and assigns
of the undersigned from the date first above written.
The
undersigned hereby acknowledges that Representative’s determination, if any, to
release all or any portion of the Relevant Securities from the Lock-Up Period
will depend on several factors including, but not limited to, the market
price
and demand for the Shares and the general condition of the securities markets.
Any decision by the Representative decision to shorten the Lock-Up Period
is
arbitrary and may not be based on any specific parameters.
It
is
understood that, if the Company notifies the Representative that it does
not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior
to
payment for and delivery of the Shares, the undersigned will be released
from
each of its obligations under this Agreement. In addition, this Agreement
shall
terminate and be of no further force or effect if the Company has not prepared
and filed with the Securities and Exchange Commission a registration statement
with respect to the Offering which becomes effective within 120 days of the
date
of this Agreement.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York, without regard to the conflicts of laws principles thereof.
Delivery of a signed copy of this letter by facsimile transmission shall
be
effective as delivery of the original hereof.
Very
truly yours,
By:
_____________________________
Print
Name: _______________________
IV-2
