2,500,000 Units Velocity Portfolio Group, Inc. Underwriting Agreement
EXHIBIT 1.1
2,500,000 Units
Velocity Portfolio Group, Inc.
[•], 2009
Sandler X’Xxxxx & Partners, L.P.,
GunnAllen Financial, Inc.
Maxim Group, LLC
c/o Sandler X’Xxxxx & Partners, L.P.
as Representatives of the several Underwriters
named in Schedule I hereto,
000 Xxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000
GunnAllen Financial, Inc.
Maxim Group, LLC
c/o Sandler X’Xxxxx & Partners, L.P.
as Representatives of the several Underwriters
named in Schedule I hereto,
000 Xxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Velocity Portfolio Group, Inc., a Delaware corporation (the “Company”), proposes, subject to
the terms and conditions stated herein, to issue and sell to the underwriter or underwriters, as
the case may be, named in Schedule I hereto (each, an “Underwriter” and, collectively, the
“Underwriters;” in the event that only a sole Underwriter is named on Schedule I hereto, then all
references to “Underwriters” shall be deemed to mean and refer to such sole Underwriter,
mutatis mutandis), for whom Sandler X’Xxxxx & Partners, L.P. (“Sandler X’Xxxxx”),
GunnAllen Financial, Inc. and Maxim Group LLC are acting as the representatives (the
“Representatives”), an aggregate of 2,500,000 units (the “Firm Units”) of the Company’s securities,
and, at the election of the Underwriters, up to 375,000 additional units (the “Optional Units”) of
the Company’s securities (the Firm Units and the Optional Units that the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the “Units”). Each Unit
consists of one share of the Company’s common stock, par value $0.001 per share (the “Common
Stock”), and one class A warrant, one class B warrant and one class C warrant (each, a “Warrant”
and collectively, the “Warrants”). Each Warrant entitles the holder to purchase one share of
Common Stock (as more fully described in Section 2 hereof). The Units, the shares of Common Stock
underlying the Units (the “Shares”), the Warrants and the shares of Common Stock issuable upon
exercise of the Warrants are hereinafter referred to collectively as the “Securities.”
1. The Company represents and warrants to each of the several Underwriters, as of the date
hereof and as of each Time of Delivery referred to in Section 4(a) hereof (each such date, a
“Representation Date”), and agrees with each of the several Underwriters, as follows:
(a) (i) The Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a registration statement, and an amendment or amendments thereto, on Form S-1 (File
No. 333-153549) including any related preliminary prospectus (the “Preliminary Prospectus”) for
the registration of the Securities under the Securities Act of 1933, as amended (the “1933 Act”),
which registration statement, as so amended prior to the Applicable Time (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 under the
1933 Act (the “1933 Act Regulations”) and paragraph (b) of Rule 424 (“Rule 424(b)”) of the 1933
Act 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 (the “Effective
Time”), and including the Rule 430A Information, is herein called the “Registration Statement”;
(ii) In the event that the Company shall file a registration statement pursuant to Rule
462(b) under the 1933 Act (a “Rule 462(b) Registration Statement”) in connection with the
offering of the Units, then, from and after the date of such filing, all references herein to the
“Registration Statement” shall be deemed to mean and include such Rule 462(b) Registration
Statement, mutatis mutandis, unless otherwise expressly stated or the context
otherwise requires;
(iii) All references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a Preliminary Prospectus, the Statutory 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 Statutory 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 promulgated by the Commission;
(iv) All references in this Agreement to the terms “amend,” “amendment” or “supplement” with
respect to the Registration Statement, any Preliminary Prospectus, the Statutory Prospectus or
the Prospectus shall be deemed to include the filing of any document via XXXXX after the
effective date of the Registration Statement, the date of such Preliminary Prospectus, the
Statutory Prospectus or the Prospectus, as the case may be, which is incorporated by reference
therein.
- 2 -
(v) All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” (or other references of like import) in
the Registration Statement, any preliminary prospectus, the Statutory Prospectus or the
Prospectus shall be deemed to mean and include all such financial statements and schedules and
other information which is incorporated or deemed to be incorporated by reference in, or
otherwise deemed by the 1933 Act Regulations (including, without limitation, pursuant to Rule 430
of the 1933 Act Regulations) to be a part of or included in, the Registration Statement, such
preliminary prospectus, the Statutory Prospectus or the Prospectus, as the case may be;
(b) At the time of the filing of the Registration Statement, at the earliest time thereafter
that the Company or another offering participant made a bona fide offer (within the meaning of
Rule 164(h)(2) of the 1933 Act Regulations) of the Units, the Company was not, is not and will
not be an “ineligible issuer” as defined in Rule 405 under the 1933 Act;
(c) Based on communications with the Commission, no stop order suspending the effectiveness
of the Registration Statement or preventing or suspending the use of the Prospectus, the
Statutory Prospectus or any Issuer-Represented Free Writing Prospectus has been issued under the
1933 Act and no proceedings for that purpose have been instituted or, to the knowledge of the
Company, are pending or threatened by the Commission or any state regulatory authority, and any
request on the part of the Commission for additional information with respect to the Registration
Statement has been complied with;
(d) Each part of the Registration Statement and any post-effective amendment thereto, at the
time such part became effective (including each deemed effective date with respect to the
Underwriters pursuant to Rule 430B under the Securities Act), at all other subsequent times until
the expiration of the Prospectus Delivery Period (as defined below), and at each Time of Delivery
(as defined in Section 4(a) of this Agreement), complied and will comply in all material respects
with the applicable requirements and provisions of the 1933 Act and the 1933 Act Regulations and
did not and will not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading.
The Prospectus, as amended or supplemented, as of its date, or the time of first use within the
meaning of the 1933 Act Regulations, at all subsequent times until the expiration of the
Prospectus Delivery Period (as defined in Section 5(c) of this Agreement), and at each Time of
Delivery, complied and will comply in all material respects with the applicable requirements and
provisions of the 1933 Act and the 1933 Act Regulations and did not and will not contain any
untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in this Subsection (d) do not apply to
statements in or omissions from the Registration Statement or any post-effective amendment
thereto, the General Disclosure Package or the Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with the Underwriters’ Information (as defined
in Section 8(a));
(e) The Statutory Prospectus, as of the Applicable Time, when considered together with the
public offering price per Unit, the exercise price of the Warrants and the number of Units and
Warrants offered, each as set forth on the cover page of the Prospectus,
- 3 -
did not include any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and each Issuer-Represented Free Writing Prospectus, as of its
issue date and at all subsequent times through the completion of the public offering and sale of
the Units, does not conflict with the information contained in the Registration Statement, the
Statutory Prospectus or the Prospectus and each such Issuer-Represented Free Writing Prospectus,
as supplemented by and taken together with the Statutory Prospectus as of the Applicable Time,
did not include any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the representation and warranty set forth
in this Subsection (e) shall not apply to statements or omissions made in the Statutory
Prospectus or in any Issuer-Represented Free Writing Prospectus in reliance upon and in
conformity with the Underwriters’ Information. Each Issuer Free Writing Prospectus satisfied, as
of its issue date and at all subsequent times through the Prospectus Delivery Period, all other
conditions to use thereof as set forth in Rules 164 and 433 under the Securities Act.
As used in this Section 1 and elsewhere in this Agreement:
“Applicable Time” means • •.m. (New York City time) on •, 2008 or such other date or time as
agreed by the Company and the Representatives.
“General Disclosure Package” means (i) the Statutory Prospectus, (ii) Issuer-Represented
General Use Free Writing Prospectuses and (iii) any other Issuer-Represented Free Writing
Prospectuses that the parties hereto shall hereafter expressly agree in writing to treat as part of
the General Disclosure Package.
“Issuer-Represented Free Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433 of the 1933 Act Regulations (“Rule 433”), relating to the Units (including,
without limitation, any such issuer free writing prospectus that (i) is required to be filed with
the Commission by the Company, (ii) is a “road show that is a written communication” within the
meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission or (iii) is
exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the Units or
of the offering that does not reflect the final terms), in each case in the form filed or required
to be filed with the Commission or, if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g).
“Issuer-Represented General Use Free Writing Prospectus” means any Issuer-Represented Free
Writing Prospectus that is intended for general distribution to prospective investors, as evidenced
by its being specified in Schedule III hereto.
“Issuer-Represented Limited-Use Free Writing Prospectus” means any Issuer-Represented Free
Writing Prospectus that is not an Issuer-Represented General Use Free Writing Prospectus.
“Statutory Prospectus” means the preliminary prospectus dated •, 2008 that was included in the
Registration Statement at the Applicable Time, except that if any revised
- 4 -
prospectus or prospectus supplement shall be provided to the Underwriters by the Company for
use in connection with the offering which differs from the Statutory 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 “Statutory 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.
“Prospectus” means the final prospectus in the form first furnished to the Underwriters for
use in connection with the offering of the Units.
(f) Neither the Company nor any of its subsidiaries has sustained, since the respective
dates as of which information is presented in the Registration Statement, the General Disclosure
Package and the Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Registration Statement, the General Disclosure Package and the Prospectus;
and, since the respective dates as of which information is given in the Registration Statement,
the Registration Statement, the General Disclosure Package and the Prospectus, except as set
forth or contemplated in the Registration Statement, the General Disclosure Package and the
Prospectus, (A) there has not been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the business prospects, financial position,
stockholders’ equity or results of operations of the Company and its subsidiaries taken as a
whole (a “Material Adverse Effect”), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries, taken as a whole, and (C) except
as disclosed in the Registration Statement, there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class or series of its capital stock;
(g) The Company and its subsidiaries have good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as are described in the
Registration Statement, the General Disclosure Package and the Prospectus or such as do not
materially affect the business of the Company; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere with the use
made and proposed to be made of such property and buildings by the Company and its subsidiaries;
(h) The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with power and authority (corporate and other)
to own its properties and conduct its business as described in the Registration Statement, the
General Disclosure Package and the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so as to require such
qualification or is subject to no liability or disability by reason
- 5 -
of failure to be so qualified in any such other jurisdiction, 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;
(i) Each subsidiary of the Company has been duly incorporated or organized, and in each case
is in good standing under the laws of the jurisdiction of its incorporation or organization, with
power and authority (corporate and other) to own its properties and conduct its business as
described in the Registration Statement, the General Disclosure Package and the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, or is subject to no material liability
or disability by reason of the failure to be so qualified in any such other jurisdiction; all of
the issued and outstanding shares of capital stock of each subsidiary of the Company have been
duly authorized and validly issued and are fully paid and nonassessable and are owned, directly
or through other subsidiaries of the Company, by the Company, free and clear of any pledge, lien,
encumbrance, claim or equity, and none of such shares of capital stock was issued in violation of
any preemptive rights, rights of first refusal or other similar rights; the Company does not own
or control, directly or indirectly, any corporation, association, business trust or other entity
other than the subsidiaries listed in the Company’s most recent Annual Report on Form 10-K filed
with the Commission;
(j) The Company has an authorized capitalization as set forth in the Registration Statement,
the General Disclosure Package and the Prospectus under the heading “Capitalization;” all of the
issued shares of capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable and have been issued in compliance with all applicable federal
and state securities laws and none of those shares was issued in violation of any preemptive
rights, rights of first refusal or other similar rights; the Securities have been duly authorized
and, when issued and delivered against payment therefore as provided in this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of the Securities is not subject
to any preemptive rights, rights of first refusal or other similar rights; and no holder of any
Securities or any shares of Common Stock is or will be subject to personal liability by reason of
being such a holder. The Securities will conform to the description of the capital stock
contained in the General Disclosure Package and the Prospectus. When issued, the Warrants will
constitute valid and binding obligations of the Company to issue and sell, upon exercise thereof
and payment of the respective exercise prices therefor, the number and type of securities of the
Company called for thereby in accordance with the terms thereof and such Warrants are enforceable
against the Company in accordance with their respective terms, except: (i) as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally; (ii) as enforceability of any indemnification or contribution provision may be
limited under federal and state securities laws; and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor may be brought.
The Shares issuable upon exercise of the Warrants have been reserved for issuance upon the
separation of the Units and the exercise of the Warrants and when issued in accordance with the
terms thereof, will be validly issued, fully paid and non-assessable; will not be subject to any
- 6 -
preemptive rights, rights of first refusal or other similar rights; and the holders thereof
will not be subject to personal liability by reason of being such holders;
(k) Except as described in the Registration Statement, the General Disclosure Package and
the Prospectus, (A) there are no outstanding rights (contractual or otherwise), warrants or
options to acquire, or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of capital stock of or other
equity interest in the Company (other than this Agreement) and (B) there are no contracts,
agreements or understandings between the Company and any person granting such person the right to
require the Company to file a registration statement under the 1933 Act or otherwise register any
securities of the Company owned or to be owned by such person;
(l) This Agreement has been duly authorized, executed and delivered by the Company, and
constitutes a valid, legal and binding obligation of the Company, enforceable in accordance with
its terms, except as rights to indemnity hereunder may be limited by federal or state securities
laws and except as such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity;
(m) The Company has entered into a warrant agreement (the “Warrant Agreement”) with
Continental Stock Transfer & Trust Co. with respect to the Warrants substantially in the form
filed as an exhibit to the Registration Statement. The Warrant Agreement has been duly
authorized, executed and delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to general principles of
equity;
(n) The issuance and sale of the Securities by the Company, the execution, delivery and
performance of this Agreement and the Warrant Agreement by the Company, compliance by the Company
with all of the provisions of this Agreement and the Warrant Agreement, and the consummation of
the transactions contemplated in this Agreement and the Warrant Agreement (including, without
limitation, the use of proceeds from the sale of the Units as described in the Registration
Statement, the General Disclosure Package and the Prospectus under the caption “Use of Proceeds”)
do not and will not contravene, conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any contract, indenture, mortgage, deed of
trust, loan agreement, note, lease or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries is subject
(collectively, the “Agreements and Instruments”), except, in each case, for any default,
violation or event that (individually and in the aggregate) could not reasonably be expect to
have a Material Adverse Effect, nor will any such action (A) contravene, conflict with or
constitute a breach or violation of any of the terms or provisions of (i) the articles of
incorporation or charter (as applicable) or by-laws of the Company or any of its subsidiaries, or
(ii) any law, statute, order, rule or regulation of any federal, state, local or foreign court,
arbitrator, regulatory authority or governmental agency or
- 7 -
body (each, a “Governmental Entity”) having jurisdiction over the Company or any of its
subsidiaries or any of their properties, except, in each case under provision (A)(ii) of this
Subsection (m), for any default, violation or event that (individually and in the aggregate)
could not reasonably be expected to have a Material Adverse Effect, or (B) constitute a Repayment
Event (as defined below) under, or result in the creation or imposition of any lien, charge or
other encumbrance upon any assets or operations of the Company or any subsidiary pursuant to, any
of the Agreements and Instruments; and no consent, approval, authorization, order, registration
or qualification of or with any such Governmental Entity is required for the issuance and sale of
the Securities or the consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the 1933 Act of the Securities, such as may be required
under the rules and regulations of the Financial Industry Regulatory Authority (“FINRA”), and
such consents, approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase and distribution of the
Units by the Underwriters and the approval for listing of the Securities on the American Stock
Exchange. As used herein, a “Repayment Event” means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any subsidiary;
(o) Neither the Company nor any of its subsidiaries is (A) in violation of its certificate
of incorporation or by-laws or other organizational documents, as applicable, or (B) in default
in the performance or observance of any obligation, agreement, covenant or condition contained in
any of the Agreements and Instruments, except with respect to subsection (B) for such defaults
that would not be reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect;
(p) The statements set forth in the Prospectus under the captions “Risk Factors,”
“Description of Securities,” “Divided Policy,” and “Underwriting” insofar as they purport to
constitute a summary of the terms of the Securities, the Company’s capital stock or certain
provisions of the Company’s charter and by-laws or applicable law, and under the captions “Xxxx
Factors — Government regulations may limit our ability to recover and enforce the collection of
our consumer receivables” and “Business — Government Regulation” in the General Disclosure
Package and the Prospectus, insofar as they purport to describe the provisions of the laws,
rules, regulations and documents referred to therein, are accurate and complete;
(q) The financial statements included in the Registration Statement, the General Disclosure
Package and the Prospectus, together with the supporting schedules, if any, and notes, comply in
all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and
present fairly the consolidated financial condition of the Company and its subsidiaries at the
dates indicated and the consolidated results of operations and cash flows of the Company and its
subsidiaries for the periods specified. Such financial statements and supporting schedules, if
any, have been prepared in conformity with generally accepted accounting principles (“GAAP”)
applied on a consistent basis throughout the periods involved. The selected financial data and
the summary financial information included in the Registration Statement, the General Disclosure
Package and the Prospectus present fairly the
- 8 -
information shown therein and have been compiled on a basis consistent with that of the
audited and unaudited financial statements included in the Registration Statement, the General
Disclosure Package and the Prospectus. No other financial statements or schedules are required
to be included in the Registration Statement, the General Disclosure Package or the Prospectus.
All disclosures contained in the Registration Statement, the General Disclosure Package and the
Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and
regulations of the Commission) comply with Regulation G of the 1934 Act Regulations and Item 10
of Regulation S-K of the 1933 Act Regulations to the extent applicable;
(r) Each of the Company and its subsidiaries maintains a system of accounting controls
sufficient to provide reasonable assurances that (A) transactions are executed in accordance with
the management’s general or specific authorization, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to maintain asset
accountability, (C) access to assets is permitted only in accordance with the management’s
general or specific authorization and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with respect to any
differences; and except as described in the General Disclosure Package and the Prospectus or as
otherwise remedied by the Company, since the end of the Company’s most recent fiscal year, there
has been (I) no material weakness in the Company’s internal control over financial reporting
(whether or not remediated) and (II) no change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting;
(s) The Company and its subsidiaries have established and maintain disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934 (the “1934 Act”)). Such disclosure controls and procedures (A) are designed to
ensure that material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company’s chief executive officer and its chief financial
officer by others within those entities to allow timely decisions regarding disclosures, (B) have
been evaluated for effectiveness as of the end of the most recent fiscal quarter and (C) are
effective to perform the functions for which they were established. The Company’s independent
registered public accounting firm and the Audit Committee of the Board of Directors of the
Company have been advised of (1) any significant deficiencies or 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 data
and (2) any fraud, whether or not material, that involves management or other employees who have
a role in the Company’s internal control over financial reporting. Since the date of the most
recent evaluation of such disclosure controls and procedures, there have been no changes in
internal control over financial reporting that have materially affected, or are reasonably likely
to materially affect the Company’s internal control over financial reporting;
(t) Neither the Company nor any of its subsidiaries is subject or is party to, or has
received any notice or advice that any of them may become subject or party to any investigation
with respect to, any corrective, suspension or cease-and-desist order, agreement,
- 9 -
consent agreement, memorandum of understanding or other regulatory enforcement action,
proceeding or order with or by, or is a party to any commitment letter or similar undertaking to,
or is subject to any directive by, or has been a recipient of any supervisory letter from, or has
adopted any board resolutions at the request of, any Regulatory Agency (as defined below) that
currently relates to or restricts in any material respect the conduct of their business or that
in any manner relates to their capital adequacy, credit policies or management (each, a
“Regulatory Agreement”), nor has the Company or any of its subsidiaries been advised by any
Regulatory Agency that it is considering issuing or requesting any such Regulatory Agreement.
There is no unresolved violation, criticism or exception by any Regulatory Agency with respect to
any report or statement relating to any examinations of the Company or any of its subsidiaries
which, in the reasonable judgment of the Company, is expected to result in a Material Adverse
Effect. As used herein, the term “Regulatory Agency” means any Governmental Entity having
supervisory or regulatory authority with respect to the Company or any of its subsidiaries,
including, but not limited to, any federal or state agency charged with the supervision or
regulation of depositary institutions or holding companies of depositary institutions, or engaged
in the insurance of depositary institution deposits;
(u) Except as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, the Company and its subsidiaries have conducted and are conducting their
respective businesses in compliance with all federal, state and local laws, rules and regulations
applicable to them, including, without limitation, the Fair Debt Collection Practices Act, the
Federal Truth-In-Lending Act, the Fair Credit Billing Act, the Equal Opportunity Act, the Fair
Foreclosure Act and the Fair Credit Reporting Act, and the Company and its subsidiaries are
conducting their respective business in compliance with all judgments, decisions, directives,
orders and decrees of any Governmental Entity and any other applicable federal or state bank
regulator or regulatory authority, except where the failure to so comply would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
(v) Other than as set forth in the Registration Statement, the General Disclosure Package
and the Prospectus, there are no legal or governmental actions, suits, investigations or
proceedings before or by any Governmental Entity, now pending or, to the best of the Company’s
knowledge, threatened by Governmental Entities or threatened by others, to which the Company or
any of its subsidiaries is a party or of which any property or asset of the Company or any of its
subsidiaries is the subject (A) that are required, by the 1933 Act, the 1933 Act Regulations, the
1934 Act or the the rules and regulations of the Commission under the 1934 Act (the “1934 Act
Regulations”), to be disclosed in the Registration Statement, the General Disclosure Package or
the Prospectus or (B) which, if determined adversely to the Company or any of its subsidiaries,
would, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect; and there are no such contracts or documents of the Company or any of its subsidiaries
that are required, by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations, to be described in the Registration Statement, the General Disclosure Package or the
Prospectus that are not otherwise described therein;
(w) Each of the Company and its subsidiaries possess such permits, licenses, approvals,
consents and other authorizations (collectively, “Governmental Licenses”) issued
- 10 -
by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary
to conduct the business now operated by the Company or its subsidiaries, as the case may be; the
Company and its subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failures so to comply would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except where the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and effect would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and
neither the Company nor any of its subsidiaries has received any notice of proceedings relating
to the revocation or modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be
expected to result in a Material Adverse Effect;
(x) Each of the Company and its subsidiaries is in compliance with all applicable federal,
state and local environmental laws and regulations, including, without limitation, those
applicable to emissions to the environment, waste management, and waste disposal (each, an
“Environmental Law”), except where such noncompliance would not reasonably be expected to have a
Material Adverse Effect, or except as disclosed in the Prospectus, and to the knowledge of the
Company, there are no circumstances that would prevent, interfere with or materially increase the
cost of such compliance in the future;
(y) To the knowledge of the Company, under applicable law, there are no past or present
actions, activities, circumstances, events or incidents, including, without limitation, releases
of any material into the environment, that are reasonably likely to form the basis of any claim
under any Environmental Law, including common law, against the Company or its subsidiaries which
would be reasonably likely to have a Material Adverse Effect;
(z) Any statistical and market related data contained in the Registration Statement, the
General Disclosure Package and the Prospectus are based on or derived from sources which the
Company believes are reliable and accurate;
(aa) Neither the Company nor any affiliate of the Company nor any person acting on their
behalf has taken, nor will the Company or any affiliate or any person acting on their behalf
take, directly or indirectly, any action which is designed to or which has constituted or which
would be expected to cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Units;
(bb) The Company is not and, after giving effect to the offering and sale of the Units, the
receipt of payment for the Units and the application of such proceeds as described in the
Prospectus, will not be an “investment company” or an entity “controlled” by an “investment
company”, as such terms are defined in the Investment Company Act of 1940, as amended (the
“Investment Company Act”);
(cc) Neither the Company nor any of its affiliates does business with the government of Cuba
or with any person or affiliate located in Cuba within the meaning of Section 517.075, Florida
Statutes;
- 11 -
(dd) Xxxxxx, LLP, who have certified the financial statements and supporting schedules of
the Company and its subsidiaries included in the Registration Statement and the Prospectus are
independent registered public accountants as required by the 1933 Act, 1933 Act Regulations, the
1934 Act and the 1934 Act Regulations, and such accountants are not in violation of the auditor
independence requirements of the Xxxxxxxx-Xxxxx Act of 2002 with respect to the Company;
(ee) No labor problem or dispute with the employees of the Company or any of its
subsidiaries exists or, to the Company’s knowledge, is threatened or imminent, and the Company is
not aware of any existing or imminent labor disturbance by the employees of any of its or its
subsidiaries’ principal suppliers, contractors or customers that could have a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of business, except as
set forth in the Registration Statement, the General Disclosure Package and the Prospectus;
(ff) The Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and
customary in the business in which they are engaged; all policies of insurance insuring the
Company or any of its subsidiaries are in full force and effect; the Company and its subsidiaries
are in compliance with the terms of such policies and instruments in all material respects; and
there are no claims by the Company or any of its subsidiaries under any such policy or instrument
as to which any insurance company is denying liability or defending under a reservation of rights
clause; neither the Company nor any such subsidiary has been refused any insurance coverage
sought or applied for; and neither the Company nor any such subsidiary has any 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, except as set forth or
contemplated in the Registration Statement, the General Disclosure Package and the Prospectus;
(gg) The Company has filed all foreign, federal, state and local tax returns that are
required to be filed or is eligible for, and has requested, extensions thereof, except as set
forth or contemplated in Registration Statement, the General Disclosure Package and the
Prospectus and has paid all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due and payable, except for
any such assessment, fine or penalty that is currently being contested in good faith or as would
not have a Material Adverse Effect, except as set forth or contemplated in the Registration
Statement, the General Disclosure Package and the Prospectus;
(hh) No subsidiary of the Company is prohibited or restricted, directly or indirectly, from
paying any dividends to the Company, from making any other distributions on such subsidiary’s
capital stock, from repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary’s property or assets to the Company or any
other subsidiary of the Company, except as set forth or contemplated in the Registration
Statement, the General Disclosure Package and the Prospectus; and the Company is not prohibited
or restricted, directly or indirectly, from paying any dividends or making any other
distributions on the Common Stock, except as set
- 12 -
forth or contemplated in the Registration Statement, the General Disclosure Package and the
Prospectus;
(ii) Any “employee benefit plan” (as defined under the Employee Retirement Income Security
Act of 1974, as amended, and the regulations and published interpretations thereunder
(collectively, “ERISA”)) established or maintained by the Company, any of the subsidiaries or
their “ERISA Affiliates” (as defined below) are in compliance in all material respects with
ERISA; “ERISA Affiliate” means, with respect to the Company or any subsidiary, any member of any
group of organizations described in Section 414(b), (c), (m) or (o) of the Internal Revenue Code
of 1986, as amended, and the regulations and published interpretations thereunder (the “Code”) of
which the Company or such subsidiary is a member; no “reportable event” (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any “employee benefit plan”
established or maintained by the Company, any of the subsidiaries or any of their ERISA
Affiliates; no “employee benefit plan” established or maintained by the Company, any of its
subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were terminated,
would have any “amount of unfunded benefit liabilities” (as defined under ERISA); none of the
Company, its subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to
incur any liability under (A) Title IV of ERISA with respect to termination of, or withdrawal
from, any “employee benefit plan” or (B) Sections 412, 4971, 4975 or 4980B of the Code; each
“employee benefit plan” established or maintained by the Company, any of the subsidiaries or any
of their ERISA Affiliates that is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred whether by action or failure to act, which would cause the
loss of such qualification;
(jj) The Company and its subsidiaries own, or have valid, binding enforceable and sufficient
licenses or other rights to use, the patents and patent applications, copyrights, trademarks,
service marks, trade names, technology, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary rights) and other intellectual property necessary or used in any
material respect to conduct their business in the manner in which it is being conducted and in
the manner in which it is contemplated as set forth in the Registration Statement, the General
Disclosure Package and the Prospectus or otherwise necessary or used in connection with the
commercialization of the existing products of the Company and its subsidiaries and the products
described in the Registration Statement, the General Disclosure Package and the Prospectus as
being under development (collectively, the “Company Intellectual Property”); except as would not
reasonably be expected to have a Material Adverse Effect, the Company Intellectual Property is
valid, subsisting and enforceable, and none of the patents owned or licensed by the Company or
any of its subsidiaries is unenforceable or invalid, and none of the patent applications owned or
licensed by the Company or any of its subsidiaries would be unenforceable or invalid if issued as
patents; the Company and its subsidiaries, and to the Company’s knowledge, their licensors, have
complied with the duty of candor and disclosure of the U.S. Patent and Trademark Office and any
similar foreign intellectual property office (collectively, the “Patent Offices”); neither the
Company nor its subsidiaries have infringed or otherwise violated any intellectual property
rights of any third person or have breached any contract in connection with which any Company
Intellectual Property is provided to the Company and its subsidiaries; neither the
Company nor any of its subsidiaries is obligated to pay a royalty, grant a license, or
provide
- 13 -
other consideration to any third party in connection with the Company Intellectual
Property other than as disclosed in the Registration Statement, the General Disclosure Package
and the Prospectus; no person has asserted or threatened to assert any claim against, or
notified, the Company (or any of its subsidiaries) that (A) the Company or any of its
subsidiaries has infringed or otherwise violated any intellectual property rights of any third
person, (B) the Company or any of its subsidiaries is in breach or default of any contract under
which any Company Intellectual Property is provided, (C) such person will terminate a contract
described in clause (B) or adversely alter the scope of the rights provided thereunder or (D)
otherwise concerns the ownership, enforceability, validity, scope, registerability, interference,
use or the right to use, any Company Intellectual Property (other than a patent office review of
pending applications in the ordinary course); to the knowledge of the Company no third party is
infringing or otherwise violating any of the Company Intellectual Property owned by the Company
or any of its subsidiaries, except as would not reasonably be expected to have a Material Adverse
Effect;
(kk) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee or other person associated with or acting on behalf of the
Company or any of its subsidiaries has (A) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to political activity; (B)
made any direct or indirect unlawful payment to any foreign or domestic government official or
employee; (C) violated or is in violation of any provision of the Foreign Corrupt Practices Act
of 1977; (D) made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment; or (E) made any payment of funds to the Company or any of its subsidiaries or received
or retained funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the Registration Statement, the
General Disclosure Package and the Prospectus, that is not described in the Registration
Statement, the General Disclosure Package or the Prospectus as required;
(ll) The operations of the Company and its subsidiaries are and have been conducted at all
times in compliance with applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”), except for such violations which singly, or in the
aggregate, could not reasonably be expected have a Material Adverse Effect, and no action, suit
or proceeding by or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened;
(mm) No relationship, direct or indirect, exists between or among the Company or any of its
subsidiaries, on the one hand, and the directors, officers, stockholders, customers or suppliers
of the Company or any of its subsidiaries, on the other, that is required by the 1933 Act, the
1933 Act Regulations, the 1934 Act or the 1934 Act Regulations to be
described in the Registration Statement, the General Disclosure Package and the Prospectus
and that is not so described as required;
- 14 -
(nn) Except as described in the Registration Statement, the General Disclosure Package and
the Prospectus, there are no off-balance sheet transactions, arrangements, obligations (including
contingent obligations), or any other relationships with unconsolidated entities or other
persons, that may have a material current or future effect on the Company’s financial condition,
changes in financial condition, results of operations, liquidity, capital expenditures, capital
resources, or significant components of revenues or expenses;
(oo) Neither the Company nor any of its subsidiaries has any material liability, whether
known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any
liability for taxes (and there is no past or present fact, situation, circumstance, condition or
other basis for any present or future action, suit, proceeding, hearing, charge, complaint, claim
or demand against the Company or its subsidiaries giving rise to any such liability), except (A)
for liabilities set forth in the financial statements set forth in the Company’s most recent
Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q and (B) normal
fluctuations in the amount of the liabilities referred to in clause (A) above occurring in the
ordinary course of business of the Company and all of its subsidiaries since the date of the most
recent balance sheet included in such financial statements;
(pp) No filing with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity, other than those that have been made or
obtained, is necessary or required in connection with the offering, issuance or sale of the
Securities hereunder, the authorization, execution, delivery or performance by the Company of its
obligations under this Agreement and the Warrant Agreement or the consummation by the Company of
the transactions contemplated by this Agreement and the Warrant Agreement;
(qq) Except as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, the Company (A) does not have any material lending or other relationship with any
bank or lending affiliate of any Underwriter and (B) does not intend to use any of the proceeds
from the sale of the Units hereunder to repay any outstanding debt owed to any affiliate of any
Underwriter;
(rr) The Company is in material compliance with the provisions of the Xxxxxxxx-Xxxxx Act and
the rules and regulations of the Commission thereunder applicable to it and will comply with
those provisions of the Xxxxxxxx-Xxxxx Act that will become effective in the future upon their
effectiveness, including Section 402 related to loans and Sections 302 and 906 related to
certifications;
(ss) All of the directors and executive officers of the Company are listed on Schedule II
hereto; and the Company has obtained and delivered to the Underwriters executed copies of an
agreement signed by each of the persons listed on Schedule II hereto,
substantially to the effect set forth in Annex III hereof and in form and substance
satisfactory to the Representatives;
- 15 -
(tt) The Common Stock is registered pursuant to Section 12(b) of the 1934 Act and is listed
on the American Stock Exchange (the “AMEX”) and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the Common Stock under the 1934 Act
or delisting the Common Stock from the AMEX nor has the Company received any notification that
the Commission or the AMEX is contemplating terminating such registration or listing. The Company
has complied in all material respects with the applicable requirements of the AMEX for
maintenance of the listing of the Common Stock thereon. The Company has filed an additional
listing application to list the Shares and a listing application to list the other Securities on
the AMEX;
(uu) Other than as contemplated by this Agreement, the Company has not incurred any
liability for any finder’s or broker’s fee or agent’s commission in connection with the execution
and delivery of this Agreement or the consummation of the transactions contemplated hereby;
(vv) Since January 1, 2007, the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it under the 1934 Act, including pursuant to Section
13(a) or 15(d) thereof, (the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the “SEC Reports”),
on a timely basis or has received a valid extension of such time of filing and has filed any such
SEC Reports prior to the expiration of any such extension, provided however that the Company’s
quarterly report on Form 10-Q for the quarter ended March 31, 2008 was not timely filed. As of
their respective dates, or to the extent corrected by a subsequent restatement, the SEC Reports
complied in all material respects with the requirements of the 1933 Act and the 1934 Act and the
rules and regulations of the Commission promulgated thereunder and, at the time of filing, none
of such SEC Reports contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
2. Subject to the terms and conditions herein set forth, (a) the Company agrees to issue and
sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly,
to purchase from the Company, at a purchase price per Unit of $___, the number of Firm Units
set forth opposite the name of such Underwriter in Schedule I hereto and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase Optional Units as provided
below, the Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at the purchase price
per Unit set forth in clause (a) of this Section 2, that portion of the number of Optional Units as
to which such election shall have been exercised (to be adjusted by the Representatives so as to
eliminate fractional shares) determined by multiplying such number of Optional Units by a fraction,
the numerator of which is the maximum number of Optional Units which such Underwriter is entitled
to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of Optional Units that all of the Underwriters are
entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at their election up to
375,000 Optional Units, at the purchase price per Unit set forth in the paragraph above, for the
- 16 -
sole purpose of covering overallotments in the sale of the Firm Units (the “Over-allotment
Option”). The Over-allotment Option may be exercised only by written notice from the
Representatives to the Company, given within a period of 30 calendar days after the date of this
Agreement, setting forth the aggregate number of Optional Units to be purchased and the date on
which such Optional Units are to be delivered, as determined by the Representatives but in no event
earlier than the First Time of Delivery (as defined in Section 4 hereof) or, unless the
Representatives and the Company otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice.
Each Unit consists of one share of Common Stock and one class A warrant, one class B warrant
and one class C warrant. Each of the class A warrants, class B warrants, and class C warrants
entitles the registered holder to purchase one share of Common Stock at a price of $[Ÿ],
$[Ÿ] , and $[Ÿ] per share, respectively. The Warrants will become exercisable on the
date of the separation of the Common Stock and Warrants underlying the Units and expire on the
five-year anniversary of the date of the Prospectus, or earlier upon redemption. The Warrants
shall trade separately from the Common Stock underlying the Units on the 5th day following the
earlier to occur of: (i) the expiration of the Underwriters’ Over-allotment Option, (ii) its
exercise in full, or (iii) the announcement by the Underwriters of their intention not to exercise
all or any remaining portion of the Over-allotment Option, subject to the Company having issued a
press release announcing when such separate trading will begin. The Company has the right to
redeem the classes of outstanding Warrants, in whole and not in part, with respect to each class,
upon not less than 20 days’ prior written notice, at a price of $0.01 per Warrant at any time after
the Warrants become exercisable, so long as the average sales price of the Common Stock equals or
exceeds 120% of the respective class exercise price for any 20 trading days within a 30 trading day
period ending three Business Days before the Company sends the notice of redemption; provided that
on the date the Company gives notice of redemption and during the entire period thereafter until
the time the Company redeems the Warrants, the Company has an effective registration statement
covering the shares of Common Stock issuable upon exercise of the Warrants and a current prospectus
relating to them is available. As used herein, the term “Business Day” shall mean any day other
than a Saturday, Sunday or any day on which national banks in New York, New York are not open for
business.
It is understood that each Underwriter has authorized the Representatives, for such
Underwriter’s account, to accept delivery of, receipt for, and make payment of the purchase price
for the Firm Units and the Optional Units, if any, which such Underwriter has agreed to purchase.
Sandler X’Xxxxx & Partners, L.P., individually and not as representative of the Underwriters, may
(but shall not be obligated to) make payment of the purchase price for the Firm Units or the
Optional Units, if any, to be purchased by any Underwriter whose funds have not been received by
Sandler X’Xxxxx & Partners, L.P. by the relevant Time of Delivery, but such payment shall not
relieve such Underwriter from its obligations hereunder.
3. Upon the authorization by the Representatives of the release of the Firm Units, the several
Underwriters propose to offer the Firm Units for sale upon the terms and conditions set forth in
the Prospectus.
4. (a) The Units to be purchased by each Underwriter hereunder, in definitive form, and in
such authorized denominations and registered in such names as the Representatives
- 17 -
may request upon at least forty-eight hours prior notice to the Company shall be delivered by
or on behalf of the Company to the Representatives, through the facilities of the Depository Trust
Company (“DTC”), for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal (same day) funds to the
account specified by the Company, to the Representatives at least forty-eight hours in advance.
The Company will cause the certificates representing the Securities to be made available for
checking and packaging at least twenty-four hours prior to the Time of Delivery (as defined below)
with respect thereto at the office of DTC or its designated custodian (the “Designated Office”).
The time and date of such delivery and payment shall be, with respect to the Firm Units, 9:30 a.m.,
New York City Time, on [•], 2008 or such other time and date as the Representatives and the Company
may agree upon in writing, and, with respect to the Optional Units, 9:30 a.m., New York City time,
on the date specified by the Representatives in the written notice given by the Representatives of
the Underwriters’ election to purchase such Optional Units, or such other time and date as the
Representatives and the Company may agree upon in writing. Such time and date for delivery of the
Firm Units is herein called the “First Time of Delivery,” such time and date for delivery of the
Optional Units, if not the First Time of Delivery, is herein called the “Second Time of Delivery,”
and each such time and date for delivery is herein called a “Time of Delivery.”
(b) The documents to be delivered at each Time of Delivery by or on behalf of the parties
hereto pursuant to Section 7 hereof, including the cross receipt for the Units and any additional
documents requested by the Representatives pursuant to Section 7 hereof, will be delivered at the
offices of Xxxxxxxxxx Xxxxxxx PC, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
“Closing Location”), and the Units will be delivered at the Designated Office, all at such Time
of Delivery. A meeting will be held at the Closing Location at [•] a.m., New York City time, on
the New York Business Day next preceding such Time of Delivery, at which meeting the final
executed copies of the documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto. For the purposes of this Section 4, “New York
Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
on which banking institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by the Representatives and to file such Final
Prospectus pursuant to Rule 424(b) under the 1933 Act (without reliance on Rule 424(b)(8)) not
later than the Commission’s close of business on the second business day following the execution
and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the 1933 Act; to make no further amendment or any supplement to the Registration
Statement or Prospectus which shall be disapproved by the Representatives promptly after reasonable
notice thereof; to advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Statutory Prospectus, Issuer-Represented Free Writing Prospectus or
Prospectus, of the suspension of the qualification
- 18 -
of the Securities for offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement, Statutory Prospectus, Issuer-Represented Free Writing
Prospectus or Prospectus (in each case, including any document incorporated or deemed incorporated
by reference therein) or for additional information; and in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Statutory Prospectus,
Issuer-Represented Free Writing Prospectus or Prospectus or suspending any such qualification,
promptly to use its best efforts to obtain the withdrawal of such order;
(b) If at any time following issuance of an Issuer-Represented Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer-Represented Free
Writing Prospectus conflicted or would conflict with the information contained in the Registration
Statement, the General Disclosure Package or the Prospectus or included or would include an untrue
statement of a material fact or omitted or would omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances prevailing at that subsequent
time, not misleading, the Company has notified or will notify promptly the Representative so that
any use of such Issuer-Represented Free Writing Prospectus may cease until it is amended or
supplemented and the Company has promptly amended or supplemented or will promptly amend or
supplement such Issuer-Represented Free Writing Prospectus to eliminate or correct such conflict,
untrue statement or omission;
(c) The Company represents and agrees that, unless it obtains the prior written consent of the
Representatives, and each Underwriter represents and agrees that, unless it obtains the prior
written consent of each of the Company and the Representatives, it has not made and will not make
any offer relating to the Units that would constitute an “issuer free writing prospectus,” as
defined in Rule 433 under the 1933 Act, or that would otherwise constitute a “free writing
prospectus,” as defined in Rule 405 under the 1933 Act, required to be filed with the Commission.
Any such free writing prospectus consented to by the Company and the Representatives is hereinafter
referred to as a “Permitted Free Writing Prospectus”. The Company represents that it has treated
and agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing
prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule
433 applicable to any Permitted Free Writing Prospectus, including timely filing with the
Commission where required, legending and record keeping. The Company represents that it has
satisfied the conditions in Rule 433 to avoid a requirement to file with the Commission any
electronic road show;
(d) Promptly from time to time to take such action as the Representatives may reasonably
request to qualify the Securities for offering and sale under the securities laws of such
jurisdictions as the Representatives may request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Securities, provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a general consent to service
of process in any jurisdiction;
(e) Prior to 10:00 a.m., New York City time, on the New York Business Day next succeeding
the date of this Agreement and from time to time, to furnish the Underwriters with written and
electronic copies of the Prospectus in New York City in such quantities as
- 19 -
the Representatives may from time to time reasonably request, and, if the delivery of a
Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the 0000 Xxx) is
required at any time in connection with the offering or sale of the Securities (the “Prospectus
Delivery Period”) and if at such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus (or in lieu thereof,
the notice referred to in Rule 173(a) under the 0000 Xxx) is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or supplement the
Prospectus in order to comply with the 1933 Act or the 1933 Act Regulations, to notify the
Representatives and upon its request to prepare and furnish without charge to the Underwriters
and to any dealer in securities as many copies as the Representatives may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance, and in case any Underwriter is required to
deliver a Prospectus in connection with sales of any of the Securities at any time nine months or
more after the time of issue of the Prospectus, upon its request, to prepare and deliver to such
Underwriter as many copies as the Representatives may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the 1933 Act;
(f) To make generally available to its securityholders as soon as practicable, but in any
event not later than eighteen months after the effective date of the Registration Statement (as
defined in Rule 158(c) under the 1933 Act), an earning statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of the 1933 Act and the
1933 Act Regulations (including, at the option of the Company, Rule 158);
(g) During the period beginning on and including the date of the Prospectus and continuing
through and including the date that is 180 days after the date of the Prospectus, not to, and not
to allow any of the individuals listed on Schedule II hereto to, sell, offer, agree to sell,
contract to sell, hypothecate, pledge, grant any option to purchase, make any short sale of, or
otherwise dispose of or hedge, directly or indirectly, except as provided in the last sentence of
this Section 5(g), any shares of Common Stock, any securities of the Company substantially
similar to the Common Stock or any securities convertible into, repayable with, exchangeable or
exercisable for, or that represent the right to receive any shares of Common Stock or any
securities of the Company substantially similar to the Common Stock, or publicly announce an
intention to do any of the foregoing, without the prior written consent of Sandler X’Xxxxx &
Partners, L.P.; provided, however, that if: (1) during the last 17 days of such 180-day period
the Company issues an earnings release or material news or a material event relating to the
Company occurs; or (2) prior to the expiration of such 180-day period, the Company announces that
it will release earnings results or becomes aware that material news or a material event relating
to the Company will occur during the 16-day period beginning on the last day of such 180-day
period, the restrictions imposed by this Section 5(g) shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event. Notwithstanding the provisions set forth in
the immediately preceding sentence, the Company may (1) issue Securities to the Underwriters
pursuant to this Agreement, (2) issue shares, and
- 20 -
options to purchase shares, of Common Stock pursuant to stock option plans described in the
Registration Statement, the General Disclosure Package and the Prospectus, as those plans are in
effect on the date of this Agreement, (3) issue shares of Common Stock upon the exercise of stock
options that are described in the Registration Statement, the General Disclosure Package and the
Prospectus and that are outstanding on the date of this Agreement, (4) issue shares of Common
Stock upon the exercise of warrants that are described in the Registration Statement, (5) issue
shares of Common Stock upon the conversion of shares of Series A Preferred Stock that are
described in the Registration Statement, and (6) issue shares of Common Stock upon conversion of
convertible debt described in the Registration Statement, and (7) issue shares of Common Stock
upon the exercise of stock options issued after the date of this Agreement under stock option
plans referred to in clause (2) of this sentence, as those plans are in effect on the date of
this Agreement;
(h) During a period of five years from the date of this Agreement, to furnish to the
Representatives copies of all reports or other communications (financial or other) furnished to
stockholders and such information concerning the business and financial condition of the Company
as the Representatives may from time to time reasonably request (such financial statements to be
on a consolidated basis to the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its stockholders generally or to the Commission);
(i) To use the net proceeds received by it from the sale of the Securities pursuant to this
Agreement in the manner specified in each of the Registration Statement, the General Disclosure
Package and the Prospectus under the caption “Use of Proceeds;”
(j) To use its best efforts to list the Securities on the AMEX;
(k) To comply, and to use its best efforts to cause the Company’s directors and officers, in
their capacities as such, to comply, in all material respects, with all effective applicable
provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations thereunder; and
(l) If the Company elects to rely on Rule 462(b), the Company shall file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the 1933 Act.
(m) To reserve and keep available that maximum number of its authorized but unissued shares of
Common Stock which are issuable upon exercise of the Warrants outstanding from time to time.
(n) The Company hereby engages Sandler X’Xxxxx, on a non-exclusive basis, as its agent for the
solicitation of the exercise of the Warrants. The Company covenants and agrees that it will (i)
assist Sandler X’Xxxxx with respect to such solicitation and (ii) at Sandler X’Xxxxx’x request,
provide Sandler X’Xxxxx, and direct the Company’s transfer and warrant agent
- 21 -
to provide to Sandler X’Xxxxx, at the Company’s cost, lists of the record and, to the extent
known, beneficial owners of, the Warrants. The Company has agreed to pay Sandler X’Xxxxx for bona
fide services rendered a commission equal to two percent (2.0%) of the exercise price for each
Warrant exercised more than one year after the consummation of the offering contemplated by this
Agreement if the exercise was solicited by Sandler X’Xxxxx; provided that no compensation will be
paid to Sandler X’Xxxxx upon exercise of the Warrants if: (i) the market price of the underlying
shares of Common Stock is lower than the exercise price of the Warrants; (ii) the holder of the
Warrants has not confirmed in writing that Sandler X’Xxxxx solicited the exercise; (iii) the
Warrants are held in a discretionary account; and (iv) the Warrants are exercised in an unsolicited
transaction; and (v) the arrangement to pay the commission is not disclosed in the Prospectus.
6. The Company covenants and agrees with the Underwriters that the Company will pay or cause
to be paid the following: (i) the reasonable out-of-pocket expenses incurred by the Underwriters in
connection with the transactions contemplated hereby (regardless of whether the sale of the Units
is consummated) up to $200,000, including, without limitation, disbursements, fees and expenses of
the Underwriters’ counsel and marketing, syndication and travel expenses and the fees set forth in
Section 6(vi); (ii) the fees, disbursements and expenses of the Company’s counsel and accountants
in connection with the registration of the Securities under the 1933 Act and all other expenses in
connection with the preparation, printing and filing of the Registration Statement, any Permitted
Free Writing Prospectus and any Prospectus, and amendments and supplements thereto, and the mailing
and delivering of copies thereof to the Underwriters and dealers; (iii) the cost of printing or
producing any agreement among Underwriters, this Agreement, closing documents (including any
copying or compilations thereof) and any other documents in connection with the offering, purchase,
sale and delivery of the Units; (iv) all expenses in connection with the qualification of the Units
for offering and sale under state securities laws as provided in Section 5(b) hereof, including the
fees and disbursements of counsel for the Underwriters in connection with such qualification; (v)
all fees and expenses in connection with listing the Securities on the AMEX; (vi) the filing fees
incident to, and the fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the FINRA of the terms of the sale of the Units; (vii) the cost of
preparing stock certificates; (viii) the cost and charges of any transfer agent or registrar; and
(ix) all other costs and expenses incident to the performance of its obligations hereunder which
are not otherwise specifically provided for in this Section.
7. The obligations of the Underwriters hereunder, as to the Units to be delivered at each Time
of Delivery, shall be subject, in their discretion, to the condition that all representations and
warranties and other statements of the Company herein are, at and as of such Time of Delivery, true
and correct, the condition that the Company shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) in the
manner and within the time period required by Rule 424(b) (without reliance on Rule 424(d)(8))
and in accordance with Section 5(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of the Prospectus, the Statutory
Prospectus or any Issuer-Represented Free Writing Prospectus or any part thereof shall have been
issued and no proceeding for that purpose shall
- 22 -
have been initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to the reasonable
satisfaction of the Representatives; and FINRA shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements;
(b) Xxxxxxxxxx Xxxxxxx PC, counsel for the Underwriters, shall have furnished to the
Representatives such written opinion or opinions, dated such Time of Delivery, with respect to
the existence of the Company, the Units, the Registration Statement, the Prospectus as amended or
supplemented and other related matters as the Representatives may reasonably request, and such
counsel shall have received such papers and information as they may reasonably request to enable
them to pass upon such matters;
(c) Ellenoff Xxxxxxxx & Schole LLP, counsel for the Company, shall have furnished to the
Representatives their written opinion, dated such Time of Delivery, in form and substance
satisfactory to the Representatives, to the effect set forth in Annex I hereto and to such
further effect as counsel to the Underwriters may reasonably request;
(d) Barron, Newburger, Xxxxxxx & Xxxx, PLLC, special regulatory counsel for the Company,
shall have furnished to the Representatives their written opinion, dated such Time of Delivery,
in form and substance satisfactory to the Representatives, to the effect set forth in Annex II
hereto and to such further effect as counsel to the Underwriters may reasonably request;
(e) At the time of execution of this Agreement, Xxxxxx LLP shall have furnished to the
Representatives a letter or letters, dated the date of this Agreement, in form and substance
satisfactory to the Representatives, and at each Time of Delivery, Xxxxxx LLP shall have
furnished to the Representatives a letter or letters, dated such Time of Delivery, as the case
may be, in form and substance satisfactory to the Representatives, to the effect that they
reaffirm the statements made in a letter or letters furnished at the time of execution of this
Agreement, except that the specified date referred to therein shall be a date not more than three
business days prior to such Time of Delivery, as the case may be;
(f) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date
of the latest audited financial statements included in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Registration Statement, the General Disclosure Package
and the Prospectus, and (ii) since the respective dates as of which information is given in the
Registration Statement, the General Disclosure Package and the Prospectus there shall not have
been any change in the capital stock or long-term debt of the Company or any of its subsidiaries
or any change, or any development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders’ equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated in the Registration
Statement, the General Disclosure Package and the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is in the judgment of the Representatives so material and
adverse as to make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Units being delivered at
- 23 -
such Time of Delivery on the terms and in the manner contemplated in the Registration
Statement, the General Disclosure Package and the Prospectus. As used in this paragraph,
references to the Prospectus exclude any amendments or supplements thereto subsequent to the date
of this Agreement;
(g) On or after the date hereof there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the The New York Stock
Exchange or the AMEX; (ii) a suspension or material limitation in trading in the Company’s
securities on the AMEX; (iii) a general moratorium on commercial banking activities declared by
either federal or New York or New Jersey State authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States of a national
emergency or war or a material adverse change in general economic, political or financial
conditions, including without limitation as a result of terrorist activities after the date
hereof (or the effect of international conditions on the financial markets in the United States
shall be such), or any other calamity or crisis, if the effect of any such event specified in
this clause (iv) in the judgment of the Representatives makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Units being delivered at such Time of
Delivery on the terms and in the manner contemplated in the General Disclosure Package and the
Prospectus;
(h) The Securities shall have been listed on the AMEX and the Company shall have delivered
to the Representatives a letter from the AMEX to such effect, which letter will be reasonably
satisfactory to the Representatives;
(i) Prior to the execution and delivery of this Agreement, the Company has obtained and
delivered to the Underwriters executed agreements from each of the persons listed on Schedule II
hereto, substantially to the effect set forth in Annex III hereof, in form and substance
satisfactory to the Representatives;
(j) On or after the Applicable Time, (i) no downgrading shall have occurred in the rating
accorded any of the Company’s securities by any “nationally recognized statistical organization,”
as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities
Act, and (ii) no such organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any of the Company’s securities.
(k) The Company shall have complied with the provisions of Section 5(c) hereof with respect
to the furnishing of prospectuses on the New York Business Day next succeeding the date of this
Agreement;
(l) The Company shall have furnished or caused to be furnished to the Representatives at
such Time of Delivery certificates of officers of the Company satisfactory to the Representatives
as to the accuracy of the representations and warranties of the Company herein at and as of such
Time of Delivery, as to the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a)
and (f) of this Section and as to such other matters as the Representatives may reasonably
request.
- 24 -
8. (a) The Company agrees to indemnify and hold harmless the Underwriters and each person,
if any, who controls such Underwriter within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act, against any losses, claims, damages or liabilities to which the Underwriter
may become subject, under the 1933 Act or otherwise (including in settlement of any litigation if
such settlement is effected with the written consent of the Company), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i)
an untrue statement or alleged untrue statement of a material fact contained in the Registration
Statement, including the information deemed to be a part of the Registration Statement at the
time of effectiveness and at any subsequent time pursuant to Rules 430A and 430B of the 1933 Act
Regulations, the General Disclosure Package, the Prospectus or any individual Issuer-Represented
Limited Use Free Writing Prospectus, when considered together with the General Disclosure
Package, or any amendment or supplement thereto (including any documents filed under the 1934 Act
and deemed to be incorporated by reference into the Prospectus), or arise out of or are based
upon the omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii) in whole or in part upon
any inaccuracy in the representations and warranties of the Company contained herein; or (iii) in
whole or in part upon any failure of the Company to perform its obligations hereunder or under
law and in each case will reimburse the Underwriters for any legal or other expenses reasonably
incurred by it in connection with investigating or defending against such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission made in the General
Disclosure Package, any Prospectus, the Registration Statement or any individual
Issuer-Represented Limited Use Free Writing Prospectus, when considered together with the General
Disclosure Package, or any such amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by any Underwriter through the
Representatives expressly for use therein (provided that the Company and the Underwriters hereby
acknowledge and agree that the only information that the Underwriters have furnished to the
Company specifically for inclusion in the General Disclosure Package, the Prospectus, the
Registration Statement or any individual Issuer-Represented Limited Use Free Writing Prospectus
or any amendment or supplement thereto, are (i) the fourth paragraph pertaining to the concession
and reallowance figures appearing in the Prospectus in the section entitled “Underwriting,” (ii)
the second sentence of the eighth paragraph under the section entitled “Underwriting” in the
Prospectus relating to the Underwriters’ reservation of the right to withdraw, cancel or modify
the offer contemplated by this Agreement and to reject orders in whole or in part, (iii) the
thirteenth paragraph under the section entitled “Underwriting” in the Prospectus relating to
stabilization transactions, over-allotment transactions, syndicate covering transactions and, if
applicable, penalty bids in which the Underwriters may engage, (iv) the fifteenth paragraph
appearing in the Prospectus in the section entitled “Underwriting” beginning with the words
“Passive Market Making”; (v) the percentage of the Company’s Common Stock held by Xxxxxx Xxxxxxxx
and another partner of Sandler X’Xxxxx & Partners L.P. appearing in the Prospectus in the
sections entitled “Underwriting” and “Certain Relationships and Related Transactions”; and (vi)
the disclosure in the Prospects in the section entitled “Certain Relationships and Related
Transactions” pertaining to the compensation
- 25 -
receivable by Sandler X’Xxxxx & Partners L.P. as a result of the closing of the Offering
(collectively, the “Underwriters’ Information”).
(b) Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the General Disclosure Package, any Prospectus,
the Registration Statement or any individual Issuer-Represented Limited Use Free Writing
Prospectus, when considered together with the General Disclosure Package, or any amendment 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 such untrue statement or
alleged untrue statement or omission or alleged omission was made in such General Disclosure
Package, any Prospectus, the Registration Statement or any individual Issuer-Represented Limited
Use Free Writing Prospectus, when considered together with the General Disclosure Package, or any
such amendment or supplement thereto, in reliance upon and in conformity with the Underwriters’
Information; and will reimburse the Company for any legal or other expenses reasonably incurred
by the Company in connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of
notice of the commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to any indemnified
party otherwise than under such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and, after notice from
the indemnifying party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the indemnified party is
an actual or potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified party.
- 26 -
(d) If the indemnification provided for in this Section 8 is unavailable to or insufficient
to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the Units. If, however, the
allocation provided by the immediately preceding sentence is not permitted by applicable law or
if the indemnified party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative benefits but also the
relative fault of the Company on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other 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 contributions pursuant to this
subsection (d) 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 subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Units underwritten by it and distributed to the public were
offered 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. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the 0000 Xxx) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters’ obligations in this subsection (d) to contribute
are several in proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in addition to any
liability which the Company otherwise have and shall extend, upon the same terms and conditions,
to each person, if any, who controls (within the meaning of the 0000 Xxx) any Underwriter, or any
of the respective partners, directors, officers and employees of any Underwriter or any such
controlling person; and the several obligations of the Underwriters under this Section 8 shall be
in addition to any liability which the respective Underwriters
- 27 -
may otherwise have and shall extend, upon the same terms and conditions, to each director 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 officer of the Company who signs
the Registration Statement and to each person, if any, who controls the Company within the
meaning of the 1933 Act.
9. (a) If any Underwriter shall default in its obligation to purchase the Units which it has
agreed to purchase hereunder at a Time of Delivery, the Representatives may in its discretion
arrange for it or another party or other parties to purchase such Units on the terms contained
herein. If within thirty-six hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Units, then the Company shall be entitled to a further period
of thirty-six hours within which to procure another party or other parties satisfactory to the
Representatives to purchase such Units on such terms. In the event that, within the respective
prescribed periods, the Representatives notifies the Company that it has so arranged for the
purchase of such Units, or the Company notifies the Representatives that it has so arranged for the
purchase of such Units, the Representatives or the Company shall have the right to postpone such
Time of Delivery for a period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in the Representatives’s opinion may thereby be made
necessary. The term “Underwriter” as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a party to this Agreement
with respect to such Units.
(b) If, after giving effect to any arrangements for the purchase of the Units of a
defaulting Underwriter or Underwriters by the Representatives and the Company as provided in
subsection (a) above, the aggregate number of such Units which remains unpurchased does not
exceed one-tenth of the aggregate number of all the Units to be purchased at such Time of
Delivery, then the Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Units which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Units which such Underwriter agreed to purchase hereunder) of the
Units of such defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the Units of a
defaulting Underwriter or Underwriters by the Representatives and the Company as provided in
Section 9(a) hereof, the aggregate number of such Units which remains unpurchased exceeds
one-tenth of the aggregate number of all the Units to be purchased at such Time of Delivery, or
if the Company shall not exercise the right described in Section 9(b) hereof to require
non-defaulting Underwriters to purchase Units of a defaulting Underwriter or Underwriters, then
this Agreement (or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional Units) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or the Company, except
for the expenses to be borne by the Company as provided in Section 6 hereof and the indemnity and
contribution and other agreements in
- 28 -
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
10. The respective indemnities, agreements, representations, warranties and other statements
of the Company and the several Underwriters, as set forth in this Agreement or made by or on behalf
of them, respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company, or any officer or
director or controlling person of the Company, and shall survive delivery of and payment for the
Units.
11. If this Agreement is terminated pursuant to Section 9 hereof, the Company shall not then
be under any liability to any Underwriter except as provided in Sections 6 and 8 hereof; but, if
for any other reason, any Units are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Underwriters through the Representatives for all
out-of-pocket expenses up to $200,000, including fees and disbursements of counsel, incurred by the
Underwriters in connection with the transactions contemplated hereby, including, without
limitation, marketing, syndication and travel expenses incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Units not so delivered, but the Company
shall then be under no further liability to the Underwriters except as provided in Sections 6 and 8
hereof.
12. The Company acknowledges and agrees that:
(a) in connection with the sale of the Units, the Underwriters have been retained
solely to act as underwriters, and no fiduciary, advisory or agency relationship between the
Company and the Underwriters has been created in respect of any of the transactions
contemplated by this Agreement;
(b) the price of the Units set forth in this Agreement was established following
discussions and arms-length negotiations between the Company and the Underwriters, and the
Company is capable of evaluating and understanding, and understands and accepts the terms,
risks and conditions of, the transactions contemplated by this Agreement;
(c) it has been advised that the Underwriters and their respective affiliates are
engaged in a broad range of transactions which may involve interests that differ from those
of the Company and that each Underwriter has no obligation to disclose such interests and
transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and
(d) it waives, to the fullest extent permitted by law, any claims it may have against
any Underwriter for breach of fiduciary duty or alleged breach of fiduciary duty and agrees
that each Underwriter shall have no liability (whether direct or indirect) to the Company in
respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on
behalf of or in right of the Company, including stockholders, employees, depositors or
creditors of the Company.
- 29 -
13. In all dealings hereunder, the Representatives shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by the Representatives.
All statements, requests, notices and agreements hereunder shall be in writing, and if to the
Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the
Representatives at 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, Attention: General
Counsel; and if to the Company or to the Bank shall be delivered or sent by mail to the Company at
0000 Xxxxx 00 Xxxxx, Xxxxxxxx 0, Xxxxx 000X, Xxxx, XX 00000, Attention: Xxxxx Xxxxxxxxx, with a
copy to Ellenoff Xxxxxxxx & Schole LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000, Attention:
Xxxxxxx X. Xxxxxxxx, Esq.; provided, however, that any notice to an Underwriter pursuant to Section
8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters’ Questionnaire, or telex or email constituting such
Questionnaire, which address will be supplied to the Company by the Representatives upon request.
Any such statements, requests, notices or agreements shall take effect upon receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the benefit of, the
Underwriters, the Company, and, to the extent provided in Sections 8 and 10 hereof, the officers
and directors of the Company and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Units
from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.
15. 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.
16. This Agreement shall be governed by and construed in accordance with the laws of the State
of New York.
17. This Agreement may be executed by any one or more of the parties hereto 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.
- 30 -
If the foregoing is in accordance with your understanding, please sign and return to us four
counterparts hereof, and upon the acceptance hereof by the Representatives, on behalf of each of
the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement among
each of the Underwriters and the Company. It is understood that the Representatives’s acceptance
of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a
form of Agreement among Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on the Representatives’s part as to the authority of
the signers thereof.
| Very truly yours, VELOCITY PORTFOLIO GROUP, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Accepted as of the date hereof: | ||||
| SANDLER X’XXXXX & PARTNERS, L.P. | ||||
| GUNNALLEN FINANCIAL, INC. | ||||
| MAXIM GROUP LLC | ||||
| c/o SANDLER X’XXXXX & PARTNERS, L.P., | ||||
| as Representatives of the several Underwriters | ||||
By:
|
Sandler X’Xxxxx & Partners Corp., | |||
| the sole general partner | ||||
By: |
||||
| Name: | ||||
| Title: | ||||
- 31 -
SCHEDULE I
| Number of Optional | ||||||||
| Units to be | ||||||||
| Total Number of | Purchased if | |||||||
| Firm Units | Maximum Option | |||||||
| Underwriter | to be Purchased | Exercised | ||||||
Sandler X’Xxxxx & Partners, L.P. |
||||||||
GunnAllen Financial, Inc. |
||||||||
Maxim Group LLC |
||||||||
SCHEDULE II
Officers and Directors
Officers and Directors
SCHEDULE III
Issuer-Represented General Use Free Writing Prospectus
Issuer-Represented General Use Free Writing Prospectus
ANNEX I
Opinion of Company Counsel
ANNEX II
Form of Regulatory Counsel Opinion
ANNEX III
Form of Lock-Up Agreement
