Exhibit 1.1
[_____________] SHARES
NANODYNAMICS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
[______], 2007
XXXXXXXXX & COMPANY, INC.
As Representative of the several Underwriters
c/o JEFFERIES & COMPANY, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. NanoDynamics, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to the several underwriters named in
Schedule A (the "UNDERWRITERS") an aggregate of [___] shares of its common
stock, par value $.001 per share (the "SHARES"). The Shares to be sold by the
Company are called the "FIRM SHARES." In addition, the Company has granted to
the Underwriters an option to purchase up to an additional [___] Shares as
provided in Section 2. The additional [___] Shares to be sold by the Company
pursuant to such option are called the "OPTIONAL SHARES." The Firm Shares and,
if and to the extent such option is exercised, the Optional Shares are
collectively called the "OFFERED SHARES." Jefferies & Company, Inc.
("JEFFERIES") has agreed to act as representative of the several Underwriters
(in such capacity, the "REPRESENTATIVE") in connection with the offering and
sale of the Offered Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-142641), which contains a form of prospectus to be used in connection with
the public offering and sale of the Offered Shares. Such registration statement,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "SECURITIES ACT"), including any information
deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A
under the Securities Act, is called the "REGISTRATION STATEMENT." Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the "RULE 462(b) REGISTRATION STATEMENT," and from and
after the date and time of filing of the Rule 462(b) Registration Statement the
term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriters to
confirm sales of the Offered Shares or in the form first made available to the
Underwriters by the Company to meet requests of purchasers pursuant to Rule 173
under the Securities Act, is called the "PROSPECTUS." As used herein,
"APPLICABLE TIME" is __:___ _m (New York time) on [ ] [ ], 2007. As used
herein, "FREE WRITING PROSPECTUS" has the
meaning set forth in Rule 405 under the Securities Act, and "TIME OF SALE
PROSPECTUS" means the preliminary prospectus, as amended or supplemented
immediately prior to the Applicable Time, together with the free writing
prospectuses, if any, identified in Schedule B hereto, and each "ROAD SHOW" (as
defined in Rule 433 under the Securities Act), if any, related to the offering
of the Shares contemplated hereby that is a "written communication" (as defined
in Rule 405 under the Securities Act) (each such road show, a "ROAD SHOW"). As
used herein, the terms "Registration Statement," "Rule 462(b) Registration
Statement", "preliminary prospectus," "Time of Sale Prospectus" and "Prospectus"
shall include the documents incorporated and deemed to be incorporated by
reference therein. All references in this Agreement to (i) the Registration
Statement, Rule 462(b) Registration Statement, any preliminary prospectus, or
the Prospectus, or any amendments or supplements to any of the foregoing, shall
include any copy thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System ("XXXXX") and (ii) the Prospectus
shall be deemed to include the "electronic Prospectus" provided for use in
connection with the offering of the Offered Shares as contemplated by Section
3(n) of this Agreement.
The Company hereby confirms its agreement with the Underwriters as
follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents, warrants and covenants to each
Underwriter, as of the date of this Agreement, as of the First Closing Date (as
hereinafter defined) and as of each Option Closing Date (as hereafter defined),
if any, and covenants with each Underwriter, as follows:
(a) Compliance with Registration Requirements. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has
complied to the Commission's satisfaction with all requests of the
Commission for additional or supplemental information. No stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best knowledge of
the Company, are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied
in all material respects with the Securities Act and, if filed by
electronic transmission pursuant to XXXXX (except as may be permitted by
Regulation S-T under the Securities Act), was identical to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale
of the Offered Shares. Each of the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto, at the
time it became effective and at all subsequent times, complied and will
comply in all material respects with the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. As of the Applicable Time, the Time of
Sale Prospectus [(INCLUDING ANY PRELIMINARY PROSPECTUS WRAPPER)] did not,
and at the time of each sale of the Offered Shares and at the First Closing
Date (as defined in Section 2), the Time of Sale Prospectus, as then
amended or supplemented by the Company, if applicable, will not, contain
any untrue
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statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. The Prospectus [(INCLUDING ANY PRELIMINARY
PROSPECTUS WRAPPER)], as amended or supplemented, as of its date and at all
subsequent times, 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
the three immediately preceding sentences do not apply to statements in or
omissions from the Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment thereto, or the Prospectus or
the Time of Sale Prospectus, or any amendments or supplements thereto, made
in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by the Representative
expressly for use therein, it being understood and agreed that the only
such information furnished by the Representative to the Company consists of
the information described in Section 9(b) below. There are no contracts or
other documents required to be described in the Time of Sale Prospectus or
the Prospectus or to be filed as exhibits to the Registration Statement
which have not been described or filed as required.
The Company is not an "ineligible issuer" in connection with the
offering of the Offered Shares pursuant to Rules 164, 405 and 433 under the
Securities Act. Any free writing prospectus that the Company is required to
file pursuant to Rule 433(d) under the Securities Act has been, or will be,
filed with the Commission in accordance with the requirements of the
Securities Act. Each free writing prospectus that the Company has filed, or
is required to file, pursuant to Rule 433(d) under the Securities Act or
that was prepared by or on behalf of or used or referred to by the Company
complies or will comply in all material respects with the requirements of
Rule 433 under the Securities Act including timely filing with the
Commission or retention where required and legending, and each such free
writing prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Offered Shares
did not, does not and will not include any information that conflicted,
conflicts with or will conflict with the information contained in the
Registration Statement, the Prospectus or any preliminary prospectus,
including any document incorporated by reference therein. Except for the
free writing prospectuses, if any, identified in Schedule B hereto, and
electronic road shows, if any, furnished to you before first use, the
Company has not prepared, used or referred to, and will not, without your
prior consent, prepare, use or refer to, any free writing prospectus.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representative one complete manually signed copy of the
Registration Statement, each amendment thereto and any Rule 462(b)
Registration Statement and of each consent and certificate of experts filed
as a part thereof, and conformed copies of the Registration Statement, each
amendment thereto and any Rule 462(b) Registration Statement (without
exhibits) and preliminary prospectuses, the Time of Sale Prospectus, the
Prospectus, as amended or supplemented, and any free writing prospectus
reviewed and consented to by the Representative, in such quantities and at
such places as the Representative has reasonably requested for each of the
Underwriters.
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(c) Distribution of Offering Material By the Company. The Company has
not distributed and will not distribute, prior to the later of (i) the
expiration or termination of the option granted to the several Underwriters
in Section 2, (ii) the completion of the Underwriters' distribution of the
Offered Shares, and (iii) the expiration of 25 days after the date of the
Prospectus, any offering material in connection with the offering and sale
of the Offered Shares other than a preliminary prospectus, the Time of Sale
Prospectus, the Prospectus, any free writing prospectus reviewed and
consented to by the Representative, or the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement
of, the Company, enforceable in accordance with its terms, except as rights
to indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles.
(e) Authorization of the Offered Shares. The Offered Shares have been
duly authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement, will be
validly issued, fully paid and nonassessable, and the issuance and sale of
the Offered Shares is not subject to any preemptive rights, rights of first
refusal or other similar rights to subscribe for or purchase the Offered
Shares.
(f) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or
debt securities registered for sale under the Registration Statement or
included in the offering contemplated by this Agreement except for such
rights as have been duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed in the
Time of Sale Prospectus, subsequent to the respective dates as of which
information is given in the Time of Sale Prospectus: (i) there has been no
material adverse change, or any development that could reasonably be
expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business, operations or
prospects, whether or not arising from transactions in the ordinary course
of business, of the Company and its subsidiaries, considered as one entity
(any such change is called a "MATERIAL ADVERSE CHANGE"); (ii) the Company
and its subsidiaries, considered as one entity, have not incurred any
material liability or obligation, indirect, direct or contingent, not in
the ordinary course of business nor entered into any material transaction
or agreement not in the ordinary course of business; and (iii) there has
been no dividend or distribution of any kind declared, paid or made by the
Company or, except for dividends paid to the Company or other subsidiaries,
any of its subsidiaries on any class of capital stock or repurchase or
redemption by the Company or any of its subsidiaries of any class of
capital stock.
(h) Independent Accountants. Deloitte & Touche LLP, who have expressed
their opinion with respect to the financial statements (which term as used
in this Agreement includes the related notes thereto) and supporting
schedules filed with the Commission as a part of the Registration Statement
and included in the Time of Sale Prospectus and the
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Prospectus (each, an "APPLICABLE PROSPECTUS" and collectively, the
"APPLICABLE PROSPECTUSES"), are (i) independent public or certified public
accountants as required by the Securities Act, (ii) to the best knowledge
of the Company, in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X and
(iii) a registered public accounting firm as defined by the Public Company
Accounting Oversight Board (the "PCAOB") whose registration has not been
suspended or revoked and, to the best knowledge of the Company, who has not
requested such registration to be withdrawn.
(i) Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of the Registration Statement and
included in the Time of Sale Prospectus and the Prospectus present fairly
the consolidated financial position of the Company and its subsidiaries as
of and at the dates indicated and the results of their operations and cash
flows for the periods specified. The supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. Such financial statements and supporting schedules have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, except as
may be expressly stated in the related notes thereto. No other financial
statements or supporting schedules are required to be included in the
Registration Statement or any Applicable Prospectus. The financial data set
forth in each Applicable Prospectus under the captions "Prospectus
Summary--Summary Consolidated Financial Data," "Selected Consolidated
Financial Data" and "Capitalization" fairly present the information set
forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement and each Applicable
Prospectus. To the best knowledge of the Company, no person who has been
suspended or barred from being associated with a registered public
accounting firm, or who has failed to comply with any sanction pursuant to
Rule 5300 promulgated by the PCAOB, has participated in or otherwise aided
the preparation of, or audited, the financial statements, supporting
schedules or other financial data filed with the Commission as a part of
the Registration Statement and included in any Applicable Prospectus.
(j) Company's Accounting System. The Company and each of its
subsidiaries make and keep accurate books and records and maintain a system
of internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles as applied in the United States and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect
to any differences. There has not been and is no material weakness in the
Company's internal control over financial reporting (whether or not
remediated) and since December 31, 2006, there has been 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.
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(k) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
incorporated or organized, as the case may be, and is validly existing as a
corporation, partnership or limited liability company, as applicable, in
good standing under the laws of the jurisdiction of its incorporation or
organization and has the power and authority (corporate or other) to own,
lease and operate its properties and to conduct its business as described
in each Applicable Prospectus and, in the case of the Company, to enter
into and perform its obligations under this Agreement. Each of the Company
and each subsidiary is duly qualified as a foreign corporation, partnership
or limited liability company, as applicable, to transact business and is in
good standing in the State of Delaware and each other jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business. All of the issued and
outstanding capital stock or other equity or ownership interests of each
subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable and are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or adverse claim. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other
than (i) the subsidiaries listed in Exhibit 21 to the Registration
Statement and (ii) such other entities omitted from Exhibit 21 which, when
such omitted entities are considered in the aggregate as a single
subsidiary, would not constitute a "significant subsidiary" within the
meaning of Rule 1-02(w) of Regulation S-X.
(l) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in each
Applicable Prospectus under the caption "Capitalization" (other than for
subsequent issuances, if any, pursuant to employee benefit plans described
in the Time of Sale Prospectus or upon the exercise of outstanding options
or warrants described in each Applicable Prospectus). The Shares (including
the Offered Shares) conform in all material respects to the description
thereof contained in the Time of Sale Prospectus. All of the issued and
outstanding Shares have been duly authorized and validly issued, are fully
paid and nonassessable and have been issued in compliance with federal and
state securities laws. None of the outstanding Shares was issued in
violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or equity or
debt securities convertible into or exchangeable or exercisable for, any
capital stock of the Company or any of its subsidiaries other than those
accurately described in each Applicable Prospectus. The description of the
Company's stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, set forth in each
Applicable Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(m) Stock Exchange Listing. The Offered Shares have been approved for
listing on the Nasdaq Global Market (the "Nasdaq"), subject only to
official notice of issuance.
(n) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by laws, partnership
agreement or operating agreement or similar organizational document, as
applicable, or is in default (or, with the giving of notice or lapse of
time, would
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be in default) ("DEFAULT") under any indenture, mortgage, loan or credit
agreement, note, contract, franchise, lease or other instrument to which
the Company or any of its subsidiaries is a party or by which it or any of
them may be bound (including, without limitation, any credit agreement,
indenture, pledge agreement, security agreement or other instrument or
agreement evidencing, guaranteeing, securing or relating to indebtedness of
the Company or any of its subsidiaries ), or to which any of the property
or assets of the Company or any of its subsidiaries is subject (each, an
"EXISTING INSTRUMENT"), except for such Defaults as would not, individually
or in the aggregate, result in a Material Adverse Change. The Company's
execution, delivery and performance of this Agreement, consummation of the
transactions contemplated hereby and by each Applicable Prospectus and the
issuance and sale of the Offered Shares (i) have been duly authorized by
all necessary corporate action and will not result in any violation of the
provisions of the charter or by-laws, partnership agreement or operating
agreement or similar organizational document of the Company or any
subsidiary, as applicable, (ii) will not conflict with or constitute a
breach of, or Default, or a Debt Repayment Triggering Event (as defined
below) under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument and (iii) will not result in any violation of any law,
administrative regulation or administrative or court decree applicable to
the Company or any subsidiary. No consent, approval, authorization or other
order of, or registration or filing with, any court or other governmental
or regulatory authority or agency, is required for the Company's execution,
delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by each Applicable Prospectus, except
such as have been obtained or made by the Company and are in full force and
effect under the Securities Act and applicable state securities or blue sky
laws. As used herein, a "DEBT REPAYMENT TRIGGERING EVENT" means any event
or condition which gives, or which the giving of notice or lapse of time
would give, the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries.
(o) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened (i) against or affecting the Company or any
of its subsidiaries, (ii) which have as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination matters,
where in any such case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the Company,
such subsidiary or such officer or director, and any such action, suit or
proceeding, if so determined adversely, would reasonably be expected to
result in a Material Adverse Change or adversely affect the consummation of
the transactions contemplated by this Agreement or (B) any such action,
suit or proceeding is or would be material in the context of the sale of
Shares. No material labor dispute with the employees of the Company or any
of its subsidiaries exists or, to the best of the Company's knowledge, is
threatened or imminent.
(p) Intellectual Property Rights. The Company owns, possesses or can
acquire on reasonable terms sufficient trademarks, servicemarks, trade
names, patents, copyrights, and
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any registrations and applications for any of the foregoing, domain names,
licenses, approvals, trade secrets, know-how, inventions, technology and
other similar rights (collectively, "INTELLECTUAL PROPERTY RIGHTS")
reasonably necessary to conduct their businesses as now conducted and as
proposed to be conducted as set forth in each Applicable Prospectus. To the
best knowledge of the Company, the operation of the business of the
Company, as now conducted or as proposed in each Applicable Prospectus to
be conducted, together with the Company's use of the Company's Intellectual
Property Rights, does not conflict with, infringe, misappropriate or
otherwise violate the Intellectual Property Rights of any third party.
Except as disclosed in each Applicable Prospectus, no actions, suits,
claims or proceedings have been asserted, or to the best of our knowledge,
threatened against the Company alleging any of the forgoing or seeking to
challenge, deny or restrict the operation of the business of the Company
and the Company is unaware of any facts which would form a reasonable basis
for any such claim. The Company has not received any notice of a claim of
infringement, misappropriation or conflict with Intellectual Property
Rights of others. No court, administrative body or arbitral body has issued
any order, judgment, decree or injunction restricting the operation of the
business of the Company.
Except as disclosed in each Applicable Prospectus, the Intellectual
Property Rights owned by the Company and, to the knowledge of the Company,
any Intellectual Property Rights licensed to the Company, have not been
adjudged invalid or unenforceable, in whole or in part, and there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding
or claim by others challenging the validity or scope of any such
Intellectual Property Rights, and the Company is unaware of any facts which
would form a reasonable basis for any such challenge. Except as disclosed
in each Applicable Prospectus, there is no pending or, to the knowledge of
the Company, threatened action, suit, proceeding or claim by others
challenging the Company's rights in or to any Intellectual Property Rights
owned or used by the Company, and the Company is unaware of any facts which
would form a reasonable basis for any such challenge. Except as otherwise
disclosed in each Applicable Prospectus, the Company is not a party to or
bound by any options, licenses or agreements with respect to the
Intellectual Property Rights of any other person or entity that are
required to be set forth in each such Applicable Prospectus. None of the
technology or intellectual property used by the Company in its business has
been obtained or is being used by the Company in violation of any
contractual obligation binding on the Company or, to the Company's
knowledge, any of its officers, directors or employees or otherwise in
violation of the rights of any persons.
The Company has duly and properly filed or caused to be filed with the
U.S. Patent and Trademark Office (the "PTO") or foreign and international
patent authorities all patent applications disclosed in each Applicable
Prospectus as owned by the Company (the "COMPANY PATENT APPLICATIONS"). The
Company has complied with the PTO's duty of candor and disclosure for the
Company Patent Applications and has made no material misrepresentation
during prosecution of the Company Patent Applications. To the Company's
knowledge, the Company Patent Applications disclose patentable subject
matters, correctly name the inventors of the claimed subject matter and the
Company has not been notified of any inventorship challenges nor has any
interference been declared or provoked nor is any material fact known by
the Company that would preclude the issuance of patents
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with respect to the Company Patent Applications or would render such
patents, if issued, invalid or unenforceable.
The Company has used its best efforts, but in no event less than those
efforts that would accord with normal industry practice, to maintain the
confidentiality of the trade secrets and other confidential Intellectual
Property Rights used in connection with the Company's business. All
material trade secrets used in connection with the Company's business are
valid and protectible. Furthermore, no third party has been granted any
rights to use any trade secret or other confidential Intellectual Property
Rights material to the business of the Company and, to the best knowledge
of the Company, (i) there has been no misappropriation of any material
trade secrets or other material confidential Intellectual Property Rights
used in connection with the business of the Company by any person, (ii) no
employee, independent contractor or agent of the Company has
misappropriated any trade secrets of any other person in the course of
performance as an employee, independent contractor or agent of the Company,
(iii) no third party is using any trade secret or other confidential
Intellectual Property Rights material to the business of the Company, and
(iv) no employee, independent contractor or agent of the Company is in
default or breach of any term of any employment agreement, nondisclosure
agreement, assignment of invention agreement or similar agreement or
contract relating in any way to the protection, ownership, development, use
or transfer of Intellectual Property Rights.
(q) All Necessary Permits, etc. The Company and each subsidiary possess
such valid and current certificates, authorizations or permits issued by
the appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, and neither the Company
nor any subsidiary has received, or has any reason to believe that it will
receive, any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate,
authorization or permit.
(r) Title to Properties. The Company and each of its subsidiaries has
good and marketable title to all of the real and personal property and
other assets reflected as owned in the financial statements referred to in
Section 1(i) above, in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, adverse claims and other defects.
The real property, improvements, equipment and personal property held under
lease by the Company or any subsidiary are held under valid and enforceable
leases, with such exceptions as are not material and do not materially
interfere with the use made or proposed to be made of such real property,
improvements, equipment or personal property by the Company or such
subsidiary.
(s) Tax Law Compliance. The Company and its consolidated subsidiaries
have filed all necessary federal, state and foreign income and franchise
tax returns or have properly requested extensions thereof and have paid all
taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them.
The Company has made adequate charges, accruals and reserves in the
applicable financial statements referred to in Section 1(i) above in
respect of all federal, state and foreign income and franchise taxes for
all periods as to which the tax liability of the Company or any of its
consolidated subsidiaries has not been finally determined.
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(t) Company Not an "Investment Company". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "INVESTMENT COMPANY ACT"). The Company is not, and will not
be, either after receipt of payment for the Offered Shares or after the
application of the proceeds therefrom as described under "Use of Proceeds"
in each Applicable Prospectus, an "investment company" within the meaning
of Investment Company Act and will conduct its business in a manner so that
it will not become subject to the Investment Company Act.
(u) Insurance. Each of the Company and its subsidiaries are insured by
recognized, financially sound and reputable institutions with policies in
such amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for their businesses including, but
not limited to, policies covering real and personal property owned or
leased by the Company and its subsidiaries against theft, damage,
destruction, acts of vandalism and earthquakes and policies covering the
Company and its subsidiaries for product liability claims. The Company has
no reason to believe that it or any subsidiary will not be able (i) to
renew its existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct its business as now conducted and at a
cost that would not result in a Material Adverse Change. Neither of the
Company nor any subsidiary has been denied any insurance coverage which it
has sought or for which it has applied.
(v) No Price Stabilization or Manipulation; Compliance with Regulation
M. The Company has not taken, directly or indirectly, any action designed
to or that might be reasonably expected to cause or result in stabilization
or manipulation of the price of the Shares whether to facilitate the sale
or resale of the Offered Shares or otherwise, and has taken no action which
would directly or indirectly violate Regulation M under the 1934 Act
("REGULATION M")).
(w) Related-Party Transactions. There are no business relationships or
related-party transactions involving the Company or any of its subsidiaries
or any other person required to be described in each Applicable Prospectus
which have not been described as required.
(x) NASD Matters. All of the information provided to the Underwriters
or to counsel for the Underwriters by the Company, its officers and
directors and, to the best knowledge of the Company, the holders of any
securities (debt or equity) or options to acquire any securities of the
Company in connection with letters, filings or other supplemental
information provided to NASD Regulation Inc. pursuant to NASD Conduct Rule
2710 or 2720 is true, complete and correct.
(y) Parties to Lock-Up Agreements. Each of the Company's directors and
executive officers and each of the other persons and entities listed in
Exhibit C hereto has executed and delivered to Jefferies a lock-up
agreement in the form of Exhibit D hereto. Exhibit C hereto contains a
true, complete and correct list of all directors and officers of the
Company. If any additional persons shall become directors or executive
officers of the Company prior to the end of the Company Lock-up Period (as
defined below), the Company shall cause each such person, prior to or
contemporaneously with their appointment or election as a director or
10
executive officer of the Company, to execute and deliver to Jefferies an
agreement in the form attached hereto as Exhibit D.
(z) Statistical and Market-Related Data. The statistical, demographic
and market-related data included in the Registration Statement and each
Applicable Prospectus are based on or derived from sources that the Company
believes to be reliable and accurate or represent the Company's good faith
estimates that are made on the basis of data derived from such sources.
(aa) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge,
any employee or agent of the Company or any subsidiary, has made any
contribution or other payment to any official of, or candidate for, any
federal, state or foreign office in violation of any law or of the
character required to be disclosed in the Registration Statement and each
Applicable Prospectus.
(bb) Deficiencies in Internal Control Over Financial Reporting. The
Company is not aware of (i) 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 information or
(ii) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal control
over financial reporting.
(cc) Compliance with Environmental Laws. Except as described in each
Applicable Prospectus and except as would not, singly or in the aggregate,
result in a Material Adverse Change, (i) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "HAZARDOUS MATERIALS") or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"ENVIRONMENTAL LAWS"), (ii) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(iii) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (iv)
there are no events or circumstances that might reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(dd) ERISA Compliance. The Company and its subsidiaries and any
"EMPLOYEE BENEFIT PLAN" (as defined under the Employee Retirement Income
Security Act of 1974, as
11
amended, and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Company, its
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 a subsidiary, any member of any group of
organizations described in Sections 414(b),(c),(m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "CODE") of which the Company 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, its subsidiaries or
any of their ERISA Affiliates. No "EMPLOYEE BENEFIT PLAN" established or
maintained by the Company, 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). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has
incurred or reasonably expects to incur any liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "EMPLOYEE
BENEFIT PLAN" or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each
"EMPLOYEE BENEFIT PLAN" established or maintained by the Company, its
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.
(ee) Brokers. Except for the underwriting discounts and commissions
payable to the Underwriters as described in the Time of Sale Prospectus and
the Prospectus, there is no broker, finder or other party that is entitled
to receive from the Company any brokerage or finder's fee or other fee or
commission as a result of any transactions contemplated by this Agreement.
(ff) No Outstanding Loans or Other Extensions of Credit. Neither the
Company nor any of its subsidiaries has extended or maintained credit,
arranged for the extension of credit, or renewed any extension of credit,
in the form of a personal loan, to or for any director or executive officer
(or equivalent thereof) of the Company and/or such subsidiary except for
such extensions of credit as are expressly permitted by Section 13(k) of
the Exchange Act.
(gg) Compliance with Laws. The Company has not been advised, and has no
reason to believe, that it or any of its subsidiaries is not conducting
business in compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business, except where failure
to be so in compliance would not result in a Material Adverse Change.
(hh) Foreign Corrupt Practices Act. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director, officer,
agent, employee, affiliate or other person acting on behalf of the Company
or any of its subsidiaries is aware of or has taken any action, directly or
indirectly, that has resulted or would result in a violation of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the "FCPA"), including, without limitation, making use of the
mails or any means or instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or authorization of the
payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any "foreign official"
(as such term is defined in the FCPA) or any foreign political party or
official thereof or any candidate for
12
foreign political office, in contravention of the FCPA; and the Company and
its subsidiaries and, to the knowledge of the Company, the Company's
affiliates have conducted their respective businesses in compliance with
the FCPA and have instituted and maintain policies and procedures designed
to ensure, and which are reasonably expected to continue to ensure,
continued compliance therewith.
(ii) Money Laundering Laws. 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 applicable jurisdictions, the rules and
regulations thereunder and any related or similar applicable rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the "MONEY LAUNDERING LAWS") 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 best knowledge of the Company, threatened.
(jj) OFAC. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee, affiliate
or person acting on behalf of the Company or any of its subsidiaries is
currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the
Company will not directly or indirectly use the proceeds of this offering,
or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
Any certificate signed by any officer of the Company or any of its
subsidiaries and delivered to the Representative or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company
to each Underwriter as to the matters covered thereby.
The Company acknowledges that the Underwriters and, for purposes
of the opinions to be delivered pursuant to Section 6 hereof, counsel to
the Company and counsel to the Underwriters, will rely upon the accuracy
and truthfulness of the foregoing representations and hereby consents to
such reliance.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE OFFERED SHARES
(a) The Firm Shares. Upon the terms herein set forth, the Company
agrees to issue and sell to the several Underwriters an aggregate of [___]
Firm Shares. On the basis of the representations, warranties and agreements
herein contained, and upon the terms but subject to the conditions herein
set forth, the Underwriters agree, severally and not jointly, to purchase
from the Company the respective number of Firm Shares set forth opposite
their names on Schedule A. The purchase price per Firm Share to be paid by
the several Underwriters to the Company shall be $[___] per share.
13
(b) The First Closing Date. Delivery of certificates for the Firm
Shares to be purchased by the Underwriters and payment therefor shall be
made at the offices of Jefferies, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
(or such other place as may be agreed to by the Company and the
Representative) at 9:00 a.m. New York time, on [ ], 2007, or such other
time and date not later than 1:30 p.m. New York time, on [ ], 2007 as the
Representative shall designate by notice to the Company (the time and date
of such closing are called the "FIRST CLOSING DATE"). The Company hereby
acknowledges that circumstances under which the Representative may provide
notice to postpone the First Closing Date as originally scheduled include,
but are in no way limited to, any determination by the Company or the
Representative to recirculate to the public copies of an amended or
supplemented Prospectus or a delay as contemplated by the provisions of
Section 11.
(c) The Optional Shares; Option Closing Date. In addition, on the basis
of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally
and not jointly, up to an aggregate of [___] Optional Shares from the
Company at the purchase price per share to be paid by the Underwriters for
the Firm Shares. The option granted hereunder is for use by the
Underwriters solely in covering any over-allotments in connection with the
sale and distribution of the Firm Shares. The option granted hereunder may
be exercised at any time and from time to time in whole or in part upon
notice by the Representative to the Company, which notice may be given at
any time within 30 days from the date of this Agreement. Such notice shall
set forth (i) the aggregate number of Optional Shares as to which the
Underwriters are exercising the option, (ii) the names and denominations in
which the certificates for the Optional Shares are to be registered and
(iii) the time, date and place at which such certificates will be delivered
(which time and date may be simultaneous with, but not earlier than, the
First Closing Date; and in the event that such time and date are
simultaneous with the First Closing Date, the term "FIRST CLOSING DATE"
shall refer to the time and date of delivery of certificates for the Firm
Shares and such Optional Shares). Any such time and date of delivery, if
subsequent to the First Closing Date, is called an "OPTION CLOSING DATE"
and shall be determined by the Representative and shall not be earlier than
three nor later than five full business days after delivery of such notice
of exercise. If any Optional Shares are to be purchased, each Underwriter
agrees, severally and not jointly, to purchase the number of Optional
Shares (subject to such adjustments to eliminate fractional shares as the
Representative may determine) that bears the same proportion to the total
number of Optional Shares to be purchased as the number of Firm Shares set
forth on Schedule A opposite the name of such Underwriter bears to the
total number of Firm Shares. The Representative may cancel the option at
any time prior to its expiration by giving written notice of such
cancellation to the Company.
(d) Public Offering of the Offered Shares. The Representative hereby
advises the Company that the Underwriters intend to offer for sale to the
public, initially on the terms set forth in the Time of Sale Prospectus and
the Prospectus, their respective portions of the Offered Shares as soon
after this Agreement has been executed and the Registration Statement has
been declared effective as the Representative, in its sole judgment, has
determined is advisable and practicable.
14
(e) Payment for the Offered Shares. Payment for the Offered Shares to
be sold by the Company shall be made at the First Closing Date (and, if
applicable, at each Option Closing Date) by wire transfer of immediately
available funds to the order of the Company.
It is understood that the Representative has been authorized, for
its own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for,
the Firm Shares and any Optional Shares the Underwriters have agreed to
purchase. Jefferies, individually and not as the Representative of the
Underwriters, may (but shall not be obligated to) make payment for any
Offered Shares to be purchased by any Underwriter whose funds shall not
have been received by the Representative by the First Closing Date or the
applicable Option Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from
any of its obligations under this Agreement.
(f) Delivery of the Offered Shares. The Company shall deliver, or cause
to be delivered, to the Representative for the accounts of the several
Underwriters certificates for the Firm Shares at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company shall also
deliver, or cause to be delivered, to the Representative for the accounts
of the several Underwriters, certificates for the Optional Shares the
Underwriters have agreed to purchase at the First Closing Date or the
applicable Option Closing Date, as the case may be, against the irrevocable
release of a wire transfer of immediately available funds for the amount of
the purchase price therefor. The certificates for the Offered Shares shall
be in definitive form and registered in such names and denominations as the
Representative shall have requested at least two full business days prior
to the First Closing Date (or the applicable Option Closing Date, as the
case may be) and shall be made available for inspection on the business day
preceding the First Closing Date (or the applicable Option Closing Date, as
the case may be) at a location in New York City as the Representative may
designate. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of
the Underwriters.
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY
The Company further covenants and agrees with each Underwriter as
follows:
(a) Delivery of Registration Statement, Time of Sale Prospectus and
Prospectus. The Company shall furnish to you, without charge, [ ] signed
copies of the Registration Statement, any amendments thereto and any Rule
462(b) Registration Statement (including exhibits thereto) and for delivery
to each other Underwriter a conformed copy of the Registration Statement,
any amendments thereto and any Rule 462(b) Registration Statement (without
exhibits thereto) and shall furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 3(e) or 3(f) below, as many copies of the Time of Sale Prospectus,
the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
15
(b) Representative's Review of Proposed Amendments and Supplements.
Prior to amending or supplementing the Registration Statement (including
any registration statement filed under Rule 462(b) under the Securities
Act), any preliminary prospectus, the Time of Sale Prospectus or the
Prospectus, the Company shall furnish to the Representative for review, a
reasonable amount of time prior to the proposed time of filing or use
thereof, a copy of each such proposed amendment or supplement, and the
Company shall not file or use any such proposed amendment or supplement
without the Representative's consent, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities
Act any prospectus required to be filed pursuant to such Rule.
(c) Free Writing Prospectuses. The Company shall furnish to the
Representative for review, a reasonable amount of time prior to the
proposed time of filing or use thereof, a copy of each proposed free
writing prospectus or any amendment or supplement thereto to be prepared by
or on behalf of, used by, or referred to by the Company and the Company
shall not file, use or refer to any proposed free writing prospectus or any
amendment or supplement thereto without the Representative's consent. The
Company shall furnish to each Underwriter, without charge, as many copies
of any free writing prospectus prepared by or on behalf of, or used by the
Company, as such Underwriter may reasonably request. If at any time when a
prospectus is required by the Securities Act (including, without
limitation, pursuant to Rule 173(d)) to be delivered in connection with
sales of the Offered Shares (but in any event if at any time through and
including the First Closing Date) there occurred or occurs an event or
development as a result of which any free writing prospectus prepared by or
on behalf of, used by, or referred to by the Company conflicted or would
conflict with the information contained in the Registration Statement 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 shall promptly amend or
supplement such free writing prospectus to eliminate or correct such
conflict or so that the statements in such free writing prospectus as so
amended or supplemented will not include an 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 prevailing at such
subsequent time, not misleading, as the case may be; provided, however,
that prior to amending or supplementing any such free writing prospectus,
the Company shall furnish to the Representative for review, a reasonable
amount of time prior to the proposed time of filing or use thereof, a copy
of such proposed amended or supplemented free writing prospectus and the
Company shall not file, use or refer to any such amended or supplemented
free writing prospectus without the Representative's consent.
(d) Filing of Underwriter Free Writing Prospectuses. The Company shall
not take any action that would result in an Underwriter or the Company
being required to file with the Commission pursuant to Rule 433(d) under
the Securities Act a free writing prospectus prepared by or on behalf of
the Underwriter that the Underwriter otherwise would not have been required
to file thereunder.
(e) Amendments and Supplements to Time of Sale Prospectus. If the Time
of Sale Prospectus is being used to solicit offers to buy the Shares at a
time when the Prospectus is not yet available to prospective purchasers and
any event shall occur or condition exist as a
16
result of which it is necessary to amend or supplement the Time of Sale
Prospectus so that the Time of Sale Prospectus does not include an 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
when delivered to a prospective purchaser, not misleading, or if any event
shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration
Statement, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Time of Sale Prospectus to comply with
applicable law, including the Securities Act, the Company shall (subject to
Sections 3(b) and 3(c)) forthwith prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to any dealer upon
request, either amendments or supplements to the Time of Sale Prospectus so
that the statements in the Time of Sale Prospectus as so amended or
supplemented will not include an 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 when delivered to a prospective
purchaser, not misleading or so that the Time of Sale Prospectus, as
amended or supplemented, will no longer conflict with the Registration
Statement, or so that the Time of Sale Prospectus, as amended or
supplemented, will comply with applicable law including the Securities Act.
(f) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representative in writing (i) of the
receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing
of any post-effective amendment to the Registration Statement, any Rule
462(b) Registration Statement or any amendment or supplement to any
preliminary prospectus, the Time of Sale Prospectus, any free writing
prospectus or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement or any Rule 462(b)
Registration Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto, any Rule
462(b) Registration Statement or any amendment or supplement to any
preliminary prospectus, the Time of Sale Prospectus or the Prospectus or of
any order preventing or suspending the use of any preliminary prospectus,
the Time of Sale Prospectus, any free writing prospectus or the Prospectus,
or of any proceedings to remove, suspend or terminate from listing the
Shares from any securities exchange upon which they are listed for trading,
or of the threatening or initiation of any proceedings for any of such
purposes. If the Commission shall enter any such stop order at any time,
the Company will use its best efforts to obtain the lifting of such order
at the earliest possible moment. Additionally, the Company agrees that it
shall comply with the provisions of Rule 424(b), Rule 433 and Rule 430A, as
applicable, under the Securities Act and will use its reasonable efforts to
confirm that any filings made by the Company under such Rule 424(b) or Rule
433 were received in a timely manner by the Commission.
(g) Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Prospectus so that the
Prospectus does not include an 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 when the Prospectus is delivered to a
purchaser, not misleading, or if in the opinion of the Representative or
counsel for the Underwriters it is otherwise necessary to amend or
supplement the Prospectus to comply
17
with applicable law, including the Securities Act, the Company agrees
(subject to Section 3(b) and 3(c)) to promptly prepare, file with the
Commission and furnish at its own expense to the Underwriters and to
dealers, amendments or supplements to the Prospectus so that the statements
in the Prospectus as so amended or supplemented will not include an 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
when the Prospectus is delivered to a purchaser, be misleading or so that
the Prospectus, as amended or supplemented, will comply with applicable law
including the Securities Act. Neither the Representative's consent to, or
delivery of, any such amendment or supplement shall constitute a waiver of
any of the Company's obligations under Sections 3(b) or (c).
(h) Blue Sky Compliance. The Company shall cooperate with the
Representative and counsel for the Underwriters to qualify or register the
Offered Shares for sale under (or obtain exemptions from the application
of) the state securities or blue sky laws or Canadian provincial securities
laws (or other foreign laws) of those jurisdictions designated by the
Representative, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required
for the distribution of the Offered Shares. The Company shall not be
required to qualify as a foreign corporation or to take any action that
would subject it to general service of process in any such jurisdiction
where it is not presently qualified. The Company will advise the
Representative promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Offered Shares for
offering, sale or trading in any jurisdiction or any initiation or threat
of any proceeding for any such purpose, and in the event of the issuance of
any order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(i) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Offered Shares sold by it in the manner described under the
caption "Use of Proceeds" in each Applicable Prospectus.
(j) Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Shares.
(k) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representative an
earnings statement (which need not be audited) covering a period of at
least twelve months beginning with the first fiscal quarter of the Company
occurring after the date of this Agreement which shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(l) Periodic Reporting Obligations. The Company shall file, on a timely
basis, with the Commission and the Nasdaq Stock Market, LLC all reports and
documents required to be filed under the Exchange Act. Additionally, the
Company shall report the use of proceeds from the issuance of the Offered
Shares as may be required under Rule 463 under the Securities Act.
18
(m) Listing. The Company will use its best efforts to maintain the
listing of the Shares on the Nasdaq.
(n) Company to Provide Copy of the Prospectus in Form That May be
Downloaded from the Internet. The Company shall cause to be prepared and
delivered, at its expense, within one business day from the effective date
of this Agreement, to Jefferies an "electronic Prospectus" to be used by
the Underwriters in connection with the offering and sale of the Offered
Shares. As used herein, the term "ELECTRONIC PROSPECTUS" means a form of
Time of Sale Prospectus, and any amendment or supplement thereto, that
meets each of the following conditions: (i) it shall be encoded in an
electronic format, satisfactory to Jefferies, that may be transmitted
electronically by Jefferies and the other Underwriters to offerees and
purchasers of the Offered Shares; (ii) it shall disclose the same
information as the paper Time of Sale Prospectus, except to the extent that
graphic and image material cannot be disseminated electronically, in which
case such graphic and image material shall be replaced in the electronic
Prospectus with a fair and accurate narrative description or tabular
representation of such material, as appropriate; and (iii) it shall be in
or convertible into a paper format or an electronic format, satisfactory to
Jefferies, that will allow investors to store and have continuously ready
access to the Time of Sale Prospectus at any future time, without charge to
investors (other than any fee charged for subscription to the Internet as a
whole and for on-line time). The Company hereby confirms that it has
included or will include in the Prospectus filed pursuant to XXXXX or
otherwise with the Commission and in the Registration Statement at the time
it was declared effective an undertaking that, upon receipt of a request by
an investor or his or her representative, the Company shall transmit or
cause to be transmitted promptly, without charge, a paper copy of the Time
of Sale Prospectus.
(o) Agreement Not to Offer or Sell Additional Shares. During the period
commencing on and including the date hereof and ending on and including the
180th day following the date of the Prospectus (as the same may be extended
as described below, the "LOCK-UP PERIOD"), the Company will not, without
the prior written consent of Jefferies (which consent may be withheld at
the sole discretion of Jefferies), directly or indirectly, sell (including,
without limitation, any short sale), offer, contract or grant any option to
sell, pledge, transfer or establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise
dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any Shares,
options, rights or warrants to acquire Shares or securities exchangeable or
exercisable for or convertible into Shares (other than as contemplated by
this Agreement with respect to the Offered Shares) or publicly announce the
intention to do any of the foregoing; provided, however, that the Company
may issue Shares or options to purchase Shares, or issue Shares upon
exercise of options, pursuant to any stock option, stock bonus or other
stock plan or arrangement described in each Applicable Prospectus, but only
if the holders of such shares, options, or shares issued upon exercise of
such options, agree in writing not to sell, offer, dispose of or otherwise
transfer any such shares or options during such Lock-up Period without the
prior written consent of Jefferies (which consent may be withheld at the
sole discretion of the Jefferies). Notwithstanding the foregoing, if (i)
during the last 17 days of the Lock-up Period, the Company issues an
earnings release or material news or a material event relating to the
Company occurs or (ii) prior to the expiration of the Lock-up Period, the
19
Company announces that it will release earnings results during the 16-day
period beginning on the last day of the Lock-up Period, then in each case
the Lock-up Period will be extended until the expiration of the 18-day
period beginning on the date of the issuance of the earnings release or the
occurrence of the material news or material event, as applicable, unless
Jefferies waives, in writing, such extension (which waiver may be withheld
at the sole discretion of Jefferies. The Company will provide the
Representative with prior notice of any such announcement that gives rise
to an extension of the Lock-up Period.
(p) Future Reports to the Representative. During the period of five
years hereafter the Company will furnish to Jefferies at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx Attention: [CAPITAL MARKETS]: (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report
of the Company containing the balance sheet of the Company as of the close
of such fiscal year and statements of income, stockholders' equity and cash
flows for the year then ended and the opinion thereon of the Company's
independent public or certified public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report
on Form 8-K or other report filed by the Company with the Commission, the
NASD or any securities exchange; and (iii) as soon as available, copies of
any report or communication of the Company mailed generally to holders of
its capital stock; provided, however, that the Company shall be deemed to
satisfy the requirement to furnish such documents if such documents are
filed with the Commission pursuant to XXXXX.
(q) Investment Limitation. The Company shall not invest, or otherwise
use the proceeds received by the Company from its sale of the Offered
Shares in such a manner as would require the Company or any of its
subsidiaries to register as an investment company under the Investment
Company Act.
(r) No Stabilization or Manipulation; Compliance with Regulation M. The
Company will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Shares or any other reference security,
whether to facilitate the sale or resale of the Offered Shares or
otherwise, and the Company will, and shall cause each of its affiliates to,
comply with all applicable provisions of Regulation M. If the limitations
of Rule 102 of Regulation M ("RULE 102") do not apply with respect to the
Offered Shares or any other reference security pursuant to any exception
set forth in Section (d) of Rule 102, then promptly upon notice from the
Representative (or, if later, at the time stated in the notice), the
Company will, and shall cause each of its affiliates to, comply with Rule
102 as though such exception were not available but the other provisions of
Rule 102 (as interpreted by the Commission) did apply.
(s) Existing Lock-Up Agreements. During the lock-up Period, the Company
will enforce all existing agreements between the Company and any of its
security holders that prohibit the sale, transfer, assignment, pledge or
hypothecation of any of the Company's securities in connection with the
Company's initial public offering. In addition, the Company will direct the
transfer agent to place stop transfer restrictions upon any such securities
of the Company that are bound by such existing "lock-up" agreements for the
duration of the periods contemplated in such agreements, including, without
limitation,
20
"lock-up" agreements entered into by the Company's officers and directors
pursuant to Section 6(h).
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its
obligations hereunder and in connection with the transactions contemplated
hereby, including without limitation (i) all expenses incident to the
issuance and delivery of the Offered Shares (including all printing and
engraving costs), (ii) all fees and expenses of the registrar and transfer
agent of the Shares, (iii) all necessary issue, transfer and other stamp
taxes in connection with the issuance and sale of the Offered Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel,
independent public or certified public accountants and other advisors, (v)
all costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of the Registration Statement
(including financial statements, exhibits, schedules, consents and
certificates of experts), the Time of Sale Prospectus, the Prospectus, any
free writing prospectus prepared by or on behalf of, used by, or referred
to by the Company, and each preliminary prospectus, and all amendments and
supplements thereto, and this Agreement, (vi) all filing fees, attorneys'
fees and expenses incurred by the Company or the Underwriters in connection
with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Offered Shares for
offer and sale under the state securities or blue sky laws or provincial
laws of Canada, and, if requested by the Representative, preparing and
printing a "Blue Sky Survey" or memorandum and a "Canadian wrapper" and any
supplements thereto, advising the Underwriters of such qualifications,
registrations, determinations and exemptions, (vii) the filing fees
incident to, and the reasonable fees and expenses of counsel for the
Underwriters (up to $10,000 of counsel fees and expenses) in connection
with, the NASD's review, if any, and approval of the Underwriters'
participation in the offering and distribution of the Offered Shares,
(viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation,
expenses associated with the preparation or dissemination of any electronic
road show, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with
the road show presentations with the prior approval of the Company, travel
and lodging expenses of the representatives, employees and officers of the
Company and of the Representative and any such consultants, and the cost of
any aircraft chartered in connection with the road show, (ix) the fees and
expenses associated with listing the Offered Shares on the Nasdaq, and (x)
all other fees, costs and expenses of the nature referred to in Item 13 of
Part II of the Registration Statement. Except as provided in this Section
4, Section 7, Section 8 and Section 9 hereof, the Underwriters shall pay
their own expenses, including the fees and disbursements of their counsel.
SECTION 5. COVENANT OF THE UNDERWRITERS. Each Underwriter severally and
not jointly, covenants with the Company not to take any action that would
result in the Company being required to file with the Commission pursuant
to Rule 433(d) under the Securities Act a free writing prospectus prepared
by or on behalf of such Underwriter that otherwise would not be required to
be filed by the Company thereunder, but for the action of the Underwriter
21
SECTION 6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Offered
Shares as provided herein on the First Closing Date and, with respect to
the Optional Shares, each Option Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company
set forth in Section 1 hereof as of the date hereof and as of the First
Closing Date as though then made and, with respect to the Optional Shares,
as of each Option Closing Date as though then made, to the timely
performance by the Company of its covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Representative
shall have received from Deloitte & Touche LLP, independent public or
certified public accountants for the Company, (i) a letter dated the date
hereof addressed to the Underwriters, in form and substance satisfactory to
the Representative, containing statements and information of the type
ordinarily included in accountant's "comfort letters" to underwriters,
delivered according to Statement of Auditing Standards No. 72 (or any
successor bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in the Registration
Statement, the Time of Sale Prospectus, and each free writing prospectus,
if any, and, with respect to each letter dated the date hereof only, the
Prospectus (and the Representative shall have received an additional [___]
conformed copies of such accountants' letter for each of the several
Underwriters), and (ii) confirming that they are (A) independent public or
certified public accountants as required by the Securities Act and (B) in
compliance with the applicable requirements relating to the qualification
of accountants under Rule 2-01 of Regulation S-X.
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the
Optional Shares, each Option Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act;
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in
effect and no proceedings for such purpose shall have been instituted
or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the fairness
and reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For the period
from and after the date of this Agreement and through and including the
First Closing Date and, with respect to the Optional Shares, each Option
Closing Date:
(i) in the judgment of the Representative there shall not have
occurred any Material Adverse Change; and
22
(ii) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any securities
of the Company or any of its subsidiaries by any "nationally recognized
statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act.
(d) Opinion of Counsel for the Company. On each of the First Closing
Date and each Option Closing Date the Representative shall have received
the opinion of (i) Loeb & Loeb LLP, counsel for the Company, dated as of
such Closing Date, the form of which is attached as Exhibit A and to such
further effect as counsel for the Underwriters shall reasonably request and
(ii) each of Xxxxxx, Halter & Xxxxxxxx, LLP, Xxxxxxxxx Xxxxxxx LLP and
Xxxxxxxxxx & Xxxxxxxx Xxxxxxx Xxxxx Xxxxx LLP, intellectual property
counsel for the Company, dated as of such Closing Date, the form of which
is attached as Exhibit B and to such further effect as counsel for the
Underwriters shall reasonably request (and the Representative shall have
received an additional [___] signed copies of each such counsel's legal
opinion for each of the several Underwriters).
(e) Opinion of Counsel for the Underwriters. On each of the First
Closing Date and each Option Closing Date the Representative shall have
received the opinion of Xxxxx Day, counsel for the Underwriters, in form
and substance satisfactory to the Underwriters, dated as of such Closing
Date.
(f) Officers' Certificate. On each of the First Closing Date and each
Option Closing Date the Representative shall have received a written
certificate executed by the Chief Executive Officer of the Company and the
Chief Financial Officer of the Company, dated as of such Closing Date, to
the effect set forth in subsections (b)(ii) and (c)(ii) of this Section 6,
and further to the effect that:
(i) for the period from and including the date of this
Agreement through and including such Closing Date, there has not
occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the
Company set forth in Section 1 of this Agreement are true and correct
with the same force and effect as though expressly made on and as of
such Closing Date; and
(iii) the Company has complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed
or satisfied hereunder at or prior to such Closing Date.
(g) Bring-down Comfort Letter. On each of the First Closing Date and
each Option Closing Date the Representative shall have received from
Deloitte & Touche LLP, independent public or certified public accountants
for the Company, a letter dated such date, in form and substance
satisfactory to the Representative, to the effect that they reaffirm the
statements made in the letter furnished by them pursuant to subsection (a)
of this Section 6, except that the specified date referred to therein for
the carrying out of procedures shall be no more than three business days
prior to the First Closing Date or the applicable Option
23
Closing Date, as the case may be (and the Representative shall have
received an additional [___] conformed copies of such accountants' letter
for each of the several Underwriters).
(h) Lock-Up Agreement from Certain Securityholders of the Company. On
or prior to the date hereof, the Company shall have furnished to the
Representative an agreement in the form of Exhibit D hereto from each
director, executive officer and each beneficial owner (as defined and
determined according to Rule 13d-3 under the Exchange Act, except that a
one hundred eighty day period shall be used rather than the sixty day
period set forth therein) of [ ] percent of the outstanding issued share
capital of the Company and such agreement shall be in full force and effect
on each of the First Closing Date and each Option Closing Date.
(i) Rule 462(b) Registration Statement. In the event that a Rule 462(b)
Registration Statement is filed in connection with the offering
contemplated by this Agreement, such Rule 462(b) Registration Statement
shall have been filed with the Commission on the date of this Agreement and
shall have become effective automatically upon such filing.
(j) Additional Documents. On or before each of the First Closing Date
and each Option Closing Date, the Representative and counsel for the
Underwriters shall have received such information, documents and opinions
as they may reasonably request for the purposes of enabling them to pass
upon the issuance and sale of the Offered Shares as contemplated herein, or
in order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements,
herein contained; and all proceedings taken by the Company in connection
with the issuance and sale of the Offered Shares as contemplated herein and
in connection with the other transactions contemplated by this Agreement
shall be satisfactory in form and substance to the Representative and
counsel for the Underwriters.
If any condition specified in this Section 6 is not satisfied when
and as required to be satisfied, this Agreement may be terminated by the
Representative by notice to the Company at any time on or prior to the
First Closing Date and, with respect to the Optional Shares, at any time on
or prior to the applicable Option Closing Date, which termination shall be
without liability on the part of any party to any other party, except that
Section 4, Section 7, Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
SECTION 7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this Agreement
is terminated by the Representative pursuant to Section 6 or Section 11, or
if the sale to the Underwriters of the Offered Shares on the First Closing
Date is not consummated because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Representative and
the other Underwriters (or such Underwriters as have terminated this
Agreement with respect to themselves), severally, upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the
Representative and the Underwriters in connection with the proposed
purchase and the offering and sale of the Offered Shares, including but not
limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges.
SECTION 8. INDEMNIFICATION.
24
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter, its officers and employees,
and each person, if any, who controls any Underwriter within the meaning of
the Securities Act or the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Underwriter or such
officer, employee or controlling person may become subject, under the
Securities Act, the Exchange Act, other federal or state statutory law or
regulation, or the laws or regulations of foreign jurisdictions where
Offered Shares have been offered or sold or at common law or otherwise
(including in settlement of any litigation), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based upon (A) (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be
a part thereof pursuant to Rule 430A under the Securities Act, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading;
or (ii) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Time of Sale Prospectus, any
free writing prospectus that the Company has used, referred to or filed, or
is required to file, pursuant to Rule 433(d) of the Securities Act or the
Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; or (iii) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Shares or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon any matter covered by
clause (i) or (ii) above, provided that the Company shall not be liable
under this clause (iii) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss,
claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter
through its bad faith or willful misconduct or (B) the violation of any
laws or regulations of foreign jurisdictions where Offered Shares have been
offered or sold; and to reimburse each Underwriter and each such officer,
employee and controlling person for any and all expenses (including the
fees and disbursements of counsel chosen by the Representative) as such
expenses are reasonably incurred by such Underwriter or such officer,
employee or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense
to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by the Representative expressly for use in the
Registration Statement, any preliminary prospectus, the Time of Sale
Prospectus, any such free writing prospectus or the Prospectus (or any
amendment or supplement thereto), it being understood and agreed that the
only such information furnished by the Representative to the Company
consists of the information described in subsection (b) below. The
indemnity agreement set forth in this Section 8(a) shall be in addition to
any liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, each of its
25
directors, each of its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, against any loss, claim, damage,
liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory law
or regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of
such Underwriter), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of
or is based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, any free writing prospectus that
the Company has used, referred to or filed, or is required to file,
pursuant to Rule 433(d) of the Securities Act or the Prospectus (or such
amendment or supplement thereto), or arises out of or is based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, such preliminary
prospectus, the Time of Sale Prospectus, such free writing prospectus that
the Company has used, referred to or filed, or is required to file,
pursuant to Rule 433(d) of the Securities Act, the Prospectus (or such
amendment or supplement thereto), in reliance upon and in conformity with
written information furnished to the Company by the Representative
expressly for use therein; and to reimburse the Company, or any such
director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. The Company hereby acknowledges that the only information that the
Representative and the Underwriters have furnished to the Company expressly
for use in the Registration Statement, any preliminary prospectus, the Time
of Sale Prospectus, any free writing prospectus that the Company has filed,
or is required to file, pursuant to Rule 433(d) of the Securities Act or
the Prospectus (or any amendment or supplement thereto) are the statements
set forth in the table in the first paragraph and as set forth in the
fourth and thirteenth paragraphs under the caption "Underwriting" in the
Time of Sale Prospectus and the Prospectus. The indemnity agreement set
forth in this Section 8(b) shall be in addition to any liabilities that
each Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not
relieve the indemnifying party from any liability which it may have to any
indemnified party for contribution under Section 9 below or otherwise under
the indemnity agreement contained in this Section 8, except to the extent
such indemnifying party is materially prejudiced as a proximate result of
such failure. In case any such action is brought against any indemnified
party and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate
in, and, to the extent that it shall elect, jointly with all other
indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
26
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have concluded that a
conflict may arise between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right
to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to
such indemnified party of such indemnifying party's election so to assume
the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i)
the indemnified party shall have employed separate counsel in accordance
with the proviso to the preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the fees and expenses
of more than one separate firm of attorneys (together with local counsel),
representing the indemnified parties who are parties to such action), which
counsel (together with any local counsel) for the indemnified parties shall
be selected by the Representative (in the case of counsel for the
indemnified parties referred to in Section 8(a) above) or by the Company
(in the case of counsel for the indemnified parties referred to in Section
8(b) above)), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or
(iii) the indemnifying party has authorized in writing the employment of
counsel for the indemnified party at the expense of the indemnifying party,
in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party and shall be paid as they are incurred.
(d) Settlements. The indemnifying party under this Section 8 shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 8(c) hereof, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement, compromise or consent to
the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been
a party and indemnity was or could have been sought hereunder by such
indemnified party, unless such settlement, compromise or consent includes
an unconditional release of such indemnified party from all liability on
claims that are the subject matter of such action, suit or proceeding.
27
SECTION 9. CONTRIBUTION. If the indemnification provided for in Section
8 is for any reason held to be unavailable to or otherwise insufficient to
hold harmless an indemnified party in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable
by such indemnified party, as incurred, as a result of any losses, claims,
damages, liabilities or expenses referred to therein (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company,
on the one hand, and the Underwriters, on the other hand, from the offering
of the Offered Shares pursuant to this Agreement or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
on the one hand, and the Underwriters, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one
hand, and the Underwriters, on the other hand, in connection with the
offering of the Offered Shares pursuant to this Agreement shall be deemed
to be in the same respective proportions as the total net proceeds from the
offering of the Offered Shares pursuant to this Agreement (before deducting
expenses) received by the Company, and the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth on the
front cover page of the Prospectus bear to the aggregate initial public
offering price of the Offered Shares as set forth on such cover. The
relative fault of the Company, on the one hand, and the Underwriters, on
the other hand, shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or the Underwriters,
on the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in Section 8(c), any legal
or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set
forth in Section 8(c) with respect to notice of commencement of any action
shall apply if a claim for contribution is to be made under this Section 9;
provided, however, that no additional notice shall be required with respect
to any action for which notice has been given under Section 8(c) for
purposes of indemnification.
The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions received by such Underwriter in connection with
the Offered Shares underwritten by it and distributed to the public. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not
28
guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 9 are several, and not joint, in
proportion to their respective underwriting commitments as set forth
opposite their respective names on Schedule A. For purposes of this Section
9, each officer and employee of an Underwriter and each person, if any, who
controls an Underwriter within the meaning of the Securities Act or the
Exchange Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement, and each person, if any, who
controls the Company with the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Company.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If, on
the First Closing Date or the applicable Option Closing Date, as the case
may be, any one or more of the several Underwriters shall fail or refuse to
purchase Offered Shares that it or they have agreed to purchase hereunder
on such date, and the aggregate number of Offered Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase does not exceed 10% of the aggregate number of the Offered Shares
to be purchased on such date, the Representative may make arrangements
satisfactory to the Company for the purchase of such Offered Shares by
other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date, the other Underwriters shall be
obligated, severally and not jointly, in the proportions that the number of
Firm Shares set forth opposite their respective names on Schedule A bears
to the aggregate number of Firm Shares set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representative with the consent of the non-defaulting
Underwriters, to purchase the Offered Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on
such date. If, on the First Closing Date or the applicable Option Closing
Date, as the case may be, any one or more of the Underwriters shall fail or
refuse to purchase Offered Shares and the aggregate number of Offered
Shares with respect to which such default occurs exceeds 10% of the
aggregate number of Offered Shares to be purchased on such date, and
arrangements satisfactory to the Representative and the Company for the
purchase of such Offered Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any party to
any other party except that the provisions of Section 4, Section 7, Section
8 and Section 9 shall at all times be effective and shall survive such
termination. In any such case either the Representative or the Company
shall have the right to postpone the First Closing Date or the applicable
Option Closing Date, as the case may be, but in no event for longer than
seven days in order that the required changes, if any, to the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected.
As used in this Agreement, the term "UNDERWRITER" shall be deemed
to include any person substituted for a defaulting Underwriter under this
Section 10. Any action taken under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the purchase of the
Firm Shares by the Underwriters on the First Closing Date this Agreement
may be terminated by the Representative by notice given to the Company if
at any time (i) trading or quotation in any of the Company's securities
shall have been suspended or limited by the Commission or by
29
the Nasdaq, or trading in securities generally on either the Nasdaq Stock
Market or the New York Stock Exchange shall have been suspended or limited,
or minimum or maximum prices shall have been generally established on any
of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any of federal, New York or
Delaware authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial
markets, or any substantial change or development involving a prospective
substantial change in United States' or international political, financial
or economic conditions, as in the judgment of the Representative is
material and adverse and makes it impracticable to market the Offered
Shares in the manner and on the terms described in the Time of Sale
Prospectus or the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Representative there shall have
occurred any Material Adverse Change; or (v) the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other
calamity of such character as in the judgment of the Representative may
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured. Any
termination pursuant to this Section 11 shall be without liability on the
part of (a) the Company to any Underwriter, except that the Company shall
be obligated to reimburse the expenses of the Representative and the
Underwriters pursuant to Sections 4 and 7 hereof, (b) any Underwriter to
the Company, or (c) of any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and
shall survive such termination.
SECTION 12. NO ADVISORY OR FIDUCIARY RELATIONSHIP. The Company
acknowledges and agrees that (a) the purchase and sale of the Offered
Shares pursuant to this Agreement, including the determination of the
public offering price of the Offered Shares and any related discounts and
commissions, is an arm's-length commercial transaction between the Company,
on the one hand, and the several Underwriters, on the other hand, (b) in
connection with the offering contemplated hereby and the process leading to
such transaction each Underwriter is and has been acting solely as a
principal and is not the agent or fiduciary of the Company, or its
stockholders, creditors, employees or any other party, (c) no Underwriter
has assumed or will assume an advisory or fiduciary responsibility in favor
of the Company with respect to the offering contemplated hereby or the
process leading thereto (irrespective of whether such Underwriter has
advised or is currently advising the Company on other matters) and no
Underwriter has any obligation to the Company with respect to the offering
contemplated hereby except the obligations expressly set forth in this
Agreement, (d) the Underwriters and their respective affiliates may be
engaged in a broad range of transactions that involve interests that differ
from those of the Company, and (e) the Underwriters have not provided any
legal, accounting, regulatory or tax advice with respect to the offering
contemplated hereby and the Company has consulted its own legal,
accounting, regulatory and tax advisors to the extent it deemed
appropriate.
SECTION 13. RESEARCH ANALYST INDEPENDENCE. The Company acknowledges
that the Underwriters' research analysts and research departments are
required to and should be independent from their respective investment
banking divisions and are subject to certain regulations and internal
policies, and as such Underwriters' research analysts may hold views and
make statements or investment recommendations and/or publish research
reports with
30
respect to the Company or the offering that differ from the views of their
respective investment banking divisions. The Company understands that each
of the Underwriters is a full service securities firm and as such from time
to time, subject to applicable securities laws, may effect transactions for
its own account or the account of its customers and hold long or short
positions in debt or equity securities of the companies that may be the
subject of the transactions contemplated by this Agreement.
SECTION 14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters
set forth in or made pursuant to this Agreement will remain in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of its or their partners, officers or
directors or any controlling person, as the case may be, and, anything
herein to the contrary notwithstanding, will survive delivery of and
payment for the Offered Shares sold hereunder and any termination of this
Agreement.
SECTION 15. NOTICES. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the
parties hereto as follows:
If to the Representative:
Xxxxxxxxx & Company, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx Day
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxx, Esq.
If to the Company:
NanoDynamics, Inc.
000 Xxxxxxx Xxxx.
Xxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with copy to:
Loeb & Loeb, LLP
000 Xxxx Xxxxxx
00
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 16. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 hereof, and to the benefit of the employees,
officers and directors and controlling persons referred to in Section 8 and
Section 9, and in each case their respective successors, and no other
person will have any right or obligation hereunder. The term "successors"
shall not include any purchaser of the Offered Shares as such from any of
the Underwriters merely by reason of such purchase.
SECTION 17. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
SECTION 18. GOVERNING LAW PROVISIONS. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New
York applicable to agreements made and to be performed in such state. Any
legal suit, action or proceeding arising out of or based upon this
Agreement or the transactions contemplated hereby may be instituted in the
federal courts of the United States of America located in the Borough of
Manhattan in the City of New York or the courts of the State of New York in
each case located in the Borough of Manhattan in the City of New York
(collectively, the "SPECIFIED COURTS"), and each party irrevocably submits
to the exclusive jurisdiction (except for proceedings instituted in regard
to the enforcement of a judgment of any such court, as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to
such party's address set forth above shall be effective service of process
for any suit, action or other proceeding brought in any such court. The
parties irrevocably and unconditionally waive any objection to the laying
of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such suit, action or other proceeding brought in
any such court has been brought in an inconvenient forum.
SECTION 19. GENERAL PROVISIONS. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written
or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may
be executed in two or more counterparts, each one of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in
32
writing by each party whom the condition is meant to benefit. The Table of
Contents and the Section headings herein are for the convenience of the
parties only and shall not affect the construction or interpretation of
this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus, the Time of Sale Prospectus, each free writing prospectus and the
Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
33
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
NANODYNAMICS, INC.
By:
----------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer and
Chairman of the Board
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representative in New York, New York as of the date first above written.
XXXXXXXXX & COMPANY, INC.
Acting as Representative of the
several Underwriters named in
the attached Schedule A.
By: XXXXXXXXX & COMPANY, INC.
By:
-----------------------------------------
Name:
Title:
SCHEDULE A
NUMBER OF
FIRM SHARES
UNDERWRITERS TO BE PURCHASED
Xxxxxxxxx & Company, Inc. .................................... [___]
[___] ........................................................ [___]
[___] ........................................................ [___]
[___] ........................................................ [___]
[___] ........................................................ [___]
Total......................................................... [___]
SCHEDULE B
Schedule of Free Writing Prospectuses included in the Time of Sale
Prospectus
EXHIBIT A
(i) The Company is a corporation incorporated under the laws of
the State of Delaware, with corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in each Applicable Prospectus and to
enter into and perform its obligations under the
Underwriting
Agreement.
(ii) The Company is validly existing and in good standing under the
laws of the State of Delaware and is qualified to do business
as a foreign corporation and is in good standing in each
jurisdictions set forth on Exhibit A attached to such opinion.
(iii) Each subsidiary of the Company is a corporation, partnership
or limited liability company, as applicable, incorporated or
organized under the laws of the state of its incorporation or
organization, as applicable, with power and authority
(corporate or other) to own, lease and operate its properties
and to conduct its business as described in each Applicable
Prospectus.
(iv) Each subsidiary of the Company is validly existing and in good
standing under the laws of the state of its incorporation or
organization, as applicable, and is qualified to do business
as a foreign corporation, partnership or limited liability
company, as applicable, in good standing in each jurisdiction
set forth on Exhibit B attached to such opinion.
(v) All of the issued and outstanding shares of capital stock or
other equity or ownership interests of each subsidiary of the
Company have been duly authorized and validly issued, and are
fully paid and nonassessable and all of the outstanding shares
of capital stock or other equity or ownership interests of
such subsidiaries are owned of record by the Company, directly
or through subsidiaries.
(vi) The authorized, issued and outstanding capital stock of the
Company (including the Shares) conforms to the descriptions
thereof set forth in each Applicable Prospectus. All of the
outstanding Shares have been duly authorized and validly
issued, and, to the best knowledge of such counsel, are fully
paid and nonassessable. The form of certificate used to
evidence the Shares is in due and proper form and complies
with all applicable requirements of the charter and by-laws of
the Company and the General Corporation Law of the State of
Delaware.
(vii) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar
right to subscribe for or purchase securities of the Company
arising (i) by operation of the charter or by-laws of the
Company or the General Corporation Law of the State of
Delaware or (ii) to the best knowledge of such counsel,
otherwise.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company.
(ix) The Offered Shares to be purchased by the Underwriters from
the Company have been duly authorized for issuance and sale
pursuant to this Agreement and, when
A-1
issued and delivered by the Company pursuant to this Agreement
against payment of the consideration set forth therein, will
be validly issued, fully paid and nonassessable.
(x) Each of the Registration Statement and the Rule 462(b)
Registration Statement has been declared effective by the
Commission under the Securities Act. To the best knowledge of
such counsel, no stop order suspending the effectiveness of
either of the Registration Statement or the Rule 462(b)
Registration Statement has been issued under the Securities
Act and no proceedings for such purpose have been instituted
or are pending or are contemplated or threatened by the
Commission. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time
period required by such Rule 424(b).
(xi) In the opinion of such counsel, the Registration Statement and
the Prospectus (except for the financial statements and
financial schedules and other financial and statistical data
included therein, as to which such counsel need not express
any opinion) appear on their face to be appropriately
responsive in all material respects to the requirements of the
Securities Act and the applicable rules and regulations of the
Commission thereunder, and (1) nothing has come to the
attention of such counsel that causes such counsel to believe
that (1) the Registration Statement or the prospectus included
therein (except for the financial statements and financial
schedules and other financial data included therein, as to
which such counsel need not express any belief) at the time
the Registration Statement became effective contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or (2) the Time of
Sale Prospectus (except for the financial statements and
financial schedules and other financial data included therein,
as to which such counsel need not express any belief) as of
the date of this Agreement or as amended or supplemented, if
applicable, as of the Closing Date contained or contains any
untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, or (3) the Prospectus
(except for the financial statements and financial schedules
and other financial data included therein, as to which such
counsel need not express any belief) as of its date or as
amended or supplemented, if applicable, as of the Closing Date
contained or contains any untrue statement of a material fact
or omitted or omits 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.
(xii) The Offered Shares have been approved for listing on the
Nasdaq.
(xiii) The statements (i) in the Time of Sale Prospectus under the
captions "Description of Capital Stock," "Business --
Intellectual Property," "Certain Relationships and Related
Transactions," "Shares Eligible for Future Sale," "Certain
United States Income Tax Considerations" and "Underwriting",
in each case insofar as such
A-2
statements purport to describe certain provisions of
documents, instruments, agreements, statutes, or regulations
referred to therein, are accurate in all material respects.
(xiv) To the best knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or
threatened which are required to be disclosed in the
Registration Statement, other than those disclosed therein.
(xv) To the best knowledge of such counsel, there are no Existing
Instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto
other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto; and the
descriptions thereof and references thereto are accurate in
all material respects.
(xvi) To the best knowledge of such counsel, there are no persons
with registration or other similar rights to have any debt or
equity securities registered for sale under the Registration
Statement or included in the offering contemplated by this
Agreement, except for such rights as have been duly waived.
(xvii) The execution and delivery of this Agreement by the Company,
the performance by the Company of its obligations thereunder
(other than performance by the Company of its obligations
under the indemnification section of this Agreement, as to
which no opinion need be rendered) and the issuance and sale
of the Offered Shares (i) have been duly authorized by all
necessary corporate action on the part of the Company; (ii)
will not result in any violation of the provisions of the
charter or by-laws or operating agreement or similar
organizational document of the Company or any subsidiary;
(iii) will not constitute a breach of, or Default or a Debt
Repayment Triggering Event under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries
pursuant to any material Existing Instrument; (iv) will not
result in any violation of any federal securities or Delaware
law or, to the best knowledge of such counsel any
administrative regulation or administrative or court decree,
applicable to the Company; or (v) will not require any
consents, approvals or authorizations to be obtained by the
Company, or any registrations, declarations or filings to be
made by the Company, in each case, under any federal
securities or Delaware statute, rule or regulation applicable
to the Company that have not been obtained or made.
(xviii) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental
or regulatory authority or agency, is required for the
consummation of the transactions contemplated by this
Agreement, except such as have been obtained or made by the
Company and are in full force and effect under the Securities
Act or applicable state securities or blue sky laws.
(xix) To the best of such counsel's knowledge, none of the Company
nor any of its subsidiaries is in violation of its charter,
by-laws, operating agreement or similar organizational
document, as applicable, or in Default under any Existing
A-3
Instrument, except for such violation or Default as would not,
individually or in the aggregate, result in a Material Adverse
Change.
(xx) The Company is not, and after receipt of payment for the
Offered Shares will not be, an "investment company" within the
meaning of Investment Company Act.
A-4
EXHIBIT B
(i) To such counsel's knowledge, (a) except as disclosed in the
Time of Sale Prospectus and the Prospectus, there are no legal
or governmental proceedings pending relating to patent rights
of the Company set forth on Exhibit A attached to such
counsel's opinion (the "PATENT RIGHTS"), and (b) no such
proceedings are threatened or contemplated by governmental
authorities or others.
(ii) Except as described in the Time of Sale Prospectus and the
Prospectus, to such counsel's knowledge, (a) the Company is
not infringing or otherwise violating any patents of others,
and (b) there are no infringements by others of any of the
Company's patents set forth on Exhibit A attached to such
counsel's opinion (the "PATENTS").
(iii) Such counsel has no knowledge that would preclude the Company
from having valid license rights or clear title to the
Patents. Such counsel has no knowledge that the Company lacks
or will be unable to obtain any rights or licenses to use all
Patents necessary to conduct the business now conducted or
proposed to be conducted by the Company as described in the
Time of Sale Prospectus and the Prospectus, except as
described in the Time of Sale Prospectus and the Prospectus.
Such counsel is unaware of any basis for a finding of
unenforceability or invalidity of any of the Company's
Patents.
(iv) Such counsel has no knowledge with respect to the patent
applications of the Company presently on file and as set forth
on Exhibit A to such counsel's opinion (the "PATENT
APPLICATIONS") that would preclude the issuance of patents
with respect to such Patent Applications in due course and
with appropriate amendment, or would lead such counsel to
conclude that such patents, when issued, would not be valid
and enforceable in accordance with applicable regulations.
Such counsel has no knowledge of any material defects of form
in the preparation, filing or prosecution of any Patents or
Patent Applications on behalf of the Company. Such counsel is
not aware of any pertinent prior art that has not been
disclosed to the United States Patent and Trademark Office or
any foreign patent office, as applicable. Such counsel notes,
however, that the claims pending in the Patent Applications
presently on file have been and/or may be rejected by the
United States Patent and Trademark Office, or foreign patent
offices, as unpatentable in view of prior art, and the pending
Patent Application claims may need to be amended to secure the
allowance thereof.
B-1
EXHIBIT C
LIST OF PERSONS EXECUTING LOCK-UPS
DIRECTORS AND EXECUTIVE OFFICERS
Xxxxx Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxxxx XxXxxxxx
Xxxxxxx Xxxxxxx
Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxx
Xxxxx XxXxxxx
Xxxx Xxxxxx
OTHER
Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx
C-1
EXHIBIT D
_____________ ___. 2007
Xxxxxxxxx & Company, Inc.
As Representative of the Several Underwriters
c/x Xxxxxxxxx & Company, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
RE:
NanoDynamics, Inc. (the "COMPANY")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
common stock, par value $.0001 per share, of the Company ("SHARES") or
securities convertible into or exchangeable or exercisable for Shares. The
Company proposes to carry out a public offering of Shares (the "OFFERING") for
which you will act as the representative of the underwriters. The undersigned
recognizes that the Offering will be of benefit to the undersigned and will
benefit the Company by, among other things, raising additional capital for its
operations. The undersigned acknowledges that you and the other underwriters are
relying on the representations and agreements of the undersigned contained in
this letter agreement in carrying out the Offering and in entering into
underwriting arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not, (and will cause any spouse or immediate family member
of the spouse or the undersigned living in the undersigned's household not to),
without the prior written consent of Xxxxxxxxx & Company, Inc. (which consent
may be withheld in its sole discretion), directly or indirectly, sell, offer,
contract or grant any option to sell (including without limitation any short
sale), pledge, transfer, establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended,
or otherwise dispose of any Shares, options or warrants to acquire Shares, or
securities exchangeable or exercisable for or convertible into Shares currently
or hereafter owned either of record or beneficially (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended) by the undersigned (or
such spouse or family member), or publicly announce an intention to do any of
the foregoing, for a period commencing on the date hereof and continuing through
the close of trading on the date 180 days after the date of the Prospectus (as
defined in the
Underwriting Agreement relating to the Offering to which the
Company is a party) (the "LOCK-UP PERIOD"); provided, that if (i) during the
last 17 days of the Lock-up Period, the Company issues an earnings release or
material news or a material event relating to the Company occurs or (ii) prior
to the expiration of the Lock-up Period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the Lock-up Period, then in each case the Lock-up Period will be extended until
the expiration of the 18-day period beginning on the date of the issuance of the
earnings release or the occurrence of the material news or material event, as
applicable, unless Xxxxxxxxx & Company, Inc. waives, in writing, such extension;
provided, further, that the foregoing restrictions shall not apply to the
transfer of any or all of the Shares owned by the
D-1
undersigned, either during the undersigned's lifetime or on death, by gift, will
or intestate succession to the immediate family of the undersigned or to a trust
the beneficiaries of which are exclusively the undersigned and/or a member or
members of the undersigned's immediate family; provided, however, that in any
such case, it shall be a condition to such transfer that the transferee executes
and delivers to Xxxxxxxxx & Company, Inc. an agreement stating that the
transferee is receiving and holding the Shares subject to the provisions of this
letter agreement, and there shall be no further transfer of such Shares, except
in accordance with this letter agreement. The undersigned hereby acknowledges
and agrees that written notice of any extension of the Lock-up Period pursuant
to the preceding sentence will be delivered by Xxxxxxxxx & Company, Inc. to the
Company and that any such notice properly delivered will be deemed to have been
given to, and received by, the undersigned.
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of Shares or securities convertible into or exchangeable or exercisable
for Shares held by the undersigned except in compliance with the foregoing
restrictions.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Shares owned
either of record or beneficially by the undersigned, including any rights to
receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
-------------------------------------
Printed Name of Holder
By:
----------------------------------
Signature
-------------------------------------
Printed Name of Person Signing
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