UNDERWRITING AGREEMENT Dated February 16, 2010 Rodman & Renshaw, LLC
EXHIBIT
1.1
Dated
February 16, 2010
Xxxxxx
& Xxxxxxx, LLC
February
16, 2010
Xxxxxx
& Xxxxxxx, LLC
0000
Xxxxxx xx xxx Xxxxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Ladies
and Gentlemen:
Introductory. Derma
Sciences, Inc., a Pennsylvania corporation (the “Company”) proposes to
issue and sell to the several underwriters listed on Schedule A hereto (each an
“Underwriter” and collectively, the “Underwriters”) an
aggregate of 972,000 shares (the “Firm Shares”) of its
common stock, par value $.01 per share (“Common Stock) and
warrants (collectively, the “Firm Warrants”) to
purchase up to 324,000 shares of Common Stock (the “Warrant Shares”) at
any time on or before February 16, 2015 (the “Warrant Expiration
Date”) for. All of the terms of the Firm Warrants are set
forth in the form of warrant certificate (the “Warrant Certificate”)
filed as an exhibit to the Registration Statement (as defined
below). In addition, the Company has granted the Underwriters an
option to purchase up to an additional 145,800 shares of Common Stock (the
“Option
Shares”) and warrants to purchase 48,600 shares of Common Stock (the
“Option
Warrants” as provided in Section 2. Unless specified to the
contrary, all references herein to (i) “Shares” shall be
deemed to include the Firm Shares and the Option Shares (to the extent the
aforementioned option has been exercised); (ii) “Warrants” shall be
deemed to include the Firm Warrants and the Option Warrants; (iii) “Warrant Shares” shall
be deemed to refer to the shares of Common Stock issuable upon exercise of the
Warrants; and (iv) “Securities” shall be
deemed to include the Shares, the Warrants and the Warrant
Shares. Xxxxxx & Xxxxxxx, LLC is acting as representative of the
Underwriters (the “Representative”) in
connection with the offering and sale of the Securities.
In consideration of the mutual
agreements contained herein and of the interests of the parties in the
transactions contemplated hereby, the parties hereto agree as
follows:
The Company represents, warrants and
covenants to each Underwriter as follows:
(a) Filing of the Registration
Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-1 (File No. 333-163127), which contains a form
of prospectus to be used in connection with the public offering and sale of the
Securities. Such registration statement, as amended, including the financial
statements, schedules and exhibits thereto, and the documents incorporated by
reference in the prospectus contained in the registration statement at the time
such registration statement became effective, 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”), and
including any required information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430A, Rule 430B or Rule 430C under the Securities
Act, or pursuant to the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder (collectively, the “Exchange 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. The
prospectus, in the form first filed pursuant to Rule 424(b) under the Securities
Act after the date and time that this Agreement is executed and delivered by the
parties hereto (the “Execution Time”), or,
if no filing pursuant to Rule 424(b) under the Securities Act is required, the
form of final prospectus relating to the Securities included in the Registration
Statement at the effective date of the Registration Statement, is called the
“Prospectus.”
All references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, the Company’s preliminary prospectus included in the
Registration Statement (each a “Preliminary
Prospectus”), the Prospectus, or any amendments or supplements to any of
the foregoing, shall relate to the copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“XXXXX”). Any
reference herein to any Preliminary Prospectus or the Prospectus or any
supplement or amendment to either thereof shall be deemed to refer to and
include any documents incorporated by reference therein as of the date of such
reference.
Each
Preliminary Prospectus and the Prospectus when filed complied or will comply 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 in content to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale of
the Securities other than with respect to any artwork and graphics that were not
filed. 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 until the expiration of the prospectus
delivery period required under Section 4(3) of the Securities Act, 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. The Prospectus (including any Prospectus wrapper), as
amended or supplemented, as of its date and at all subsequent times until the
Underwriters have completed their distribution of the offering of the
Securities, 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 two 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 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 consists of the information described as such in
Section 8 hereof. There are no contracts or other documents required to be
described in the Prospectus or to be filed as exhibits to the Registration
Statement that have not been described or filed as required.
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(h) The Underwriting
Agreement. This Agreement
has been duly authorized (to the extent applicable), 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.
(i) The
Shares and the shares of Common Stock issuable upon exercise of the
Representative's Warrants described in Section 2(h)) have been duly authorized
and reserved for issuance and sale pursuant to this Agreement and, in the case
of the shares of Common Stock issuable on exercise of the Representative's
Warrants, the terms thereof and, when so issued and delivered by the Company,
will be validly issued, fully paid and nonassessable.
(ii) The
Warrants have been duly and validly authorized by all required corporate actions
and will, when issued and delivered by the Company pursuant to this Agreement,
be validly executed and delivered by, and will be valid and binding agreements
of, the Company, enforceable in accordance with their terms, except as the
enforcement thereof 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.
(iii) The
Representative's Warrants have been duly and validly authorized by all required
corporate actions and will, when issued and delivered by the Company pursuant to
this Agreement, be validly executed and delivered by, and will be valid and
binding agreements of, the Company, enforceable in accordance with their terms,
except as the enforcement thereof 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.
(iv) The
Warrant Shares have been duly authorized and reserved for issuance and sale
pursuant to their terms and, when issued and delivered by the Company pursuant
to their terms, will be validly issued, fully paid and
nonassessable.
(vi) The
Warrants and the Representative's Warrants will, when issued, possess rights,
privileges, and characteristics as represented in the most recent form of
Warrant Certificate or Representative's Warrants, as the case may be, filed as
an exhibit to the Registration Statement.
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(n) Incorporation and Good
Standing;
Subsidiaries. The Company and each of its subsidiaries has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and has corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Disclosure Package and the Prospectus and to enter
into and perform its obligations under this Agreement. The
Company and each of its subsidiaries is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, except for such jurisdictions where the failure to so
qualify or to be in good standing would not, individually or in the aggregate,
result in a Material Adverse Change. Except as set forth in the Registration
Statement, the Company and each of its subsidiaries does not own or control,
directly or indirectly, any corporation, association or other entity.
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(q) Non-Contravention of Existing
Instruments; No Further Authorizations or Approvals Required. The Company is
not in violation of its charter or bylaws or in default (or, with the giving of
notice or lapse of time, would be in default) (“Default”) under any
indenture, mortgage, loan or credit agreement, note, contract, franchise, lease
or other instrument to which it is a party or by which it may be bound
(including, without limitation, such agreements and contracts filed as exhibits
to the Registration Statement or to which any of the property or assets of the
Company 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 and consummation of the transactions
contemplated hereby and by the Disclosure Package and the Prospectus (i) have
been duly authorized
by all necessary corporate action and will not result in any violation of the
provisions of the charter or bylaws of the Company; (ii) will not conflict with
or constitute a breach of, or Default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to, or require the consent of any other party to, any Existing
Instrument, except for such conflicts, breaches, Defaults, liens, charges or
encumbrances as would not, individually or in the aggregate, result in a
Material Adverse Change; and (iii) will not result in any violation of any law,
administrative regulation or administrative or court decree applicable to the
Company. 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
the Disclosure Package and the Prospectus, except the registration or
qualification of the Securities under the Securities Act and applicable state
securities or blue sky laws and from the Financial Industry Regulatory
Authority, Inc. (the “FINRA”).
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(t) All Necessary Permits,
etc. Except
as otherwise disclosed in the Disclosure Package and the Prospectus and except
as would not result in a Material Adverse Change, the Company possesses such
valid and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct its businesses,
and the Company has not received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change.
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(y) No Price Stabilization or
Manipulation. The Company has
not taken and 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 any securities of the Company to facilitate the
sale or resale of any of the Securities. The Company acknowledges that the
Underwriters
may engage in passive market making transactions in the Company’s Common Stock
in accordance with Regulation M under the Exchange Act.
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(dd) Compliance with Environmental
Laws. Except as would
not, individually or in the aggregate, result in a Material Adverse Change (i)
the Company is not in violation of any federal, state, local or foreign law or
regulation relating to pollution or protection of human health or 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 emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum and petroleum products
(collectively, “Materials of Environmental
Concern”), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environment Concern (collectively, “Environmental Laws”),
which violation includes, but is not limited to, noncompliance with any permits
or other governmental authorizations required for the operation of the business
of the Company under applicable Environmental
Laws, or noncompliance with the terms and conditions thereof, nor has the
Company received any written communication, whether from a governmental
authority, citizens group, employee or otherwise, that alleges that the Company
is in violation of any Environmental Law; (ii) there is no claim, action or
cause of action filed with a court or governmental authority, no investigation
with respect to which the Company has received written notice, and no written
notice by any person or entity alleging potential liability for investigatory
costs, cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys’ fees or penalties arising out
of, based on or resulting from the presence, or release into the environment, of
any Material of Environmental Concern at any location owned, leased or operated
by the Company, now or in the past (collectively, “Environmental
Claims”), pending or, to the best of the Company’s knowledge, threatened
against the Company or any person or entity whose liability for any
Environmental Claim the Company has retained or assumed either contractually or
by operation of law; and (iii) to the best of the Company’s knowledge, there are
no past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that reasonably
could result in a violation of any Environmental Law or form the basis of a
potential Environmental Claim against the Company or against any person or
entity whose liability for any Environmental Claim the Company has retained or
assumed either contractually or by operation of law.
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(ff) Corporate
Governance. The Company has adopted organizational structures
and policies sufficient to comply with the requirements of NASDAQ’s corporate
governance standards in effect as of the date hereof (collectively, the “NASDAQ Corporate Governance
Standards”). Without limiting the generality of the foregoing, the
Company’s Board of Directors has validly appointed an Audit Committee, a
Nominating and Governance Committee and a Compensation Committee (collectively,
the “Committees”), whose
composition satisfies the requirements
of the NASDAQ Corporate Governance Standards. The Board of Directors and the
Committees have each adopted a charter governing the respective activities of
each such Committee that satisfies the requirements of the NASDAQ Corporate
Governance Standards. The Committees have each acted in accordance with the
provisions of their respective charters, as amended from time to
time.
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(nn) Blue Sky. The
Securities are qualified for sale in each jurisdiction listed on Schedule D
hereto. No state regulatory, administrative or judicial authority has
issued any order preventing the sale of the Securities in such jurisdiction or
suspended the use of the Prospectus or instituted proceedings for that
purpose.
Any certificate signed by an officer of
the Company and delivered to the Representative or to counsel for the
Underwriters shall be deemed to be a representation and warranty by the Company
to each Underwriter as to the matters set forth therein.
The
Company acknowledges that the Underwriters and, for purposes of the opinions to
be delivered pursuant to Section 5 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.
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(b) The First Closing Date. Delivery of the
Firm Shares to be purchased by the Underwriters and payment therefor shall be
made at 10:00 a.m. New York time on February 22, 2010, or such other time and
date 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 Disclosure Package or a delay as
contemplated by the provisions of Section 10.
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 Shares and Warrants the
Underwriters have agreed to purchase. The Representative,
individually and not as the Representative of the Underwriters, may (but shall
not be obligated to) make payment for any Shares or Warrants to be purchased by
any Underwriter whose funds shall not have been received by the Representative
by the First Closing Date or any Subsequent Closing Date, as the case maybe, for
the account of such Underwriter, but any
such payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
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(g) Delivery of Prospectus to the
Underwriter. As soon as
practicable, but not later than 10:00 a.m. New York Time on the second business
day following the date the Shares and Warrants are first released by the
Underwriters for sale to the public, the Company shall deliver or cause to be
delivered, copies of the Prospectus in such quantities and at such places as the
Representative shall request.
The
Company covenants and agrees with the Underwriter as follows:
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(b) Securities Act
Compliance. After the date
of this Agreement, the Company shall promptly advise the Representative in
writing (i) when the Registration Statement, if not effective at the Execution
Time, shall have become effective; (ii) of the receipt of any comments of, or
requests for additional or supplemental information from, the Commission or any
regulatory or administrative authority in a state where the Underwriters propose
to offer and sell the Securities; (iii) of the time and date of any filing of
any post-effective amendment to the Registration Statement or any amendment or
supplement to any Preliminary Prospectus or the Prospectus; (iv) of the time and
date that any post-effective amendment to the Registration Statement becomes
effective; and (v) of the issuance by the Commission of any stop order
suspending
the effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order or notice preventing or suspending the use of the
Registration Statement, any Preliminary Prospectus or the Prospectus, or of any
proceedings to remove, suspend or terminate the Common Stock from being quoted
on the OTCBB or from being listed on any securities exchange upon which it is
listed for trading, or of the threatening or initiation of any proceedings for
any of such purposes. The Company shall use its best efforts to prevent the
issuance of any such stop order or prevention or suspension of such use. If the
Commission shall enter any such stop order or order or notice of prevention or
suspension at any time, the Company will use its best efforts to obtain the
lifting of such order at the earliest possible moment, or will file a new
registration statement and use its best efforts to have such new registration
statement declared effective as soon as practicable. Additionally, the Company
agrees that it shall comply with the provisions of Rules 424(b) and 430A, as
applicable, under the Securities Act, including with respect to the timely
filing of documents thereunder, and will use its reasonable efforts to confirm
that any filings made by the Company under such Rule 424(b) were received in a
timely manner by the Commission.
(d) Amendments and Supplements to the
Registration Statement, Prospectus and Other Securities Act Matters. If, during the
Prospectus Delivery Period, any event or development shall occur or condition
exist as a result of which the Disclosure Package or the Prospectus as then
amended or supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein in the light of the circumstances under which they were made, as the
case may be, not misleading, or if it shall be necessary to amend or supplement
the Disclosure Package or the Prospectus, or to file under the Exchange Act any
document incorporated by reference in the Disclosure Package or the Prospectus,
in order to make the statements therein, in the light of the circumstances under
which they were made, as the case may be, not misleading, or if in the opinion
of the Representative it is otherwise necessary to amend or supplement the
Registration Statement, the Disclosure Package or the Prospectus, or to file
under the Exchange Act any document incorporated by reference in the Disclosure
Package or the Prospectus, or to file a new registration statement containing
the Prospectus, in order to comply with law, including in connection with the
delivery of the Prospectus, the Company agrees to (i) notify the Representative
of any such event or condition (unless such event or condition was previously
brought to the Company’s attention by the Representative during the Prospectus
Delivery Period) and (ii) promptly prepare (subject to Sections 3(a) and 3(e)
hereof), file with the Commission (and use its best efforts to have any
amendment to the Registration Statement or any new registration statement to be
declared effective) and furnish at its own expense to the Underwriters and to
dealers, amendments or supplements to the Registration Statement, the Disclosure
Package or the Prospectus, or any new registration statement, necessary in order
to make the statements in the Disclosure Package or the Prospectus as so amended
or supplemented, in the light of the circumstances under which they were made,
as the case may be, not misleading or so that the Registration Statement, the
Disclosure Package or the Prospectus, as amended or supplemented, will comply
with applicable law. (e)Permitted Free Writing
Prospectuses. The Company
represents that it has not made, and agrees that, unless it obtains the prior
written consent of the Representative, it will not make, any offer relating to
the Securities that would constitute an Issuer Free Writing Prospectus or that
would otherwise constitute a “free writing
prospectus” (as defined in Rule 405 of the Securities Act) required to be
filed by the Company with the Commission or retained by the Company under Rule
433 of the Securities Act; provided that the prior written consent of the
Representative hereto shall be deemed to have been given in respect of the Free
Writing Prospectuses included in Schedule B hereto. Any such free writing
prospectus consented to by the Representative is hereinafter referred to as a
“Permitted Free
Writing Prospectus.” The Company agrees that (i) it has treated and will
treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer
Free Writing Prospectus, and (ii) has complied and will comply, as the case may
be, with the requirements of Rules 164 and 433 of the Securities Act applicable
to any Permitted Free Writing Prospectus, including in respect of timely filing
with the Commission, legending and record keeping.
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(o) Future Reports to the Representative. During the five
year period from and after the date hereof the Company will furnish, if not
otherwise available on IDEA (XXXXX), to the Representative at 1251 Avenue of the
Xxxxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate
Department: (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 registered public accounting firm; (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, FINRA 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.
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(a) The
Representative shall be entitled to payment from the Company of a
non-accountable expense allowance equal to one half of one percent (0.50%) of
the aggregate initial public offering price of the Firm Shares and Firm Warrants
(but not the Option Shares and Option Warra
nts)
purchased by the Underwriters, of which $50,000 has been previously paid. The
Representative shall be entitled to withhold this allowance on the Closing Date
related to the purchase of the Firm Shares and firm Warrants.
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(b) In
addition to the payment described in Paragraph (a) of this Section 4, 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 Securities (including all printing
and engraving costs, if any); (ii) all fees and expenses of the registrar and
transfer agent of the Common Stock; (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Securities to
the Underwriters; (iv) all fees and expenses of the Company’s counsel,
independent registered public accounting firm 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), each Issuer Free Writing Prospectus, each Preliminary
Prospectus and the Prospectus, and all amendments and supplements thereto, and
this Agreement; (vi) all filing fees, attorneys’ fees (including Blue Sky
Counsel fees) and expenses incurred in connection with qualifying or registering
(or obtaining exemptions from the qualification or registration of) all or any
part of the Securities for offer and sale under the state securities or blue sky
laws, and, if requested by the Representative, preparing and printing a “Blue
Sky Survey” or memorandum, and any supplements thereto, advising the
Underwriters of such qualifications, registrations and exemptions; (vii) the
filing fees incident to FINRA’s review and approval of the Underwriters’
participation in the offering and distribution of the Securities; (viii) the
fees and expenses associated with having the Common Stock listed; (ix) all other
fees, costs and expenses referred to in Item 13 of Part II of the Registration
Statement; (x) all fees, expenses and disbursements relating to background
checks of the Company’s officers and directors in an amount not to exceed $3,500
in the aggregate; (xi) the costs associated with post-Closing advertising the
Offering in the national editions of the Wall Street Journal and New York Times;
(xii) the costs associated with bound volumes of the public offering materials
as well as commemorative mementos and lucite tombstones, each of which the
Company or its designee will provide within a reasonable time after the Closing
in such quantities as Xxxxxx may reasonably request; (xiii) the $16,000 cost
associated with Xxxxxx’x use of i-Deal’s book-building, prospectus tracking and
compliance software for the Offering; and (xiv) up to $10,000 of Xxxxxx’x actual
accountable “road show” expenses. Provided, however, the Company’s
responsibility for the fees and expenses set forth in Section 4(a) and in
Section 4(b)(x), (xi), (xii), (xiii) and (xiv) shall in no event exceed the sum
of $100,000 in the aggregate. Except as provided in this Section 4, Section 6,
Section 8 and Section 9 hereof, each Underwriter shall pay its own expenses,
including the fees and disbursements of its counsel.
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(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; or the
Company shall have filed a post-effective amendment to the Registration
Statement containing the information required by such Rule 430A, and such
post-effective amendment shall have become effective; and
(ii) no
stop order suspending the effectiveness of the 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.
With respect to factual matters,
counsel for the Company may rely on (i) certificates issued by governmental
agencies; (ii) certificates executed and delivered by an executive officer
of the Company; and (iii) the representations and warranties of the Company
as set forth herein, provided that such counsel shall not have actual knowledge
that any information or statements set forth in such certificates or any
representations and warranties contained herein are untrue, inaccurate, wrong or
misleading and such counsel shall specifically state that they believe that the
Underwriters and Underwriters’ counsel may rely on the same.
In addition to the matters set forth
above, the opinion of Xxxxxx & Xxxxxx shall also state that such counsel has
participated in conferences with officers and other representatives of the
Company, the Representative and representatives of the Company’s independent
registered public accounting firm, at which conferences the contents of the
Registration Statement, the Prospectus and the Disclosure Package and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus, on the
basis of the foregoing, no facts have come to the attention of such counsel
which lead such counsel to believe that (i) the Registration Statement at the
time it 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; (ii) that
the
Prospectus as amended or supplemented (except with respect to the financial
statements and notes thereto and other financial data, as to which such counsel
need make no statement) on the date thereof, the Closing Date or any Option
Closing Date, as the case may be; or (iii) the Disclosure Package as of the
Initial Sale Time contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no belief as to the financial
statements and notes thereto and other financial data derived therefrom included
in the Registration Statement, the Prospectus or the Disclosure
Package.
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(i) for
the period from and after the date of this Agreement and prior to 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.
(h) Secretary’s
Certificate. On each of the First Closing Date and each
Subsequent Closing Date, the Underwriters shall have received a written
certificate, in form and substance satisfactory to the Representative, executed
by the Secretary of the Company, dated as of such Closing
Date, with respect to such customary matters as the Representative shall deem
reasonably appropriate.
- 21
-
(k) The
Shares shall have been listed on the NASDAQ Global Market or NASDAQ Capital
Market.
If any
condition specified in this Section 5 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 Option Shares and Option Warrants, at any time prior to each
Subsequent Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Section 4, Section 6, Section
8 and Section 9 shall at all times be effective and shall survive such
termination.
Section
6. Reimbursement of
Underwriters’ Expenses. If this
Agreement is terminated by the Representative pursuant to Section 5, Section 10,
or Section 11, or by the Company pursuant to Section 7, or if the sale to the
Underwriters of the Securities on the First Closing Date or Subsequent 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 Underwriters upon demand for all
out-of-pocket accountable
expenses that shall have been actually incurred by the Underwriters in
connection with the proposed offering of the Securities, provided, however, the
Company’s responsibility for the foregoing fees and expenses shall in no event
exceed the sum of $75,000.
- 22
-
Prior to
such effectiveness, this Agreement may be terminated by any party by notice to
each of the other parties hereto, and any such termination shall be without
liability on the part of (a) the Company to any Underwriter, except that (solely
in the case where the Company has terminated this Agreement pursuant to this
Section 7) the Company shall be obligated to reimburse the expenses of the
Underwriters pursuant to Sections 4 and 6 hereof, or (b) any Underwriter to the
Company except that the provisions of Section 8 and Section 9 shall at all times
be effective and shall survive such termination.
The
Company agrees to indemnify and hold harmless each Underwriter, its respective
officers and employees, and each person, if any, who controls such Underwriter
within the meaning of the Securities Act and the Exchange Act against any loss,
claim, damage, liability or expense, as incurred, to which such Underwriter or
such 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 the Company), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon 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, Rule 430B and Rule 430C 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) upon any untrue statement or alleged untrue statement of a material fact
contained in any Issuer Free Writing Prospectus, any Preliminary Prospectus 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) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iv) in whole
or in part upon any failure of the Company to perform its obligations hereunder
or under law; or (v) upon 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 Common Stock 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 (v) 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 an Underwriter through its
gross negligence or willful misconduct; and to reimburse the Underwriters and
each such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by the Underwriters) as such expenses are
reasonably incurred by the Underwriters or such 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 Issuer Free Writing Prospectus, any Preliminary
Prospectus or the Prospectus (or any amendment or supplement
thereto). The indemnity agreement set forth in this Section 8(a)
shall be in addition to any liabilities that the Company may otherwise
have.
- 23
-
- 24
-
(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.
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 was 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.
- 25
-
Section
11. Termination of
this Agreement. Prior to the
First Closing Date and, with respect to the Option Shares and Option Warrants,
each Subsequent Closing Date, whether before or
after notification by the Commission to the Company of the effectiveness of the
Registration Statement under the Securities Act, this Agreement may be
terminated by the Representative by notice given to the Company if at any time
(i) trading in any of the Company’s securities shall have been suspended or
limited by the Commission or by the NASDAQ Stock Market, Inc. or trading in
securities generally on either the NASDAQ Stock Market, Inc. 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 FINRA; (ii) a general banking moratorium shall have been
declared by any of federal or State of New York 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 that, in the judgment of the
Representative is material and adverse and makes it impracticable to market the
Securities in the manner and on the terms described in the Prospectus or to
enforce contracts for the sale of securities or (iv) in the judgment of the
Representative there shall have occurred any Material Adverse Change (regardless
of whether any loss associated with such Material Adverse Change shall have been
insured). Any termination pursuant to this Section 11 shall be without liability
on the part of (a) the Company to the Underwriters, except that the Company
shall be obligated to reimburse the actual out-of-pocket accountable expenses of
the Underwriters pursuant to Sections 4 and 6 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.
- 26
-
This
Agreement supersedes all prior agreements and understandings (whether written or
oral) between the Company and any Underwriter with respect to the subject matter
hereof.
- 27
-
If to the
Underwriters:
Xxxxxx
& Xxxxxxx, LLC
1251
Avenue of the Xxxxxxxx, 00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Facsimile: (000)
000-0000
Attention: Syndicate
Department
with
a copy to:
Xxxxx
Xxxxxxx Xxxx & Xxxxxx LLP
000 Xxxx
Xxxxxx, Xxxxx 0000
Xxx Xxxx,
Xxx Xxxx 00000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
X. Xxxx
If to the
Company:
000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx,
Xxx Xxxxxx 00000
Facsimile: (000)
000-0000
Attention: Chief
Executive Officer
with
a copy to:
Xxxxxx
& Xxxxxx
0 Xxx
Xxxxx Xxxxx
X.X. Xxx
000
Xxxxxxx,
Xxxxxxxxxxxx 00000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
X. Xxxxxx, Xx., Esq.
Any party
hereto may change the address for receipt of communications by giving written
notice to the others.
- 28
-
Section
17. 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.
Section
18. Consent to
Jurisdiction. Any legal suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby (“Related Proceedings”)
may be instituted in the federal courts of the United States of America located
in New York, New York or the courts of New York in each case located in New
York, 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 (a “Related
Judgment”), 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.
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 and the Prospectus (and any
amendments and supplements thereto), as required by the Securities Act and the
Exchange Act.
The
respective indemnities, contribution agreements, representations, warranties and
other statements of the Company and the Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the officers or employees of any
Underwriter, any person controlling any Underwriter, the Company, the officers
or employees of the Company, or any person controlling the Company; (ii)
acceptance of the Securities and payment for them hereunder; and (iii)
termination of this Agreement.
- 29
-
Except as
otherwise provided, this Agreement has been and is made solely for the benefit
of and shall be binding upon the Company, the Underwriters, the Underwriters’
officers and employees, any controlling persons referred to herein, the
Company’s directors and the Company’s officers who sign the Registration
Statement and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term “successors and
assigns” shall not include a purchaser of any Securities from any
Underwriter merely because of such purchase.
This
Underwriting Agreement may be executed in counterparts (including facsimile or
..pdf counterparts), each of which shall be deemed an original but all of which
together shall constitute one and the same instrument
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,
By:
Name:
Xxxxxx X. Xxxxxx
Title: President
and Chief Executive Officer
The
foregoing Underwriting Agreement is hereby confirmed and accepted by the
Representative, for itself and on behalf of the several Underwriters, as of the
date first above written.
XXXXXX
& XXXXXXX, LLC
Acting as
Representative of the several Underwriters named in the attached Schedule
A.
By:
___________________________________
Name:
Title:
- 30
-
SCHEDULE
A
Underwriters
|
Number
of Firm
Shares
to be
Purchased
|
Number
of Firm
Warrants
to be
Purchased
|
||
Xxxxxx
& Xxxxxxx, LLC
|
972,000
|
324,000
|
||
Total
|
972,000
|
324,000
|
||
SCH.
A-1
SCHEDULE
B
Issuer Free Writing
Prospectus
None.
SCH.
B-1
SCHEDULE
C
Pricing
Terms
Price
per Share and Warrant to public:
|
$5.00
|
Underwriting
discounts and commissions per Share and Warrant:
|
$0.325
|
Offering
proceeds to the Company, before expenses:
|
$4,544,100
|
Closing
Date: February 22, 2010
SCH.
C-1
SCHEDULE
D
States
in which Offering has been Qualified
The
offering is qualified in all 50 states based on the federal pre-emption statute,
since the Company is listed on the NASDAQ Capital Market.
SCH.
D-1
EXHIBIT
A
OPINION
OF COUNSEL FOR THE COMPANY
TO
BE DELIVERED PURSUANT TO SECTION 5(d)
OF
THE UNDERWRITING AGREEMENT
(i) The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Pennsylvania.
(ii) The
Company has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Disclosure Package
and the Prospectus and to enter into and perform its obligations under this
Agreement.
(iii) The
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each other jurisdiction in which such qualification is
required, except for such jurisdictions where the failure to so qualify or to be
in good standing would not, individually or in the aggregate, result in a
Material Adverse Change.
(iv) To
the best of counsel’s knowledge, the Company does not own an equity interest in
any other entity.
(v) The
Company has authorized and outstanding capital stock as set forth under the
caption “Capitalization” in the Prospectus and the Disclosure Package; the
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable and, to the best of counsel’s knowledge,
have been issued in compliance with the registration and qualification
requirements of federal and state securities laws; the Shares and Warrants to be
sold by the Company, including the shares underlying the Warrants, have been
duly authorized and, when issued and delivered in accordance with the terms of
this Agreement and the Warrants, will be validly issued, fully paid and
non-assessable; all of the securities of the Company conform to the description
thereof contained in the Prospectus and the Disclosure Package; the certificates
for the Common Stock are in due and proper form under Pennsylvania law and
comply in all material respects with the requirements of the NASDAQ Stock
Market, Inc.; no preemptive rights of stockholders exist with respect to any of
the Common Stock or the issuance or sale thereof pursuant to any applicable
statute or the provisions of the Company’s Certificate of Incorporation or
Bylaws or, to the best of counsel’s knowledge, pursuant to any contractual
obligation.
(vi) Except
as described in or contemplated by the Prospectus and the Disclosure Package, to
the knowledge of such counsel (a) there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and (b) there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus and the
Disclosure Package, to the knowledge of such counsel, no holder of any
securities of the Company or any other person has the right, contractual or
otherwise, which has not been satisfied or effectively waived, to cause the
Company to sell or otherwise issue to them, or to permit them to underwrite the
sale of, any of the Shares or the right to have any Common Stock or other
securities of the Company included in the Registration Statement or the right,
as a result of the filing of the Registration Statement, to require registration
under the Securities Act of any shares of Common Stock or other securities of
the Company.
EXH.
A-1
(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 Certificate of Incorporation or
Bylaws of the Company or the Business Corporation Law of the State of
Pennsylvania or (ii) to the best of counsel’s knowledge, otherwise.
(viii) The
Company has all necessary material licenses, authorizations, consents and
approvals and has made all necessary filings required under any federal, state
or local law, regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons (including federal, state and local
regulators), required to conduct their respective businesses, as described in
both the Prospectus and the Disclosure Package; the Company is not in violation
of, in default under, nor has it received any notice regarding a possible
violation, default or revocation of any such material license, authorization,
consent or approval or any federal, state, local or foreign law, regulation or
decree, order or judgment applicable to the Company.
(ix) The
Underwriting Agreement has been duly authorized, executed and delivered by the
Company as contemplated in the Registration Statement, the Prospectus and the
Disclosure Package. The Underwriting Agreement constitutes a legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors’
rights and to general equity principles.
(x) The
Common Stock to be purchased by the Underwriter from the Company, including the
Option Shares, has been duly authorized and reserved for issuance and sale
pursuant to the Underwriting Agreement and, when so issued and delivered by the
Company, will be validly issued, fully paid and nonassessable.
(xi) The
Registration Statement and the Rule 462(b) Registration Statement, if any, has
been declared effective by the Commission under the Securities Act. To the best
of counsel’s knowledge, no stop order suspending the effectiveness of either of
the Registration Statement or the Rule 462(b) Registration Statement, if any,
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 Disclosure Package and 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).
EXH.
A-2
(xii) The
Underwriter’s Warrants have been duly authorized by the Company. When duly
executed, issued and delivered by the Company as contemplated in this Agreement
and the Registration Statement, the Prospectus and the Disclosure Package, the
Underwriter’s Warrants will constitute the legally binding obligation of the
Company, enforceable against the Company in accordance with their terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles. The shares of Common Stock issuable upon exercise
of the Underwriter’s Warrants have been duly authorized and reserved for
issuance and sale and when so issued and delivered by the Company, will be
validly issued, fully paid and non-assessable.
(xiii) The
Registration Statement has become effective under the Securities Act and, to the
best of the knowledge of such counsel, no stop order proceedings with respect
thereto have been instituted or are pending or threatened under the Securities
Act.
(xiv) The
Registration Statement, including any Rule 462(b) Registration Statement, the
Prospectus, and each amendment or supplement to the Registration Statement and
the Prospectus, and each document deemed to be part of the Disclosure Package,
as of their respective effective or issue dates (other than the financial
statements and supporting schedules included therein or in exhibits to or
excluded from the Registration Statement, as to which no opinion need be
rendered), comply as to form in all material respects with the applicable
requirements of the Securities Act; such counsel does not know of any contracts
or documents required to be filed as exhibits to the Registration Statement or
described or summarized in the Registration Statement, the Prospectus and the
Disclosure Package, which have not been so filed, summarized or described as
required, and all such summaries and descriptions, in all material respects,
fairly and accurately set forth the material provisions of such contracts and
documents.
(xv) The
Shares and the shares underlying the Underwriter’s Warrants have been approved
for listing on the NASDAQ Global Market or the NASDAQ Capital
Market.
(xvi) The
statements (i) in each of the Disclosure Package and the Prospectus under the
captions “Related Party Transactions,” “Description of Securities” and “Shares
Eligible for Future Sale,” (ii) under the caption “Indemnification of Officers
and Directors” in Item 14 of the Registration Statement, and (iii) under the
caption “Recent Sales of Unregistered Securities” in Item 15 of the Registration
Statement, insofar as such statements constitute matters of law, legal
conclusions or summaries of legal matters or documents or the Company’s
Certificate of Incorporation or Bylaw provisions, have been reviewed by us and
fairly present and summarize, in all material respects, the matters referred to
therein.
(xvii) Except
as described in or contemplated by the Registration Statement, the Prospectus
and the Disclosure Package, there are no material actions, suits or proceedings,
inquiries, or investigations pending or, to the best of such counsel’s
knowledge, threatened against the Company or any of its respective officers and
directors or to which the properties, assets or rights of any such entity are
subject, at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitral panel or
agency which are required to be described in the Registration Statement, the
Prospectus or the Disclosure Package but are not so described.
EXH.
A-3
(xviii) To
the best of such counsel’s knowledge, the Company each owns or possesses
adequate licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively “Intangibles”) necessary to entitle the Company to conduct its
business as described in both the Prospectus and the Disclosure Package, and the
Company has not received notice of infringement of or conflict with (and knows
of no such infringement of or conflict with) asserted rights of others with
respect to any Intangibles which could materially and adversely affect the
business, prospects, properties, assets, results of operations or condition
(financial or otherwise) of the Company.
(xix) No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental authority or agency, is required for the
Company’s execution, delivery and performance of this Agreement and consummation
of the transactions contemplated thereby and by the Prospectus, except as
required under the Securities Act, the applicable laws of any foreign
jurisdiction, applicable state securities or blue sky laws and from
FINRA.
(xx) The
execution and delivery of this Agreement by the Company and 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 we express no opinion) (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 bylaws of the Company; (iii) will
not (A) constitute a breach of, or Default under any Existing Instrument, or (B)
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, in the case of each of clauses
(A) and (B), any Existing Instrument filed as an exhibit to the Registration
Statement or, to the best of counsel’s knowledge, any other material Existing
Instrument; or (iv) to the best of counsel’s knowledge, will not result in any
violation of any law, administrative regulation or administrative or court
decree applicable to the Company.
(xxi) The
Company is not, and after receipt of payment for the Securities and the
application of the proceeds thereof as contemplated under the caption “Use of
Proceeds” in the Prospectus and in the Disclosure Package will not be, an
“investment company” within the meaning of the Investment Company
Act.
(xxii) To
the best of counsel’s knowledge, 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.
(xxiii) To
the best of counsel’s knowledge, the Company is not in violation of its
Certificate of Incorporation or Bylaws or any law, administrative regulation or
administrative or court decree applicable to the Company or is in Default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any material Existing Instrument, except in
each such case for such violations or Defaults as would not, individually or in
the aggregate, result in a Material Adverse Change.
EXH.
A-4
(xxiv) To
the best of counsel’s knowledge, there are no claims for commissions, finder’s
fees or any other payment in connection with or contingent upon the closing of
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Company, except as described
herein.
(xxv) To the best of
counsel’s knowledge, the Company’s disclosure in the Prospectus with respect to
the status of its products under the rules and regulations of the United States
Food and Drug Administration (“FDA”), the Federal Trade Commission (“FTC”),
Canada’s Medical Devices Bureau of the Therapeutic Products Directorate (“MDB”)
and the Health Products and Food Branch Inspectorate of Health Canada, including
the FDA’s Federal Food, Drug and Cosmetic Act, the FTC’s Federal Trade
Commission Act and the MDB’s Medical Devices Regulations, is accurate and
complete in all material respects.
(xxvi) To the best of
counsel’s knowledge, the Company’s disclosure in the Prospectus with respect to
the compliance of the Company and its principal suppliers with GMP (as defined
in the Prospectus) is accurate and complete in all material
respects.
EXH.
A-5
EXHIBIT
B
LOCK-UP
AGREEMENT
_________________,
2010
Xxxxxx
& Xxxxxxx, LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx,
XX 00000
Re: Derma
Sciences, Inc. (the “Company”)
Ladies
and Gentlemen:
The
undersigned owns of record or beneficially certain shares of common stock, par
value $0.01 per share (“Common Stock”), of the Company or securities convertible
into or exchangeable or exercisable for Common Stock.
This
letter is being delivered to you in connection with a follow-on public offering
of Common Stock and warrants (the “Offering”) for which you will act as
underwriter. 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 the Company’s operations. The
undersigned acknowledges that you are relying on the representations and
agreements of the undersigned contained in this letter in carrying out the
Offering.
In
consideration of the foregoing, and as a condition of the closing of the
Offering, the undersigned hereby agrees that the undersigned will not (and will
cause any spouse or minor child or immediate family member of the spouse or the
undersigned living in the undersigned’s household not to), without your prior
written consent, directly or indirectly, sell, offer, contract or grant any
option to sell (including without limitation any short sale), pledge, transfer,
or otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock, or securities exchangeable or exercisable for or
convertible into shares of Common Stock 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 minor child or
family member) (collectively, the “Undersigned’s Shares”), or publicly announce
an intention to do any of the foregoing, for a period commencing on the date
hereof and continuing though the date that is one hundred eighty (180) days from
the closing date of the Offering. 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 the Undersigned’s Shares except in
compliance with the foregoing restrictions.
EXH.
B-1
Notwithstanding
the foregoing, the undersigned may transfer the Undersigned’s Shares (i) as a
bona fide gift or gifts, provided that the donee or donees thereof agree in
writing to be bound by the restrictions set forth herein; or (ii) to any trust
for the direct or indirect benefit of the undersigned or the immediate family of
the undersigned, provided that the trustee of the trust agrees in writing to be
bound by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value. For purposes of the
foregoing, “immediate family” shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin.
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
Signature
of Holder
EXH.
B-2