Shares KIT DIGITAL, INC. Common Stock UNDERWRITING AGREEMENT
_________
Shares
Common
Stock
________,
2009
Xxxx
Capital Partners, LLC
00
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxxx, XX 00000
Ladies
and Gentlemen:
KIT
digital, Inc., a Delaware corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and sell to Xxxx
Capital Partners, LLC ("RCP") and each of the
other Underwriters named in Schedule V hereto (collectively with RCP, the “Underwriters”) an
aggregate of [3,000,000] authorized but unissued shares (the “Underwritten Shares”)
of Common Stock, par value $0.0001 per share (the “Common Stock”), of
the Company and the stockholders of the Company listed on Schedule I hereto (the
“Selling
Stockholders” and each a “Selling Stockholder”)
hereby agree, severally but not jointly, to sell an aggregate of up to
[__________] issued and outstanding shares of Common Stock (the “Secondary Shares”)
owned by them in the amounts set forth opposite their names on Schedule I
hereto. The Company has granted the Underwriters the option to
purchase an aggregate of up to [___________] additional shares of Common Stock
(the “Additional
Shares”) as may be necessary to cover over-allotments made in connection
with the offering. The Underwritten Shares, Secondary Shares and
Additional Shares are collectively referred to as the “Shares.” Xxxx
Capital Partners, LLC shall act as the representative (the “Representative”) of
the several Underwriters.
The
Company, the Selling Stockholders and the Underwriters
hereby confirm their agreement as follows:
Registration
Statement and Prospectus. The Company has prepared and filed
with the United States Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-1 (File No. 333-160182) under the Securities
Act of 1933, as amended (the “Securities Act”), and
the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder, and such amendments to such
registration statement (including post effective amendments) as may have been
required to the date of this Agreement. Such registration statement,
as amended (including any post effective amendments) has been declared effective
by the Commission. Such registration statement, at any given time,
including amendments thereto (including post effective amendments thereto) at
such time, the exhibits and any schedules thereto at such time, the documents
incorporated by reference therein pursuant to Item 12 of Form S-1 under the
Securities Act at such time and the documents and information otherwise deemed
to be a part thereof or included therein by Rule 430B under the Securities Act
or otherwise pursuant to the Rules and Regulations at such time, is herein
called the “Registration
Statement.” If the Company has filed or files an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the
“Rule 462 Registration
Statement”), then any reference herein to the term Registration Statement
shall include such Rule 462 Registration Statement.
The
Company is filing with the Commission pursuant to Rule 424 under the Securities
Act a final prospectus relating to the Shares to a form of prospectus included
in the Registration Statement in the form heretofore delivered to the
Underwriters. Such prospectus in the form in which it appears in the
Registration Statement is hereinafter called the “Base Prospectus,” and
such final prospectus as filed, together with the Base Prospectus, is
hereinafter called the “Final
Prospectus.” Such Final Prospectus and any preliminary
prospectus supplement or “red xxxxxxx,” in the form in which they shall be filed
with the Commission pursuant to Rule 424(b) under the Securities Act (including
the Base Prospectus as so supplemented) is hereinafter called a “Prospectus.” Any
reference herein to the Base Prospectus, the Final Prospectus or a Prospectus
shall be deemed to include the documents incorporated by reference therein
pursuant to Item 12 of Form S-1 under the Securities Act as of the date of such
Prospectus.
For
purposes of this Agreement, all references to the Registration Statement, the
Rule 462 Registration Statement, the Base Prospectus, the Final Prospectus, the
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System (“XXXXX”). All
references in this Agreement to financial statements and schedules and other
information which is “described,” “contained,” “included” or “stated” in the
Registration Statement, the Rule 462 Registration Statement, the Base
Prospectus, the Final Prospectus or the Prospectus (or other references of like
import) shall be deemed to mean and include all such financial statements, pro
forma financial information and schedules and other information which is
incorporated by reference in or otherwise deemed by the Rules and Regulations to
be a part of or included in the Registration Statement, the Rule 462
Registration Statement, the Base Prospectus or the Prospectus, as the case may
be; and all references in this Agreement to amendments or supplements to the
Registration Statement, the Rule 462 Registration Statement, the Base
Prospectus, the Final Prospectus or the Prospectus shall be deemed to mean and
include the subsequent filing of any document under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), that
is deemed to be incorporated therein by reference therein or otherwise deemed by
the Rules and Regulations to be a part thereof.
Representations
and Warranties of the Company Regarding the Offering.
The
Company represents and warrants to, and agrees with, the Underwriters, as of the
date hereof and as of the Closing Date (as defined in Section 4(c) below),
except as otherwise specified, as follows:
2
At each
time of effectiveness, at the date hereof and at the Closing Date, the
Registration Statement and any post-effective amendment thereto complied or will
comply (as applicable) in all material respects with the requirements of the
Securities Act and the Rules and Regulations and did not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The Time of Sale Disclosure Package (as defined in
Section 2(a)(iii) below) as of the date hereof and at the Closing Date, and the
Final Prospectus, as amended or supplemented, at the time of filing pursuant to
Rule 424(b) under the Securities Act and at the Closing Date, did not and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two
immediately preceding sentences shall not apply to statements in or omissions
from the Registration Statement or any Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by the
Underwriters specifically for use in the preparation thereof. The
Registration Statement (including each document incorporated by reference
therein) contains all exhibits and schedules required to be filed by the
Securities Act or the Rules and Regulations. No order preventing or
suspending the effectiveness or use of the Registration Statement or any
Prospectus has been issued by the Commission and no proceedings for such purpose
have been instituted or are pending, or, to the knowledge of the Company, are
contemplated or threatened. The Company has complied with all
requests of the Commission for additional or supplemental
information.
The
documents incorporated by reference in the Registration Statement, the Time of
Sale Disclosure Package and any Prospectus, when they became effective or were
filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable. Any further documents so filed and incorporated by
reference in the Registration Statement, the Time of Sale Disclosure Package or
the Final Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange Act, and
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(A) The
Company has provided a copy to the Underwriters of each Issuer Free Writing
Prospectus (as defined below) used in the sale of Shares. The Company has
filed all Issuer Free Writing Prospectuses required to be so filed with the
Commission, and no order preventing or suspending the effectiveness or use of
any Issuer Free Writing Prospectus is in effect and no proceedings for such
purpose have been instituted or are pending, or, to the knowledge of the
Company, are contemplated or threatened. When taken together with the rest
of the Time of Sale Disclosure Package or the Final Prospectus, since its
first use and at all relevant times since then, no Issuer Free Writing
Prospectus has, does or will include (1) any untrue statement of a material
fact or omission to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (2) information that conflicted, conflicts or will
conflict with the information contained in the Registration Statement or the
Final Prospectus. The representations and warranties set forth in the
immediately preceding sentence shall not apply to statements in or omissions
from the Time of Sale Disclosure Package, the Final Prospectus or any Issuer
Free Writing Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Underwriter specifically for use
therein. As used in this paragraph and elsewhere in this
Agreement:
3
(1) “Time of Sale Disclosure
Package” means the Base Prospectus, the Prospectus most recently
filed with the Commission before the time of this Agreement, including any
preliminary prospectus deemed to be a part thereof, each Issuer Free Writing
Prospectus, and any description of the transaction provided by the
Underwriter included on Schedule II hereto.
(2) “Issuer Free Writing
Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 under the Securities Act, relating to the Shares that (A) is required
to be filed with the Commission by the Company, or (B) is exempt from filing
pursuant to Rule 433(d)(5)(i) or (d)(8) under the Securities Act because it
contains a description of the Shares that does not reflect the final terms, in
each case in the form filed or required to be filed with the Commission or, if
not required to be filed, in the form retained in the Company’s records pursuant
to Rule 433(g) under the Securities Act.
(B) At
the time of filing of the Registration Statement and at the date hereof, the
Company was not and is not an “ineligible issuer,” as defined in Rule 405 under
the Securities Act or an “excluded issuer” as defined in Rule 164 under the
Securities Act.
(C) Each
Issuer Free Writing Prospectus satisfied, as of its issue date and at all
subsequent times through the Prospectus Delivery Period (as defined below), all
other conditions as may be applicable to its use as set forth in Rules 164 and
433 under the Securities Act, including any legend, record-keeping or other
requirements.
The
financial statements of the Company, together with the related notes, included
in the Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus comply in all material respects with the requirements of the
Securities Act and the Exchange Act and fairly present the financial condition
of the Company as of the dates indicated and the results of operations and
changes in cash flows for the periods therein specified in conformity with
generally accepted accounting principles consistently applied throughout the
periods involved; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated
therein. No other financial statements, pro forma financial
information or schedules are required to be included or incorporated by
reference in the Registration Statement, the Time of Sale Disclosure Package or
the Final Prospectus. To the Company’s knowledge, Xxxxx Xxxxxxxx,
P.C., which has expressed its opinion with respect to the financial statements
and schedules filed as a part of the Registration Statement and included in the
Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus is an independent registered public accounting firm with respect to
the Company within the meaning of the Securities Act and the Rules and
Regulations and such accountants are not in violation of the auditor
independence requirements of the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx
Act").
4
The
Company had a reasonable basis for, and made in good faith, each
“forward-looking statement” (within the meaning of Section 27A of the Act or
Section 21E of the Exchange Act) contained or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus.
All
statistical or market-related data, including any industry forecasts, included
in the Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus are based on or derived from industry publications and sources that
the Company reasonably believes to be reliable and accurate, and the Company has
obtained the written consent to the use of such data from such sources, to the
extent required, and no such sources are or were at any time under the Company's
control.
The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is
included or approved for inclusion on the Nasdaq Capital
Market. There is no action pending to delist the Common Stock from
the Nasdaq Capital Market, nor has the Company received any notification that
the Nasdaq Capital Market is contemplating
terminating such listing. When issued, the Shares will be listed on
the Nasdaq Capital Market.
The
Company has not taken, directly or indirectly, any action that is designed to or
that has constituted or that would reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
The
Company is not and, after giving effect to the offering and sale of the Shares,
will not be an “investment company,” as such term is defined in the Investment
Company Act of 1940, as amended.
The
Company was at the time of filing the Registration Statement, and at the date
hereof, remains eligible to use Form S-1 under the Securities Act.
The conditions for use of Form S-1 set forth in the General Instructions thereto
have been satisfied.
Any
certificate signed by any officer of the Company and delivered to the
Underwriters or counsel for the Underwriters shall be deemed a representation
and warranty by the Company to the Underwriters as to the matters covered
thereby.
Representations
and Warranties Regarding the Company.
The
Company represents and warrants to and agrees with, the Underwriters, except as
set forth in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus, as follows:
5
Each of
the Company and its subsidiaries has been duly organized and is validly existing
as a corporation in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its subsidiaries has the corporate power
and authority to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would have or is
reasonably likely to result in a material adverse effect upon the business,
prospects, properties, operations, condition (financial or otherwise) or results
of operations of the Company and its subsidiaries, taken as a whole, or in its
ability to perform its obligations under this Agreement (“Material Adverse
Effect”).
The
Company has the power and authority to enter into this Agreement and to
authorize, issue and sell the Underwritten Shares as contemplated by this
Agreement. This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding obligation
of the Company, enforceable in accordance with its terms, subject to (A)
applicable bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or other similar laws of general application relating to or
affecting the enforcement of creditors' rights generally, (B) general principles
of equity and (C) with respect to the enforcement of any rights to indemnity and
contribution, securities laws and principles of public policy.
The
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not (A) result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any law, rule or regulation to which the Company or any subsidiary is subject,
or by which any property or asset of the Company or any subsidiary is bound or
affected, (B) conflict with, result in any violation or breach of, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, lease, credit facility, debt, note, bond, mortgage, indenture or
other instrument (the “Contracts”) or
obligation or other understanding to which the Company or any subsidiary is a
party of by which any property or asset of the Company or any subsidiary is
bound or affected, except to the extent for such conflicts, defaults,
terminations, amendments, accelerations or cancellation rights as would not,
individually or in the aggregate, reasonably be expected to have or result in a
Material Adverse Effect, or (C) result in a breach or violation of any of the
terms and provisions of, or constitute a default under, the Company’s charter or
by-laws.
Neither
the Company nor any of its subsidiaries is in violation, breach or default under
its certificate of incorporation, by-laws or other equivalent organizational or
governing documents.
All
consents, approvals, orders, authorizations and filings required on the part of
the Company and its subsidiaries in connection with the execution, delivery or
performance of this Agreement have been obtained or made, other than such
consents, approvals, orders and authorizations the failure of which to make or
obtain would not reasonably be expected, individually or in the aggregate, to
have or result in a Material Adverse Effect.
6
All of
the issued and outstanding shares of capital stock of the Company are duly
authorized and validly issued, fully paid and nonassessable, and have been
issued in compliance with all applicable securities laws, and conform to the
description thereof in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus. Except for the issuances of options or
restricted stock in the ordinary course of business, since the respective dates
as of which information is provided in the Registration Statement, the Time of
Sale Disclosure Package or the Prospectus, the Company has not entered into or
granted any convertible or exchangeable securities, options, warrants,
agreements, contracts or other rights in existence to purchase or acquire from
the Company any shares of the capital stock of the Company. The
Shares have been duly authorized and when issued, will have been validly issued,
fully paid and nonassessable, will be issued in compliance with all applicable
securities laws, and will be free of preemptive, rights to subscribe for or
purchase securities, registration or similar rights.
Each of
the Company and its subsidiaries has filed all returns (as hereinafter defined)
required to be filed with taxing authorities prior to the date hereof or has
duly obtained extensions of time for the filing thereof. Each of the
Company and its subsidiaries has paid all taxes (as hereinafter defined) shown
as due on such returns that were filed and has paid all taxes imposed on or
assessed against the Company or such respective subsidiary. The
provisions for taxes payable, if any, shown on the financial statements filed
with or as part of the Registration Statement are sufficient for all accrued and
unpaid taxes, whether or not disputed, and for all periods to and including the
dates of such consolidated financial statements. Except as disclosed
in writing to the Underwriters, (i) no issues have been raised (and are
currently pending) by any taxing authority in connection with any of the returns
or taxes asserted as due from the Company or its subsidiaries, and (ii) no
waivers of statutes of limitation with respect to the returns or collection of
taxes have been given by or requested from or on behalf of the Company or its
subsidiaries. The term “taxes” mean all
federal, state, local, foreign, and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties or other
taxes, fees, assessments, or charges of any kind whatever, together with any
interest and any penalties, additions to tax, or additional amounts with respect
thereto. The term “returns” means all
returns, declarations, reports, statements, and other documents required to be
filed in respect to taxes.
Since the
respective dates as of which information is given in the Registration Statement,
the Time of Sale Disclosure Package or the Prospectus, (a) neither the Company
nor any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions,
(b) the Company has not declared or paid any dividends or made any distribution
of any kind with respect to its capital stock; (c) there has not been any change
in the capital stock of the Company or any of its subsidiaries (other than a
change in the number of outstanding shares of Common Stock due to the issuance
of shares upon the exercise of outstanding options or warrants or the issuance of restricted stock awards or
restricted stock units under the Company’s existing stock awards plan,
(d) there has not been any material change in the Company’s long-term or
short-term debt, and (e) there has not been the occurrence of any Material
Adverse Effect.
7
There is
not pending or, to the knowledge of the Company, threatened, any action, suit or
proceeding to which the Company or any of its subsidiaries is a party or of
which any property or assets of the Company is the subject before or by any
court or governmental agency, authority or body, or any arbitrator or mediator,
which individually or in the aggregate, might reasonably be expected to result
in a Material Adverse Effect.
The
Company and each of its subsidiaries holds, and is in compliance with, all
material franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders (“Permits”) of all
governmental or self-regulatory agencies, authorities or bodies required for the
conduct of its business, except where the failure to possess or comply with any
such Permits is not reasonably likely to result in a Material Adverse Effect,
and all such Permits are in full force and effect.
The
Company and its subsidiaries have good and marketable title to all property
(whether real or personal) described in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus as being owned by them that are
material to the business of the Company, in each case free and clear of all
material liens, claims, security interests, other material encumbrances or
material defects. The property held under lease by the Company and
its subsidiaries is held by them under valid, subsisting and enforceable leases
with only such exceptions with respect to any particular lease as do not
interfere in any material respect with the conduct of the business of the
Company and its subsidiaries.
The
Company and each of its subsidiaries owns or possesses or has valid right to use
all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights, licenses,
inventions, trade secrets and rights necessary for the conduct of the business
of the Company and its subsidiaries as currently carried on and as described in
the Registration Statement, in the Time of Sale Disclosure Package and in the
Prospectus; except as stated in the Registration Statement, in the Time of Sale
Disclosure Package or in the Prospectus, to
the knowledge of the Company, no name which the Company or any of its
subsidiaries uses and no other aspect of the business of the Company or any of
its subsidiaries will involve or give rise to any infringement of, or license or
similar fees for, any patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service xxxx registrations, copyrights,
licenses, inventions, trade secrets or other similar rights of others material
to the business or prospects of the Company and neither the Company nor any of
its subsidiaries has received any written notice alleging any such infringement
or fee.
8
The
Company or its subsidiaries are the exclusive owners of the entire right, title
and interest in and to the intellectual property owned by the Company or any of
its subsidiaries and material to their business (the “Owned Intellectual
Property”), and have a valid license to use the intellectual property
that is licensed or sublicensed to the Company or any of its subsidiaries and
material to their business (the “Licensed Intellectual
Property”). The
Company or its subsidiaries are entitled to use all Owned Intellectual Property
and Licensed Intellectual Property in the continued operation of their business
without limitation, subject only to the terms of the licenses relating to the
Licensed Intellectual Property. The Owned Intellectual Property and,
to the best of the Company’s knowledge, the Licensed Intellectual Property have
not been adjudged invalid or unenforceable in whole or in part, and are valid
and enforceable. The expiration of any patents, patent rights,
trademarks, service marks, trade names or copyrights would not result in a
Material Adverse Effect that is not otherwise disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus.
To the Company’s knowledge, the conduct
of the Company’s or its subsidiaries’ business as currently conducted or
proposed to be conducted does not infringe or misappropriate the intellectual
property of any third party. No actions or proceedings alleging any
of the foregoing are pending, and no claim has been threatened or asserted
against the Company or any of its subsidiaries alleging any of the
foregoing. To the Company’s knowledge, no person is engaging in any
activity that infringes the Owned Intellectual Property that would result in a
Material Adverse Effect.
No Owned
Intellectual Property is subject to any outstanding decree, order, injunction,
judgment or ruling restricting the Owned Intellectual Property or that would
impair the validity or enforceability of the Owned Intellectual Property, except
for any such decree, order, injunction, judgment or writing that would not
result in a Material Adverse Effect.
The
Company and each of its subsidiaries has complied with, is not in violation of,
and has not received any notice of violation relating to any law, rule or
regulation relating to the conduct of its business, or the ownership or
operation of its property and assets, including, without limitation, (A) the
Currency and Foreign Transactions Reporting Act of 1970, as amended, or any
money laundering laws, rules or regulations, (B) any laws, rules or regulations
related to health, safety or the environment, including those relating to the
regulation of hazardous substances, (C) the currently applicable provisions of
the Xxxxxxxx-Xxxxx Act and the rules and regulations of the Commission
thereunder, (D) the Foreign Corrupt Practices Act of 1977 and the rules and
regulations thereunder, and (E) the Employment Retirement Income Security Act of
1974 and the rules and regulations thereunder, in each case except where the
failure to be in compliance is not reasonably likely to result in a Material
Adverse Effect.
Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, employee, representative, agent or affiliate of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the offering of the
Shares contemplated hereby, or lend, contribute or otherwise make available such
proceeds to any person or entity, for the purpose of financing the activities of
any person currently subject to any U.S. sanctions administered by
OFAC.
9
The
Company carries, or is covered by, insurance in such amounts and covering such
risks as is reasonable for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries.
No labor
dispute with the employees of the Company or any of its subsidiaries exists or,
to the knowledge of the Company, is imminent that is reasonably likely to result
in a Material Adverse Effect.
Neither
the Company nor, to its knowledge, any other party is in violation, breach
or default of any Contract that is reasonably likely to result in a Material
Adverse Effect.
No
customer of the Company has notified the Company that it intends
to discontinue or decrease the rate of business
done with the Company, except where such decrease is not reasonably
likely to result in a Material Adverse Effect.
There are
no claims, payments, issuances, liabilities, arrangements or understandings for
services in the nature of a finder’s, consulting or origination fee with respect
to the introduction of the Company to any Underwriter or the sale of the Shares
hereunder or any other arrangements, agreements, understandings, payments or
issuances with respect to the Company that may affect the Underwriter’s
compensation, as determined by the Financial Industry Regulatory Authority
(“FINRA”).
Except as
disclosed to the Underwriters in writing, the Company has not made any direct or
indirect payments (in cash, securities or otherwise) to (i) any person, as a
finder’s fee, investing fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company persons who
provided capital to the Company, (ii) any FINRA member, or (iii) any person or
entity that has any direct or indirect affiliation or association with any FINRA
member within the 12-month period prior to the date on which the Registration
Statement was filed with the Commission (“Filing Date”) or
thereafter, except as contemplated by this Agreement.
None of
the net proceeds of the offering will be paid by the Company to any
participating FINRA member or any affiliate or associate of any participating
FINRA member, except as specifically authorized herein.
To the
Company’s knowledge, no (i) officer or director of the Company or its
subsidiaries, (ii) owner of 5% or more of the Company’s unregistered securities
or that of its subsidiaries or (iii) owner of any amount of the Company’s
unregistered securities acquired within the 180-day period prior to the Filing
Date, has any direct or indirect affiliation or association with any FINRA
member. The Company will advise the Underwriter and its counsel if it
becomes aware that any officer, director or 5% or more stockholder of the
Company or its subsidiaries is or becomes an affiliate or associated person of a
FINRA member participating in the offering.
10
Other
than the Underwriters, no person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the transactions
contemplated hereby.
The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that: (1)
transactions are executed in accordance with management’s general or specific
authorization; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with United States generally accepted
accounting principles and to maintain accountability for assets; (3) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Time of Sale
Disclosure Package and the Prospectus, since the end of the Company’s most
recent audited fiscal year, there has been (I) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated)
and (II) no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
The
Company and its consolidated subsidiaries employ disclosure controls and
procedures that are designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms, and is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
principal financial officer or officers, as appropriate, to allow timely
decisions regarding disclosure.
No event
has occurred which, with notice or lapse of time or both, would constitute such
a default, in the performance of any material obligation, agreement or condition
contained in any bond, debenture, note, indenture, loan agreement or any other
material contract, lease or other instrument to which it is subject or by which
any of them may be bound, or to which any of the material property or assets of
the Company or any of its subsidiaries is subject.
Other
than the subsidiaries of the Company listed in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus, the Company, directly or
indirectly, owns no capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust or other
entity.
There are
no business relationships or related-party transactions involving the Company or
any subsidiary or any other person required to be described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus that have not
been described as required.
11
The
Company has not distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the Securities
other than any Preliminary Prospectus, the Time of Sale Disclosure Package or
the Prospectus or other materials permitted by the Securities Act to be
distributed by the Company; provided, however, that, except as
set forth on Schedule II, the Company has not made and will not make any offer
relating to the Securities that would constitute a “free writing prospectus” as
defined in Rule 405 under the Securities Act, except in accordance with the
provisions of Section 6(a)(viii) of this Agreement.
Representations
and Warranties of the Selling Stockholders.
Each
Selling Stockholder, severally and not jointly, represents and warrants to, and
agrees with, the Underwriters as follows:
The
Selling Stockholder has the power and authority to enter into this Agreement and
to sell the Shares as contemplated by this Agreement. This Agreement
has been duly authorized, executed and delivered by the Selling Stockholder, and
constitutes a valid, legal and binding obligation of the Selling Stockholder,
enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity.
The
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not (A) result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any law, rule or regulation to which the Selling Stockholder is subject, or by
which any property or asset of the Selling Stockholder is bound or affected, (B)
conflict with, result in any violation or breach of, or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any Contract or
obligation or other understanding to which the Selling Stockholder is a party of
by which any property or asset of the Selling Stockholder is bound or affected,
except to the extent that such conflict, default, termination, amendment,
acceleration or cancellation right is not reasonably likely to result in a
Material Adverse Effect, or (C) result in a breach or violation of any of the
terms and provisions of, or constitute a default under, the Selling
Stockholder’s charter or by-laws or other organizational documents.
All
consents, approvals, orders, authorizations and filings required on the part of
the Selling Stockholder in connection with the execution, delivery or
performance of this Agreement have been obtained or made, other than such
consents, approvals, orders and authorizations the failure of which to make or
obtain is not reasonably likely to result in a Material Adverse
Effect.
12
Certificates
in negotiable form representing all of the Shares to be sold by such Selling
Stockholder hereunder have been placed in custody under a Custody Agreement, in
the form heretofore furnished to the Underwriters (the “Custody Agreement”),
duly executed and delivered by such Selling Stockholder to the Company, as
custodian (the “Custodian”). Each
Selling Stockholder has executed a Power of Attorney appointing the
stockholder representative as the attorney-in-fact (the “Attorney-in-Fact”) for
such Selling Stockholder with authority to execute and deliver this Agreement
and the Custody Agreement on behalf of such Selling Stockholder, to determine
the purchase price to be paid to such Selling Stockholder for Shares, to
authorize the delivery of the Shares to be sold by such Selling
Stockholder hereunder and otherwise to act on behalf of such Selling
Stockholder, to the extent authorized in the Power of Attorney, in connection
with the transactions contemplated by this Agreement and the Custody
Agreement. The Custody Agreement has been duly authorized, executed and
delivered by each Selling Stockholder, and a Power of Attorney has been duly
authorized, executed and delivered by each Selling Stockholder.
Such
Selling Stockholder is, on the date hereof, the record and beneficial owner of
all of the Shares to be sold by the Selling Stockholder hereunder free and clear
of all liens, encumbrances, equities and claims and has duly indorsed such
Shares in blank or has duly signed a stock power assigning all right, title and
interest to the Shares to be sold by such Selling Stockholder, with all
signatures appropriately guaranteed by an eligible guarantor institution with
membership in an approved medallion guaranty program pursuant to
Rule 17Ad-15 under the Exchange Act.
On the
applicable Closing Date, all stock transfer or other taxes (other than income
taxes) that are required to be paid in connection with the sale and transfer by
such Selling Stockholder of the Shares will be fully paid or provided for by
such Selling Stockholder and all laws imposing such taxes will be fully complied
with.
All
information with respect to such Selling Stockholder contained in the
Registration Statement, the Time of Sale Disclosure Package and any Prospectus,
or any amendment or supplement thereto, complied or will comply in all material
respects with all applicable requirements of the Securities Act and the Rules
and Regulations promulgated thereunder and does not and will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
Such
Selling Stockholder, directly or indirectly, has not entered into any
commitment, transaction or other arrangement, including any prepaid forward
contract, 10b5-1 plan or similar agreement, which transfers or may transfer any
of the legal or beneficial ownership or any of the economic consequences of
ownership of the Shares, except as has been previously disclosed in writing to
the Underwriters.
Such
Selling Stockholder represents and warrants that it has not prepared or had
prepared on its behalf or used or referred to any “free writing prospectus” (as
defined in Rule 405 of the Act) and further represents that it has not
distributed and will not distribute any written materials in connection with the
offer or sale of the Shares that could otherwise constitute a “free writing
prospectus” (as defined in Rule 405 of the Act) required to be filed with the
Commission or retained under Rule 433 of the Act.
13
All
information relating to such Selling Stockholder furnished by or on behalf of
such Selling Stockholder in writing expressly for use in the Registration
Statement, the Time of Sale Disclosure Package or any Prospectus, as the
case may be, is as of the applicable Closing Date, true, correct, and complete
in all material respects, and does not, and will not, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make such information not misleading. In addition, such Selling
Stockholder confirms as accurate the number of shares of Common Stock set forth
opposite such Selling Stockholder’s name in the Time of Sale Disclosure Package
and any Prospectus under the caption “Selling Stockholders” (both prior to and
after giving effect to the sale of the Shares).
Such
Selling Stockholder does not have any registration or other similar rights to
have any equity or debt securities registered for sale by the Company under the
Registration Statement or included in an offering contemplated by this
Agreement, except for such rights that have been waived.
Such
Selling Stockholder 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 security of the Company to
facilitate the sale or resale of the Shares.
Any
certificate signed by any officer of a Selling Stockholder and delivered to the
Underwriters or counsel for the Underwriters shall be deemed a representation
and warranty by such Selling Stockholder to the Underwriters as to the matters
covered thereby.
Purchase,
Sale and Delivery of Shares.
On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Underwriters the Underwritten Shares, and the Selling
Stockholders agree to sell to the Underwriters the Secondary Shares, and the
Underwriters, severally and not jointly, agree to purchase the Underwritten
Shares and Secondary Shares. The purchase price for each Underwritten
Share and Secondary Share shall be $[_______] per
share (the “Per Share
Price”). Notwithstanding the foregoing provisions of this
Section 5, the Per Share Price for sales of Underwritten Shares by the
Underwriters to KIT Media Ltd. and Xxxxxxxx XxXxxxx Capital, LLC shall be
$[_______] per share. The Underwriters hereby acknowledge that they
are not being paid a fee for the Underwritten Shares sold to KIT Media Ltd. and
Xxxxxxxx XxXxxxx Capital, LLC, however, all such shares being sold to KIT Media
Ltd. and Xxxxxxxx XxXxxxx Capital, LLC are being underwritten by the
Underwriters. The Company and the Selling Stockholders agree to pay
the Underwriters’ compensation as set forth in Schedule II hereto.
14
Payment
of the purchase price for and delivery of the Additional Shares shall be made at
the Option Closing Date in the same manner and at the same office as the payment
for the Underwritten Shares as set forth in subparagraph (c)
below. For the purpose of expediting the checking of the certificate
for the Additional Shares by the Underwriters, the Company agrees to make a form
of such certificate available to the Underwriters for such purpose at least one
full business day preceding the Option Closing Date.
The
Underwritten Shares and Secondary Shares will be delivered by the
Company and the Selling Stockholders to the Underwriters
against payment of the purchase price therefor by wire transfer of immediately
available or same day funds payable to the order of the Company or a Selling
Stockholder, as appropriate, at the offices of Xxxx Capital Partners, LLC, 24
Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000, or such other location as may be
mutually acceptable, at 6:00 a.m. Pacific Time, on the third (or if the
Underwritten Shares and Secondary Shares are priced, as
contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m. Eastern
time, the fourth) full business day following the date hereof, or at such other
time and date as the Underwriter and the Company determine pursuant to Rule
15c6-1(a) under the Exchange Act, or, in the case of the Additional Shares, at
such date and time set forth in the Option Notice. The time and date
of delivery of the Underwritten Shares and the Secondary Shares or the
Additional Shares, as applicable, is referred to herein as the “Closing
Date.” If an Underwriter so elects, delivery of the
Underwritten Shares, Secondary Shares and Additional Shares
may be made by credit through full fast transfer to the account at The
Depository Trust Company designated by such Underwriter. Certificates
representing the Shares, in definitive form and in such denominations and
registered in such names as the Underwriters may request upon at least two
business days’ prior notice to the Company, will be made available for checking
and packaging not later than 10:30 a.m. Pacific Time on the business day next
preceding the Closing Date at the above addresses, or such other location as may
be mutually acceptable.
Covenants.
The
Company covenants and agrees with the Underwriters as follows:
During
the period beginning on the date hereof and ending on the later of the Closing
Date or such date as determined by the Underwriters the Prospectus is no longer
required by law to be delivered in connection with sales by an underwriter or
dealer (the “Prospectus Delivery
Period”), prior to amending or supplementing the Registration Statement,
including any Rule 462 Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, the Company shall furnish to the Representative for
review and comment a copy of each such proposed amendment or supplement, and the
Company shall not file any such proposed amendment or supplement to which the
Representative reasonably objects.
15
From the
date of this Agreement until the end of the Prospectus Delivery Period, the
Company shall promptly advise the Underwriters in writing (A) of the receipt of
any comments of, or requests for additional or supplemental information from,
the Commission, (B) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to the
Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, (C) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (D) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending its use or the use of the
Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, or of any proceedings to remove, suspend or terminate from listing
or quotation the Common Stock from any securities exchange upon which it is
listed for trading or included or designated for quotation, or of the
threatening or initiation of any proceedings for any of such
purposes. If the Commission shall enter any such stop order at any
time during the Prospectus Delivery Period, the Company will use its reasonable
efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with
the provisions of Rules 424(b), 430A and 430B, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any filings
made by the Company under Rule 424(b) or Rule 433 were received in a timely
manner by the Commission (without reliance on Rule 424(b)(8) or 164(b) of the
Securities Act).
(A)
During the Prospectus Delivery Period, the Company will comply with all
requirements imposed upon it by the Securities Act, as now and hereafter
amended, and by the Rules and Regulations, as from time to time in force, and by
the Exchange Act, as now and hereafter amended, so far as necessary to permit
the continuance of sales of or dealings in the Shares as contemplated by the
provisions hereof, the Time of Sale Disclosure Package, the Registration
Statement and the Prospectus. If during such period any event occurs
the result of which the Prospectus (or if the Prospectus is not yet available to
prospective purchasers, the Time of Sale Disclosure Package ) would include an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances then existing,
not misleading, or if during such period it is necessary or appropriate in the
opinion of the Company or its counsel or the Representative or its counsel to
amend the Registration Statement or supplement the Prospectus (or if the
Prospectus is not yet available to prospective purchasers, the Time of Sale
Disclosure Package ) to comply with the Securities Act or to file under the
Exchange Act any document that would be deemed to be incorporated by reference
in the Prospectus in order to comply with the Securities Act or the Exchange
Act, the Company will promptly notify the Underwriter and will amend the
Registration Statement or supplement the Prospectus (or if the Prospectus is not
yet available to prospective purchasers, the Time of Sale Disclosure Package) or
file such document (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.
16
(B) If
at any time following the issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development the result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information contained
in the Registration Statement or any Prospectus or included or would include an
untrue statement of a material fact or omitted or would omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances prevailing at that subsequent time, not misleading, the Company
has promptly notified or promptly will notify the Underwriter and has promptly
amended or will promptly amend or supplement, at its own expense, such Issuer
Free Writing Prospectus to eliminate or correct such conflict, untrue statement
or omission.
The
Company shall use reasonable efforts to qualify the Shares for sale under the
securities laws of such jurisdictions as the Underwriters reasonably designate
and to continue such qualifications in effect so long as required for the
distribution of the Shares, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified, to execute a
general consent to service of process in any state or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise subject.
The
Company will furnish to the Underwriters and counsel for the Underwriters copies
of the Registration Statement, each Prospectus, any Issuer Free Writing
Prospectus, and all amendments and supplements to such documents, in each case
as soon as available and in such quantities as the Underwriters may from time to
time reasonably request.
The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period that shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 of the Rules and
Regulations.
The
Company will pay or cause to be paid (A) all expenses (including
transfer taxes allocated to the respective transferees) incurred in connection
with the delivery to the Underwriters of the Shares, (B) all expenses and fees
(including, without limitation, fees and expenses of the Company’s counsel) in
connection with the preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein and all
amendments, schedules, and exhibits thereto), the Shares, the Time of Sale
Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus and any
amendment thereof or supplement thereto, and the printing, delivery, and
shipping of this Agreement and other underwriting documents, including Blue Sky
Memoranda (covering the states and other applicable jurisdictions) (C) all
filing fees and fees and disbursements of counsel for the Underwriters incurred
in connection with the qualification of the Shares for offering and sale by the
Underwriters or by dealers under the securities or blue sky laws of the states
and other jurisdictions that the Underwriters shall designate, (D) the fees and
expenses of any transfer agent or registrar, (E) listing fees, if any, (F) the
filing fees and reasonable and documented fees and disbursements of
Underwriters’ counsel incident to any required review and approval by FINRA of
the terms of the sale of the Shares and (G) all other costs and expenses
incident to the performance of its obligations hereunder that are not otherwise
specifically provided for herein. In addition to the foregoing, the
Company will reimburse the Underwriter for up to $90,000 for its pre-approved
expenses incurred in connection with the purchase and sale of the Shares
contemplated hereby, it being agreed and understood that those expenses
described in Schedule
6(a)(vii) attached hereto have been pre-approved by the Company (the “Underwriter’s
Expenses”). If this Agreement is terminated by the
Representative in accordance with the provisions of Section 7 or Section 10 or
if the sale of the Shares provided for herein is not consummated by reason of
any failure, refusal or inability on the part of the Company to perform any,
agreement on its part to be performed, or because any other condition of the
Underwriters’ obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all out-of-pocket
disbursements (including, but not limited to, fees and disbursements of counsel,
travel expenses, postage, facsimile and telephone charges) incurred by the
Underwriters in connection with their respective investigation, preparing to
market and marketing the Shares or in contemplation of performing their
respective obligations hereunder. Notwithstanding anything contained
herein, the maximum amount payable by the Company for the fees of counsel for
the Underwriters, disbursements and other out-of-pocket expenses pursuant to
this Section 6(a)(vii) exclusive of the Underwriter’s Expenses shall be
$90,000.
17
The
Company represents and agrees that, unless it obtains the prior written consent
of the Representative, and each of the Underwriters represents and agrees that,
unless it obtains the prior written consent of the Company, it has not made and
will not make any offer relating to the Shares that would constitute an Issuer
Free Writing Prospectus; provided, that the
prior consent of the parties hereto shall be deemed to have been given in
respect of the free writing prospectuses included in Schedule II. Any
such free writing prospectus consented to by the Company and the Representative
is hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents that it has treated or
agrees that it will treat each Permitted Free Writing Prospectus as an “issuer
free writing prospectus,” as defined in Rule 433, and has complied or will
comply with the requirements of Rule 433 applicable to any Permitted Free
Writing Prospectus, including timely Commission filing where required, legending
and record-keeping.
The
Company hereby agrees that, without the prior written consent of the
Representative, it will not, during the period ending 180 days after the date
hereof (“Lock-Up
Period”), (i) offer, pledge, issue, sell (including through any hedging
transactions or short sales), contract to sell, purchase, contract to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any options,
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock; or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise; or (iii) file any registration statement
with the Commission relating to the offering of any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common
Stock. The restrictions contained in the preceding sentence shall not
apply to (1) the Shares to be sold hereunder, (2) the issuance of
Common Stock upon the exercise of options or warrants disclosed as
outstanding in the Registration Statement (excluding exhibits thereto) or the
Prospectus, (3) the issuance of employee/consultant stock options or warrants
not exercisable during the Lock-Up Period and the grant of restricted stock
awards or restricted stock units pursuant to equity incentive plans described in
the Registration Statement (excluding exhibits thereto) and the Prospectus, (4)
the issuance of Common Stock, warrants, stock options or other securities in
connection with investor relations and similar services, or (5) the issuance of
Common Stock, warrants, stock options or other securities in connection with
acquisitions and acquisition financing. Notwithstanding the
foregoing, if (x) the Company issues an earnings release or material news, or a
material event relating to the Company occurs, during the last 17 days of the
Lock-Up Period, or (y) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the Lock-Up Period, the restrictions imposed by
this clause shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event, unless the Representative waives such extension
in writing.
18
The
Company shall cause each stockholder, officer and director of the Company listed
on Schedule VI to furnish to the Underwriters, on or prior to the date of this
Agreement, a lock-up agreement substantially in the form of Exhibit A attached
hereto.
The
Company intends to apply the net proceeds from the sale of the Shares to be sold
by it hereunder for the purposes set forth in the Time of Sale Disclosure
Package and in the Prospectus.
The
Company has not taken and will not take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result in, or
which has constituted, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares.
The
Company will not incur any liability for any finder’s or broker’s fee or agent’s
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
The
Company and its subsidiaries will maintain such controls and other procedures,
including without limitation those applicable to the Company and required by
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act and the applicable regulations
thereunder, that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms, including without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure, to ensure that material information
relating to Company, including its subsidiaries, is made known to them by others
within those entities.
19
The
Company shall not invest, or otherwise use the proceeds received by the Company
from its sale of the Shares in such a manner as would require the Company to
register as an investment company under the Investment Company Act of 1940, as
amended.
The
Company and its subsidiaries will substantially comply with all effective
applicable provisions of the Xxxxxxxx-Xxxxx Act.
During
the Prospectus Delivery Period, the Company will file on a timely basis with the
Commission such periodic and current reports as required by the Rules and
Regulations.
Prior to
the Closing Date, the Company will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company, its condition, financial or otherwise, or the earnings,
business, operations or prospects of any of them, or the offering of the Shares,
without the prior written consent of the Representative, unless in the
reasonable judgment of the Company and its counsel, and after notification to
the Representative, such press release or communication is required by law, in
which case the Company shall use its reasonable best efforts to allow the
Representative reasonable time to comment on such release or other communication
in advance of such issuance.
Covenants of the
Selling Stockholders. Each Selling
Stockholder, severally and not jointly, covenants and agrees with the
Underwriters as follows:
The
Selling Stockholders, whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, will pay or cause to be paid all
expenses (including transfer taxes allocated to the respective transferees)
incurred in connection with the delivery to the Underwriters of the Secondary
Shares to be sold by the Selling Stockholders hereunder.
The
Selling Stockholders hereby agree that, without the prior written consent of the
Underwriters, it will not, during the Lock-Up Period, (i) offer, pledge, sell,
contract to sell, purchase, contract to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock; or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or
otherwise. The restrictions contained in the preceding sentence shall
not apply to (1) the Shares to be sold hereunder, (2) the issuance of
Common Stock upon the exercise of options or warrants disclosed as
outstanding in the Registration Statement (excluding exhibits thereto) or the
Prospectus, (3) the issuance of employee stock options not exercisable during
the Lock-Up Period and the grant of restricted stock pursuant to equity
incentive plans described in the Registration Statement (excluding exhibits
thereto) and the Prospectus. Notwithstanding the foregoing, if (x)
the Company issues an earnings release or material news, or a material event
relating to the Company occurs, during the last 17 days of the Lock-Up Period,
or (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, the restrictions imposed by this clause shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or
material event, unless the Underwriter waives such extension in
writing.
20
Such
Selling Stockholder will deliver to the Underwriters prior to the
applicable Closing Date a properly completed and executed United States Treasury
Department Form W-9.
During
the Prospectus Delivery Period, such Selling Stockholder will advise the
Underwriters promptly, and if requested by the Underwriters, will confirm
such advice in writing, of any change in information relating to such Selling
Stockholder in the Registration Statement, the Time of Sale Disclosure Package
or any Prospectus.
Such
Selling Stockholder agrees that it will not prepare or have prepared on its
behalf or use or refer to any "free writing prospectus" (as such
term is defined in Rule 405 under the Act), and agrees that it will not
distribute any written materials in connection with the offer or sale of the
Shares.]
Conditions of the
Underwriter’s Obligations. The obligations of the Underwriters
hereunder to purchase the Shares are subject to the accuracy, as of the date
hereof and at the Closing Date and any Option Closing Date (as if made at such
date), of and compliance with all representations, warranties and agreements of
the Company and the Selling Stockholders (as applicable)
contained herein, the performance by the Company and the Selling
Stockholders of its
obligations hereunder and the following additional conditions:
If filing
of the Prospectus, or any amendment or supplement thereto, or any Issuer Free
Writing Prospectus, is required under the Securities Act or the Rules and
Regulations, the Company shall have filed the Prospectus (or such amendment or
supplement) or such Issuer Free Writing Prospectus with the Commission in the
manner and within the time period so required (without reliance on Rule
424(b)(8) or 164(b) under the Securities Act); the Registration Statement shall
remain effective; no stop order suspending the effectiveness of the Registration
Statement or any part thereof, any Rule 462 Registration Statement, or any
amendment thereof, nor suspending or preventing the use of the Time of Sale
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus shall
have been issued; no proceedings for the issuance of such an order shall have
been initiated or threatened; any request of the Commission or the Underwriters
for additional information (to be included in the Registration Statement, the
Time of Sale Disclosure Package, the Prospectus, any Issuer Free Writing
Prospectus or otherwise) shall have been complied with to the satisfaction of
the Representative; and FINRA shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
21
The
Representative shall not have reasonably
determined, and advised the Company, that the Registration Statement, the
Time of Sale Disclosure Package or the Prospectus, or any amendment thereof or
supplement thereto, or any Issuer Free Writing Prospectus, contains an untrue
statement of fact which, in the Representative's reasonable opinion, is
material, or omits to state a fact which, in the Representative's reasonable
opinion, is material and is required to be stated therein or necessary to make
the statements therein not misleading.
On or
after the date hereof (i) no downgrading shall have occurred in the rating
accorded any of the Company’s securities by any “nationally recognized
statistical organization,” as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company’s
securities.
Except as
contemplated in the Time of Sale Disclosure Package or in the Prospectus, subsequent to the
respective dates as of which information is given in the Time of Sale Disclosure
Package, neither the Company nor any of its subsidiaries shall have incurred any
material liabilities or obligations, direct or contingent, or entered into any
material transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and there shall not
have been any change in the capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants), or any material change in the
short-term or long-term debt of the Company, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital stock
of the Company or any of its subsidiaries, or any Material Adverse Effect
(whether or not arising in the ordinary course of business), or any loss by
strike, fire, flood, earthquake, accident or other calamity, whether or not
covered by insurance, incurred by the Company or any subsidiary, the effect of
which, in any such case described above, in the Representative’s judgment, makes
it impractical or inadvisable to offer or deliver the Shares or the Additional
Shares, as applicable, on the terms and in the manner contemplated in the Time
of Sale Disclosure Package, the Registration Statement and in the
Prospectus.
On the
Closing Date and any Option Closing Date, there shall have been furnished to the
Underwriters the opinion, including the negative assurance opinion, of Xxxxxxxxx
Xxxxxxx, LLP, counsel to the Company, dated the Closing Date and Option Closing
Date, as applicable, and addressed to the Underwriters, in form and substance
reasonably satisfactory to the Representative, to the effect set forth in
Schedule III.
On the
Closing Date and any Option Closing Date, there shall have been furnished to the
Underwriters the opinion and negative assurance letters of [Selling Stockholder
counsel], counsel to the Selling Stockholders, dated the Closing Date and Option
Closing Date, as applicable, and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representative, to the effect set forth
in Schedule IV.
22
On the
Closing Date and any Option Closing Date, the Underwriters shall have received a
letter of Xxxxx Xxxxxxxx, P.C., dated the Closing Date and addressed to the
Underwriters, confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualifications of accountants under Rule 2-01 of
Regulation S-X of the Commission, and confirming, as of the date of such letter
(or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Time of Sale Disclosure Package, as of a date not prior to the date hereof or
more than five days prior to the date of such letter), the conclusions and
findings of said firm with respect to the financial information and other
matters covered by its letter delivered to the Representative concurrently with
the execution of this Agreement, and the effect of the letter so to be delivered
on the Closing Date and any Option Closing Date shall be to confirm the
conclusions and findings set forth in such prior letter.
On each
of the Closing Date and each Option Closing Date, there shall have been
furnished to the Underwriters a certificate, dated the Closing Date and
addressed to the Underwriters, signed by the chief executive officer and the
chief financial officer of the Company, in their capacity as officers of the
Company, to the effect that:
The
representations and warranties of the Company in this Agreement are true and
correct, in all material respects, as if made at and as of the Closing Date or
Option Closing Date, as the case may be, and the Company has complied with all
the agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date or Option Closing Date, as the case
may be;
No stop
order or other order (A) suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof, (B) suspending the
qualification of the Shares for offering or sale, or (C) suspending or
preventing the use of the Time of Sale Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus, has been issued, and no proceeding for that
purpose has been instituted or, to their knowledge, is contemplated by the
Commission or any state or regulatory body; and
There has
been no occurrence of any event resulting or reasonably likely to result in a
Material Adverse Effect during the period from and after the date of this
Agreement and prior to the Closing Date or Option Closing Date, as the case may
be.
On the
Closing Date and each Option Closing Date, there shall have been furnished to
the Underwriters certificates, dated the Closing Date and each Option Closing
Date and addressed to the Underwriters, signed by each Selling Stockholder, to
the effect that the representations and warranties of such Selling Stockholder
in this Agreement are true and correct, in all material respects, as if made at
and as of the Closing Date and such Option Closing Date, as applicable, and such
Selling Stockholder has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date and such Option Closing Date, as applicable;
The
“lock-up” agreements between the Representative and the stockholders, officers
and directors of the Company listed on Schedule VI, delivered to the
Representative on or before the date hereof, shall be in full force and effect
on the Closing Date or such Option Closing Date, as applicable.
23
The
Company and the Selling Stockholders shall
have furnished to the Underwriters and their counsel such additional documents,
certificates and evidence customary under the circumstances as the Underwriters
or their counsel may have reasonably requested.
If
any condition specified in this Section 7 shall not have been fulfilled when and
as required to be fulfilled, this Agreement may be terminated by the
Representative by notice to the Company at any time at or prior to the Closing
Date and such termination shall be without liability of any party to any other
party, except that Section 6(a)(vii), Section 8 and Section 9 shall survive any
such termination and remain in full force and effect.
Indemnification
and Contribution.
The
Company agrees to indemnify, defend and hold harmless each Underwriter, its
respective affiliates, directors and officers and employees, and each person, if
any, who controls the Underwriters within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any losses,
claims, damages or liabilities to which the Underwriters or such person may
become subject, under the Securities Act or otherwise (including in settlement
of any litigation if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, including the information deemed to be a part of the Registration
Statement at the time of effectiveness and at any subsequent time pursuant to
Rules 430A and 430B of the Rules and Regulations, the Time of Sale Disclosure
Package, the Prospectus, or any amendment or supplement thereto (including any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Registration Statement or the Prospectus), or any Issuer Free
Writing Prospectus, or in any materials or information provided to investors by,
or with the approval of, the Company in connection with the marketing of the
offering of the Common Stock, including any roadshow or investor presentations
made to investors by the Company (whether in person or electronically), or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (ii) in whole or in part, any inaccuracy in the representations and
warranties of the Company contained herein, or (iii) in whole or in part, any
failure of the Company to perform its obligations hereunder or under law, and
will reimburse the Underwriters for any documented legal or other expenses
reasonably incurred by them in connection with evaluating, investigating or
defending against such loss, claim, damage, liability or action; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Time of Sale Disclosure Package, the Prospectus, or
any amendment or supplement thereto or any Issuer Free Writing Prospectus, in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter specifically for use in the preparation
thereof.
24
Each
Selling Stockholder will, severally and not jointly, indemnify, defend and hold
harmless each Underwriter, its respective affiliates, directors and officers and
employees, and each person, if any, who controls the Underwriters within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any losses, claims, damages or liabilities to which the
Underwriters or such person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities to which the
Underwriters or such person may become subject, under the Securities Act or
otherwise (including in settlement of any litigation if such settlement is
effected with the written consent of such Selling Stockholder), insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Prospectus or any
Issuer Free Writing Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case, as to each Selling Stockholder, (ii) in
whole or in part, any inaccuracy in the representations and warranties of the
Selling Stockholder contained herein, or (iii) in whole or in part, any failure
of the Selling Stockholder to perform its obligations hereunder or under law,
and will reimburse the Underwriters for any legal or other expenses reasonably
incurred by it in connection with evaluating, investigating or defending against
such loss, claim, damage, liability or action; provided, however, that the Selling
Stockholders shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto or any Issuer Free Writing
Prospectus, in reliance upon and in conformity with written information
furnished to the Company by the Underwriters specifically for use in the
preparation thereof.
Each
Underwriter will, severally and not jointly, indemnify, defend and hold harmless
the Company and the Selling Stockholders, their respective affiliates,
directors, officers and employees, and each person, if any, who controls the
Company or a Selling Stockholder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any losses, claims, damages or liabilities to which the Company or a
Selling Stockholder may become subject,
under the Securities Act or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriters), insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, the Time of Sale Disclosure Package, the Prospectus, or any amendment
or supplement thereto or any Issuer Free Writing Prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto or any Issuer Free Writing
Prospectus in reliance upon and in conformity with written information furnished
to the Company by such Underwriter specifically for use in the preparation
thereof, and will reimburse the Company or a Selling Stockholder for any legal or other
expenses reasonably incurred by the Company or a Selling Stockholder in connection with
defending against any such loss, claim, damage, liability or
action.
25
Promptly
after receipt by an indemnified party under subsection (a), (b), or (c) above of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof; but the failure to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to any indemnified party
except to the extent such indemnifying party has been materially prejudiced by
such failure. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party’s election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof; provided,
however, that if (i)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(ii) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party), or (iii) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, the indemnified party
shall have the right to employ a single counsel to represent it in any claim in
respect of which indemnity may be sought under subsection (a), (b), or (c) of
this Section 8, in which event the reasonable and documented fees and expenses
of such separate counsel shall be borne by the indemnifying party or parties and
reimbursed to the indemnified party as incurred; it being understood, however,
that the indemnifying party shall not be liable for the expenses of more than
one separate counsel (plus local counsel).
The
indemnifying party under this Section 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. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is a party or could be named and indemnity was or would be
sought hereunder by such indemnified party, unless such settlement, compromise
or consent (a) includes an unconditional release of such indemnified party from
all liability for claims that are the subject matter of such action, suit or
proceeding and (b) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified
party.
26
If the
indemnification provided for in this Section 8 is unavailable or insufficient to
hold harmless an indemnified party under subsection (a), (b), or (c) above, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (a), (b), or (c) above, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the
Underwriters on the other from the offering and sale of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by
the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company and the Selling Stockholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Final
Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling
Stockholders or the
Underwriters and the parties’ relevant intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or
omission. The Company, the Selling Stockholders and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were to be determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in the first sentence of this subsection (d). The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any documented legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending against any
action or claim that is the subject of this subsection
(d). Notwithstanding the provisions of this subsection (d), the Underwriters shall not
be required to contribute any amount in excess of the amount of the
Underwriters' commissions referenced in Section 5(a) actually received by the
Underwriters pursuant to this Agreement. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The
obligations of the Company and the Selling Stockholders under this Section 8
shall be in addition to any liability that the Company and the Selling
Stockholders may
otherwise have and the benefits of such obligations shall extend, upon the same
terms and conditions, to each person, if any, who controls the Underwriters
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act; and the obligations of the Underwriter under this Section 8 shall
be in addition to any liability that the Underwriters may otherwise have and the
benefits of such obligations shall extend, upon the same terms and conditions,
to the Company, the Selling Stockholders and their respective officers,
directors and each person who controls the Company or a Selling Stockholder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act.
27
For
purposes of this Agreement, the Underwriters confirm, and the Company and the
Selling Stockholders acknowledge, that there
is no information concerning the Underwriters furnished in writing to the
Company or the Selling Stockholders by the Underwriters
specifically for preparation of or inclusion in the Registration Statement, the
Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, other than the statements set forth in the last paragraph on the
cover page of the Prospectus and the statements set forth in the “Underwriting”
section of the Prospectus and Time of Sale Disclosure Package, and then only
insofar as such statements relate to the amount of selling concession and
re-allowance or to over-allotment and related activities that may be undertaken
by the Underwriters and prior relationships with Underwriters.
Representations
and Agreements to Survive Delivery. All representations,
warranties, and agreements of the Company and the Selling Stockholders herein
or in certificates delivered pursuant hereto, including, but not limited to, the
agreements of the Underwriters, the Selling Stockholders and the Company
contained in Section 6(a)(vii) and Section 8 hereof, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
the Underwriters or any controlling person thereof, or the Company and the
Selling Stockholders or any of their
respective officers, directors, or
controlling persons, and shall survive delivery of, and payment for, the Shares
to and by the Underwriters hereunder.
Termination of
this Agreement.
In
addition to the provisions of Section 7, the Representative shall have the right
to terminate this Agreement by giving notice to the Company and the Selling
Stockholders as
hereinafter specified at any time at or prior to the Closing Date, if (i)
trading in the Company’s Common Stock shall have been suspended by the
Commission or the Nasdaq Capital Market or trading in securities generally on
Nasdaq, New York Stock Exchange or NYSE Amex shall have been suspended, (ii)
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on Nasdaq, New York Stock
Exchange or NYSE Amex, by such exchange or by order of the Commission or any
other governmental authority having jurisdiction, (iii) a banking moratorium
shall have been declared by federal or state authorities, (iv) there shall have
occurred any attack on, outbreak or escalation of hostilities or act of
terrorism involving the United States, any declaration by the United States of a
national emergency or war, any change in financial markets, any substantial
change or development involving a prospective substantial change in United
States or international political, financial or economic conditions or any other
calamity or crisis, or (v) the Company suffers any loss by strike, fire, flood,
earthquake, accident or other calamity, whether or not covered by insurance, the
effect of which, in each case described in this subsection (a), in the
Representative’s judgment is material and adverse and makes it impractical or
inadvisable to proceed with the completion of the sale of and payment for the
Shares. Any such termination shall be without liability of any party
to any other party except that the provisions of Section 6(a)(vii) and Section 8
hereof shall at all times be effective and shall survive such
termination.
If the
Representative elects to terminate this Agreement as provided in this Section,
the Company and the Selling Stockholders shall be notified
promptly by the Representative by telephone, confirmed by letter.
28
Notices. Except
as otherwise provided herein, all communications hereunder shall be in writing
and, if to Xxxx, shall be mailed, delivered or telecopied to Xxxx Capital
Partners, LLC, 00 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000, telecopy number:
(000) 000-0000, Attention: Managing Director; and if to the Company,
shall be mailed, delivered or telecopied to it at 000 Xxxxx Xxxxxx, Xxxxx 000,
Xxx Xxxx, XX 00000, telecopy number: 971-4-429-0330, Attention: Mr. Kaleil Xxxxx
Xxxxxx, Chairman and Chief Executive Officer, with a copy to Xxxxxxxxx Traurig,
LLP, MetLife Bldg., 000 Xxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000, telecopy number: (000) 000-0000,
Attention: Xxxxxxx X. Xxxxxxx, Esq.; and if to the Selling
Stockholders, shall be mailed, delivered or telecopied to it at the address set
forth on such Selling Stockholder's signature page hereto; or in each case to
such other address as the person to be notified may have requested in
writing. Any party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a new
address for such purpose.
Persons Entitled
to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers and directors
referred to in Section 8. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term “successors and assigns” as herein used
shall not include any purchaser, as such purchaser, of any of the Shares from
the Underwriters.
Absence of
Fiduciary Relationship. The Company and each of the Selling
Stockholders acknowledges and agrees
that: (a) the Underwriters have been retained solely to act as underwriter in
connection with the sale of the Shares and that no fiduciary, advisory or agency
relationship between the Company and the Selling Stockholders and the Underwriters
have been created in respect of any of the transactions contemplated by this
Agreement, irrespective of whether the Underwriters have advised or is advising
the Company or the Selling Stockholders on other matters; (b)
the price and other terms of the Shares set forth in this Agreement were
established by the Company and the Selling Stockholders following discussions
and arms-length negotiations with the Underwriters and the Company and the
Selling Stockholders are capable of
evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement; (c) it has been
advised that each of the Underwriters and its affiliates are engaged in a broad
range of transactions that may involve interests that differ from those of the
Company and the Selling Stockholders and that the
Underwriters have no obligation to disclose such interest and transactions to
the Company or the Selling Stockholders by virtue of any
fiduciary, advisory or agency relationship; (d) it has been advised that each
Underwriter is acting, in respect of the transactions contemplated by this
Agreement, solely for the benefit of such Underwriter, and not on behalf of the
Company or the Selling Stockholders.
Amendments and
Waivers. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. The failure of a party to exercise any right or remedy shall
not be deemed or constitute a waiver of such right or remedy in the
future. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (regardless of
whether similar), nor shall any such waiver be deemed or constitute a continuing
waiver unless otherwise expressly provided.
29
Partial
Unenforceability. The invalidity or unenforceability of any
section, paragraph, clause or provision of this Agreement shall not affect the
validity or enforceability of any other section, paragraph, clause or
provision.
Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Counterparts. This
Agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an
original and all such counterparts shall together constitute one and the same
instrument.
30
Please
sign and return to the Company the enclosed duplicates of this letter whereupon
this letter will become a binding agreement between the Company, the Selling
Stockholders and
the Underwriters in accordance with its terms.
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Very
truly yours,
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By:
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Name:
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Title:
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SELLING
STOCKHOLDERS
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By:
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Name:
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Title:
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Address:
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Facsimile:
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By:
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Name:
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Title:
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Address:
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Facsimile:
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Confirmed
as of the date first above-
mentioned
by the Underwriter.
XXXX
CAPITAL PARTNERS, LLC
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By:
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Name:
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Title:
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[Signature
page to Underwriting Agreement]
