UNDERWRITING AGREEMENT dated , 2007 Paulson Investment Company, Inc.
, 2007
Xxxxxxx Investment Company, Inc.
[As representative of the several underwriters listed on Schedule A hereto.]
000 XX Xxxxx Xxxxxxx
Xxxxxxxx, Xxxxxx 00000
[As representative of the several underwriters listed on Schedule A hereto.]
000 XX Xxxxx Xxxxxxx
Xxxxxxxx, Xxxxxx 00000
Ladies and Gentlemen:
Introductory. NitroSecurity, Inc., a Delaware corporation (the “Company”), proposes
to issue and sell to the several underwriters named in Schedule A (the “Underwriters”) an
aggregate of 1,750,000 units (each a “Unit” and, collectively, the “Firm Units”),
each Unit consisting of (i) one share of the Company’s common stock (“Common Stock”), and
(ii) one redeemable common stock purchase warrant to purchase one share of Common Stock (each a
“Warrant” and, collectively, the “Warrants”). The Warrants are to be issued under
the terms of a Warrant Agreement (the “Warrant Agreement”) by and between the Company and
[NITRO TO APPOINT WARRANT AGENT REASONABLY ACCEPTABLE TO XXXXXXX], as warrant agent (the
“Warrant Agent”), substantially in the form most recently filed as an exhibit to the
Registration Statement (hereinafter defined). In addition, the Company has granted to the
Underwriters an option to purchase up to an additional 262,500 Units (the “Optional
Units”), solely to cover over-allotments, as provided in Section 2. The Firm Units and, if and
to the extent such option is exercised, the Optional Units are collectively called the
“Units”. Any references in this Agreement to the Warrants shall be deemed to refer to the
Warrants includable in the Optional Units. Xxxxxxx Investment Company, Inc. has agreed to act as
representative of the several Underwriters (in such capacity, the “Representative”) in
connection with the offering and sale of the Units.
The Company confirms its agreement with the Underwriters as follows:
As an inducement to the Underwriters to enter into this Agreement and to purchase the Units on
the terms and conditions set forth herein, the Company represents, warrants and covenants to each
Underwriter as follows:
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statement became effective, in the form in which it was declared effective by the Commission under
the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the “Securities Act”), and including any required information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A, Rule 430B or Rule 430C under the
Securities Act, or pursuant to the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder (collectively, the “Exchange Act”), is called the “Registration
Statement.” Any registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the “Rule 462(b) Registration Statement,” and from and after the
date and time of filing of the Rule 462(b) Registration Statement the term “Registration
Statement” shall include the Rule 462(b) Registration Statement. The prospectus, in the form
first filed pursuant to Rule 424(b) under the Securities Act after the date and time that this
Agreement is executed and delivered by the parties hereto (the “Execution Time”), or, if no
filing pursuant to Rule 424(b) under the Securities Act is required, the form of final prospectus
relating to the Units included in the Registration Statement at the effective date of the
Registration Statement, is called the “Prospectus.” All references in this Agreement to
the Registration Statement, the Rule 462(b) Registration Statement, the Company’s preliminary
prospectus dated ___, 2007 included in the Registration Statement (the “Preliminary
Prospectus”), the Prospectus, or any amendments or supplements to any of the foregoing, shall
include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System (“XXXXX”). Any reference herein to any Preliminary
Prospectus or the Prospectus or any supplement or amendment to either thereof shall be deemed to
refer to and include any documents incorporated by reference therein as of the date of such
reference.
Each Preliminary Prospectus and the Prospectus, when filed, complied or will comply in all
material respects with the Securities Act and, if filed by electronic transmission pursuant to
XXXXX (except as may be permitted by Regulation S-T under the Securities Act), was identical in
content to the copy thereof delivered to the Underwriters for use in connection with the offer and
sale of the Units other than with respect to any artwork and graphics that were not filed. Each of
the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendment
thereto, at the time it became effective and at all subsequent times until the expiration of the
prospectus delivery period required under Section 4(3) of the Securities Act, complied and will
comply in all material respects with the Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus (including any Prospectus
wrapper), as amended or supplemented, as of its date and at all subsequent times until the
Underwriters have completed their distribution of the Units, did not and will not contain any
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
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they were made, not misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with
information furnished to the Company in writing by the Representative expressly for use therein, it
being understood and agreed that the only such information furnished by the Representative consists
of the information described as such in Section 7 hereof. There are no contracts or other
documents required to be described in the Prospectus or to be filed as exhibits to the Registration
Statement that have not been described or filed as required.
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(i) The Underwriting Agreement. This Agreement has been duly authorized, executed and
delivered by, and is a valid and, assuming payment for the Units as set forth in Section 2, binding
agreement of, the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the enforcement hereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to
or affecting the rights and remedies of creditors or by general equitable principles.
(A) The Units to be purchased by the Underwriters from the Company (including the Firm
Units and the Optional Units and the units issuable upon exercise of the Underwriters’
Warrants described in Section 2(h)) have been duly authorized and, in the case of the units
issuable upon exercise of the Underwriters’ Warrants, reserved for issuance and sale
pursuant to this Agreement and when so issued and delivered by the Company (in the case of
the units issuable upon exercise of the Underwriters’ Warrants, in accordance with the terms
hereof and thereof, respectively) will be valid and binding instruments of the Company,
enforceable in accordance with their terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable principles.
(B) The Common Stock included in the Units to be purchased by the Underwriters from the
Company and the Common Stock included in the units issuable upon exercise of the
Underwriters’ Warrants described in Section 2(h), has been duly authorized and reserved for
issuance and, in the case of the Common Stock included in the Units, sale pursuant to this
Agreement and when so issued and delivered by the Company, will be validly issued, fully
paid and nonassessable.
(C) The Warrants included in the Units to be purchased by the Underwriters from the Company
have been duly and properly authorized by all required corporate actions and will, when
issued and delivered by the Company pursuant to this Agreement, be validly executed and
delivered by, and will be valid and binding agreements of, the Company, enforceable in
accordance with their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(D) The Underwriters’ Warrants have been duly and properly authorized by all required
corporate actions and will, when issued and delivered by the Company pursuant to this
Agreement, be validly executed and delivered by, and will be valid and binding
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agreements of, the Company, enforceable in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(E) The Common Stock issuable on exercise of the Warrants, the Underwriters’ Warrants and
the warrants underlying the Underwriters’ Warrants has been duly authorized and reserved for
issuance and sale pursuant to their terms and, when issued and delivered by the Company
pursuant to such warrants, will be validly issued, fully paid and nonassessable.
(F) The Warrant Agreement has been duly and properly authorized by all required corporate
actions of the Company and will, when executed and delivered (and assuming due and valid
execution by the Warrant Agent) constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(G) Each Warrant and each Underwriter’s Warrant will, when issued, possess rights,
privileges, and characteristics as represented in the most recent form of Warrant Agreement
or Underwriters’ Warrants, as the case may be, filed as an exhibit to the Registration
Statement.
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included in the Disclosure Package and the Prospectus, is an independent registered public
accounting firm as required by the Securities Act and the Exchange Act.
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plans or arrangements, and the options or other rights granted thereunder, set forth or
incorporated by reference in the Disclosure Package and the Prospectus accurately and fairly
presents the information required to be shown with respect to such plans, arrangements, options and
rights in all material respects.
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labor dispute with the employees of the Company exists or, to the Company’s knowledge after due
investigation by its officers, is threatened or imminent except for such disputes as would not,
individually or in the aggregate, result in a Material Adverse Change.
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Section 1(n) above in respect of all federal, state and foreign income and franchise taxes for all
periods as to which the tax liability of the Company has not been finally determined.
(x) Company Not an “Investment Company.” The Company has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended (the “Investment Company
Act”). The Company is not, and after receipt of payment for the Units and the application of
the proceeds thereof as contemplated under the caption “Use of Proceeds” in the Disclosure Package
and the Prospectus will not be, an “investment company” within the meaning of the Investment
Company Act and will conduct its business in a manner so that it will not become subject to the
Investment Company Act.
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Company’s ability to record, process, summarize and report financial data or any material
weaknesses in internal controls or (b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company’s internal controls.
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Material of Environmental Concern, that reasonably could result in a violation of any Environmental
Law or form the basis of a potential Environmental Claim against the Company or against any person
or entity whose liability for any Environmental Claim the Company has retained or assumed either
contractually or by operation of law.
(hh) Restated Certificate of Incorporation; Amendment to Amended and Restated Stockholders
Agreement. The Company has filed the Restated Certificate of Incorporation in the form attached to
the Registration Statement as Exhibit 3.2. Stockholders owning an aggregate of 3,059,245 shares of
Common Stock are subject to a one-year lock-up agreement pursuant to and as set forth in the
Amended and Restated Stockholders Agreement, dated as of January 12, 2006, among the Company and
such stockholders, as amended.
Any certificate signed by an officer of the Company and delivered to the Representative or to
counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to
each Underwriter as to the matters set forth therein.
The Company acknowledges that the Underwriters and, for purposes of the opinions to be
delivered pursuant to Section 5 hereof, counsel to the Company and counsel to the Underwriters,
will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents
to such reliance.
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Section 2. Purchase, Sale and Delivery of the Units.
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It is understood that the Representative has been authorized, for its own account and the
accounts of the several Underwriters, to accept delivery of and receipt for, and make payment of
the purchase price for, the Firm Units and any Optional Units the Underwriters have agreed to
purchase. The Representative, individually and not as the Representative of the Underwriters, may
(but shall not be obligated to) make payment for any Units to be purchased by any Underwriter whose
funds shall not have been received by the Representative by the First Closing Date or any
Subsequent Closing Date, as the case may be, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations under this Agreement.
Section 3. Covenants of the Company
As a further inducement to the Underwriters to enter into this Agreement and to purchase the
Units as provided for in Section 2, the Company covenants and agrees with each Underwriter as
follows:
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supplement, and the Company shall not file any such proposed amendment or supplement to which
the Representative reasonably objects.
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brought to the Company’s attention by the Representative during the Prospectus Delivery
Period) and (ii) promptly prepare (subject to Section 3(a) and 3(e) hereof), file with the
Commission (and use its best efforts to have any amendment to the Registration Statement or any new
registration statement to be declared effective) and furnish at its own expense to the Underwriters
and to dealers, amendments or supplements to the Registration Statement, the Disclosure Package or
the Prospectus, or any new registration statement, necessary in order to make the statements in the
Disclosure Package or the Prospectus as so amended or supplemented, in the light of the
circumstances under which they were made, as the case may be, not misleading or so that the
Registration Statement, the Disclosure Package or the Prospectus, as amended or supplemented, will
comply with law.
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options, in each case, pursuant to any stock option, stock bonus or other stock plan,
arrangement or contractual obligation that has been approved by the Board and ratified by the
Company’s stockholders; and (B) will not issue any shares of its Common Stock or grant options to
purchase shares of its Common Stock or other stock-based awards pursuant to its 2005 Stock
Incentive Plan (other than issuances of Common Stock upon exercise of
options outstanding as of September 30, 2007 as described in the
Disclosure Package and Prospectus, as the case may be). In addition,
the Company will not engage Mirus Capital Advisors, Inc. to provide
any financial advisory or other services to the Company during the ninety (90) day period
immediately following the date on which the Registration Statement is declared effective.
Section 4. Payment of Expenses.
(a) The Representative shall be entitled to reimbursement from the Company, for itself alone
and not as Representative of the Underwriters, to a non-accountable expense allowance equal to 2%
of the aggregate initial public offering price of the Firm Units purchased at closing, provided
that the first amount so withheld will be reduced by the retainer amount advanced against
Representative’s expenses. If this Agreement is terminated by the
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Representative pursuant to Section 5, or Section 10, or by the Company pursuant to Section 6,
or if the sale to the Underwriters of the Units on the First Closing Date or Subsequent Closing
Date is not consummated because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or to comply with any provision hereof, the Representative shall be
entitled, upon presentation of a written accounting therefor in reasonable detail (but without the
need to include the underlying statements or evidence of payment), to prompt reimbursement from the
Company of the excess amount over the retainer of the Representative’s actual, out-of-pocket
expenses related to the offering of the Units pursuant to this Agreement, including, but not
limited to, fees and expenses of its investment banking staff, legal counsel, travel expenses, and
the fees and expenses of outside experts, if any, (collectively, the “Representative’s
Expenses”) retained to assist us with due diligence. In the event the Representative’s Expenses
are less than the retainer amount, the difference shall be returned to the Company.
(b) In addition to the payment described in Paragraph (a) of this Section 4, the Company
agrees to pay all costs, fees and expenses incurred in connection with the performance of its
obligations hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the Units (including
all printing and engraving costs, if any), (ii) all fees and expenses of the registrar and transfer
agent of the Common Stock and the Warrant Agent, (iii) all necessary issue, transfer and other
stamp taxes in connection with the issuance and sale of the Units to the Underwriters, (iv) all
fees and expenses of the Company’s counsel, independent public or certified public accountants and
other advisors, (v) all costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), each Issuer Free Writing Prospectus,
each Preliminary Prospectus and the Prospectus, and all amendments and supplements thereto, and
this Agreement, (vi) the costs and expenses relating to presentations or meetings undertaken in
connection with the marketing of the offering and sale of the shares to prospective investors and
the Underwriter’s sales forces, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations, travel, lodging and other expenses, and the cost of
any aircraft chartered in connection with the road show, (vii) all filing fees, attorneys’ fees and
expenses incurred by the Company or the Underwriters in connection with qualifying or registering
(or obtaining exemptions from the qualification or registration of) all or any part of the Units
for offer and sale under the state securities or blue sky laws, and, if requested by the
Representative, preparing and printing a “Blue Sky Survey” or memorandum, and any supplements
thereto, advising the Underwriters of such qualifications, registrations and exemptions, (viii) the
filing fees incident to the FINRA’s review and approval of the Underwriters’ participation in the
offering and distribution of the Units, (ix) the fees and expenses associated with including the
Units on the NASDAQ Capital Market, and (x) all other fees, costs and expenses referred to in Item
25 of Part II of the Registration Statement. Except as provided in this Section 4(b) and Sections
7 and 8 hereof, the Underwriters shall pay their own expenses, including the fees and disbursements
of their counsel.
Section 5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Units as provided herein on the First
Closing Date and, with respect to the Optional Units, each Subsequent Closing Date, shall be
subject to (1) the accuracy of the representations and warranties on the part of the Company set
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forth in Section 1 hereof as of the date hereof and as of the First Closing Date and each
Subsequent Closing Date as though then made; (2) the timely performance by the Company of its
covenants and other obligations hereunder; and (3) each of the following additional conditions:
(i) the Company shall have filed the Prospectus with the Commission (including the
information required by Rule 430A under the Securities Act) in the manner and within
the time period required by Rule 424(b) under the Securities Act; or the Company
shall have filed a post-effective amendment to the Registration Statement containing
the information required by such Rule 430A, and such post-effective amendment shall
have become effective; and
(ii) no stop order suspending the effectiveness of the Registration Statement, or
any post-effective amendment to the Registration Statement, shall be in effect and
no proceedings for such purpose shall have been instituted or threatened by the
Commission.
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the Subsequent Closing Date, as applicable, in a form satisfactory to the Representative (and
the Representative shall have received an additional four conformed copies of such counsel’s legal
opinion for the several Underwriters).
(i) for the period from and after the date of this Agreement and prior to such
Closing Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company set forth in
Section 1 of this Agreement are true and correct with the same force and effect as
though expressly made on and as of such Closing Date; and
(iii) the Company has complied with all the agreements hereunder and satisfied all
the conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date.
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If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Representative by notice to the Company at any
time on or prior to the First Closing Date and, with respect to the Optional Units, at any time
prior to each Subsequent Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 4, Section 7 and Section 8 shall at all times be
effective and shall survive such termination.
Section 6. Effectiveness of this Agreement. This Agreement shall not become
effective until the later of (i) the execution of this Agreement by the parties hereto and (ii)
notification (including by way of oral notification from the reviewer at the Commission) by the
Commission to the Company of the effectiveness of the Registration Statement under the Securities
Act; provided that Sections 4, 7 and 8 shall at all times be effective.
Prior to such effectiveness, this Agreement may be terminated by any party by notice to each
of the other parties hereto, and any such termination shall be without liability on the part of (a)
the Company to any Underwriter, except that (solely in the case where the Company has terminated
this Agreement pursuant to this Section 6) the Company shall be obligated to reimburse the expenses
of the Representative and the Underwriters pursuant to Section 4, or (b) any Underwriter to the
Company except that the provisions of Section 7 and Section 8 shall at all times be effective and
shall survive such termination.
Section 7. Indemnification.
The Company agrees to indemnify and hold harmless each Underwriter, its officers and
employees, and each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such settlement is effected
with the written consent of the Company), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based (i) upon any untrue
statement or alleged untrue statement of a material fact contained in the Registration Statement,
or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule
430A, Rule 430B and Rule 430C under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make the statements
therein not misleading; or (ii) upon any untrue statement or alleged untrue statement of a material
fact contained in any Issuer Free Writing Prospectus, any Preliminary Prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and to reimburse each Underwriter and each such
controlling person for any and all expenses (including the fees
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and disbursements of counsel chosen by the Representative) as such expenses are reasonably
incurred by such Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the foregoing indemnity agreement shall not apply to any loss,
claim, damage, liability or expense to the extent, but only to the extent, arising out of or based
upon any untrue statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the Company by the
Representative expressly for use in the Registration Statement, any Issuer Free Writing Prospectus,
any Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto). The
indemnity agreement set forth in this Section 7(a) shall be in addition to any liabilities that the
Company may otherwise have.
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under this Section 7, notify the indemnifying party in writing of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under the indemnity
agreement contained in this Section 7 or to the extent it is not prejudiced as a proximate result
of such failure. In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it shall elect, jointly with all
other indemnifying parties similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may arise between the positions
of the indemnifying party and the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party under this Section 7
for any legal or other expenses subsequently incurred by such indemnified party in connection with
the defense thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one separate counsel (together
with local counsel), approved by the indemnifying party (the Representative in the case of Section
7(b) and Section 8), representing the indemnified parties who are parties to such action) or (ii)
the indemnifying party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
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unless such settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such action, suit or
proceeding.
Section 8. Contribution. If the indemnification provided for in Section 7 is for
any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then
each indemnifying party shall contribute to the aggregate amount paid or payable by such
indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying parties on the one hand, and the indemnified parties, on the other
hand, from the offering of the Units pursuant to this Agreement or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also the relative fault
of the indemnifying parties, on the one hand, and the indemnified parties, on the other hand, in
connection with the statements or omissions or inaccuracies in the representations and warranties
herein which resulted in such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The relative benefits received by the indemnifying
parties, on the one hand, and the indemnified parties, on the other hand, in connection with the
offering of the Units pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Units pursuant to this Agreement
(before deducting expenses) received by the indemnifying parties, and the total underwriting
discount received by the indemnified parties, in each case as set forth on the front cover page of
the Prospectus bear to the aggregate initial public offering price of the Units as set forth on
such cover. The relative fault of the indemnifying parties, on the one hand, and the indemnified
parties, on the other hand, shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or alleged omission to state
a material fact or any such inaccurate or alleged inaccurate representation or warranty relates to
information supplied by indemnifying parties, on the one hand, or the indemnified parties, on the
other hand, and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the limitations set forth in
Section 7(c), any legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in Section 7(c) with
respect to notice of commencement of any action shall apply if a claim for contribution is to be
made under this Section 8; provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under Section 7(c) for purposes of
indemnification.
The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 8.
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Notwithstanding the provisions of this Section 8, no Underwriter shall be required to
contribute any amount in excess of the underwriting commissions received by such Underwriter in
connection with the Units underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters’ obligations to contribute pursuant to this Section 8 are several, and not joint,
in proportion to their respective underwriting commitments as set forth opposite their names in
Schedule A. For purposes of this Section 8, each officer and employee of an Underwriter and each
person, if any, who controls an Underwriter within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as such Underwriter; and each director of
the Company, each officer of the Company who signed the Registration Statement, and each person, if
any, who controls the Company within the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as the Company.
Section 9. Default of One or More of the Several Underwriters. If, on the First
Closing Date or each Subsequent Closing Date, as the case may be, any one or more of the several
Underwriters shall fail or refuse to purchase Units that it or they have agreed to purchase
hereunder on such date, and the aggregate number of Units which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the aggregate number
of the Units to be purchased on such date, the other Underwriters shall be obligated, severally, in
the proportions that the number of Firm Units set forth opposite their respective names on Schedule
A bears to the aggregate number of Firm Units set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as may be specified by the Representative
with the consent of the non-defaulting Underwriters, to purchase the Units which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such date. If, on the First
Closing Date or each Subsequent Closing Date, as the case may be, any one or more of the
Underwriters shall fail or refuse to purchase Units and the aggregate number of Units with respect
to which such default occurs exceeds 10% of the aggregate number of Units to be purchased on such
date, and arrangements satisfactory to the Representative and the Company for the purchase of such
Units are not made within 48 hours after such default, this Agreement shall terminate without
liability of any party to any other party except that the provisions of Section 4(b), Section 7 and
Section 8 shall at all times be effective and shall survive such termination. In any such case
either the Representative or the Company shall have the right to postpone the First Closing Date or
each Subsequent Closing Date, as the case may be, but in no event for longer than seven days in
order that the required changes, if any, to the Registration Statement and the Prospectus or any
other documents or arrangements may be effected.
As used in this Agreement, the term “Underwriter” shall be deemed to include any
person substituted for a defaulting Underwriter under this Section 9. Any action taken under this
Section 9 shall not relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
Section 10. Termination of this Agreement. Prior to the First Closing Date and,
with respect to Optional Units, each Subsequent Closing Date, whether before or after notification
by the Commission to the Company of the effectiveness of the Registration Statement under the
Securities Act, this Agreement may be terminated by the Representative by notice given to the
Company if at any time (i) trading or quotation in any of the Company’s securities shall have
25
been suspended or limited by the Commission or by the NASDAQ Capital Market, or trading in
securities generally on either the NASDAQ Capital Market or the New York Stock Exchange shall have
been suspended or limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the FINRA; (ii) a general banking moratorium shall
have been declared by any of federal or New York or Delaware authorities; (iii) there shall have
occurred any outbreak or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets, or any substantial
change or development involving a prospective substantial change in United States’ or international
political, financial or economic conditions that, in the judgment of the Representative is material
and adverse and makes it impracticable to market the Units in the manner and on the terms described
in the Prospectus or to enforce contracts for the sale of securities; or (iv) in the reasonable
judgment of the Representative there shall have occurred any Material Adverse Change (regardless of
whether any loss associated with such Material Adverse Change shall have been insured). Any
termination pursuant to this Section 10 shall be without liability on the part of (a) the Company
to any Underwriter, except that the Company shall be obligated to reimburse the expenses of the
Representative and the Underwriters pursuant to Section 4(b), (b) any Underwriter to the Company,
or (c) of any party hereto to any other party except that the provisions of Section 7 and Section 8
shall at all times be effective and shall survive such termination.
Section 11. No Advisory or Fiduciary Responsibility. The Company acknowledges and
agrees that: (i) the purchase and sale of the Units pursuant to this Agreement, including the
determination of the public offering price of the Units and any related discounts and commissions,
is an arm’s-length commercial transaction between the Company, on the one hand, and the several
Underwriters, on the other hand, and the Company is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the transactions contemplated by this
Agreement; (ii) in connection with each transaction contemplated hereby and the process leading to
such transaction each Underwriter is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary of the Company or its affiliates, stockholders, creditors or
employees or any other party; (iii) no Underwriter has assumed or will assume an advisory, agency
or fiduciary responsibility in favor of the Company with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has
advised or is currently advising the Company on other matters) and no Underwriter has any
obligation to the Company with respect to the offering contemplated hereby except the obligations
expressly set forth in this Agreement; (iv) the several Underwriters and their respective
affiliates may be engaged in a broad range of transactions that involve interests that differ from
those of the Company and that the several Underwriters have no obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Underwriters
have not provided any legal, accounting, regulatory or tax advice with respect to the offering
contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax
advisors to the extent it deemed appropriate. The Company hereby waives and releases, to the
fullest extent permitted by law, any claims that the Company may have against the several
Underwriters with respect to any breach or alleged breach of agency or fiduciary duty.
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This Agreement supersedes all prior agreements and understandings (whether written or oral)
between the Company and the several Underwriters, or any of them, with respect to the subject
matter hereof.
Section 12. Representations and Indemnities to Survive Delivery. The respective
indemnities, rights of contribution, agreements, representations, warranties, covenants and other
statements of the Company, of its officers, and of the several Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect, regardless of: (i)
any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter,
the officers or employees of any Underwriter, any person controlling any Underwriter, the Company,
the officers or employees of the Company or any person controlling the Company; (ii) delivery of
and payment for the Units sold hereunder; and (iii) termination of this Agreement.
Section 13. Notices. All communications hereunder shall be in writing and shall be
mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representative:
Xxxxxxx Investment Company, Inc.
000 X.X. Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Syndicate Department
000 X.X. Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Syndicate Department
with a copy to:
Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
If to the Company:
NitroSecurity, Inc.
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx, LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Any party hereto may change the address for receipt of communications by giving written notice
to the others.
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Section 14. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto, including any substitute Underwriters pursuant to Section 9 hereof, and to
the benefit of the employees, officers and directors and controlling persons referred to in Section
7 and Section 8, and in each case their respective successors, and personal representatives and no
other person will have any right or obligation hereunder. The term “Successors” shall not
include any purchaser of the Units as such from any of the Underwriters merely by reason of such
purchase.
Section 15. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity or enforceability
of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable.
Section 16. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF OREGON APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SUCH STATE.
Section 17. Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby (“Related
Proceedings”) may be instituted in the federal courts of the United States of America located
in Portland, Oregon or the courts of the Oregon in each case located in Portland, Oregon
(collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any
such court (a “Related Judgment”), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. Service of any process, summons, notice or document
by mail to such party’s address set forth above shall be effective service of process for any suit,
action or other proceeding brought in any such court. The parties irrevocably and unconditionally
waive any objection to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court
that any such suit, action or other proceeding brought in any such court has been brought in an
inconvenient forum.
Section 18. General Provisions. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.
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Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof, including,
without limitation, the indemnification provisions of Section 7 and the contribution provisions of
Section 8, and is fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 7 and 8 hereto fairly allocate the risks in light of
the ability of the parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Registration Statement, any Preliminary
Prospectus and the Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
Except as otherwise provided, this Agreement has been and is made solely for the benefit of
and shall be binding upon the Company, the Underwriters, the Underwriters’ officers and employees,
any controlling persons referred to herein, the Company’s directors and the Company’s officers who
sign the Registration Statement and their respective successors and assigns, all as and to the
extent provided in this Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term “Successors and Assigns” shall not include a purchaser
of any of the Units from any of the several Underwriters merely because of such purchase.
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If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.
| Very truly yours, NITROSECURITY, INC. |
||||
| By: | ||||
| Name: | Xxxxxxx Xxxxxx | |||
| Title: | President and Chief Executive Officer | |||
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representative as
of the date first above written.
XXXXXXX INVESTMENT COMPANY, INC.
Acting as Representative of the several
Underwriters named in the attached Schedule A.
Acting as Representative of the several
Underwriters named in the attached Schedule A.
| By: | Title: |
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